America's hold over Panama tightened following the building of the Panama Railroad between 1851 and 1855 by New York businessmen, which linked Panama City to the Atlantic side of the isthmus region. The building of the railroad was precipitated by the discovery of gold in California which subsequently increased the need for export transport links. It was an enormous success and almost single-handedly restored prosperity to Panama. In 1905 the New York owners of the railway were paid some $35 million in dividends.
The Panama Railroad enmeshed relations between the US and Panama further: not entirely satisfactorily, however. Not surprisingly, Panamanians -who were richer and less dependent because of the railway- became increasingly nationalistic and began resenting being hemmed in by the US. In what would become the first of many bitter skirmishes between America and Panamanian nationalists, the 'Watermelon War' - initiated by a tourist who refused to pay for a piece of watermelon- caused one of the worst anti-US riots in Panamanian history. In 1856 the first American troops landed in Panama to resolve the issue.
