The construction of the Derby Castle to Ramsey electric tramway had attracted world-wide attention but it was soon to fall into problems. The electrical engineering, mostly technology still in its infancy, had been very expensive. Loans were taken out to pay for the Laxey-Ballure, and Ballure-Ramsey extensions by Alexander Bruce, the company secretary resigning in January 1899 fearing the worst!
The IOMT&EPCo owed £150,000 to Dumbells Bank, which was underwritten by Parr’s Bank of England. In February 1900, Parr’s foreclosed on the loan, which in turn lead to the collapse of Dumbells, with disastrous results to both the Island and the IOMT&EPCo. Bruce was largely held to blame, warrants for his arrest appearing soon after! He passed away in September 1900, the one time hero departing un-mourned.
Liquidation was imposed, the company being ran by the engineer and secretary, Joshua Shaw. As a contingency, Dhoon Quarry was closed, and the various hotels rented out, but the order for the sale was made in July 1901. Tendering opened in September, an offer from the British Electric Traction Company of £225,000 for all of the lines was turned down. A less extensive offer, from Douglas Corporation of £50,000 for the Horse and Cable Tramways was approved.
It was not until January 1902 that a bid for the electric lines was received, £250,000 from a merchant banker on behalf of a ‘Manchester Syndicate’, an agreement to this deal and a final settlement being made in September. On the 1st of November 1902, the Manx Electric Railway Company was incorporated, with the registered office in London.
The interim period had also seen the visit of King Edward VII and Queen Alexandra on the 2nd of August 1902; after touring parts of the island by carriage, they returned from Derby Castle to Walpole Drive, Ramsey by the M.E.R, Enclosed Trailer No.59 and a Winter Saloon being used for the purpose.
The M.E.R also repurchased the Dhoon Quarries, building a Car and Goods Shed at Laxey, and a Goods Shed at Ramsey. New Trailers and goods vehicles were also ordered, the Dhoon Quarry supplying material for granite paving and road material, both in high demand with the initial transportation being met by the bolstered M.E.R fleet. All of the previously rented-out hotels were regained, the company looking well for its new existence as a transportation giant on the Isle of Man.