When the Canadian Pacific
Railway was built across the Canadian prairies in the early 1880s, there
were no branch lines and few settlements in what is now Alberta and Saskatchewan.
In 1882, the North Western Coal & Navigation Company was incorporated
in Great Britain by Sir Alexander Galt and associates to develop coal
deposits near the Saskatchewan River. In 1884, the Canadian Parliament
authorized a narrow-gauge railway (with 3 feet or .91 m between the rails)
to be built from Dunmore, on the Canadian Pacific mainline, westward to
the vicinity of Lethbridge in southern Alberta, a distance of about 108
miles (174 km).
Opened on October 19, 1885, the line permitted the successful development of coal mines at Coalbanks near the new townsite of Lethbridge. In 1889, the Alberta Railway & Coal Company gained control of the little narrow gauge railway and built additional trackage to Coutts on the Montana border and a subsidiary in the United States extended trackage south to Great Falls, Montana. However, in 1893, the trackage between Dunmore and Lethbridge was leased to the Canadian Pacific and rebuilt to standard gauge (4-feet, 8 1/2 inches or 1.43 m between the rails). It became the first section of the Canadian Pacific's Crowsnest Pass railway route. The CPR carried out surveys and some grading of the right-of-way towards the Crowsnest Pass in the early 1890s but did not undertake full scale construction because it had not reached a satisfactory agreement the Canadian government. Moreover, economic conditions were depressed at that time. Additional narrow gauge railway trackage was built in the area and most of it was eventually rebuilt to standard gauge and taken over by the CPR before the First World War.
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