Panama Canal

A

Early Efforts

As early as the 16th century, Europeans dreamed of building a ship canal across the Isthmus of Panama. Spanish kings considered building a canal to carry treasure from their South American colonies back to Spain, but no attempt was made. Such a project became possible only in the 19th century, with the machinery and knowledge produced during the Industrial Revolution, the transition from an agricultural to a mechanized economy.

In the 1830s and 1840s, while Panama was a province of Colombia, a number of European and U.S. studies were conducted to determine where and how such a crossing could be built. In 1850 the United States and Britain signed the Clayton-Bulwer Treaty, in which they pledged to cooperate if either one undertook such a project. That same year, a New York company began construction of the Panama Railroad, along the same general route as the present-day canal. It opened to traffic five years later, carrying many gold seekers to California during the gold rush. During the rest of the 1800s, the U.S. government frequently sent in troops to protect the railroad from bandits and military threats, under the authority of a treaty signed with Colombia in 1846.

In the late 1870s a private French company won a concession from Colombia to build a sea-level canal in Panama and soon raised enough money to begin construction. The company was directed by Ferdinand de Lesseps, a French engineer and diplomat who had overseen construction of the Suez Canal in Egypt. Excavation in Panama began in 1882, but the company quickly ran into problems caused by the difficult terrain, climate, tropical diseases, labor shortages, and a flawed design. In 1888 it ceased work and went into bankruptcy. Reorganized a few years later as the New Panama Canal Company, it barely managed to keep the concession and prevent the equipment from deteriorating. At that stage, the French company sought another sponsor for the project.

B

U.S. Involvement

The United States had long been interested in a Central American canal, to link its east and west coasts and expand trade. However, it did not have the money or the will to build one before 1900. During the 1890s Congress appropriated money to begin work on a canal in Nicaragua, but the project was soon cancelled.

---

---

The Spanish-American War in 1898 heightened military interest in a canal. After defeating Spain, the United States acquired the Philippines and Puerto Rico and wanted better access for its navy to both the Atlantic and Pacific oceans. American officials negotiated the Hay-Pauncefote Treaty with Britain in 1901, in which the two countries agreed that the United States alone could build and regulate a canal.

The canal issue reached a critical point in 1902 and 1903. In a complex series of events, Congress and President Theodore Roosevelt decided on Panama over Nicaragua and negotiated a treaty with Colombia. Under the agreement, the United States would obtain a strip of land across the isthmus and build a canal. But Colombia’s senate rejected the treaty. Panamanians feared the United States would build a canal in Nicaragua instead, so they took matters into their own hands. A group of Panamanians conspired with agents of the French company and the Panama Railroad to rebel against Colombian rule and declared Panama independent on November 3, 1903. The United States supported the revolt and used its navy to prevent Colombia from defeating the rebels.

Two weeks later Panama signed a treaty with the United States giving permission for the canal project. The Panamanians had authorized Philippe Bunau-Varilla, a French citizen and longtime official of the French canal company, to negotiate the terms and sign the agreement. Bunau-Varilla gave the United States even more than it had asked for: a perpetual lease on a section of central Panama 16 km (10 mi) wide, where the canal would be built; the right to take over more Panamanian land if needed; and the right to use troops to intervene in Panama. The United States agreed to guarantee Panama’s independence and pay $10 million, plus an annual fee of $250,000. In exchange for their independence, then, Panamanians were forced to accept the treaty, which no Panamanian ever signed, that virtually gave away the canal zone to the United States (see Panama: History).

C

Construction

Canal construction began in 1904, directed by an Inter-Oceanic Canal Commission. Most of the excavation and construction was done by private contractors. The U.S. Army Corps of Engineers supplied the technical guidance, and Colonel George W. Goethals served as chief engineer from 1907 to 1916. After initial plans for a sea-level canal, the commission decided on a canal with locks. The canal commission recruited more than 50,000 laborers, mostly from nearby Caribbean islands, to work on the canal. In all, another 100,000 people migrated to Panama during the construction era, adding to the diversity of Panama’s population.

An important breakthrough during construction was the successful effort to control mosquito-borne diseases. Malaria and yellow fever had killed thousands of workers during the French canal attempt. But a U.S. campaign, directed by Army medical officer William Gorgas, drained or sprayed mosquito breeding grounds and built sewage and water systems. Within two years the diseases were brought under control.

