To achieve this, it founded in 1856 with other investors the Franco–Swiss Company, and subscribed 40% of the capital for the construction of a railway line from Pontarlier in France to the Swiss border at Les Verrières through the Val-de-Travers to Neuchâtel.

In order to achieve a maximum gradient of 2% between Auvernier and the crest at Les Bayards the line had many cuttings and tunnels.

The line was not profitable as its rival, the Swiss Central Railway carried most traffic between Switzerland and France over the border at Basel.

The railway played an important role in the Franco-Prussian War, when during January and February 1871, the French Armée de l'Est with 87,000 men under General Bourbaki retreated into Switzerland and were disarmed and interned in Les Verrières.

On 22 March when the interned troops were released and were being repatriated by train a collision occurred due to an incorrect setting of points.