Panama Canal Railway
The Panama Railway also operated a significant shipping line, connecting its service with New York and San Francisco. It ran a Central American line of steamships linking Nicaragua, Costa Rica, San Salvador, and Guatemala to Panama City. The shipping service was greatly expanded when canal construction began. Ships included the SS "Salvador", SS "Guatemala", SS "Cristobel", and , which became the first of the ships to cross the completed canal in 1914.
In 1904 the United States took over the license to build and operate the canal. The choice to use locks and an artificial lake (Gatun) meant that the old railway route from 1855 had to be changed because it followed the Chagres River valley, which would be flooded by the lake. Also, the railway would be extended and altered continuously for the building process. The stock of the Panama Railway Company, vital in canal construction, was entirely controlled by the United States Secretary of War.
Panama scandals
On 4 February 1889, the "Tribunal Civil de la Seine" ordered the winding up of the Panama Canal Company in Paris. Work on the isthmus was stopped in the meantime, while the court-appointed liquidator arranged to maintain the existing buildings, tools and machinery. Within a few years, however, high losses were incurred due to the damp, warm climate. The French government delayed the liquidation further and further, because the take-over offers by various American companies seemed insufficient. An intermediate company could not be started for lack of capital. The liquidator appointed a commission of inquiry, whose 1890 report recommended continuation of the sluice canal and renewal of the 1878 contract with Colombia. This was agreed on in 1890 in Bogotá, to run until 1904.