Construction of the railway was funded by the publisher George Newnes, also proprietor of the Lynton and Lynmouth Cliff Railway, and as at Lynton and Lynmouth the engineer was George Croydon Marks. Construction of the line started in March 1891. The wide tunnel was bored through the limestone cliffs using both machine-drills and hand-drills and then lined with bricks. It took two years to construct and cost £30000 () three times its original estimate. Propulsion was by the water-balance method, in which the cars of each pair were connected by a cable running around a pulley at the upper station; a large tank on each car was filled with water at the top and the extra weight provided the motive power.