IT would be difficult to over-emphasize the historic and economic importance of the Panama Railroad to the Americas and to the world, for its history is the history of a realized dream of thinking men who for centuries had recognized the importance of a free interoceanic communication at the narrow strip of land known as the Isthmus of Panama. It is necessary, before considering the Panama Railroad as it exists today, to glance at the background of the historical forces which produced it. Its early beginnings antedated those of North America many years and our successful efforts were but a renewal of many previous attempts to construct a rail-and-water communication between the Atlantic seaboard and the Pacific Ocean.

England, inspired by the appeal of the benefits which would result from the shorter trade route to her possessions in the East, investigated the possibility of building a railroad or a canal, but the stupendous magnitude of such an undertaking discouraged her and the project was abandoned. France, ambitious also, entered into a contract to establish a railroad and a grant for this purpose was made by the Government of New Granada (the Colombian district was disrupted in 1831 and the region of Panama became known as New Granada) to Mateo Kline in 1848, but the many obstacles and huge sums of money required for its completion discouraged the contractors to such an extent that the contracts were defaulted within the year.

It was then, with the changing of the North American boundaries when the US came into possession of Oregon, and the war with Mexico giving California to the US, that the attention of North America was properly aroused to the necessity of a shorter route to the almost (at that time) inaccessible possessions.

There were three routes to California from the East Coast. A man could go across the continent, presumably on his own two feet if he had to. He could take a ship for the long, uncomfortable and dangerous voyage around Cape Horn, or he could make the "pleasant voyage to Panama, stroll across the fifty miles of Isthmus to the Pacific and, after another easy sea voyage, find himself in San Fransisco."

So read the advertisements of the day. The trip wasn't quite like this, but no matter. The pot of gold was just over the horizon.

The discovery of gold in California attracted a multitude of "Forty-niners" who, urged on by the true spirit of the pioneer and a cupidity that was dauntless, flocked to the Isthmus in such numbers that the need was infinitely increased for a regular line of steamships between the Atlantic and Pacific ports.

The changes that took place were sparked initially by, of all things, the United States Post Office! Some new way had to be found to carry the growing volume of mail from the East Coast to California, and the Panama route was logical.

Accordingly, the North American Congress hastened to authorize contracts for the establishment of two lines of mail steamships--one from New York and New Orleans to Panama, and the other to connect with this by the Isthmus of Panama to California and Oregon. Mr. William H. Aspinwall secured the line on the Pacific side and Mr. George Law the line on the Atlantic side. The ships in the Pacific helped to relieve the congestion on that side, but it was more than offset by the number of new arrivals at San Lorenzo, for of course in addition to mail, the ships carried passengers.

The tremendous bottleneck, both for mail and for people was that ghastly fifty-mile hike through the jungle. A railroad was the obvious answer.

William H. Aspinwall was a man of vision and in securing the contracts for the steamship line it was his plan in the beginning to build a railroad across the Isthmus. Together with his associates, John L. Stephens and Henry Chauncey, they entered into a contract for the construction of an "Iron Road across the Isthmus of Panama". However, before the contract was ratified, the services of Mr. G. W. Hughes of the United States Topographical Corps were engaged and he, accompanied by a large party of engineers, came down from New York for the purpose of mapping and surveying and locating the road. Their report that a railroad across the Isthmus was a practical and feasible proposition corroborated Mr. Stephens' own opinion. Mr. Aspinwall immediately returned to New York and conjointly with his partners, John L. Stephens and Mr. Henry M. Chauncey, incorporated under the name of Panama Railroad Company and a formal contract was entered into on April 15, 1850, with the Government of New Granada for the exclusive privilege of establishing "an iron Railroad between the two oceans across the Isthmus of Panama"

This contract was liberal in its terms and granted to this company the right of operating the road for a period of forty-nine years from the date of completion. It was stipulated that the construction should not occupy a longer period than six years. The engineers secured on the construction of the road were Col. G. W. Totten and John C. Trautwine, and under their capable guidance the work on this gigantic undertaking was begun in May, 1850.

