In 1871, construction began on the PEI Railway. In the age before reliable roads, the Railway was a dramatic improvement in transportation, benefiting the economy and tourism. Unfortunately, the cost of the Railway grew to such an extent that by 1872, the colony was on the brink of bankruptcy.
Although the Island had previously resisted Confederation, it was now forced to approach the Canadian Government with intentions of joining the Dominion. Ottawa agreed to take on the Railway debt and PEI became a Province of Canada 1 July 1873.
The tender for the PEI Railway called for 14 engines, one of which was the No.1 engine built by the Hunslet Engine Company of Leeds, England. Although a handsome machine, it proved to be no match for the snowbanks that are so common in Island winters – or the heavy loads. As a result, it was generally used around the rail yard and United States built engines were relied upon to provide service on the main line.