After the building of the first transcontinental railroad, further railroad extension was naturally planned. The gold camps of Helena, Virginia City and Bannack which had been producing fabulous wealth, had been opened some years before, and these mining camps attracted a large population. Among the first branch lines of railroad contemplated was a line from Utah into Montana. About 1877, the Union Pacific acquired the narrow gauge Utah & Northern, and soon was pushing the line northward, the successive terminal points being Oneida (near present Pocatello), Eagle Rock (present Idaho Falls), Beaver Canyon (now Spencer), then at Red Rock, near present town of Dell; finally the road entered Beaverhead Valley.
As railroad construction approached the valley it was first thought that the mouth of the canyon, at present Barratt's station, would be the ideal site, but unexpected obstacles in securing the right of way made another location necessary. Richard Deacon resisted the railroad when an attempt was made to cross his ranch. To overcome this obstacle, a group of enterprising business men purchased the lands of Richard Deacon and gave the railroad company the right of way. It was a prompt and satisfactory manner of handling a difficult situation. It also led to the formation of a town site company and the town of Dillon began its interesting history.
This land was purchased Sept. 14, 1880, from Deacon, by a company headed by Howard Sebree, for the sum of $10,500.
The company immediately became active and declared dividends for each share as soon as a number of lots were sold. These lots were sold at auction at different times. The railroad reached Dillon, the terminus for the year, on Oct. 15, 1880.
By Oct. 10, Dillon was a thriving town of 300 inhabitants. The town was named Dillon in honor of Sidney Dillon, the president of the Union Pacific railroad. During this period, Bannack had the county seat, but in May 1881, the voters elected to move the county seat to Dillon. Until 1884, Dillon had been a village, but at that time articles of incorporation were applied for and were granted by the legislature.