They decided the road could be built in six months at a cost of one million dollars. True, there were swamps, but these could be filled. Crews of men could chop through the jungle and the numerous rivers and streams could be easily bridged. The cordillera, or hump, rose to a modes 300 feet-- no height to deter railroad men who were already eyeing the Rockies and Sierra Nevada. To lay several miles of rail a day was commonplace in the States, and so the estimated time and money seemed reasonable for this bit of track which seemed scarcely more than an oversized spur.

The jumping-off place was to be near the old fort of San Lorenzo. Good solid ground extended about twenty-five miles inland, and presumably it would not be too difficult to run the line up this valley. However, an early real estate shark had leased all the land and was holding out for what seemed an unreasonable price. Very well! In their appalling innocence, the outraged railroad men simply moved a few miles further down the bay and selected another spot -- a low bit of land called Manzanillo Island. Here they made their headquarters.

The inauguration of the beginning of the work was marked with no "imposing ceremonial or breaking of ground,'' but with a primitive simplicity. Mr. Trautwine and Mr. Baldwin with a few Indians armed with machetes began work at the Island of Manzanillo, which is now known as Colon. The first thirteen miles of the road traversed dense jungles, which were a morass of pestilential dangers infested with snakes and poisonous insects. In Seeman's "Voyage of H. M. S. Herald" we find a graphic description of this region:

"In all muddy places down to the verge of the ocean are impenetrable thickets of mangroves, chiefly rhizophoras and avicennias, which exhale putrid miasmata. Myriads of mosquitoes and sand flies fill the air, while huge alligators sun themselves in the slimy soil."

Despite the discouragements, dangers, and seemingly insurmountable obstacles, these brave men pushed on and worked painstakingly and methodically for the achievement of their ideal--a completed railroad.

Panama had been known as a pesthole since the earliest Spanish settlement. But the horror stories to come out of Panama as the railroad was being pushed ahead mile by mile quite surpassed anything. The cost paid in human life for the minuscule bit of track was of the kind people associated with dark, barbaric times, before the age of steam and iron and the upward march of Progress. The common story, the one repeated up and down the California gold fields, the one carried home on the New York steamer, the claim that turns up time and again in the dim pages of old letters, is that there was a dead man for every railroad tie between Colon and Panama City. In some versions it was a dead Irishman, in others, a dead Chinese. The story was nonsense--there were some seventy-four thousand ties along the Panama line--but that had not kept it from spreading, and from what many thousands of people had seen with their own eyes, it seemed believable enough.

From the very beginning, the Isthmus fought the new invaders. Men and equipment started inland and were promptly swallowed up in mud. For many months the company was unable even to set up quarters on the little gridiron of streets which had been surveyed on Manzanillo island. Soapy, slippery, gummy, bottomless, obscured in miasmic vapors and swirling clouds of insects, the swamps waited. The laborers vanished at dawn in the rowboats from the ships into the drenching rains, the steaming muck and gumbo. They labored all day like lost and forgotten slaves. Up to their necks in mud, they stumbled, slipped, struggled and cursed. Over their heads black couds of mosquitoes and other insects whined and buzzed. They emerged at night soaked to the skin and caked with mud, to fall more dead than alive into the boats, and were taken out to where a grimy brig and the paddle steamer Telegraph rolled in the long gray swells.

Sickness took such a terrible toll that the men could work only one week out of three. How many did actually die is not known. The company kept no systematic records, no body count, except for its white workers, who represented only a fraction of the total force employed over the five years of construction. (In 1853, for example, of some 1,590 men on the payroll, 1,200 were black.) However, the company's repeated assertion that in fact fewer than a thousand had died was patently absurd. A more reasonable estimate is six thousand, but it could very well have been twice that. No one will ever know, and the statistic is not so important as the ways in which they died--if cholera, dysentery, fever, smallpox, all the scourges against which there was no known protection or any known cure.

The country was almost entirely without resources: the food and materials had to be shipped thousands of miles. The natives, apathetic and unaccustomed to labor, could not be relied upon and all labor had to be imported. They were brought in by the boatload from every part of the world: natives from the coast, West Indians, English, Irish, Germans, coolies and Chinamen, and all with the same result. Death thinned their ranks until it looked for a time as if the work would have to be abandoned. It became increasingly difficult as the work progressed to get more men, for the gruesome and weird stories of the "Hell Strip" which had proven a graveyard for such a vast number had spread abroad. The plan to import a boatload of Chinese laborers was finally decided upon; and eight hundred eventually arrived. The story of their ill-fated expedition to a land where they expected high wages and an eventual triumphant return to China is one of the many tragedies connected with Panama’s history.

