By 1887 the Northern Pacific, like many U.S. roads, was living on borrowed time. Henry Villard returned to the board of directors. Though offered the presidency, he refused. However, an associate of Villard dating back to his time on the Kansas Pacific, Thomas Fletcher Oakes, assumed the presidency on September 20, 1888. In an effort to garner business, Oakes pursued an aggressive policy of branch line expansion. In addition, the Northern Pacific experienced the first competition in the form of James Jerome Hill and his Great Northern Railway.

Arlee was named after the Salish leader Arlee. In October 1873, he moved a small group of his people from the Bitterroot Valley, a "conditional reservation" according to the 1855 Hellgate Treaty, to the Jocko Agency, later known as the Flathead Indian Agency, located a few miles south of the town of Arlee. This forced move stemmed from the efforts of a congressional delegation led by future president James Garfield to negotiate Salish removal from the Bitterroot Valley. The Indians of Arlee have a celebration that happens to fall on the fourth of July.

During the Pleistocene glacial periods, glaciers dammed the Clark Fork River Valley creating Glacial Lake Missoula. The ice dams broke periodically and at that time the Clark Fork River carried more water than the combined flow of all of the streams of the world: The Missoula Floods, also known as the Spokane Floods or the Bretz Floods, would rush down the Clark Fork and the Columbia River, flooding much of eastern Washington and the Willamette Valley in western Oregon. After the rupture, the ice would reform, recreating Glacial Lake Missoula.

As we have a day here, the ladies have overhauled and repacked their trunks. I think there is no occupation that has the fascination for women when travelling as the unpacking and overhauling of large travelling trunks. They go at it early miss their luncheon and are late to dinner and yet show no signs of fatigue. ...

This is a land of abandoned erosional waterways, streamless coulees with empty cataract cliffs and plunge basins, potholes and deep rock basins, all eroded into the basalt of the gently southwestward dipping slope of the Columbia Plateau. The pattern of dry stream ways; a plexus, an anastomosis; totally unlike any other drainage pattern on earth. A debacle was demanded to explain this landscape, the volume of which would fill normal stream valleys to overflowing. These great floods spilled over former divides, eroding their summits to complete the new network.

With the opening of the line to the coast, GN received twenty E-7 Ten-Wheelers (4-6-0's). Sporting 72" drivers and a tractive effort of 17,730 lbs, they were the first Ten-Wheelers acquired specifically for passenger service. The E-7s were limited to 9 passenger cars and 350 tons. While reliable Eight-Wheelers (4-4-0's) continued to handle the train for the level parts of the journey, the E-7 serves as the backbone of the transcontinental passenger power pool.

In 1889, the Great Northern Railroad leased trackage rights through the Tumwater Canyon. In the agreement, the GN was required to maintain it, but the right-of-way remained the property of the CR & TN. Included in the agreement was the stipulation that any changes made would allow the CR & TN to use the Tumwater Canyon, resulting in a rather strange, but not all that uncommon, three rail arrangement. As engineering techniques improved, the GN was able to do away with the switchback and tunnel method employed by the CR & TN, replacing it with track that had a maximum 2.2% grade.

Stevens Pass is named for John F. Stevens, an engineer in the employ of the Great Northern Railway. He had located the route the railway took over the Rockies, Marias Pass, and he had found the route over his eponymous pass. Not an ideal route but workable and James Jerome Hill had little time to waste.