The company was founded by Sir Robert Gillespie Reid of Scotland, a businessman who had interests in the development of the pulp and paper industry and mining industry.

[1] The company had its beginnings in 1890 when the Newfoundland Government under William Whiteway wanted to build a railway line from Whitbourne to Halls Bay at $15,600 per mile ($9,700/km).

To ensure that the line was going to be completed to Port aux Basques, Reid had negotiated with the Newfoundland Government to operate the railway for 10 years.

[2] In 1896, he negotiated another contract, the Railway Contract of 1896, to build the railway from Whitbourne to Harbour Grace which gave him ownership of the entire railway (including the line to Harbour Grace) for 50 years and again 5,000 acres (2,023 ha) of land for every 1 per mile (0.62/km) built.

The contract also allowed Reid to purchase the St. John's dry-dock from the government for $325,000.