In 1870 the Colonial Treasurer, Julius Vogel, startled the colony with an ambitious and imaginative proposal to build a national network of light railways similar to those he had seen in North America. To carry out his proposal Vogel planned to borrow within 10 years the sum of £10 million and, to provide the necessary manpower, he envisaged large-scale immigration. To appreciate fully the magnitude of this scheme, one must bear in mind that New Zealand's European population at that time was only a quarter of a million. In the whole country there existed less than 50 miles of public railways. The “Vogel Railways” were intended to facilitate the settlement and development of land, and to provide outlets for the products of farm, mine, and forest. Of a uniform 3 ft 6 in. gauge, they were built as cheaply as possible, and were expected to produce revenue quickly. High operating costs, low speeds, and inconvenience in operation were accepted as necessary evils. The general plan was to complete and extend provincial lines already begun, and eventually to have a Main Trunk line running the length of each island, with branch lines into the interior. Political pressure brought to bear by local interests soon forced the Government to make many deviations from its original plan, resulting in piecemeal construction and expenditure that quite often was unwarranted.

Some of the earliest lines, such as Auckland-Mercer, Wellington – Lower Hutt, Picton-Blenheim, and Dunedin-Balclutha, were let on contract to the English firm of John Brogden and Sons. Others were constructed in short sections by local contractors. When allowance is made for the lack of mechanical equipment, the rapid rate of construction was remarkable. By early 1879, when the initial “boom” ended and a series of financial depressions began, 1,136 miles of railway were in operation – 339 miles in the North Island and 797 miles in the South, including a 390-mile main line from Lyttelton to Bluff. In all, more than 1,000 miles had been built since the launching of Vogel's public works policy.

During the depressions of the eighties and nineties railway construction continued fairly steadily, if somewhat haphazardly, and by the turn of the century there were 10 separate sections of line with an aggregate route length of more than 2,000 miles. In addition, a considerable number of short lines had been constructed by private interests under various statutes such as the District Railways Act 1877 and the Railways Construction and Land Act 1881. Nearly all these privately owned lines were eventually acquired by the Government. The largest and most successful was the 83-mile Wellington and Manawatu Railway, between Wellington and Longburn. Completed in 1886, it was purchased at the end of 1908.