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Panama The California Gold Rush and the Railroad
Even before the United States acquired California after the
Mexican War (1846-48), many heading for California used the isthmus
crossing in preference to the long and dangerous wagon route across
the vast plains and rugged mountain ranges. Discovery of gold in
1848 increased traffic greatly. In 1847 a group of New York
financiers organized the Panama Railroad Company. This company
secured an exclusive concession from Colombia allowing construction
of a crossing, which might be by road, rail, river, or a
combination. After surveys, a railroad was chosen, and a new
contract so specifying was obtained in 1850. The railroad track
followed generally the line of the present canal. The first through
train from the Atlantic to the Pacific side ran on the completed
track on January 28, 1855.
The gold rush traffic, even before the completion of the
railroad, restored Panama's prosperity. Between 1848 and 1869,
about 375,000 persons crossed the isthmus from the Atlantic to the
Pacific, and 225,000 crossed in the opposite direction. Prices for
food and services were greatly inflated, producing enormous profits
from meals and lodging.
The railroad also created a new city and port at the Atlantic
terminus of the line. The town that immediately sprang up to
accommodate the railroad offices, warehouses, docks, and shops and
to lodge both railroad workers and passengers soon became, and
remains, the second largest in the country. United States citizens
named it Aspinwall, after one of the founders of the Panama
Railroad Company, but the Panamanians christened it Colón, in honor
of Columbus. Both names were used for many years, but because the
Panamanians insisted that no such place as Aspinwall existed and
refused to deliver mail so addressed, the name Colón prevailed.
The gold rush and the railroad also brought the United States
"Wild West" to the isthmus. The forty-niners tended to be an unruly
lot, usually bored as they waited for a ship to California,
frequently drunk, and often armed. Many also displayed prejudice
verging on contempt for other races and cultures. The so-called
Watermelon War of 1856, in which at least sixteen persons were
killed, was the most serious clash of races and cultures of the
period.
In 1869 the first transcontinental railroad was completed in
the United States. This development reduced passenger and freight
traffic across the isthmus and diminished the amount of gold and
silver shipped east. During the height of the gold rush, however,
from 1855 to 1858, only one-tenth of the ordinary commercial
freight was destined for or originated in California. The balance
concerned trade of the North Americans with Europe and Asia. The
railroad company, because of its exceptionally high return on a
capitalization that never exceeded US$7 million, paid a total of
nearly US$38 million in dividends between 1853 and 1905. Panama
received US$25,000 from Colombia's annuity and benefited from
transient trade and some inflow of capital.
Data as of December 1987
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