Completing construction of the Panama Railway was not the end of their problems. No one had any experience of building a railway in such tropical conditions before, indeed at the time of opening, commercial public railways services were less than 30 years old. Wooden bridges that had served in the US, quickly decayed in the tropical heat and had to be replaced with iron bridges, wooden trestles had to be replaced with gravel embankments and the original pine sleepers proved to have a life of less than a year in the Panamanian climate.

Six heavy locomotives and four lighter ones provided the initial motive-power. Trains were made up from a variety of rolling stock that included 22 passenger cars (each with a capacity of 60 passengers), 51 closed boxcars and 72 flat cars. On opening the First class passenger fare was $25 (one way), children under 12 years old travelled for $6.25, the second class fare was ‘only’ $10 and personal baggage ten cents a pound. Mail was charged at .22 cents a pound, coal was $5.00/ton, first class freight in boxes or bales was .50 cents a cubic foot. All freight charges were paid in gold. The Panama Railroad was a very lucrative investment. From 1855 and 1867 more than $700 million in gold was carried on the railroad without the loss of a single dollar, and earning the railway’s owners 0.25% in fees.

The completion of the Central Pacific – Union Pacific railroad at Promontory, Utah on May 10, 1869 was the turning point in the fortunes of the Panama Railroad. By 1877 the Panama Railroad had revenues of $1,284,000 and operating expenses of $998,000, leaving a profit of just $286,000. Essentially the railroad was bankrupt. On Wall Street the stock plummeted from $369 per share in 1874 to less than $52 in 1877.

Again though, just when things were looking bleak, the railway again managed to turn things around. The existence of the railway was one of the key factors that contributed s to the selection of Panama as the site of the canal. In 1881 the French Compagnie Universelle du Canal Interocéanique purchased controlling interest in the Panama Railway Company. It was then used extensively to provide logistical support for the can al construction effort. When the French Canal effort failed, the value of the railway was not lost on the Americans and in 1904, the United States government under Theodore Roosevelt purchased the railway from the French canal company. At that time, railway assets included some 75 miles (121 km) of track, 35 locomotives, 30 passenger cars, and 900 freight cars.

Under the Americans, the railway enjoyed initial investment, with much of the rolling stock being replaced. However, investment was not maintained and the railway went into decline as the growth of road transport took much of its traffic.