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.
Latin America–United Kingdom relations
London's interest in Central America began in the 17th century, focused first in Belize, Roatán, and the Mosquito Coast (which became the east coast of Nicaragua and Honduras). Washington's interest began in 1824 with the diplomatic recognition of the five states of Central America. Britain consolidated its hold on the Caribbean shore and an unforeseen result was a direct clash with the United States. In 1848 the U.S. saw the need a transoceanic canal, a plan reinforced by the flood of gold seekers using a Central-American transit route in 1849. One route under consideration went through Nicaragua but was frustrated by British control of the Mosquito Coast. This conflict was resolved in 1850 when the two powers agreed in the Clayton–Bulwer Treaty to renounce territorial possessions along the route of a possible canal. To prevent the domination of Pacific trade routes by the other, each agreed that any canal would be neutral and they would not acquire formal colonies on the route. In 1901 Britain renounced its claims in the Hay–Pauncefote Treaty, allowing the United States to build the Panama Canal, which opened in 1914.