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.
Hay–Bunau-Varilla Treaty
Bunau-Varilla was originally involved in the building of the Panama Canal under Ferdinand de Lesseps, who had built the Suez Canal. After the collapse of the de Lesseps efforts to build the Panama Canal, Bunau-Varilla became an important shareholder of the "Compagnie Nouvelle du Canal de Panama", which still had the concession, as well as certain valuable assets, for the building of a canal in Panama. Although not Panamanian himself, Bunau-Varilla had provided financial assistance to the rebel side in Panama's independence from Colombia, which occurred two weeks prior to the signing of the treaty. He had not, however, been in Panama for seventeen years, nor had he ever returned. As part of the Hay–Bunau-Varilla negotiations, the U.S. bought the shares and assets of the "Compagnie Nouvelle du Canal de Panama" for US$40 million.