Essential to the railway link between the two oceans was a connecting ship route from New York to Aspinwall (now Colon) which began with sailing ships in 1855, as did a steamship service between Panama and Nicaragua, Costa Rica, Salvador and Guatemala. Steam replaced sail between New York and Aspinwall four years later by the North Atlantic Steamship Company, a joint venture of Panama Railroad and the Pacific Mail Steamship Company. The 3,000 grt ADRIATIC, ATLANTIC, and BALTIC were acquired from Collins Line in 1859, but proved too large and were withdrawn in 1863. In 1865 Pacific Mail Steamship Company assumed the operations, providing service to both the Atlantic and Pacific terminals of the railroad. In 1881, the French canal company, obtained control of the Panama Railroad, but left its management in the hands of its U.S. operators.

On February 1, 1893, the agreement with Pacific Mail ended. The Panama Railroad then formed its own shipping company, the Colombian Line, which provided service between New York and Colon utilizing chartered tonnage.  Re-named Panama Railroad Steamship Line on January 1, 1896, the line passed on May 4, 1904, to the U.S. government after it assumed the canal project.  Operated by a Board of Directors appointed by the Secretary of War, the line played a critical role in the canal construction.

Operations began with the 2,600 grt screw-steamers FINANCE and ADVANCE built in 1883 and 1882 for the United States & Brazil Mail Steamship Company and ALLIANCA (b. 1886/3,905 grt). In 1905, Ward Line's HAVANA and MEXICO were chartered and renamed PANAMA and COLON. The FINANCE sank off Sandy Hook on November 26, 1908, after a collision with the White Star liner GEORGIC.

Two vessels which would long prove the mainstay of the service were purchased in 1908: TREMONT and SHAWMUT (9,606 grt), built in 1902 for the Boston Steamship Company. Their first sailings as CRISTOBAL and ANCON were on June 25 and July 22, 1909 respectively. Fittingly, the line's ships inaugurated the Panama Canal in 1914 with ALLIANCA the first to pass through Gatun Locks on June 8, CRISTOBAL the first to make a test passage through the Canal and ANCON the first to make an official transit on August 15. To supply U.S. Marines stationed there, calls at Port-au-Prince, Haiti, began in 1917.

The CRISTOBAL and ANCON were refitted in 1919-20, which included oil firing and new accommodation for 150 passengers. These 12.5-knot vessels maintained fortnightly, eight-day sailings to Cristobal. The Lake-class freighters LAKE FLATTERY and LAKE FANQUIER were purchased from the U.S. Shipping Board in 1923 and 1925, and as BUENVENTURA and GUAYAQUIL maintained the cargo service.

After Congress overruled President Hoover's desire to disband the line in 1932, plans for new tonnage began, but came under attack from privately-owned companies opposed to a government-owned line diverting commercial trade.

CONTRACT & CONSTRUCTION

As America began to strengthen defenses of the Panama Canal, new building plans were revived in late 1936. This coincided with legistration to revive the U.S. Merchant Marine, and led to the creation of the Federal Maritime Commission which subsidized vessel construction and operation. After the Merchant Marine Act of 1936 had reaffirmed government encouragement of private steamship companies, upgrading a government-owned line prompted opposition; to which Panama Railroad responded by citing a Supreme Court decision of October 1935.

"We attach no importance to the fact that the railway company has utilized both its ships and railroad to carry private freight and passengers. The record shows that this is done to a limited extent compared; and that it is only incidental to the government operations."

Plans were finalized for three vessels designed by the noted naval architect George G. Sharp, to offer 52 passenger sailings a year versus the then present 26. They were wholly financed from profits, reserves and depreciation funds accrued over the years by Panama Railroad under the shrewd management of T.H. Rossbottom.

