The minutes of the committee of the Chamber of Commerce meeting in Hong Kong, where a letter setting out his ideas was considered on 7 March 1864, stated that "the opinions of the Chamber in respect to his suggestions should be recorded in the form of a letter, to the effect that the Committee deem it essential for the advancement of the project that short lines of railway should at first only be tried, and that it is not advisable at present to interfere with any water communications which are already established and can generally be worked more cheaply than railway traffic.

"[2] The main reason for this decision, which effectively killed MacDonald Stephenson's idea, was that many of the businessmen concerned had a personal interest in protecting their investments in the established shipping companies that enjoyed a monopoly on carriage of passengers and goods into and out of China.

Li Hanzhang [zh], Qing governor of the Guangdong province,[3][4] also made at the time a similar proposal for a railway connecting Guangzhou with the rural hamlet of Sham Shui Po just outside the British border.

Britain was at the time vastly expanding her sphere of influence in the Far East and was striving to obtain the rest of Hong Kong up to the Sham Chun River.

However, by the beginning of the 20th century, the Hong Kong Government under the leadership of the colony's governor, Sir Henry Blake, decided that urgent action was required.

The arrangements were finally ratified by the Hong Kong Government's passage of the Railway Loans Ordinance in 1905, clearing the way for construction of the British Section.

It took until 1907, however, for the loan agreement for the Chinese Section to be concluded, with the financing being provided by way of a bond issue floated in London in April of the same year.

The importance attached to the project was reflected in a speech made to the Hong Kong Legislative Council by the colonial governor, Sir Frederick Lugard, in 1908: "You will recall that in 1905 it was decided to build the railway by means of a loan.

Although the formal approval of the Colonial Office in London was not given until February 1906, the Governor, Sir Matthew Nathan, had anticipated a positive outcome and had already instructed the Public Works Department to start earthworks on the route from Tai Po Market to Fanling in December 1905.

However, underestimation of the challenges, changes in design, depreciation of the Hong Kong dollar against the pound sterling (much of the equipment had to be imported from Britain), difficulties in recruiting suitable labour coupled with a high mortality and sickness rate amongst the workers (malaria, beri beri and dysentery were endemic in Hong Kong at that time) and right-of-way land acquisition costs greatly pushed up the final cost of the project.

Together with the construction of the Sha Tau Kok line,[5] a two-foot narrow-gauge branch railway from Fanling to Sha Tau Kok (making use of the rails and rolling stock used in the construction of the main line and later closed in April 1928), the final cost was HK$12,296,929, making it one of the most expensive railways in the world and, as costs escalated, the subject of much concern in both Hong Kong and London.

The railway was formally opened on Saturday, 1 October 1910, but without a terminus, this event being officially recorded by way of a notice in the following Friday's Hong Kong Government Gazette.

Some 39 acres (16 ha) of the harbour at the south of the Kowloon peninsula, between Signal Hill (Blackhead Point) and Hung Hom, had taken place using material excavated from the route and carried to the site by a two-foot gauge railway.

Part of a godown (warehouse) next to the site of the present day Star Ferry pier in Tsim Sha Tsui was rented and converted into a passenger station with rails to it laid down Salisbury Road from Signal Hill.

[7] Traffic on the new railway was at first quiet as there was little demand for passenger and freight services by the inhabitants of the then undeveloped New Territories north of Beacon Hill.

Only after the Chinese Section was completed and opened in 1911 did traffic start to build up as people took advantage of the fast journey time of only 3 hours 40 minutes from Kowloon to Guangzhou.

The post-war management faced many problems, including lack of records, which had almost all been destroyed by the Japanese and had to be reconstructed from the memories of serving and previous staff; shortages of coal for the engines necessitating their conversion to burning fuel oil; currency exchange rate difficulties due to devaluation of the Chinese currency requiring agreement with the Chinese authorities to use the Hong Kong dollar as the basis for all transactions; worn-out equipment; and staff shortages.

From an immediate post-war figure of around 600,000, the population of Hong Kong rose to nearly 2 million by the end of 1947, with the influx reaching a rate of about 100,000 per month during this period.

Despite the inconvenience that this caused, the railway benefitted by Hong Kong becoming the centre of communications and trade with southern China, especially as much of the traffic that had hitherto gone by sea could no longer do so.

Refugees fleeing the new communist government of China also often settled in squatter areas along the railway, and this, together with an increase in the British Army's presence, added to domestic travel demand in Hong Kong.

For the rest of the 1950s and 1960s, despite some short-term disturbances in 1967 resulting from a spill over into Hong Kong of the Cultural Revolution in China, both domestic and cross-border traffic continued to show steady overall growth.

This was necessary to permit construction of the first cross-harbour road tunnel – replacing the previous reliance on ferries to cross Victoria Harbour – and to overcome the constraints imposed on rail traffic growth by the first terminus at Tsim Sha Tsui.

While the move to Ho Tung Lau took place in 1968, the Hung Hom station complex was not completed and opened until November 1975, at which time the Tsim Sha Tsui terminus was closed and shortly thereafter demolished except for the clock tower, which remains a landmark today.

In 1972 the government set up a steering group to examine the need for future short-term and long-term improvements to the railway given the growth in freight and passenger traffic to China, coupled with the government's plans to construct large new towns at Sha Tin, Tai Po, Sheung Shui and Fanling in the New Territories that would further increase domestic travel demand.

At that time the new towns were intended to be constructed to a "balanced design" concept under which employment opportunities as well as people would be relocated from substandard accommodation in the older urban areas, thereby minimising the additional demand on the transport network.

As later became apparent, however, while people were moved in their hundreds of thousands to live in the New Territories, the major centres of employment and of leisure activities remained in the urban areas, leading to an even greater dependence on the railway to support a rapidly increasing daily commuter flow.

In 1974 a 10-year investment programme was started to provide for the complete double-tracking and electrification of the railway from Hung Hom to Lo Wu, requiring the building of a second Beacon Hill Tunnel together with the construction or upgrading of stations and other facilities.

The corporation was required to "perform its functions with a view to achieving a rate of return on the assets employed in its undertaking, and in accordance with ordinary commercial criteria, is satisfactory."

Disputes on the funding and location of the eventually cancelled Canton Road station in Tsim Sha Tsui, which was in the proposed alignment, postponed the construction by a year to 2005.

According to the non-binding memorandum of understanding signed with the government, the current MTR lines may fully integrate the interchange stations with the Sha Tin to Central Link in order to bring more convenience to the passengers.