The line was constructed by the English contractors Peto, Brassey and Betts, who undertook to raise the capital required in London if they obtained the contract.

This failure, together with a severe recession and the American Civil War, meant that no more capital could be raised and almost no railways were built in Canada during the 1860s.

There was a return of confidence with the Confederation of the British North American colonies into Canada in 1867, and the political promise of a transcontinental railway to the Pacific.

Merchants, industrialists, and politicians of Toronto, Ontario and surrounding counties began to look for ways of opening up the back country 'bush' north of the city to settlement and trade.

After a visit to Norway, the 3 ft 6 in gauge was taken up by Sir Charles Fox and Sons, the firm founded by the eminent engineer and constructor of the Crystal Palace at the Great Exhibition of 1851.

Fox had a very influential consulting practice throughout the former British Empire and Colonies and was instrumental in gaining acceptance for the 3 ft 6 in (1,067 mm) gauge in Canada, New Zealand, Australia and South Africa.

His messianic style at these meetings often generated so much enthusiasm that motions were immediately approved to grant large sums in support of the lines.

Long, drawn-out campaigns ensued, with businessmen and progressive farmers whose lots would be near the line advocating large unconditional grants, and those in more distant locations opposing the free bonuses of tax money.

But, when strongly opposed, Laidlaw's combative and insulting responses could generate such opposition that townships delayed contributing money for years, or refused entirely.

Contrary to the hopes of the promoters, the proceeds from bonuses, grants, and stock sales fell short of paying for construction of the roadbed and structures.

This deficit, and the cost of purchasing iron and equipment, had to be made up by issuing bonds whose guaranteed interest payments were a heavy burden on the income of the T&NR, and ultimately were to prove fatal to its prospects.

Gooderham and Worts had a vital interest in maintaining supplies of firewood for fuel and grain for its production processes, and for several years it was loans and other support from the distillery company which kept the T&NR afloat.

Such a branch was never built by the T&NR, although the connection was eventually made by the Whitby, Port Perry, and Lindsay Railway via a junction at Blackwater.

On the lower and longer settled part of the line, as far as Uxbridge, municipal bonuses were generally given freely and generously, but beyond that place townships were sometimes less enthusiastic.

The lack of communications in that part of east York County lying between the line of the Northern Railway of Canada through Newmarket, and the Toronto and Nipissing Railway through Uxbridge convinced local politicians that a cheap narrow-gauge line connecting with the T&NR at Stouffville and running north to Lake Simcoe near Sutton would enhance the agricultural and forest trade in the area and tap the Lake Simcoe steamer traffic.

The first consulting engineer in Canada was John Edward Boyd of New Brunswick, who conducted the preliminary surveys over the ground to Uxbridge and Orangeville.

The engineering of the T&NR and the LSJR was of a much less substantial nature than on the TG&BR, with only one significant trestle over the Rouge River between Unionville and Markham.

The first 9 miles (14 kilometres) used a third rail on the 5 ft 6 in (1,676 mm)-gauge Grand Trunk Railway easterly from Toronto's Berkeley Street Station to Scarborough Junction.

Much of the contract beyond Uxbridge was undertaken by Edward Wheler, a miller and businessman of Stouffville, and 87 miles (140 kilometres) of rail line was opened to Coboconk on 26 November 1872.

[4] The historic building was relocated to its present location off Portage Road west of Highway 35 (Laidlaw Heritage Village) in 1995[5] and is now used by 314 Hood Royal Canadian Sea Cadets.

The first locomotive on the T&NR was a small 4-4-0 ordered from the Avonside Engine Company by George Laidlaw, and John Shedden during a visit to England in the Spring of 1869.

This was before the appointment of Edmund Wragge as Chief Engineer, and it is likely that they were advised to order it by Douglas Fox based on his similar recommendations for the Queensland Railways.

Four of the locomotives were damaged beyond repair during a January 1883, fire at Uxbridge, Ontario and the remainder were sold following gauge standardisation and amalgamation with the Midland Railway of Canada.

The numbers and names of these T&NR locomotives have long been confused in early historical reviews, and the errors repeated in subsequent publications.

Based partly on contemporary British railway practice, the experience of Sir Charles Fox and Sons on the Queensland Railways, and Carl Abraham Pihl's work in Norway, the early rolling stock was intended to consist of short four-wheel boxcars, and longer six-wheel flat and passenger cars using Clark's radial axle arrangement.

Passenger and freight traffic on the Toronto and Nipissing Railway grew strongly at first, challenging the ability of the line to carry all that was offered.

The T&NR directors reacted promptly by buying substantial numbers of new locomotives and freight cars, but then the effects of poor grain harvests and the business recession of the mid-late 1870s weighed heavily on the line's ability to pay a return on the capital invested.

The small narrow-gauge engines were able to cope with normal winter weather, but there was no money for snow clearing after severe storms and Gooderham and Worts sometimes paid for this work in order to maintain their distillery fuel supplies.

The worst accident occurred when the boiler of the Fairlie engine Shedden (see illustration above) exploded at Stouffville on January 31, 1874, due to the safety valves being tied down to increase haulage power, killing three enginemen.

Many charged that the T&NR's troubles were due to the narrow gauge which made freight haulage uneconomic, but in fact the line's financial performance was better than most of its neighbours, and there was no lack of capacity.