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The history of the Columbus is linked with that of the whalebacks, an innovative but not widely accepted ship design of the late 1880s, and of their designer, Alexander McDougall. A Scottish immigrant, Great Lakes captain, inventor and entrepreneur, McDougall developed the idea of the whaleback as a way to improve the ability of barges to follow a towing vessel in heavy seas. Whalebacks were characterized by distinctive hull shapes with rounded tops, lacking conventional vertical sides. Waves thus broke across their hulls with considerably less force than when striking a conventional hull. Water could also flow around the rounded turrets which resembled gun turrets on contemporary warships; the superstructure and deckhouses were mounted on these turrets. The rounded contours of whalebacks gave them an unconventional appearance, and McDougall's ship and barge designs were received with considerable skepticism, resistance, and derision. As they had porcine-looking snouts for bows, some observers called them "pig boats".

The hull framing, which included nine bulkheads, was completed on September 13, 1892. The ship's propulsion mechanisms were next installed, consisting of a single four-bladed, 14-foot (4 m) diameter, 19-foot (6 m) pitch propeller, the two reciprocating triple-expansion steam engines (with three cylinders of 26-inch (66 cm), 42-inch (107 cm) and 70-inch (178 cm) diameters in a common frame with a 42-inch (107 cm) stroke) manufactured by Samuel F. Hodge & Co. of Detroit, Michigan, and six steel tubular return Scotch boilers, (11-foot (3 m) diameter by 12-foot (4 m) long), built by Cleveland Shipbuilding Company. The rounded hull top was then added, followed by the six turrets, which were substantially larger than those employed on freighter whalebacks. The ship was launched on December 3, 1892, after which two superstructure decks were mounted on the turrets along the centerline of her hull to afford access to her two internal decks, one in the turrets and one in the hull below.

She was fitted out over the remainder of late 1892 and early 1893. Electric lighting was used, and she was elegantly furnished. Her grand saloon and skylighted promenade deck contained several fountains and a large aquarium filled with trout and other fish of the lakes. The cabins and public spaces were fitted out with oak paneling, velvet carpets, etched glass windows, leather furniture and marble. Shops and restaurants were provided for the passengers.

McDougall's American Steel Barge Company had committed in the contract that the Columbus would be built and delivered in three months, making her one of the fastest-built large ships of her time. The builders further promised rapid loading and unloading, predicting that the vessel would be able to embark 5,000 passengers in five minutes, and disembark the same passengers in even less time. The Columbus was specified to be able run the 6 miles (10 km) from the dock downtown to the fairgrounds at Jackson Park and 64th Street in 20 minutes.

The Columbus carried between 1.7 and 2.0 million passengers (sources differ) during the exposition, with only one fatality, a crew member. In recognition of that success, the commissioners of the exposition presented Captain McArthur with a gold watch engraved with a representation of the ship. McArthur went on to captain other whalebacks including the Frank Rockefeller, which became the SS Meteor, the only whaleback surviving today.

In 1899 the Columbus was leased to and operated by the Goodrich Transit Line, whose steamer Virginia had been a perennial racing rival. She changed hands in 1905 to the Milwaukee & Chicago Transportation company – possibly a Goodrich holding company – and again in 1909 to Goodrich Transit Line. Her livery was at some point between 1906 and 1909 changed to a black hull with yellow accents, and she was placed in service on the route between Chicago and Milwaukee, Wisconsin. The Columbus remained with the Goodrich line for several years. Although she was used for excursions elsewhere around the Great Lakes, her regular schedule was a daily trip to Milwaukee, leaving Chicago mid-morning, sailing to Milwaukee for a two-hour stopover, and then returning (see advertisement right). She made daily round-trip excursions from the Goodrich docks at the Rush Street Bridge.