Soon after their arrival in the unfamiliar land of strange customs, they became morose with homesickness and fear. Added to their misery was the fact that because of a Maine opium law which on some pretext had been enforced on the Isthmus, the use of opium was prohibited because of the "immorality of administering to so pernicious a habit", and they were deprived of their accustomed daily portion of the drug. A heavy melancholia settled upon them. In their ears they heard but one sound, the mournful dirge of death, and with that strange complexity of their natures, they brooded wistfully for their native land; the promised land of their fanciful vision had proven too terrible to even endure, and with that passive resignation so characteristic of the Chinese they committed suicide, choosing weird and unexpected ways. Some hung themselves with their queues, others cut their throats, and some paid their last money to their companions to shoot them; and again in groups they joined hands and walked out beyond the margin of the sea and met their fate stoically as the turbulent incoming tide bore them out to the ocean. A watery grave was preferable to the land they found so unbearable. The small remaining group, numbering scarcely two hundred, sick in body and spirit, were sent by the engineers to Jamaica.
Read a detailed account of the Chinese Tragedy

"You are going to have the fever, Yellow eyes!
In about ten days from now
Iron bands will clamp your brow;
Your tongue resemble curdled cream,
A rusty streak the centre seam;
Your mouth will taste of untold things,
With claws and horns and fins and wings;
Your head will weigh a ton or more,
And forty gales within it roar!
In about ten days from now,
Make to health a parting bow;
For your're going to have the fever, Yellow eyes!"
--James Stanley Gilbert

The next importation of labor proved almost as unsuccessful as the Chinese. High wages lured a shipload of husky Irish immigrants, ("navvies" who had built canals and railroads across England,) from Cork, Ireland, but they "withered as cut plants in the sun." Immediately upon arrival they succumbed to the fatal fevers and scarcely a day's labor were they able to perform. The few survivors were shipped to New York where most of them died from diseases contracted in Panama. The work was completed with laborers from Cartagena, Jamaica and East Indians.

Simply disposing of dead bodies had been a problem the first year, before the line reached beyond the swamps and a regular cemetery could be established on high ground. And so many of those who died were without identity, other than a first name, without known address or next of kin, that a rather ghoulish but thriving trade developed in the shipping of cadavers, pickled in large barrels, to medical schools and hospitals all over the world. For years the Panama Railroad Company was a steady supplier of such merchandise, and the proceeds were enough to pay for the company's own small hospital at Colon.

A reporter who visited this hospital in 1855, the year the railroad was finished, wrote of seeing "the melancholy rows" of sick and dying men, then of being escorted by the head physician to an adjoining piazza, "where, in conscious pride, he displayed to me his collection of well-picked skeletons and bones, bleaching and drying in the hot sun." It was the physician's intention, for the purposes of science, to assemble a complete "museum" representing all the racial types to be found among the railroad dead.

The worst year had been 1852, the year of Stephens' death, when cholera swept across the Isthmus, starting at Colon with the arrival of a steamer from New Orleans. Of the American technicians then employed, some fifty engineers, surveyors, draftsmen-- all but two died. When a large military detachment, several hundred men of the American Fourth Infantry and their dependents, made the crossing in July en route to garrison duty in California, the tragic consequence was 150 dead-- men, women, and children. "The horrors of the road in the rainy season are beyond description," wrote the young officer in charge, Captain Ulysses S. Grant, whose memory of the experience was to be no less vivid years later when he sat in the White House.

In the end, the company discovered that for heavy work in the tropics, no race of men could match West Indian Negroes. Slow-moving, accustomed to heat, resistant to the fevers, these cheerful and humble people played a most honorable part in the realization of man's dreams on the Isthmus.

