The passenger service was suspended in 1947 as a response to the post-war national fuel emergency, but the suspension was shortly made a permanent closure.

The Stroudwater Navigation was opened in 1779, bringing cheap transportation to Stroud for imports, especially coal and agricultural requirements, and exports of the manufactures of the district.

The Stroud Journal, in reporting the first sod ceremony, asserted that "it is well understood to be the first step of an extension on through Tetbury, Malmesbury and Chippenham".

Following an easy river valley course, the line was quickly completed, and the necessary Board of Trade inspection took place, in order to obtain permission for passenger operation.

Colonel Yolland made the necessary visit in December 1866 but he declined to recommend opening to passengers, chiefly on the ground of there being only one turntable on the line.

At the time the Board of Trade policy was to prohibit the running of tender engines tender-first, so requiring a turntable at each end of a line.

There seems to have been some failure of communication, for an anguished remark was made that tank engine operation was intended, which seems to have resulted in belated approval.

As well as debenture interest of £450 in the first half year, the company was under pressure from landowners whose land had been taken, but who had not received the agreed purchase price.

The Stroud branch had been authorised in the original Stonehouse and Nailsworth Railway Act 1863, but had been considered a lower priority.