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Detailed map of the proposed route of the Panama Railroad, from Manzanilla Island to Panama City, as surveyed by G.W. Hughes in 1849.

The map also identifies the route examined by Garella in 1844 and a profile view above.

At the outset of the California Gold Rush, the demand for transportation across the Panama isthmus became pressing. One route for crossing was to crossPanama via the Chagres River by dugout canoe up the river and on mules over the hills, to Panama City and the Pacific, a trek of 50 miles which took 8 days. By 1848, various canal and rail routes across the isthmus had already been proposed.  Even the Spanish had first considered building a canal in the 1520s, before settling for the Camino Real, the overland mule track that was still in use when the first gold-diggers arrived.

In 1846, The US Government concluded a new treaty with the Republic of New Granada (Colombia and Panama), which guaranteed the republic’s sovereignty in exchange for US transit rights across the isthmus. This paved the way for a transcontinental route. A year later, the US Congress subsidized a mail and passenger steamship service up and down the Atlantic and Pacific coasts from New York to the Chagres River and from Panama City to Oregon, enabling people and goods to reach Panama easily.

New York entrepreneur William H. Aspinwall had won the bid to build and operate the Pacific mail steamships, and, with the onset of the Gold Rush, he set out to build a railroad across the Panamanian isthmus too. Aspinwall traveled to Panama and Colombia with John L. Stephens, a lawyer and writer who had traveled in Central America. They established the Panama Railroad Company, which was granted an exclusive 49-year concession to build a railroad, highway, or canal across the isthmus, as well as 250,000 acres of public land.  Aspinwall raised $1 million by selling stock in the company and persuaded the US Congress to pay an annual fee of $250,000 to transport mail over the isthmus. Meanwhile, the demand for a passenger train had become increasingly evident: by the end of May 1849, 55 ships had landed more than 4,000 passengers at Chagres, all eager to reach California.

 The route was first surveyed by US Army colonel George W. Hughes, who was misleadingly optimistic about the railroad’s construction. His survey indicated that the terrain would not be hard to traverse: it did not mention the deep swamps, thick jungle, and dangerous hills the route would have to cross. Aspinwall believed the railroad would need to be just 20 miles long, from the furthest navigable point on the Chagres River to the Pacific Ocean. He contracted experienced American civil engineers George Totten and John Trautwine to build the railroad, but they soon realized the disastrous errors of the survey—for a start, Hughes had overestimated the length of the navigable passage on the Chagres—and withdrew from the contract. However, both were eventually rehired as employees of the company, and  Totten ultimately proved to be the hero of the venture.