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 United States foreign policy
The opening of the transcontinental railroad in 1869 made travel to California fast, cheap and safe. Americans lost interest in canals and focused their attention on building long-distance railways. The British, meanwhile, turned their attention to building the Suez Canal through Egypt. London maintained a veto on on American canal building in Nicaragua. In 1890s, the French made a major effort to build a canal through Panama, but it self-destructed through mismanagement, severe corruption, and especially the deadly disease environment. By the late 1890s Britain saw the need for much improved relations with the United States, and agreed to allow the U.S. to build a canal through either Nicaragua or Panama. The choice was Panama. The Hay–Pauncefote Treaty of 1901 replaced the Clayton–Bulwer Treaty, and adopted the rule of neutralization for the Panama Canal which the U.S. built; it opened in 1914.