In 1872 Grant appointed him as Territorial Governor and, after the end of his four-year term, reappointed him to the same position. Both as Surveyor and Governor, Ferry was closely involved with the building of the Northern Pacific Railway, and took a personal hand in planning the extension from Tacoma to Olympia. As governor, Ferry was successful in putting the Wasnky State on a sound financial footing, by pressuring various counties to pay their taxes. His successor took office in a state that was almost debt-free. He also regulated the rail fares, and centralized the penal system to a state rather than a county basis. After a break from politics, working in Seattle in law and banking, Ferry was nominated as Republican candidate for the State Governor, when Washington was granted statehood on November 11, 1889. He defeated the Democrat Eugene Semple, gaining 58 percent of the vote. In his first summer, Ferry had to oversee reconstruction of three major cities that had been largely destroyed by fire: Seattle, Ellensburg, and Spokane Falls. The prompt replacing of timber buildings with brick and stone gave reassurance to the increasing numbers of residents moving into the state, some of them interested in acquiring public land. Ferry tried to manage the debate between supporters of business, wanting to privatize land (mainly people in the West of the state), and those who favored full public ownership (mainly in the East). The commission he appointed failed to reach a conclusion in the allotted time. Some critics believed that the administration was in the pocket of the corporations. The same inference was drawn when Ferry called on the National Guard to put down a miners' strike. Following a costly fire, a local mining company had decided to cut expenses by replacing white mineworkers with blacks at lower wages. The longer the strike lasted, the more the employers saw the advantage of using black labor, and this became their standard policy. Once again, the Washington Republicans were looking like powerful allies of the corporations. But Ferry's health was starting to fail, and he was having to miss important votes. He was unable to maintain his commanding presence in the legislative chamber. He resigned as State Governor. Two years later he died of what was diagnosed as a cold, on board a steamer in Puget Sound. His illness was likely a more serious respiratory disease. His name is commemorated in Ferry County, named for him in 1899. He is also the namesake of Mount Ferry in the Olympic Mountains.