It was 20 years before trains ran again in Shanghai.

Discussions among western merchants on railways in China started as early as the 1840s, just 15 years or so after the world's first railway went into operation in England. There was talk of a line from Canton to Calcutta, which would no doubt have been useful in the transport of opium.

When General Gordon was about to capture Soozhou from the Taiping rebels, a group of English and American firms petitioned the senior Chinese official Li Hung-chang to build a railway line linking Shanghai with that city. The petition was refused and Li said that "railways would only be beneficial to China when undertaken by the Chinese themselves and conducted under their own management; that China's objection existed to the employment of numerous foreigners in the interior; and that the people would evince great opposition to being deprived of their land for that purpose."

In 1865, businessmen in Shanghai formed a company to build a railway to cover the 12 miles from Shanghai to Woosung, the port at the entrance to the Huangpu River. But they called it the "Woosung Road Company" and gained permission only to reconstruct a road linking the two places and to purchase land to widen and straighten it. Permission was never given to build a railway.

The company began to buy land, but costs became so high that the scheme was abandoned in 1867 and the company liquidated. The plan was revived five years later in 1872, and the engine and cars ordered from England. The rails arrived in Shanghai in late 1875, and were laid along the route. The first five-mile stretch of track to Kiangwan, opened for traffic on June 30, 1876.

The train made six trips a day along the track, and was always crowded. In July receipts averaged around $50 daily and operations were considered to be "highly satisfactory" until on August 3, 1876, a man walking on the line was killed "under circumstances which suggested, either extremely dense stupidity or a malicious intention to commit suicide, and thereby create a prejudice against railways", as one English writer put it.

The Chinese people became hostile, and the British minister in Peking, Sir Thomas Wade, who was in Shanghai at that time, gave instructions that the train should stop. The Chinese government announced it wished to purchase the line, and Wade told the agents Jardine Matheson's that as the railway had been built without official approval and could not be defended by the British government, it would be best to sell.

Jardine's agreed, as long as the price covered all the costs. In October, 1877, a sum of 285,000 taels was paid for the land, rolling stock, and rails. The last train which ran was pulled by the engine "Victory" followed by the "Celestial Empire." The rails were torn up and shipped with the rolling stock to Taiwan, where they were left to rust on the beach.

But Jardine's didn't give up on the prospect of building railways across China, and neither did other foreign firms. A short (seven-mile) line was built at the Kaiping coal mine and went into service in 1881, which was encouraging, and in 1887, Jardine's pushed the offer of a loan to extend the line. This was given approval by the Chinese Emperor, and the Kaiping Railway Company was renamed as the China Railway Company. From that eventually grew the entire Chinese rail system.