From the beginning it was difficult to run the lines through the swamps and as the work progressed it became increasingly so. In the reports of the engineers under Col. Totten we find the statement that they failed to find the bottom of portions of the swamp at 180 feet but, undismayed, later repeated their efforts with renewed force and effected a causeway by throwing in tons of wood, rocks, brush, etc., and at last literally floated the tracks over the jungle swamps.

An interesting story found in the private papers of Colonel Totten tells of an incident in connection with filling the seemingly bottomless pit known as the Black Swamp, near Gatun, and is retold as follows:

The holes would not fill. William Thompson, who later became a passenger conductor on the railroad, was sent to Gatun Lake by Chief Engineer Totten with orders to fill in a designated part of the lake. Thompson kept running his cars to the lake, unloading and returning for more dirt and stone. Days and months passed. Still the measurements evidenced no material difference of depth of water where the dumping had been carried on. Thompson becoming discouraged, sought his chief, and after explaining his trouble, handed in his resignation. Totten leaned over his desk and put these questions to Thompson, the disconsolate:

"Beyond the Chagres River
Are paths that lead to death
To the fever's deadly breezes
To malaria's poisonous breath!

Beyond the tropic foliage,
Where the alligator waits,
Are the mansions of the Devil
His original estates.

Beyond the Chagres River
Are paths fore'er unknown,
With a spider 'neath each pebble,
A scorpion 'neath each stone.

'Tis here the boa-constrictor
His fatal banquet holds,
And to his slimy bosom
His hapless guest enfolds!

Beyond the Chagres River
Lurks the cougar in his lair,
And ten hundred thousand dangers
Hide in the noxious air.

Behind the trembling leaflets,
Beneath the fallen reeds,
Are ever-present perils
Of a million different breeds!

Beyond the Chagres River
'Tis said - the story's old -
Are paths that lead to mountains
Of purest virgin gold!

But 'tis my firm conviction,
Whatever tales they tell,
That beyond the Chagres River,
All paths lead straight to hell!"
--James Stanley Gilbert

At the end of twenty months, by toil and sweat and back-break, seven precarious miles of track had been laid. The ends of the rails lay on reasonably solid ground at Gatun, on the edge of the Chagres valley. Work came to a halt. The money was all gone and the backers could not understand how it could take anyone, no matter how lazy or what the difficulties, so long to build a measly seven miles of railroad.

Then nature came to the rescue. Two big paddle-wheel steamers, the Georgia and the Philadelphia, arrived in the bay carrying more than a thousand gold-hungry men. A hurricane roared forced the ships from their usual anchorage at Chagres, and they took refuge behind nearby Manzanillo Island. Imagine the astonishment when the passengers found a railroad ready-made to whisk them across the Isthmus.

The road builders were appalled at the prospect of their pitiful facilities being overwhelmed by such a mob of men -- most of them armed and in a big hurry. They protested that their road was only seven miles long and came to an abrupt stop in an impassable jungle. Who cared! Seven miles were seven miles. The '49ers would handle the jungle when they got to it. Frantic to get rid of the mob, the trainmen set fares which were sky-high - $25.00 to ride seven miles and $10 to walk the right of way. It seemed a bargain to the Yankees who piled aboard the work trains and were on their way.

From then on San Lorenzo was doomed. The bonanza for the Indians who operated the canoes was over. All ships discharged at Manzanillo Island.

In New York the effect of this initial thousand passengers was electric. Despite its puny length, the railroad was a success. More money was raised and the work continued. Slowly and painfully the tracks wormed thier way across rivers, through the jungles and over the mountains.

Forty-seven and a half miles of railroad had required 170 bridges and culverts of 15 feet or more, 134 bridges and culverts of less than 15 feet, a statistic that gives some idea of the difficulties there had been in making headway in such half-drowned country.

The Panama Railroad is possibly the only line in the world that literally lifted itself up by its own shoelaces. All during the gold rush, miners were taken as far as the end of the road and then continued the journey on foot. The same high fares were in existence for years. Why reduce them? The passengers never complained! By the time the road was finished, nearly a third of its tremendous cost had already been liquidated.

