A logging line would usually use slab wood (the outside cuts from the logs) to feed the boilers and locomotives. This was because, they had to cut it anyway to get to the good wood and it was basically free.
A common carrier would "usually" contract with independent wood cutters to supply x number of cords to be stacked beside the track or in specified wood sheds at track side.
Now an independent contractor of 1870 was no different from one of 1970 they were going to supply the minimal accepable product at the least cost and effort to themselves. It is far more economical to saw rounds from large logs and split them down then it is to brush-up and split knotty small logs and limb wood.
Most railroads, steamboat lines, etc, would specify what they would accept for firebox wood. The size, and species of wood was of prime consideration but they also would have limits on the amount of bark,and sap wood, as well as punky or rotten wood.
Different species of wood will produce different BTU ratings. The hard woods like ,Walnut, Oak, Locust, etc will produce far mor BTU per cubic ft. then soft woods like Redwood, Fir, or Pine. Other considerations were the amount of creosote, ashes, and sparks that a given wood would produce. Then there is the wet wood, dry wood, green wood, problem that effects both the burnability and the BTU's produced.
Now having said all that, a common carrier line in your local would perhaps have contracted for Oak, Madrone, and Mountain Maple rather than use a soft wood. It would cost them more but they would get more efficiency per cord, as well as not having to sand out the flues as often thus saving on repairs.
Using the Oak, Madrone, Maple, etc they would have a lot more bark and sap wood present and also be in smaller cross sections then split Redwood or Fir would have been.
I'm probably all wrong
but it's a good story.