Broughton was first settled at the turn of the 20th century as a mining town for the Cape Breton Coal, Iron & Railway Company, started by British mining engineer Thomas Lancaster and British businessman Col. Horace Mayhew which intended to develop the coal seam at Cochrane's Lake (aka: Loon Lake). The pair raised millions of dollars, mostly from English investors, and construction on the town was started, with streets laid out and a number of large official buildings constructed, including the Office Building, the Assistant Manager's House, the Broughton Arms Hotel and Crown Hotel. Remains of these substantial buildings can still be seen today, the scale of which giving an impression of the town's lofty ambitions. A railway was built connecting to the Sydney & Louisburg Railway at False Bay Head, continuing through Broughton Junction to Broughton, a distance of 4 ½ miles, construction beginning in 1905 and completed in 1906. Seemingly too much money and effort was spent on the details and modern conveniences of the "most up-to-date modern city", one of the first attempts at a planned community in Canada, and not enough attention to the actual mine operation. The company went bankrupt in 1907 after it failed to secure rail transportation to get its coal to port. It is said this was due to the opposition of the Dominion Coal Company, which would not allow its Sydney and Louisburg Railway to carry the coal produced by the mine.