Notwithstanding all of the difficulties and discouragements, the road was successfully completed in 1855, just five years from the date of the beginning of its construction, at a total expenditure of $7,407,535.00. On January 27,1855, at midnight, in the pitch dark and in pelting rain, the last rail had been laid. Totten himself had driven the last spike with a nine-pound maul. The following day, on January 28, 1855 the world's first transcontinental train ran from ocean to ocean.

The frightful toll of death, evidenced by the hundreds of wooden crosses that marked the graves of those who succumbed, gave rise to the epigrammatic and gruesome statement that "every tie in the Panama Railroad represents the life of some man who paid the price of its construction with his life."

The honor due these intrepid engineers, who with their men held to duty when it was more reasonable to leave it, has never been given: and the tragic fate that befell many of them has not been written in epic, song or story. Their only monument today is the Panama Railroad, the completion of which marked one of the greatest achievements of the age and will ever be a memorial to the dauntless courage of its brave builders and their story is one of the most gallant in the annals of commerce.

That Col. Totten was the dominating force back of this ambitious project is evident by the reports, and his energy and almost super-human endurance in prosecuting the enterprise is amazing. Ten years he spent in Panama, the first five in construction and the second five years in operation. He was employed after the completion of the road as Manager. Shortly after its inauguration, Col. Totten was stricken with yellow fever. For days he lingered between life and death. At last his Spanish doctor told him and his family that there was no hope for him. Hearing this, Col. Totten roused himself and with the same indomitable courage that had marked every step of his work in building the railroad said, "You are mistaken, sir; not yet. What is to become of the road! Yellow fever can't kill a Totten. I am going to get well!" And he did.

The inauguration of the Panama Railroad is graphically described in the Daily Courier of Aspinwall, New Granada, February 24, 1855. There was a special train with guests and at all the stations floral arches were erected. The day ended with a grand banquet at the Aspinwall Hotel, the social center at that time of Panama. The editorial of this issue of the Courier is interesting:

"The communication between the two oceans (Atlantic and Pacific) by railway may now be considered permanently established. The iron was connected on the evening of January 27th and on the following day (January 28th) that sure harbinger of North American civilization and triumph, the 'chariot of fire', came thundering over the summit and down the Pacific slope. It was a glorious sight to witness the "iron horse' and his rider pursuing his perilous journey over fearful chasms, through mountain gorges, along pleasant valleys, winding around hoary mountain tops and perched upon a narrow shelf of mountain rock in mid-air. On, on he went, over rivers, through dense forests, plunging clear through the awful swamps, and ever as he went there came up from the caverns of the hills strange sounds and echoes that had not been disturbed since that day 'when the heavens and earth were finished and all the hosts of them.'

"The people of Panama who had been anxiously awaiting the arrival of this strange visitor greeted its approach with such a cheer of hearty good will as made the welkin ring again. Even the dimples on the placid face of the Pacific seemed brim full of happy smiles as her waves coquetted with the shore.

"Col. G. W. Totten, Chief Engineer of the Road, J. M. Center, Vice-President of the Company, Dr. T. C. Barker, one of the Medical Officers of the Company and a few citizens composed the party which left the summit and passed over the track on that occasion."

The following highly entertaining account of the inauguration of the road, as sophisticated New York viewed it, is worth copying. The Daily Courier, issued in Panama, in the issue of Friday morning, February 16, 1855, had the following from the New York Mirror:

"A SUBLIME BRIDAL--TWO OCEANS WED."

"Invitations are out for the most sublime and magnificent nuptials ever celebrated upon our planet, the wedding of the rough Atlantic to the fair Pacific Ocean. An iron necklace has been thrown across the Isthmus; the banns are already published and the bridal party will leave this city on Monday next, February 5th, to perform the august ceremony.

"Some seven millions-of dollars have been spent in achieving this union, but the fruits thereof will soon show it has been money well invested. Across the bosom of the Isthmus the golden products of our Pacific borders and the incalculable treasures of the distant Orient are destined to flow in unremitting streams.

"The stupendous enterprise of uniting the two oceans which embrace the greater portion of the globe, we are proud to say, was conceived and executed by our own citizens in the frowning face of obstacles that none but Americans could have overcome. The swamps, the mists, and miasmata of the Isthmus drove all the engineers of Europe home in despair who contemplated the gigantic undertaking and the herculean work was left to the hands and hearts of men in whose vocabulary 'there is no such word as fail'.

