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.
Gatun Dam
As described in History of the Panama Canal, the canal effort was begun by a French company (La Compagnie Universelle du Canal Interoceanique) in 1880 to 1889. With poor exploration of the options and with poor information of the costs the French company planned to construct a sea-level canal linking the two coasts. They initially thought they could do this for about $120 million. After spending about one billion Francs (about $300,000,000) losing about 22,000 workers and going bankrupt the French effort essentially ceased. A sea level canal would not have required the dam to be built but would have still required extensive provisions made to accommodate the ever-changing Chagres River flow. When the United States took over the wide Canal Zone and resumed building the canal on 4 May 1904 almost two years were spent in infra-structure preparation, mosquito abatement (the newly discovered vector spreading Yellow fever and Malaria), Panama Railroad improvements and planning before the work got up to full speed. After reviewing the options and costs, in 1906 a lock-based canal was decided upon and agreed to by President Theodore Roosevelt.