Bids were received on April 16, 1937, from Bethlehem Steel Co. ($4,040,000 per ship), New York Shipbuilding Corp. ($4,076.000 per ship), Federal Shipbuilding and Newport News Shipbuilding & Dry Dock. On May 20, Secretary of War Harry H. Woodring announced a contract with Bethlehem Shipbuilding for "three modern fast fireproof combination passenger-cargo liners" of 10,000 grit, carrying 200 passengers and 100,000 cubic feet of cargo with a speed of 16.5 knots from steam turbines. Alternative specifications for diesel propulsion had been given, but no such bids were received. The ships were to be built at the Fore River Shipyard, Quincy, Massachusetts and delivered in 18, 20 and 22 months respectively.

Assigned yard numbers 1467, 1468 and 1469, the keels of the first two were laid down on October 25 and the third on November 15, 1937. Yard No. 1467 was christened PANAMA on September 24, 1938, by Mrs. Raquel de la Guardia de Boyd, wife of Dr. Don Augusto S. Boyd, Panama's ambassador to the United States. The 6,000-ton hull was 98 per cent complete with 90 per cent of the machinery also in place. On December 10, Mrs. Harry Woodring launched No. 1468 as ANCON. No. 1469 took to the water as CRISTOBAL on March 4, 1939, sponsored by Mrs. Clarence S. Ridley, wife of the Governor of the Panama Canal Zone, Brig. General Clarence S. Ridley.

The maiden voyages were announced on January 8, 1939; PANAMA on March 30, ANCON on June 8 and CRISTOBAL on August 18. On February 18, PANAMA's trials were set: first pierside machinery tests on the 21st, builder's trials on the 28th and acceptance trials on March 7. Evidently something proved amiss, for on March 25 her maiden voyage was set back to April 27.  Early on April 6 PANAMA left Quincy for Rockland, Maine, where she anchored at 11:00p.m. The next day she ran the Navy's measured mile course and averaged 18.76 knots at 9,138 shp and 98.28 rpm. The service speed of 16.20 knots was achieved at 5,420 shp and 83.88rpm. The very day PANAMA ran her trials, Panama Railroad observed its 90th anniversary; and a government-owned enterprise that was both profitable and essential.

MAIDEN VOYAGES

The PANAMA (Capt. E.J. Eriksen) arrived at New York from Quincy, with 100 invited guests aboard, amid the usual noisy salutes on April 22, 1939, and tied up at Pier 65 North River at noon. Dressed overall and her aluminum-painted trim glistening in spring sunshine, PANAMA was the first new American liner since WASHINGTON. T.H. Rossbottom and the noted industrial designer Raymond F. Loewy hosted a luncheon for 250 guests on the 25th.

With George G. Sharp and the line's Vice-President W.R.Pfizer and Marine Superintendent W.K.B. Potts among only 65 passengers, PANAMA sailed on her maiden voyage on April 26, 1939, to Port-au-Prince, and Cristobal. These ships seldom transited the Panama Canal in peacetime; their Cristobal terminus being on the Atlantic side. However, on this occasion PANAMA made a special passage with guests including the Governor of the Canal Zone.  Leaving Cristobal at 6:00am, on May 3, she reached Balboa at 1:15 pm and hosted 6,000 visitors. She returned to New York on May 17 with 170 passengers. Captain Eriksen enthused to the "New York Herald Tribune" that PANAMA was one of "the steadiest and easiest maneuvering" ships he had commanded, and that she "handled very nicely ... I thought the old CRISTOBAL was the steadiest ship I ever sailed, but the PANAMA beats the CRISTOBAL."

The ANCON (Captain David H. Swinson) arrived at New York at noon on June 16, 1939, from Quincy after her 350-mile delivery-trials trip on which she averaged 19.5 knots. She sailed to Cristobal on the 22nd with T.H. Rossbottom aboard and returned on July 8 with 176 passengers. Delayed six hours by thick fog off Nantucket, CRISTOBAL (Captain W.J. Murphy) docked at Pier 65, New York at 3:30pm on August 12, 1939, with T.H. Rossbottom, W.R.Pfizer and George G. Sharp as guests. With 200 passengers, she sailed on her maiden voyage at 3:00pm on the 17th. The CRISTOBAL would remain line flagship for 42 years. She returned to New York on September 2, the day after Poland was invaded and World War II began.