"The engineers of England and France pronounced the project utterly impracticable. To the late lamented Aspinwall, his associates and others, the world is indebted for the completion of the Great Bond --this commercial linking of the hemispheres--an enterprise so full of poetic sublimity and so fraught with interest coextensive with the whole earth may well command the attention of the whole world and deserves to be fitly inaugurated."

That the editor of the Aspinwall Courier was a loyal American is evidenced by the following:

"Passengers bound to California left here on the morning of the 16th and had an agreeable and expeditious transit across the line. To the United States belongs the honor of this work. From its inception to its consummation, it is purely American--American genius conceived the plan; American science pronounced it practicable; American capital has furnished the sinews; and American energy has prosecuted the gigantic enterprise to its completion in spite of the most formidable difficulties."

From the beginning of the Panama Railroad's history, to its offices had been delegated unique and unusual activities, perhaps none so strange as the enforcement of law in those early days of lawlessness when New Granada was too weak and unstable to safeguard the property and maintain order. Full power was given to the railroad by the government, and the railroad officials became the recognized police of the Isthmus. That they were successful along this line was due to the fact that they employed an armed guard of forty men who were placed under the command of a Texas Ranger, Ran Runnels, who was famous in his day for daring and fierce exploits in the cause of order, and on the Isthmus he became a terror to a group of outlaws who infested the place.

A description of his personal appearance, as related by a writer who visited Panama when Runnels' word was law is interesting: "The casual observer would not mark anything very formidable in the delicate organization of the bold Ran. He is of short stature and of slightly-built frame. His hand is small and looks better suited for a lady's kid glove than to handle a bowie knife or revolver. "His boyish, well-combed head and delicate features indicate little of the daring spirit of the man, but there is a close resolute pressure of the lips, a commanding glance of the eye, a sinewy wiryness of the limbs, and an activity of movement, all of which are in character with his bold determination and lively energies.

"His guard of forty are not very impressive in appearance. A military martinet might object to such a loose assortment of braves of all colors, heights, and varieties of dress. A bare-footed, coatless, harum-scarum looking set they are, and might easier pass for the forty thieves than that number of honest guards. However, with Ran Runnels at their head, they have cleared the Isthmus of robbers and kept thousands of unruly laborers in wholesome subjection.

"Whipping, imprisonment, and shooting down in an emergency, have been liberally inflicted in the exercise of the powers delegated by the Governor of New Granada to the Company which has the power of life and death on the Isthmus, without appeal."

The completion of the Panama Railroad marked a revolutionary period in the world's traffic, and the immediate effects on transportation of the rapidly increasing demands of commerce were such that they could not be met at the beginning.

The reservoirs of trade in California and the Orient were not the only ones tapped by the railroad. When the railroad was completed, California had a population of only 500,000 while Central America had 2,000,000. On the Pacific coast of South America, heretofore accessible to the Atlantic only by way of Cape Horn, were 800,000 more. Prior to the completion of the railroad 90 per cent of the trade from the Pacific coast of Central and South America went to Europe. This trade was estimated at $60,000,000 per annum.

The Pacific coast of Latin America, primitive and backward, did not at first understand the importance of the railroad, and most ports were isolated from it. Dr. F.N. Otis says, "Central American states had at that time no means of connection with the road. Their Pacific ports had been so long shut out from remunerative commercial relations that they could not at once realize the advantages the Isthmus railroad offered over the tedious and expensive land route to the Atlantic; they required to be lifted from the ruts along which they had been creeping and groaning for ages, and placed upon this great commercial highway.: To help these backward countries make contact with the great "commercial highway," the Panama Railroad in 1856 organized a steamship line to service the Pacific ports from Panama north of San Jose de Guatemala, and a British company founded a line offering schedules south of Chile, Peru, Bolivia and Ecuador. By 1858 the cargoes from these ports had an annual value of $2,000,000. South and Central America shipped indigo, cochineal, India rubber, coffee, cocoa, hides, pearl shells, tobacco and straw hats to the United States and Europe in return for manufactured goods.

