The American-Hawaiian Steamship Company was founded in 1899 to carry cargos of sugar from Hawaii to the United States and manufactured goods back to Hawaii. Brothers-in-law George Dearborn and Lewis Henry Lapham were the key players in the founding of the company. The company began in 1899 with three ships, operated nine by 1904 and was operating seventeen by 1911 with three on order.
At the time of the company's founding, its steamships sailed around South America via the Straits of Magellan to reach the East Coast ports. By 1907, the company began using the Mexican Isthmus of Tehuantepec Route. Shipments on the Tehuantepec Route would transship at Atlantic port of Coatzacoalcos (formerly Puerto) or the Pacific port of Salina Cruz and would traverse the Isthmus of Tehuantepec on the 310 kilometres (192.6 mi) Tehuantepec National Railway. The contract, binding until completion of the Panama Canal, with American-Hawaiian for its entire cargo moving between oceans and assuring a minimum of 500,000 tons of sugar and other cargo was important in the railway's economic plans from its beginning. For the steamship line the Tehuantepec route enabled the company to serve both a New York—Honolulu route and a coastal route from Salina Cruz to Pacific ports of the United States. With new ships to be delivered the company planned to have four 8,000 ton ships on the New York—Coatzacoalcos route, six 12,000 ton ships operating on the Salina Cruz—Honolulu route and two 6,000 ton ships serving the West Coast route.
Company ships were used on both the Pacific and Atlantic routes. When American political troubles with Mexico closed that route, American-Hawaiian returned to the Straits of Magellan route.
When the Panama Canal opened for traffic in August 1914, American-Hawaiian began routing all of its ships via this route. The temporary closure of the canal because of a series of landslides forced the company to return to the Straits of Magellan route for the third time in its history.
During World War I, twelve of the company's ships were commissioned into the United States Navy; a further five were sunk by submarines or mines during the conflict.