The Severn and Wye Railway began as an early tramroad network established in the Forest of Dean to facilitate the carriage of minerals to watercourses for onward conveyance. It was based on Lydney, where a small harbour was constructed, and opened its line to Parkend in 1810. It was progressively extended northwards, and a second line, the Mineral Loop was opened to connect newly opened mineral workings.

To facilitate transfer of traffic to the neighbouring South Wales Railway main line, the Severn and Wye Railway network was converted from a plateway to a locomotive-worked broad gauge edge railway, and then to a standard gauge railway. Extensions were made to Lydbrook, Cinderford and Coleford.

The company's finances were dependent on the mineral industry of the Forest of Dean, and in 1879 economic difficulties caused it to amalgamate with the Severn Bridge Railway. In fact this resulted in a worsening of the situation, and the combined company sold its business to the Great Western Railway and the Midland Railway jointly.

Further disappointing financial performance led to most of the passenger operation being discontinued in 1929, and after World War II inexorable decline in mineral extraction resulted in progressive closure of the network. None of the Severn and Wye Railway system is in commercial railway use today, but a heritage railway is active at Lydney.

Before railways The Forest of Dean had been a centre of mineral extraction for centuries. A coal and iron ore industry had been carried on by freeminers, who had certain statutory rights to regulate their own affairs. Stone quarrying was also undertaken in the forest. In the 18th and 19th centuries the timber of the forest became an important resource for the construction of ships for the Royal Navy, creating tension with the miners, who required timber for supports in their mine workings.

Roads in the forest were poor, and transport of heavy materials was a constant difficulty. The established rights of the miners made the deployment of capital for large-scale development very difficult, and the interests of the Royal Navy also militated against modernisation. This led to high costs, and the mining activity suffered from the competition of other locations.

Early tramway proposals In 1801 interested parties met at Ross-on-Wye and received a report from Benjamin Outram, indicating how lines of tramway might be constructed linking both Lydbrook and Lydney to the watercourses of the River Severn and the River Wye; the heavy minerals were to be transported onward to market by river and coastal shipping. The idea gained support, but it encountered fierce opposition too and the scheme foundered.

In 1806 the engineer John Rennie surveyed and proposed a route, subsequently developed with branches into a network, of tramways in the Forest, but his schemes too ended without definite action being taken.

Lydney and Lydbrook Railway

The pressure to build some form of transport was unabated, and at length the Lydney and Lydbrook Railway (often rendered as Lydney and Lidbrook Railway) was authorised by an act of Parliament, the (49 Geo. 3. c. clix), on 10 June 1809.

In fact it was to be a plateway, in which unflanged wagon wheels were to run on L-shaped plates; the guidance was provided by the upstand of the L-profile. The authorised capital was £35,000, to build from Lydbrook to Lower Forge by way of Mierystock and Parkend. There were to be eight branches. The railway company was not to be a carrier itself, but simply to provide the tramway on which independent carriers could run their own horse-drawn wagons.

Contracts were let in August 1809 for much of the construction, and by 4 June 1810 some mineral traffic was being carried, but dissatisfaction was already being expressed at deficiencies in the workmanship of the contractor.

Severn and Wye Railway

In 1810 a deviation of the main line was authorised in a further act of Parliament, the (50 Geo. 3. c. ccxv) of 21 June 1810, and the opportunity was taken to change the name of the company to the more memorable Severn and Wye Railway. An extension of the authorised capital, a further £20,000, was ratified by this act, which also authorised the making of a harbour at Lydney and a canal giving access from there to the River Severn itself.

The line was to be a plateway, with a gauge of . is given throughout Pope et al., and Paar. Casserley, page 121, gives , as does MacDermot, volume II, page 402. (The nearby Bullo Pill tramway used .) The plates were long and weighed ; they were carried on stone blocks.

Operation had started in June 1810, but weighing machines were not yet properly provided; the company's power to charge tolls required the provision of weighing machines, and in their absence no tolls could legally be levied, so that much of the traffic travelled free at first.

Dissatisfaction with the quality of the contractor's work continued to be expressed, and some track needed to be relaid at an early date. A third act of Parliament, the (51 Geo. 3. c. cxciii) was secured on 26 June 1811 authorised a further extension of the capital, of £35,000.

On 16 March 1813 a directors' meeting was held at which it was determined to circularise the shareholders:

“The water was let into the canal and basin this day, and the railways being in a state of work, the undertaking may be considered as complete.”

However the dominant purpose of the meeting was to follow:

"A considerable debt has been incurred, to liquidate which, the sum of £10,000 must be immediately raised."

If this was an invitation for someone to make a donation, it was in vain, and a fourth act of Parliament, the (54 Geo. 3. c. xlii) was obtained in May 1814 authorising a further increase in capital of £30,000.

