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In the early 1830s a group of local worthies, many of them members of the Whitby Literary & Philosophical Society, wanted to develop a railway to run from Whitby to Pickering (about 20 miles). This would shorten journey times to York, Leeds and beyond, connecting Whitby and its traders with the rest of the country.

A route was surveyed which ran along the Esk valley from Whitby to a hill sitting at the entrance to the Vale of Goathland in which the Murk Esk, a tributary of the main Esk, flows across the moors from Pickering to the south west. A tunnel - believed to be one of the first railway tunnels in the world - was dug at that spot,130 yards long, 10 feet wide and 14 feet high. The settlement became known simply as ‘Tunnel’ and an inn, not surprisingly ‘The Tunnel Inn’ was built to serve the people who began to travel on the railway. At first the coaches were pulled by horses, apart from on a section with a steep incline where a system of ropes and a counterbalance (filled with water) was used. The first section of the line, the eight miles between Whitby and the tunnel, opened in 1834 and carried 4000 passengers in that year. The full service to Pickering started in 1836.
A Brief History of the Railway at Grosmont