Early proposals in Panama  Satellite image showing the location of the Panama Canal: dense jungles are visible in green, topped by clouds.

The earliest record regarding a canal across the Isthmus of Panama was in 1534, when Charles V, Holy Roman Emperor and King of Spain, ordered a survey for a route through the Americas in order to ease the voyage for ships traveling between Spain and Peru. The Spanish were seeking to gain a military advantage over the Portuguese.[1]

In 1668, the English physician and philosopher Sir Thomas Browne speculated in his encyclopedic work, Pseudodoxia Epidemica, that "some Isthmus have been eaten through by the Sea, and others cut by the spade: And if the policy would permit, that of Panama in America were most worthy the attempt: it being but few miles over, and would open a shorter cut unto the East Indies and China".[2]

Given the strategic location of Panama, and the potential of its narrow isthmus separating two great oceans, other trade links in the area were attempted over the years. One early example of this was ill-fated Darien scheme, launched by the Kingdom of Scotland in 1698 to set up an overland trade route. Generally inhospitable conditions thwarted the effort, and it was abandoned in April 1700.[3] In 1788, Americans suggested that the Spanish should build the canal, since they controlled the colonies where it would be built. They said that this would be a less treacherous route for ships than going around the southern tip of South America, and that tropical ocean currents would naturally widen the canal after construction.[4] During an expedition from 1788 to 1793, Alessandro Malaspina outlined plans for construction of a canal.[5]

Numerous canals were built in other countries in the late 18th and early 19th centuries. The success of the Erie Canal through central New York in the United States in the 1820s and the collapse of the Spanish Empire in Latin America resulted in growing American interest in building an inter-oceanic canal. Beginning in 1826, US officials began negotiations with Gran Colombia (present-day Colombia, Venezuela, Ecuador, and Panama), hoping to gain a concession to build a canal. Jealous of their newly gained independence and fearing domination by the more powerful United States, president Simón Bolívar and New Granada officials declined American offers. After the collapse of Gran Colombia, New Granada remained unstable under constant government intrigue.[citation needed]

Great Britain attempted to develop a canal in 1843. According to the New-York Daily Tribune, August 24, 1843, Barings Bank of London and the Republic of New Granada entered into a contract for the construction of a canal across the Isthmus of Darien (Isthmus of Panama). They referred to it as the Atlantic and Pacific Canal, and it was a wholly British endeavor. Projected for completion in five years, the plan was never carried out. At nearly the same time, other ideas were floated, including a canal (and/or a railroad) across Mexico's Isthmus of Tehuantepec. That did not develop, either.[6]

In 1846, the Mallarino–Bidlack Treaty, negotiated between the US and New Granada, granted the United States transit rights and the right to intervene militarily in the isthmus. In 1848, the discovery of gold in California, on the West Coast of the United States, generated renewed interest in a canal crossing between the Atlantic and Pacific oceans. William Henry Aspinwall, who had won the federal subsidy to build and operate the Pacific mail steamships at around the same time, benefited from the gold discovery. Aspinwall's route included steamship legs from New York City to Panama, and from Panama to California, with an overland portage through Panama. This route with an overland leg in Panama was soon frequently traveled, as it provided one of the fastest connections between San Francisco, California, and the East Coast cities, about 40 days' transit in total. Nearly all the gold that was shipped out of California went by the fast Panama route. Several new and larger paddle steamers were soon plying this new route, including private steamship lines owned by American entrepreneur Cornelius Vanderbilt that made use of an overland route through Nicaragua, and the unfortunate SS Central America.[7][page needed]

 Map showing the Railway and the proposed Panama Canal route

In 1850, the United States began construction of the Panama Railroad (now called the Panama Railway) to cross the isthmus; it opened in 1855. This overland link became a vital piece of Western Hemisphere infrastructure, greatly facilitating trade. The later canal route was constructed parallel to it, as it had helped clear dense forests.[citation needed] An all-water route between the oceans was still the goal. In 1855, William Kennish, a Manx-born engineer working for the United States government, surveyed the isthmus and issued a report on a route for a proposed Panama Canal.[8] His report was published as a book entitled The Practicability and Importance of a Ship Canal to Connect the Atlantic and Pacific Oceans.[9][page needed]

 Share of the Compagnie Universelle du Canal Interocéanique de Panama, issued 29. November 1880 – signed by Ferdinand de Lesseps

In 1876, Lucien Napoléon Bonaparte Wyse and his chief assistant Armand Réclus, both officers and engineers of the French Navy, explored several routes in the Darien-Atrato regions and made proposals including the construction of tunnels and locks.[10][page needed] A second Isthmian exploratory visit began on December 6, 1877, where two routes were explored in Panama, the San Blas route and a route from Limon Bay to Panama City, the current Canal route. The French had achieved success in building the Suez Canal in the Middle East. While it was a lengthy project, they were encouraged to plan for a canal to cross the Panamanian isthmus.[11] Wyse went to Bogotá and on March 20, 1878, signed a treaty, in the name of the Société civile internationale du Canal interocéanique par l'isthme du Darien headed by general Étienne Türr, with the Colombian government, known as the Wyse concession, to build an interoceanic canal through Panama.

