Panama Railway 1848-1869

In 1848 the US Congress, in order to render the West Coast more accessible, authorized contracts to be entered into for the establishment of two mail lines of steam-ships, the one from New York and New Orleans to Chagres in Panama, and the other to connect with this by the Isthmus of Panama, from Panama to California and Oregon. The inducements to invest in these projects were not sufficient to attract the favorable attention of capitalists, and the contracts were taken by parties without means, who offered them for sale, and for a long time without success.

Men were at last found bold enough to venture upon the enterprise. Mr. William H. Aspinwall secured the line on the Pacific side, and George Law that on the Atlantic. The United States Mail Steamship Company (USMSSCo.) obtained the contract for the New York to Chagres route. In this Atlantic contract there was comparatively little risk, and a promise of almost immediate remuneration, as it connected with the cities of Savannah and New Orleans, and terminated at the portals of the Pacific Ocean. The Pacific Mail Steamship Company (PMSSCo.) was founded in 1848 by William Aspinwall of the firm of Howland and Aspinwall to execute the contract to carry mail from the Isthmus of Panama to the newly-annexed territory of California. The Pacific contract was looked upon by the generality of business men as a certain sequestration of a large amount of property for an indefinite time, with a faint prospect of profit; and the wonder seemed to be that so sound a man as Mr. Aspinwall should have engaged in it.

But it soon became evident that Aspinwall expected no great profit from the steam-ship line per se; but that, with those enlarged and far-reaching views for which he is so justly noted, this line was only a part of the great plan which he had conceived, the remainder being embraced in the bold design of a railroad across the Isthmus of Panama; and at this time he, with Mr. Henry Chauncey and Mr. John L. Stephens, entered into a contract with the government of New Granada for the construction of that work. The Panama Railroad Company was incorporated by the New York State legislature, April 7, 1849, to build and operate a railroad across the isthmus of Panama.

The overland route across the isthmus was at first carried out by the Pacific Mail Steamship Company using mules and canoes. Fortuitously for Aspinwall and his fellow investors, Pacific Mail was ideally positioned to cash in on the Gold Rush of 1849. As a result of this and the high quality of its service, the company became both an important part of the history of the American West as well as one of the most profitable enterprises of its era.

Work on the mule path commenced in the month of May 1850. Labor and malarious influences during the day, exposure and unrest at night, soon told upon their health, and in a short time more than half the party were attacked with malarious fevers. Having neither a physician nor any comfortable place of rest, their sufferings were severe. Promoters had nothing more serious to contend against than a very insalubrious climate. The mortality during the work was indeed enormous, but as there were always plenty of laborers to take the place of those who succumbed, the undertaking was never seriously retarded.

With the commencement of the dry season the sickliness abated, the hospitals were soon cleared, and by April 1851, a large portion of the road between the terminus and Gatun was completed. On the first day of October 1851, a train of working cars, drawn by a locomotive, passed over the rail line as far as Gatun. Beginning January 1, 1852, the Panama Railroad (PRR) entered into a contract with the Post Office Department to carry the mails across the isthmus. The railroad was completed in late January of 1855.

Cornelius Vanderbilt formed the Atlantic and Pacific Steamship Company (APSSCo.), with ships in service on both sides of the continent. Both the PMSSCo. and Vanderbilt's APSSCo. bid on the mail contract, but it was awarded to a Daniel H. Johnson, a broker for other investors. When Johnson was unable to carry out the contract it was awarded to Vanderbilt. By February 1860, however, Vanderbilt and the PMSSCo. came to terms and in March the PMSSCo. resumed the carriage of mail on the Pacific side. This arrangement lasted until November of 1865 when the PMSSCo. took over the entire route from New York to San Francisco.

By 1867 steam-ship lines connecting with the Panama Railroad included the General Transatlantic Company, West India and Pacific Steam-ship Company, Royal Mail Steam Packet Company, Panama and New Zealand Company and Pacific Mail Steam Navigation Company.

The possibility of railroads connecting the Atlantic and Pacific coasts was discussed in the Congress even before the treaty with England which settled the question of the Oregon boundary in 1846. The failure of Congress to act stemmed from disagreement on the route the rail line should take. The southern routes were objectionable to northern politicians and the northern routes were objectionable to the southern politicians. While sectional issues and disagreements were debated in the late 1850s, no decision was forthcoming from Congress on the Pacific railroad question. Abraham Lincoln saw military benefits in the lines, as well as the bonding of the Pacific Coast to the Union. The Railroad Act of 1862 put government support behind the transcontinental railroad and helped create the Union Pacific Railroad, which subsequently joined with the Central Pacific at Promontory, Utah, on May 10, 1869, and signaled the linking of the continent. By 1881, it was routine to travel by train from eastern cities like Boston, New York, Philadelphia, and Baltimore to San Francisco. The round trip that took Lewis and Clark two-and-a-half years in 1803 was now a nine-day journey.

The Panama Railroad Company was acquired by Compagnie Universelle du Canal Interoceanique in 1881, and by Compagnie Nouvelle du Canal de Panama in 1894. These rights were purchased by the United States as part of the assets of Compagnie Nouvelle, April 23, 1904, under the authority of the Panama Canal (Spooner) Act of 1902 (32 Stat. 481), which became law on June 28, 1902. The railroad was later reincorporated by the United States as the operating arm of The Panama Canal by the Panama Canal Railroad Company Act (62 Stat. 1076), June 29, 1948, and renamed the Panama Canal Company by act of September 26, 1950 (64 Stat. 1038). This was later superseded by the Panama Canal Commission, 1979.