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.
History of the west coast of North America
The countries of Central America continued to struggle politically during this time (with perhaps the notable exception of Costa Rica), and began to expand agriculture, particularly in coffee and bananas with investment and substantial control by the United States. The establishment in 1903 of the newly independent nation of Panama (under pressure from the United States) led to the creation of the Canal Zone and opening of the Panama Canal in 1914. The opening of the Canal benefited the region economically as trade with the Eastern United States and Europe became far easier.