It began as the second long[b][c] U.S. gravity railroad[d] built initially to haul coal to canal boats, was the second railway chartered in the United States after the Mohawk and Hudson Rail Road[e] before even, the Baltimore and Ohio (e. 1827).

The 4 ft 3 in (1,295 mm) narrow gauge railroad carried coal from Carbondale North-northeast of Scranton over the Moosic Mountains to the D&H Canal in Honesdale.

After being emptied, they were attached to a cable wound on large winch wheels (similar to a ski lift) and hauled up a short, steep inclined planes by a stationary steam engine.

The Delaware and Hudson Canal Gravity Railroad Shops have been demolished, but were once listed on the National Register of Historic Places.

Each plane contained a single track, with an automatically switched siding in the center where the loaded and empty cars could pass.

After a short time in service, the hemlock was discovered to be too soft, and a 4-inch (10 cm) wide hardwood board was positioned under the iron.

[5] On August 8, 1829, the railroad performed a trial of the first steam locomotive in America, the Stourbridge Lion, over the 3-mile (4.8 km) stretch of track from Honesdale to Seelyville, where a low bridge prevented further travel.

In 1836, a short water-powered plane was added to lift loaded cars from the mine to a trestle crossing the river into Carbondale.

The track for loaded cars was realigned at Prompton to eliminate the plane there, which allowed the loaded cars to coast under gravity power over a new "ten-mile level" (16 km) from Waymart to Honesdale, which now stayed along the southern bank of the river, descending 44 feet per mile (8.3 m/km) until reaching Honesdale.

[7] In 1848, the D&H extended the gravity railroad southward from Carbondale to newly opened mines at White Oak Run in Archbald.

[7] In 1863, the railroad was extended to the Scranton terminal at Vine Street, where the company built a station and office building.

The new light track contained a 400-foot (120 m) radius hairpin turn at Panther Bluffs which became known as the Shepherd's Crook, later providing extensive views when passenger service between Carbondale and Honesdale was started in 1877.

Although designed for transporting coal to the canal at Honesdale, the line became a popular excursion route when it began passenger operations.

Service began as early as 1860 with two small passenger cars running the steam-powered segment between Providence and Valley Junction at Olyphant.

[7] To increase the road's popularity with visitors, the D&H built a 600-acre (240 ha) picnic park at Farview near the highest elevation of the line.

A hike up a mountain trail to observation towers at the High Knob peak offered visitors extensive vistas.