The overall cost of the canal was about $350 million, the largest and costliest work ever undertaken at that time by the U.S. government. It became one of the world’s premier feats of engineering. The concrete lock chambers and mechanical lock gates were the largest ever built. At the time, Gatún Dam was the largest earthen dam ever built, forming the world’s largest artificial lake. More than 190 million cubic meters (250 million cubic yards) of earth and rock were excavated from the canal route. Frequent landslides caused problems and delays as workers dug through the ridge of the Continental Divide to form Gaillard Cut.

Despite the challenges and difficulties, the Panama Canal was completed sooner than expected. The first ship traveled through it from the Atlantic to the Pacific on August 15, 1914. However, further landslides caused closures in 1915, and the canal’s formal opening was postponed until 1920 because of World War I (1914-1918).

D

Canal Since Completion

Since it opened, the canal has served as a U.S. shipping facility for vessels of all countries. Most ships and cargo traveling through the canal belong to U.S. companies, although a majority of the ships are registered in Panama or Liberia, countries that have low fees and less restrictive regulations.

Starting in the 1930s Gaillard Cut was widened to improve navigation, and in the 1990s it was expanded again. Madden Dam was built in the 1930s to control the flow of water into Gatún Lake and generate electricity. In 1962 a high-level bridge was built over the Pacific entrance to the canal. Known as the Bridge of the Americas or Thatcher Ferry Bridge, this structure carries the Pan-American Highway into Panama City.

For much of its history, the canal and the surrounding Panama Canal Zone were run as a colony of the United States. The U.S. Department of the Army administered the canal, the Panama Railroad, and many businesses run by the railroad company. It also built 14 military bases in the area. The governor of the canal region was appointed by the secretary of the Army and was usually a retired general from the Corps of Engineers who had served in Panama. U.S. civilian employees supervised canal operations, while Panamanians and West Indians formed the labor force.

In 1950 the U.S. government reorganized management of the area into two agencies: the Panama Canal Company, which ran the canal’s commercial operations and the railroad, and the Canal Zone government, which handled courts, police, and other functions. The governor headed both agencies. A separate military structure controlled the military bases in the Canal Zone and operated independently of the civilian authorities.

The U.S. control of the area caused decades of conflict with Panamanians, who felt excluded from the economic benefits of the canal and from territory they regarded as rightfully belonging to Panama. Before negotiating the 1977 treaties, the United States and Panama modified the 1903 treaty twice. In 1936 they signed an agreement by which the United States raised Panama’s annual payment from the canal and prevented shipments of untaxed goods from the canal zone into Panama, which Panamanian merchants regarded as unfair competition. The United States also gave up the rights to intervene militarily in Panama and to take over more land for canal operations. In 1955 another treaty raised the annuity again, made Panamanians who worked in the canal zone subject to Panamanian taxes, and promised to end a wage system that paid American employees at a higher rate than Panamanians.

But these concessions did not end tensions between the United States and Panamanians, who staged demonstrations and protests in the late 1950s and 1960s. Anti-American riots in 1964 caused the two countries to suspend diplomatic relations briefly. After they were restored, the United States and Panama began negotiating new treaties, a process that lasted more than 12 years. In 1977 U.S. president Jimmy Carter and the Panamanian leader, General Omar Torrijos Herrera, signed treaties that gave control of the canal and all its operations to Panama in 1999. The agreements were ratified by Panama immediately and by the United States the following year.

The treaties went into effect in 1979. More than 60 percent of the U.S.-held Panama Canal Zone was returned to Panama. The Panama Canal Commission was established to run the canal during the transition to Panamanian control, and Panama took over operation of ship repairs, piers, and railroad operations. In 1994 the government of Panama created an agency, the Interoceanic Regional Authority, to administer the non-canal facilities of the former zone. The Panama Canal Authority, a public corporation, took possession of the canal from the Panama Canal Commission on December 14, 1999. That day the United States transferred the canal to Panama at a ceremony attended by Panamanian president Mireya Moscoso de Gruber and former U.S. president Jimmy Carter.

	More from Encarta
	•  Presidential Myths Quiz •  Coffee break: Recharge your brain