In 1881 Alexander Findlay Smith first put the project of a Peak Railway into shape and presented a petition for a concession to the governor of Hong Kong. The necessary legislation was passed two years later.
After its opening to 1926, the Peak Tram divided into three classes:
First Class: British colonial officials and residents of Victoria Peak
Second Class: British military and the Hong Kong Police Force personnel
Third Class: Other people and animals
Round trip charges were HKD 45 cents (First Class), 30 cents (Second Class) and 15 cents (Third Class).
In the 1908-1949 period, first row seats are reserved for the governor of Hong Kong, behind displaying "This seat reservation to His Excellency the Governor" (reserved for the governor of Hong Kong) in bronze plaque.
Findlay Smith did not approach the project rashly. Travelling extensively in Europe and America, he made himself conversant with nearly every existing method of railway employed for mountain ascent — San Francisco, Scarborough, Rigi, Monterey, Lucerne, the Rhine, Mount Vesuvius — and returned to Hong Kong thoroughly convinced of the feasibility of his idea. The actual construction was begun in September 1885 and in May 1888 the line was officially opened.
Smith's business partner, N. J. Ede, owned and lived in the house next to the Upper Terminus, originally named Dunheved, which they converted into the original Peak Hotel.
It took three years to build the Peak Tram. Most of the heavy equipment and rails needed for the construction was hauled uphill by the workers, who had no mechanical support. As a revolutionary new form of transport to Asia at the time, the tramway was considered a marvel in engineering upon its completion. A wooden structure was built for the terminal. According to photographs, the Garden Road terminus was originally an unadorned building, a large clock face was added to the edifice probably between the 1910s and 1920s.
The Peak Tram was opened for public service on 28 May 1888 by the then governor Sir George William des Voeux. As built, the line used a static steam engine to power the haulage cable. It was at first used only for residents of Victoria Peak, although despite this it carried 800 passengers on its first day of operation, and about 150,000 in its first year. These passengers were carried in the line's wooden bodied cars. Its existence accelerated the residential development of Victoria Peak and the Mid Levels.
In the course of its history, the tram has been victim of two natural disasters, caused by floods from heavy rainfall, which washed away steep sections of the track between Bowen Road and Kennedy Road. The first was in 1899, and the second occurred on 12 June 1966.
In 1926, the steam engine was replaced by an electric motor. On 11 December 1941, during the Battle of Hong Kong, the engine room was damaged in an attack. Service was not resumed until 25 December 1945, after the end of the Japanese occupation of Hong Kong.
In 1956, the Peak Tram was equipped with a new generation of lightweight metal bodied cars, each of which seated 62-seat passengers. Unusually for a funicular line, three such cars were provided, only two of which were in use at any one time. The third spare car was kept in a car shed near Kennedy Road station.
The system was comprehensively rebuilt in 1989 by the Swiss company, Von Roll, with new track, a computerized control system and two new two-car trams with a capacity of 120 passengers per tram. By the time of the handover in 1997, it carried some 2 million passengers annually. Today, more than 4 million people ride the Peak Tram annually, or an average of over 11,000 every day.[5]

Alexander Findlay Smith schlug 1881 das Projekt vor und beantragte eine Konzession, die ihm 1883 erteilt wurde. 1885 wurde mit dem Bau begonnen. Um den vorzubereiten, hatte Smith eine Weltreise unternommen und sich andere Bahnen angesehen, die ähnlich steile Steigungen bewältigten: die San Francisco Cable Cars, die Rigi-Bahn, die Drachenfelsbahn in Königswinter, die Funicolare del Vesuvio auf den Vesuv bei Neapel und andere. Die Peak Tram wurde am 28. oder 30. Mai 1888 durch den Gouverneur Sir George William des Voeux eröffnet, ursprünglich von einer stationären Dampfmaschine angetrieben und galt als technisches Wunderwerk. 800 Passagiere nutzten die Bahn am ersten Betriebstag, 150.000 im ersten Betriebsjahr. Sie diente zunächst vor allem den Anwohnern von Victoria Peak und förderte die Besiedlung des darunter liegenden Hanges sehr stark. Damals wiesen die hölzernen Wagen drei Wagenklassen auf:
1. Klasse: Reserviert für Kolonialbeamte und Bewohner des Victoria Peak; Rückfahrkarte: 45 cents
2. Klasse: Britisches Militär und Hong Kong Police Force; Rückfahrkarte: 30 cents
3. Klasse: andere Reisende und Tiere; Rückfahrkarte: 15 cents
1908 bis 1949 waren die Sitze in der ersten Reihe jeden Wagens für den Gouverneur der Kronkolonie Hongkong reserviert. An der Rückenlehne waren Bronze-Schilder mit der Aufschrift angebracht: „This seat reservation to His Excellency the Governor“. Wollte der Gouverneur nicht mitfahren – was ja meistens der Fall war – wurden die Sitze unmittelbar vor der Abfahrt zur allgemeinen Nutzung freigegeben.
Zwei Mal, 1899, und am 12. Juni 1966 kam es aufgrund der Topografie nach schweren Regenfällen zu Hangrutschungen, die auch Teile der Strecke mit rissen.
1926 wurde der Betrieb grundsätzlich umstrukturiert. Seit dem fährt die Standseilbahn mit elektrischer Energie. Neue Fahrzeuge mit 52 Plätzen wurden beschafft, das Drei-Klassensystem abgeschafft. Am 11. Dezember 1941 wurde bei dem Angriff der Japaner auf Hongkong das Maschinenhaus, in dem sich der Motor für die Anlage befand, schwer beschädigt. So ruhte der Betrieb während der japanischen Besetzung und wurde erst nach der Rückeroberung am 25. Dezember 1945 wieder aufgenommen. 1948 gab es neue Fahrzeuge mit 62 Sitzplätzen, 1959 erhielt die Bahn neue Fahrzeuge aus Leichtmetall, die 72 Reisende befördern konnten.