The principal purpose was to serve the Hydro Spa Hotels, bringing customers from the railway station near the River Derwent.

One of the tramway's directors, Job Smith got the idea for a steep-gradient tram for Matlock while in San Francisco in 1862.

The original plan for the tramway was to run between Matlock railway station and the Hydro Spa Hotels of Smedley's and Rockside.

The tramway was financed by locally born newspaper owner Sir George Newnes, at a cost of £20,000[1] (equivalent to £2,802,000 in 2023).

The depot was situated on Rutland Street and contained a boiler and a stationary steam engine, which pulled the cable and lifted the trams 300 feet up Bank Road.

The trams averaged 5½ mph, and had the advantage of the down-tram balancing the up-tram, and saving power in the Depot steam engine.

[6] The tram shelter and clock tower in Crown Square were the gift of R. Wildgoose JP and opened on 12 December 1899.