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 Zone
By order of President Theodore Roosevelt under the Panama Canal Acts of 1902 and 1904 the Secretary of War was made supervisor of canal construction and the second Isthmian Canal Commission made the governing body for the Canal Zone. Under the Panama Canal Act of May 24, 1912 President Woodrow Wilson issued Executive Order 1885, January 27, 1914, effective April 1, 1914 abolishing the previous governance placing it under the direction of the Secretary of War with the entity designated as The Panama Canal. The Governor of the Panama Canal was charged with "completion, maintenance, operation, government and sanitation of the Panama Canal and its adjuncts and the government of the Canal Zone" in the Executive Order. A number of departments were specified in the order with others to be established as needed by the Governor of the Panama Canal with approval of the President and under the supervision of the Secretary of War. Defense of the canal was the responsibility of the Secretary of War who retained control of troops with provisions for Presidential appointment of an Army officer in wartime who would have "exclusive authority over the operation of the Panama Canal and the Government of the Canal Zone." The Executive Order noted in closing "that the supervision of the operations of the Panama Canal under the permanent organization should be under the Secretary of War" thus establishing the essentially military arrangement and atmosphere for the canal and Canal Zone.