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 offered free right of way through state lands. This project revived in 1885 in negotiations with Huntington, and again in 1890, when Huntington took over the narrow gauge and planned extensions. It revived once more during the activities of E. H. Harriman in 1906–10, and finally lapsed on account of government repression of railroads.

Villard's move to protect his Oregon and California Railroad from competition of the growing narrow gauge was the logical one of gaining control of the invader. The narrow gauge had given him and his associates a taste of competition when they had felt impelled to build a road in 1879 to Corvallis, and to Lebanon in 1880. For the latter extension Villard had caused to be incorporated the Albany and Lebanon Railroad Company, March 1, 1880, by Joseph N. Dolph, J. Brandt Jr., and Paul Schultze, capital, $200,000. He had also caused to be incorporated a similar company to build from Salem to Silverton. This extension was not built, but the Lebanon extension, eleven miles, opened September 22, 1880.

So Villard sent to Scotland, to negotiate a lease with the narrow gauge owners for ninety-six years, J. B. Montgomery, who had built ninety miles of the narrow gauge from Ray's Landing to Brownsville and had also built parts of the Northern Pacific. The lessee was Villard's Oregon Railway and Navigation Company, which like the Oregon and California and the Northern Pacific, were then controlled by Villard's Oregon and Transcontinental. The annual rental, $140,000, to be paid to the Scotch owners, represented seven per cent a year on the total investment, which, up to that time. amounted to nearly $2,000,000 or one hundred and sixty miles of track. This lease was strenuously opposed by William Reid, builder and president of the narrow gauge, who, in three years saw his reasons for opposition to a rival that meant no good to the narrow gauge, amply verified. Reid's purpose was a connection with the Central Pacific at Winnemucca by the Pengra Pass and Humboldt route, the success of which would have brought to the Pacific Northwest a transcontinental