The Panama Railway or Panama Railroad was the world's first Transcontinental railroad. It stretches across the isthmus of Panama from the Atlantic Ocean to the Pacific Ocean.
The need for the railway was inspired by the California Gold Rush. The project was begun in 1850 and the railroad was completed in 1855, with the first train running from ocean to ocean on 28 January of that year.
The railway cost some 8 million United States dollars to build (8 times the initial estimate in 1850), and presented considerable engineering challenges, going over mountains, and through swamps. Over 300 bridges and culverts needed to be built along the route. Some swamps were found to require fill over 100 feet in depth before a solid bed could be constructed. It was the most expensive railway per mile of track built up to that time. It is estimated that more than 12,000 people may have died in its construction; the railroad company kept no official count. Cholera and malaria killed numerous workers.
It was largely built and financed by private companies from the United States. Among key individuals in building the railway were William H. Aspinwall, George Muirson Totten, and John Lloyd Stephens. Ownership of the railroad was originally by a publicly traded corporation based in New York City, which bought exclusive rights to build across the isthmus from the government of Colombia (Panama was a province of Colombia at the time). The stock of the Panama Railway Company quickly became some of the most highly valued of the era.
The railway carried significant traffic even while it was under construction, with traffic carried by mules over the unfinished sections. This had not been originally intended, but people crossing the isthmus to California were eager to use such track as had been laid. When only 7 miles of track had been completed the railway was doing a brisk business, charging 25 dollars per person for the train ride and another 10 dollars to walk the remaining 40+ miles of right-of-way across the isthmus. By the time the line was completed, more than one third of its cost had already been paid for from fares.
Railway at Culebra Summit Station, 1854
Upon completion, the 48 mile long railway was proclaimed an engineering marvel of the era.
Until the opening of the Panama Canal, it carried the heaviest volume of freight per mile of any railroad in the world. The existence of the railway was key in the selection of Panama as the site of the canal. In 1881 the French Compagnie Universale du Canal Interoceanique purchased controlling interest in the Panama Railway Company. In 1904 the United States Federal Government purchased the railway from the French Canal Company. At the time railway assets included some 75 miles of track, 35 locomotives, 30 passenger cars, and 900 freight cars.
The railway greatly assisted in the building of the canal, which closely paralleled and in some places took over the rail line. Parts of the rail route were moved during the building of the canal, and considerable additions were made to the rail system. The rebuilt and improved Panama Railway beside the canal was completed in 1912.
After World War II few additional improvements were made to the Panama Railway, and it declined in the late 20th century. In 1979 the United States government handed over control to the government of Panama. On 19 June, 1998 the government of Panama turned over control to the private Panama Canal Railway Company ("PCRC"), with majority shares owned by the Kansas City Southern Railroad.