Before a railway could be built, it was necessary to obtain the legal authority or a "charter" from the provincial government, or, for railways that were to be operated between two or more provinces in federally administered territories, from the federal government. In the late 1800s and early 1900s charters were granted for many wild schemes and extravagant propositions. Usually, the promoters had no intention of building a railway but they knew that the charter could be a valuable asset if someone else wanted to build a railway through an area they had established rights over.
The key charter for the railway through the Crowsnest Pass was granted in 1888 and a land grant was also provided. These acts, "An Act respecting a grant of land for right of way and terminal purposes to the Crow's Nest and Kootenay Lake Railway Company, British Columbia " and "An Act to Incorporate the Crow's Nest and Kootenay Lake Railway Company ," ultimately led to the construction of the Canadian Pacific's Crowsnest Pass line. The people incorporating the railway were "Edward Humphreys, of Wolf Creek, Kootenay, Gentleman; Honourable F. W. Aylmer of same place, Civil Engineer; William Fernie of same place, Farmer; Peter Fernie of same place, Farmer; Valentine H. Baker of same place, Gentlemen; and Edward Bray of same place, Contractor; and all such persons as may become shareholders in the company...".
Valentine Baker was the son of Col. James Baker and was clearly acting in the family's interests. The Bakers and their associates did not have the resources to build the railway themselves and were undoubtedly happy to form an alliance with the CPR and they turned their energies to developing the coal mines and other lands, including the townsite of Cranbrook, in the area.
The CPR leased the railway, whose name had been changed to the Crow's Nest Southern Railway, and negotiated an agreement with the government for construction. These arrangements, described in the next section, also provided for the development of the coal fields by the Crow's Nest Pass Coal Company.