French construction attempts, 1881–1899  Ferdinand de Lesseps, the French originator of the Suez Canal and the Panama Canal

The first attempt to construct a canal through what was then Colombia's province of Panama began on January 1, 1881. The project was inspired by the diplomat Ferdinand de Lesseps, who was able to raise considerable funds in France as a result of the huge profits generated by his successful construction of the Suez Canal.[12] Although the Panama Canal needed to be only 40 percent as long as the Suez Canal, it was much more of an engineering challenge because of the combination of tropical rain forests, debilitating climate, the need for canal locks, and the lack of any ancient route to follow.

Lesseps wanted a sea-level canal (like the Suez), but he visited the site only a few times, during the dry season which lasts only four months of the year.[13] His men were unprepared for the rainy season, during which the Chagres River, where the canal started, became a raging torrent, rising up to 10 m (33 ft). The dense jungle was alive with venomous snakes, insects, and spiders, but the worst challenges were yellow fever, malaria, and other tropical diseases, which killed thousands of workers; by 1884, the death rate was over 200 per month.[14] Public health measures were ineffective because the role of the mosquito as a disease vector was then unknown. Conditions were downplayed in France to avoid recruitment problems,[15] but the high mortality rate made it difficult to maintain an experienced workforce.

 Excavator at work in Bas Obispo, 1886

Workers had to continually widen the main cut through the mountain at Culebra and reduce the angles of the slopes to minimize landslides into the canal.[16] Steam shovels were used in the construction of the canal, purchased from Bay City Industrial Works, a business owned by William L. Clements in Bay City, Michigan.[17] Bucket chain excavators manufactured by both Alphonse Couvreux and Wehyer & Richemond and Buette were also used.[18] Other mechanical and electrical equipment was limited in capabilities, and steel equipment rusted rapidly in the rainy climate.[19]

In France, Lesseps kept the investment and supply of workers flowing long after it was obvious that the targets were not being met, but eventually the money ran out. The French effort went bankrupt in 1889 after reportedly spending US$287,000,000; an estimated 22,000 men died from disease and accidents, and the savings of 800,000 investors were lost.[15][20] Work was suspended on May 15, and in the ensuing scandal, known as the Panama affair, some of those deemed responsible were prosecuted, including Gustave Eiffel.[21] Lesseps and his son Charles were found guilty of misappropriation of funds and sentenced to five years' imprisonment. This sentence was later overturned, and the father, at age 88, was never imprisoned.[15]

In 1894, a second French company, the Compagnie Nouvelle du Canal de Panama, was created to take over the project. A minimal workforce of a few thousand people was employed primarily to comply with the terms of the Colombian Panama Canal concession, to run the Panama Railroad, and to maintain the existing excavation and equipment in salable condition. The company sought a buyer for these assets, with an asking price of US$109,000,000. In the meantime, they continued with enough activity to maintain their franchise. Phillipe Bunau-Varilla, the French manager of the New Panama Canal Company, eventually managed to persuade Lesseps that a lock-and-lake canal was more realistic than a sea-level canal.[22]The Comité Technique, a high level technical committee, was formed by the Compagnie Nouvelle to review the studies and work—that already finished and that still ongoing—and come up with the best plan for completing the canal. The committee arrived on the Isthmus in February 1896 and went immediately, quietly and efficiently about their work of devising the best possible canal plan, which they presented on November 16, 1898. Many aspects of the plan were similar in principle to the canal that was finally built by the Americans in 1914.[23] It was a lock canal with two high level lakes to lift ships up and over the Continental Divide. Double locks would be 738 feet long and about 30 feet deep (225 m × 9 m); one chamber of each pair would be 82 feet (25 m) wide, the other 59 ft (18 m). There would be eight sets of locks, two at Bohio Soldado and two at Obispo on the Atlantic side; one at Paraiso, two at Pedro Miguel, and one at Miraflores on the Pacific. Artificial lakes would be formed by damming the Chagres River at Bohio and Alhajuela, providing both flood control and electric power.

