While Stephens was living at Cranbrook, Stephens built up a friendship with Edward Peterson, the son of the Rector of Biddenden, the Rev William Peterson and a solicitor with a practice in Staplehurst. Born in 1848 and educated at Cranbrook Grammar School, Peterson is best known for his study of tithes and as "The Parsons Friend". According to his obituary in The Times of 7th October 1934, he founded the Tithe Owners Union in 1890 and spent many years of his life defending the status of the clergy and studying their financial problems. His enthusiasm for light railways came about in anticipation of the 1896 Act and he claimed to have clients interested in investing in railway schemes in various parts of the country. In anticipation of the passing of the Light Railways Act, Stephens and Peterson formed a company in July 1895 called the Light Railways Syndicate, for the purpose of obtaining orders for new light railways. The intention was that once the necessary authorisation had been obtained by the Syndicate, a separate company would be set up independently raise capital and construct the railway. The Syndicate would receive a fee for its services.
The first proposal put forward was for a light railway serving coal villages in the Clyddach valley near Swansea and in August 1895 Stephens did some preliminary survey work in the area on behalf of one of Peterson's clients. However, this did not get to the application stage and it was not until December 1896 that the first two formalised schemes came before the Light Railway Commissioners.
The Hadlow (Kent) Light Railway and the Gower Light Railway, were followed by the Central Essex Light Railway in 1897. A further four schemes were proposed in 1898, the Sheppey Light, the Kelvedon, Coggeshall & Halstead and the St Just, Land's End & Great Western Junction (two proposals). These schemes were put forward by the Syndicate and its sister company, the Economic Railways Company, and although 5 of these received light railway orders, only one, the Sheppey Light Railway, was built due to the inability to raise capital.
Peterson's sources of finance, if they ever existed, remain a mystery, but at the enquiry into the Central Essex Light Railway, counsel acting on behalf of Peterson said that he represented "a strong financial group with over a million sterling for investment in light railways". In fact, most of these schemes were of doubtful viability and would have been unattractive investments to all but the most optimistic capitalists. The Syndicate sold its rights to the Central Essex which would have linked Ongar with Dunmow, to other promoters and claimed a commission.
The Light Railways Syndicate became moribund and was wound up in 1912. Peterson went bankrupt in 1910, claiming that he had been unable to obtain payment of costs and professional charges as a solicitor. The Economic Railways Company had virtually ceased to exist in 1904. In the file at the companies registry there is a letter written by the Registrar of companies to the secretary asking why the statutory return for the previous year had not been filed. A copy of the reply, a sad and poignant ending to the story, is also contained on the file. ".....The reason why no return was made at the commencement of the year is that the company has practically ceased to exist. It has heavy liabilities and its only asset is a light railway order authorising the construction of a line 2 and a half miles in length in length (Kelvedon to Coggeshall). The compulsory powers for the acquisition of land have run out and a sum of just £1 in the bank. The compulsory powers ran out last November and without such it would be impossible to make the line as at least one of the landowners is decidedly hostile. The directors therefore took no steps towards calling an annual meeting and in fact are allowing the company to fall dormant. It is, I am afraid, never likely to be resuscitated and I do not think that any of the creditors will go to the expense of winding it up."