 The company was founded on 9 February 1887 by the Lokomotivfabrik Krauss & Co. and the Lechner & Krüzner Branch Line Construction and Operating Company ("Lokalbahnbau- und Betriebsunternehmung Lechner & Krüzner").Krauss brought with them the narrow gauge Feldabahn in Saxony-Weimar, which had been built in 1879/80, into the new company.The LAG rapidly grew into an important transportation organisation.