A major change for the larger railways in the 1870s was alignment with the narrower American standard gauge track (4 ft. 8 ½ in.). The volume of traffic across the border made it politic to change to the American system. The Great Western changed first, followed by the Grand Trunk and last by the Northern Railway, which had the least contact with the United States.

Four new railways, two narrow gauge (3 ft. 6 in.), and two standard gauge were built. Narrow gauge track was cheaper and quicker to lay as there was less rail bed to prepare and was often used for local railways. The Toronto and Nipissing (T&N) was the first public narrow-gauge line in North America. Its yards and terminus were at the foot of Parliament Street, opposite the Gooderham and Worts distillery and mill, which owned it. By adding a third rail between Grand Trunk's wider rails, the line ran east to Scarboro Junction, where it turned north. The railway supplied the distillery and mill with grain and lumber, and opened for business in 1871. Ten years later it was taken over by the Midland Railway, which in turn was taken over by the Grand Trunk Railway in 1883.

The second narrow gauge railway was the Toronto, Grey and Bruce (TG&B). Its terminus was at the foot of Bathurst Street between Front Street and Queen's Wharf. The line, which went northwest eventually reaching Owen Sound, opened for service in 1871. It ran a third rail between Grand Trunk's as far as Weston, where it turned north. The TG&B's first central passenger station was on Front Street, near the Parliament Buildings. Later in 1873, it became a tenant in the second Union Station. The railway suffered from its own success. The freight volume was so great that the lightweight engines and cars could not handle the loads. The directors resigned, and operations were turned over to Grand Trunk, which re-gauged and ran the railway until the early 1880s. Then Grand Trunk encountered financial problems of its own, and the TG&B merged with the Ontario and Quebec Railway, a subsidiary of Canadian Pacific Railway (CPR), in 1883.

In 1879, the third railway, the standard gauge Credit Valley, located its Toronto terminus in Parkdale on the northeast corner of Dufferin and King Streets. This railway ran on its own line to West Toronto Junction where it turned west to St. Thomas and Elora. The first section, from Parkdale to Milton opened in 1879. After a battle that went all the way to the Privy Council, Credit Valley won the right to use the Esplanade and by 1880 was running trains into Union Station. The railway was complete by 1881, but the company was nearly bankrupt and Canadian Pacific Railway purchased it. This purchase gave CPR an entry for its passenger trains into Union Station, but trains coming from the east had to go to West Toronto and back down the track five miles into Union station. Eventually in 1892, CPR built a line down the Don River from its main line at Leaside to give it eastern access to the station and the waterfront industrial area.

In 1897, the Toronto, Hamilton and Buffalo (TH&B) railway opened the fourth line. It was built by a consortium of four Canadian and American railways to provide competition to the Grand Trunk Railway route from Toronto-Hamilton-Buffalo. By 1910, a half million people a year would use this line. In 1977, CPR purchased control and ten years later merged the line into CP Rail.

The railway building era was characterized by periods of boom and bust. In the 1880s, Grand Trunk and its new competitor, the Canadian Pacific Railway, took over many of the other railways operating in Ontario. The Grand Trunk absorbed the Great Western in 1882, the Midland in 1883 and the Northern in 1888. The Ontario and Quebec Railway as part of the Canadian Pacific Railway absorbed the Toronto, Grey and Bruce and the Credit Valley in 1883.

One of the greatest benefits from these railways was the creation of markets around the city. The lines also allowed farmers to get their crops to market more swiftly, enabled mail-order business such as Eaton's catalogue, speeded up the delivery of mail, and eased travel for people living in the country.

By the 1870s, the first Union Station, built in 1858, was unable to handle the steadily increasing volume of traffic. Great Western chose to build its own station on Yonge Street. Grand Trunk formed a special company to build a new, grander second Union Station just west of the old one, which opened in 1873. However, after ten years the station required more tracks and a large building on Front Street, due to Toronto's tremendous growth. This station was in use until 1927, when the fourth Union Station opened.

The most lasting event occurred in 1884, when Sandford Fleming's proposal to create a 'standard or railway time' to bring conformity to time, was accepted. This meant fewer missed trains due to discrepancies between local times, which could vary wildly, and railway timetables. Toronto adopted standard time on November 30, 1883. Sandford Fleming was knighted for his achievement of obtaining consensus among many nations for time standardization.

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