All the money the company had had been spent on the road's construction; the equipment was inadequate and it was a grave question that faced the railroad officials--a definite curtailment of the road's operations meant not only a great loss of money but also a loss of prestige. For this reason the management in Panama conceived the idea of getting out a rate card that would be so prohibitive in price that only a limited number would travel via this expensive route. The charge for first-class passage one way was $25.00; second-class $10.00; personal baggage 5 cents per pound and express $1.80 per cubic foot. The card, which was more or less of a joke and only intended to bridge over a critical time, was duly forwarded to the New York General Offices with the explanation that the tariff would be reduced to reasonable limits in the near future. It was with utter astonishment that the management in Panama received from the New York office the statement that the rates had been accepted without protest and, more astonishing still, is the amazing fact that for a period of twenty years these exorbitant rates were unchanged.

It is small wonder that during this time the company paid a 24% dividend with an occasional stock dividend. The gold seekers continued to come and Panama enjoyed a period of affluence and importance, and the eyes of the world were focused upon her, for the completion of the railroad had but served to stimulate the ambitious dream that nations had indulged in for over two hundred years, of a canal from ocean to ocean. With the increased revenues, progress manifested itself in every department of the road. Splendid terminal wharves were erected and many improvements made. New cars and engines were purchased, hospitals were established and medical attendance was free. A well equipped library and a billiard hall contributed much to the pleasure of the employee and it was the Panama Railroad that was administratively responsible for the quaint church known as Christ Church-by-the-Sea, erected in 1865, and which is today the most picturesque place of worship on the Isthmus.

The railroad was maintained by a highly specialized subdivision organization which was extremely simple in operation as compared with methods used today. Every four miles stations were erected, the house being used for the residence of the track master, and under his supervision there were ten laborers who looked after the intervening road. There were twelve track masters and one hundred and twenty laborers, and it was in this manner that the road was kept in perfect condition. However, with the prosperity of the road at its height, there came a dark sequel which had two contributing factors. First, a change in the political life of Panama when New Granada was superseded by the Republic of Colombia, and the original concession given the railroad for a period of 49 years was modified August 16, 1867, to ninety-nine years with heavy impositions on the railroad company which made serious inroads upon its revenues. One million dollars was paid then to Colombia and a subsidy of two hundred and fifty thousand a year was exacted besides having to transport "free of charge troops, chief officers and their equipage, ammunition, armament, clothing and similar effects that may belong or be destined for the immediate service of the Government of the State of Panama." In the report for one year after this measure was put into effect we find there were 4,663 first-class paid fares, while 11,098 passengers and 6,601 troops were carried free.

The second cause of the road's waning glory was attributed to the fact that May, 1869, marked the completion of the Union Pacific Railroad, and travel to and from California was directed to this convenient transcontinental route. The business of the Panama Railroad began to decline rapidly, and until the French took up the problem of building a canal we find the finances of the company at a very low ebb. The stocks that had once sold for $335.00 could be bought for $60.00.

However, this depression in the road's affairs did not continue long, and a new impetus was given to all commerce in Panama with the arrival of the Compagnie Universale du Canal Interoceanique on the Isthmus to construct a canal, and we find the Panama Railroad stock at this time listed at $100.00 per share. It was soon evident to de Lesseps, the French engineer who was at the head of the French Canal Company, that it was highly important to obtain full control of the railroad in order to construct the canal, and accordingly he began negotiations to buy out the Panama Railroad. Immediately the shares jumped to $291.00, but this fact did not deter de Lesseps, and in 1881 the French Canal Company bought 68,887 shares of the 70,000 outstanding stock, and thus the control of the Panama Railroad passed into the hands of the French Canal Company.

However, surprising as it may seem, there was very little visible change in the status of the road with the inception of the French control, which was due to the company's charter given in 1849 from the State of New York, which stated expressly that ".... the Directors should be annually chosen in the city of New York and on such notice as shall be directed by the laws of said corporation." It was de Lesseps' intention to remove the New York office to Paris, and it was a blow to him when he learned that under the terms of the charter it would be necessary to continue the American organizations in New York. However, the policy of the railroad's affairs was dictated by the French Canal Company and appointments of the New York officials made by them.

