Only a few people noticed that there wasn't any railroad being built on the southern end of the line from Portland to Port Townsend. And then the bubble burst.

In 1890, just in time for Thanksgiving, word came that the Oregon Improvement Company had folded. It was the same old story: no money. Shipping, too, was drying up. Mill economics had fluctuated throughout the early part of the century. It had been a cosmopolitan time in the sawmill towns, but it was all too short an era: the cargo mills, the white-winged ships that loaded at their docks, and the men who sailed them were all too soon gone. After the bust, visitors to Port Ludlow glimpsed a dying age when they stayed at the stately Admiralty Hall, which became a hotel.

The Port Ludlow mill closed in 1936. Then during the housing shortage of World War II, the square, New-England style houses were loaded onto barges and towed away. For a long time, all that remained of the past was an old brick chimney.

For a few years there was a daily train between Port Townsend and Quilcene. Then even that stopped. The new drydock, built to accommodate the expected increase in shipping was towed away. The fine stone and brick buildings along Water Street, nearly completed when the bubble burst, stood unoccupied. Port Townsend was taking an eighty-year sleep.

The days of the sailing ships and their splendor have long since gone, although every once in a while you can see a masted schooner sailing into the Strait of Juan de Fuca, heeling under a south wind.

Much of the downtown and uptown areas of Port Townsend have been restored to their former splendor and are now National Historic Districts. The port is on the National Register as a Historic Victorian Seaport, one of only three in the nation.