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.
Panama Canal Railway
New technology not available in the 1850s allowed enormous earth cuts and fills to be used on the new railroad that were many times larger than those done in the original 1851–55 construction. The rebuilt, much improved, and often rerouted Panama Railway continued alongside the new canal and across Gatun Lake. The railroad was completed in its final configuration in 1912, two years before the canal, at a cost of $9 million—$1 million more than the original.