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 with the Central Pacific, Union Pacific, and valuable activities of progress. Reid sent Ellis G. Hughes, vice president of the narrow gauge company, to New York to deal with Huntington for these connections at the same time that Villard sent Montgomery to Scotland to deal with the owners. Hughes arranged a lease for payment to the stockholders of the narrow gauge four and one-half per cent annually on the cost of the road, plus one-half of the net receipts of the Winnemucca extension. But as the four and one-half per cent offered by Huntington was visibly less than the seven per cent offered by Villard, the thrifty Scotch prized more highly the larger promise and chose the money that three years later proved them penny wise and pound foolish.

The successful lessee took charge of the narrow gauge, August 1, 1881, and immediately set about doing its real purposes. Extensions to Portland and Yaquina immediately stopped; also the terminal plans for use of the public levee at Portland, of which more will be said later: also the bridge project at Ray's Landing which would have united the two branches of the system. Villard showed plainly his real policy, namely, to subordinate the lines of the troublesome invader and make them serve as feeders to the Oregon and California Railroad. When taken over by the receiver in 1885 the narrow gauge system was divided into six separate parts: (1) Coburg to South Santiam, 39 miles, operated in connection with the Lebanon branch of the Oregon and California Railroad: (2) South Santiam to West Stayton, eleven miles, not operated: (3) West Stayton to Woodburn, thirty-nine miles, operated in connection with the Oregon and California Railroad; (4) Woodburn to Ray's Landing, ten miles, not operated: (5) Fulquartz Landing to White's Junction, sixteen miles. not operated; (6) White's Junction to Airlie, forty miles, operated in connection with the Oregon and California Railroad. This policy worked ruin to the narrow gauge property. Bridges washed out by floods were abandoned. The