It was instigated by the Melbourne and Hobson's Bay Railway Company to carry passengers arriving in Victoria at Station Pier and to alleviate the high cost of shipping goods using small vessels up the Yarra River to Melbourne.
Work began on laying the railway in March 1853 under the supervision of the company's Engineer-in-Chief James Moore.
According to the Argus newspaper's report of the next day, "Long before the hour appointed ... a great crowd assembled round the station at the Melbourne terminus, lining the whole of Flinders Street".
[2][1] The line has an established place in Australian history: it was the first in Australia to operate with steam locomotives.
The section from Southbank Junction to Port Melbourne was converted to light rail, requiring the conversion from broad gauge 1,600 mm (5 ft 3 in) used by the Melbourne rail network to 1,435 mm (4 ft 8+1⁄2 in) standard gauge tram track, as well as reducing the overhead voltage from 1,500 V DC to 600 V DC required for the trams.