The reign of extravagance that marked all of the French canal operations also affected the railroad; there were some improvements in equipment and terminals, and much unnecessary machinery was purchased, including snow plows. We find in the reports that the Director General rode in a car costing forty thousand dollars. The road was run on a correspondingly lavish scale; large salaries and much graft were the order of the day, and when the French Canal Company collapsed in 1888 the railroad organization went to pieces also and there was a demoralized condition generally in the road's affairs until the Canal Commission arrived in 1904.

A long-range effect of building the railroad across the Isthmus was that it gave Panama a tremendous advantage over other sites as the place to cut an interoceanic canal. Building the road educated engineers in the most minute problems of the area's terrain and climate. The vicissitudes with which the past history of the Panama Railroad is so strongly marked came to an end with the arrival of the Canal Commission, and a new era began.

In 1904, shortly after the Republic of Panama was established, the United States Government paid the French Canal Company forty million dollars for its properties, and of this amount seven million was paid for the Panama Railroad with its franchise and all rights. This included about 4,000 acres of land that went with the railroad property and was included in the terms of the original franchise of the Panama Railroad property. This land, which includes practically all of the city of Colon, was to revert back to Colombia at the expiration of the franchise. Therefore it will be readily seen that this land can not be sold. However, the Republic of Panama, as a successor to the Republic of Colombia, transferred in the treaty between the United States and Panama in 1904 all of its rights to be acquired at the expiration of the franchise. Therefore the United States purchased the Panama Railroad from the French Canal Company with the complex result arising from this purchase that through the Panama Railroad the United States became the owner of much valuable land in Panama but can not sell it under the terms of the franchise given for 99 years and which does not expire until 1966. Meanwhile the Panama Railroad, as a successful real estate dealer makes leases of the land in question to the highest bidders for the desired term of years.

With this complication of ownership it is not surprising then that the Panama Railroad as a historical creation, should baffle and defy definition--a corporation at times, a government organization, and again an institution--but at all times independent and a necessary and vitally important adjunct to the governmental interests in every department of its economic existence on the Isthmus.

The property of the railroad transferred to the United States Government from the French Canal Company Consisted of 48 miles of single track with 26 miles of siding thirty five locomotives, thirty passenger cars, and about 900 freight cars, all of which was more or less obsolete and greatly deteriorated. Engines, cars and machinery were scattered over the entire length of the road and overgrown in many instances with rank vegetation.

It was this state of affairs that confronted the famous engineer, Mr. John F. Stevens, who arrived on the Isthmus in 1905, and it was his genius, coupled with much hard work, that brought order out of chaos. Mr. Stevens had full charge of the railroad as well as the canal. The railroad was strengthened and double-tracked, and wherever it could be used to an advantage, was made an instrumentality in canal construction, which was not difficult because of the fact that the road was in general parallel with and close to the canal axis and connection between the canal and railroad, particularly in the "Cut," was easy to make.

With full government control, and as an adjunct to canal construction, the Panama Railroad assumed new importance --its history fused and overlapping that of the canal and all of its activities, which were stupendous, subordinate to the important task of canal construction.

One of the most important achievements at this time was the reconstruction and relocation of an entirely new railroad at a higher level, made necessary by the Isthmian Canal Commission in 1906, when plans were made for a lock-type canal. Lieutenant Frederick Mears, aged twenty-nine, was put in charge of relocating the Panama Railroad, a large and very difficult task. To build the forty-odd miles of the new line would take five years and cost nearly $9,000,000. It was finished in 1912 and is the present line of the Panama Railroad. Its length is 47.61 miles. The side tracks, yards and other operated tracks represent 183.664 miles. Aside from the Railroad Company's many operations on the Isthmus, it owned and operated a splendid line of steamships plying between New York and Cristobal on the east coast, and on the west coast between Panama and Guayaquil and Buenaventura, Colombia. The important work accomplished by the railroad and steamship line during the world war is a definite illustration of the high degree of organization attained by the road in efficiency, which enabled them to achieve remarkable results.

The Panama Railroad and the US Mail

The Panama Railroad and the Panama Canal

The Panama Canal Towing Locomotives

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