The North Carolina Transportation Museum is located on the site of Southern Railway's steam locomotive repair facility in Spencer. While the museum is young—founded in 1977—the story of the Spencer Shops reaches back more than a century. In 1894 famed New York financier J. P. Morgan created the Southern Railway. A new shop complex, begun in 1896, was located halfway between Atlanta and Washington, D.C. The shops were named in honor of Southern's first president, Samuel Spencer.
Spencer Shops' mission was to repair steam locomotives that hauled Southern's passenger trains and freight trains filled with North Carolina furniture, textiles, tobacco, and produce. For many years between 2,500 and 3,000 people worked in the shops.
One of the first U.S. rail systems to experiment with diesel-electric locomotives, Southern retired its last steam engine in 1953. This event started Spencer Shops on the road to decline, and employment dropped steadily through the 1950s and 1960s. The facility finally closed in the late 1970s.
In September 1977 Southern Railway donated four acres and three buildings to the state of North Carolina. Two years later a second donation placed the entire site under the administration of the Historic Sites Section of the Department of Cultural Resources.