The viability of the was in doubt with decreasing volumes of traffic due to other routes in existence or planned, giving access to the Forest, and due to its own obsolescent technology, as edge railways had by now become the normal form of railway.

The South Wales Railway In 1846, the South Wales Railway was preparing to build its line from near Gloucester to south-west Wales, intersecting the Severn and Wye Railway at Lydney. The South Wales Railway was aware of the mineral potential in the Forest of Dean and proposed a branch line alongside the Severn and Wye line. The S&WR made a counterproposal to sell their concern to the South Wales Railway, but their price was high, and the South Wales Railway did not wish to pay for the sum demanded for a declining and old-fashioned plateway.

Nevertheless, the South Wales Railway naturally wished to carry traffic originating in the Forest, and it was authorised by the South Wales Railway Amendment Act 1847 (10 & 11 Vict. c. cix) to take over the Forest of Dean Railway (the former Bullo Pill line) and convert it to a broad-gauge edge railway, as a branch of its own network. The S&WR had opposed this in Parliament, but were bought off when the South Wales Railway agreed to give the S&WR £15,000 to modernise their line, adding a broad gauge edge railway alongside.

The South Wales Railway opened its line between Gloucester and Chepstow in 1851, but the S&WR had done nothing to convert their line, so an interchange station was built at Lydney: minerals on the horse-drawn tramway were manually transshipped to broad-gauge wagons for onward conveyance.

Limited modernisation

This arrangement made the obsolescent technology of the S&WR more obvious, and in 1851 a man called Blackwell was asked to prepare a scheme for the conversion and modernisation of the S&WR line. However Blackwell's scheme needed the approval of the Commissioners of Woods; the commissioners made their approval subject to conditions that the S&WR board considered unreasonable, and the proposals foundered.

Not wishing to allow their line to stagnate, the board decided to improve their line without conversion, and obtained the (16 & 17 Vict. c. cxcvi) in August 1853; the existing tramway was to be renovated and locomotives introduced; the cost was £82,000, of which £14,000 was to come from the South Wales Railway contribution already committed. The company was empowered to become carriers themselves. Locomotive use on plateways was uncertain, because the plates were not always capable of carrying the heavy wheel loads that were likely to be imposed by practical locomotives. Available adhesion was also an uncertain factor. The act also authorised a further of tramway, but these were required to have a gauge of .

Nonetheless, in 1860 an 0-4-0 well-tank locomotive was ordered, and it seems to have been successful, as three more were delivered in 1864, and a fifth, this time an 0-6-0, in 1865.

This progress was clearly inadequate, for the line was still a gauge plateway, and transshipment at Lydney to the mainline railway was an expensive inconvenience, while other branch lines were offering, or being planned to offer, direct interchange.

However MacDermot states that after March 1865 "much of the line was relaid with 'compound edge rails or tramplates of a peculiar character,' doubtless akin to the Monmouthshire Railway's combined rail and tramplate."

In May 1867 the board considered a more radical proposal: conversion of the line between Lydney and Parkend and Wimberry Junction, with a new line to Lydbrook. The cost was to be £95,298. On consideration, this was seen to be beyond the means of the company, and the scheme was limited to the conversion as far as Wimberry, at an estimated cost of £33,000.

This was approved, and in 1868 a Board of Trade certificate was obtained authorising further capital of £38,000. The six-wheeled locomotive was to be converted from 3 ft 6 in to broad gauge at a cost of £200. A new broad-gauge locomotive was obtained as well. These arrangements were brought into use on 19 April 1869. The line was no longer simply a toll line, of course, but it still did not own any rolling stock, and the Great Western Railway, successor to the South Wales Railway, provided wagons on request from consignors. In fact in March 1870 a broad-gauge brake van was ordered by the S&WR, as it was considered unsafe to continue working mineral trains without one. For two years or so, the S&WR therefore owned a single unit of rolling stock.

The Mineral Loop From the 1840s mining activity developed in the ridge of terrain southwest of Cinderford and traffic was being lost to the South Wales Railway's Forest of Dean branch, even though the dock facility at Bullo, to which that line led, was inferior to that at Lydney. Accordingly, the board planned a new line, the Mineral Loop, connecting to many of the new pitheads. It would be formed by extending the mainline from Wimberry Junction, near Cannop, to , near Cinderford; with the loop running from there to reconnect with the mainline at Tufts Junction, near Whitecroft.

The new line would require a level crossing where it met the broad gauge branch of the Forest of Dean Central Railway at New Fancy and a tunnel at Moseley Green. Initially, it would follow a fairly moderate descent, before a 1-in-40 drop down to Tufts Junction.

The authorising act was the (32 & 33 Vict. c. cxxxvii), receiving royal assent on the 26 July.Or 26 July according to Paar.

The Forest of Dean Central Railway, sponsored by the Great Western Railway, had opened a mineral branch line from (on the Gloucester–Chepstow line) to New Fancy Colliery in 1868.