United States acquisition  The US's intentions to influence the area (especially the Panama Canal construction and control) led to the separation of Panama from Colombia in 1903. The Culebra Cut in 1896 The Culebra Cut in 1902

At this time, the President and the Senate of the United States were interested in establishing a canal across the isthmus, with some favoring a canal across Nicaragua and others advocating the purchase of the French interests in Panama. Bunau-Varilla, who was seeking American involvement, asked for $100 million, but accepted $40 million in the face of the Nicaraguan option. In June 1902, the US Senate voted in favor of the Spooner Act, to pursue the Panamanian option, provided the necessary rights could be obtained.[24]

On January 22, 1903, the Hay–Herrán Treaty was signed by United States Secretary of State John M. Hay and Colombian Chargé Tomás Herrán. For $10 million and an annual payment, it would have granted the United States a renewable lease in perpetuity from Colombia on the land proposed for the canal.[25] The treaty was ratified by the US Senate on March 14, 1903, but the Senate of Colombia did not ratify it. Bunau-Varilla told President Theodore Roosevelt and Hay of a possible revolt by Panamanian rebels who aimed to separate from Colombia and hoped that the United States would support the rebels with US troops and money.[citation needed]

Roosevelt changed tactics, based in part on the Mallarino–Bidlack Treaty of 1846, and actively supported the separation of Panama from Colombia. Shortly after recognizing Panama, he signed a treaty with the new Panamanian government under terms similar to the Hay–Herrán Treaty.[26]

On November 2, 1903, US warships blocked sea lanes against possible Colombian troop movements en route to put down the Panama rebellion. Panama declared independence on November 3, 1903. The United States quickly recognized the new nation.[27] This happened so quickly that by the time the Colombian government in Bogotá launched a response to the Panamanian uprising US troops had already entered the rebelling province. The Colombian troops dispatched to Panama were hastily assembled conscripts with little training. While these conscripts may have been able to defeat the Panamanian rebels, they would not have been able to defeat the US army troops that were supporting the Panamanian rebels. The reason an army of conscripts was sent was that it was the best response the Colombians could muster, as Colombia still was recovering from a civil war between Liberals and Conservatives from October, 1899, to November, 1902, known as the "Thousand Days War". The US was fully aware of these conditions and even incorporated them into the planning of the Panama intervention as the US acted as an arbitrator between the two sides. The peace treaty that ended the "Thousand Days War" was signed on the USS Wisconsin on November 21, 1902. While in port, the US also brought engineering teams to Panama with the peace delegation to begin planning the canal's construction before the US had even gained the rights to build the canal. All these factors would result in the Colombians being unable to put down the Panamanian rebellion and expel the United States troops occupying what today is the independent nation of Panama.[28]

On November 6, 1903, Philippe Bunau-Varilla, as Panama's ambassador to the United States, signed the Hay–Bunau-Varilla Treaty, granting rights to the United States to build and indefinitely administer the Panama Canal Zone and its defenses. This is sometimes misinterpreted as the "99-year lease" because of misleading wording included in article 22 of the agreement.[29] Almost immediately, the treaty was condemned by many Panamanians as an infringement on their country's new national sovereignty.[30][31] This would later become a contentious diplomatic issue among Colombia, Panama, and the United States.

President Roosevelt famously stated, "I took the Isthmus, started the canal and then left Congress not to debate the canal, but to debate me." Several parties in the United States called this an act of war on Colombia: The New York Times described the support given by the United States to Bunau-Varilla as an "act of sordid conquest".[32][33] The New York Evening Post called it a "vulgar and mercenary venture".[34] The US maneuvers are often cited as the classic example of US gunboat diplomacy in Latin America, and the best illustration of what Roosevelt meant by the old African adage, "Speak softly and carry a big stick [and] you will go far." After the revolution in 1903, the Republic of Panama became a US protectorate until 1939.[35]

In 1904, the United States purchased the French equipment and excavations, including the Panama Railroad, for US$40 million, of which $30 million related to excavations completed, primarily in the Culebra Cut, valued at about $1.00 per cubic yard.[36] The United States also paid the new country of Panama $10 million and a $250,000 payment each following year.

In 1921, Colombia and the United States entered into the Thomson–Urrutia Treaty, in which the United States agreed to pay Colombia $25 million: $5 million upon ratification, and four $5 million annual payments, and grant Colombia special privileges in the Canal Zone. In return, Colombia recognized Panama as an independent nation.[37]

United States construction of the Panama canal, 1904–1914  Chief engineer John Frank Stevens Sanitation officer William C. Gorgas

The US formally took control of the canal property on May 4, 1904, inheriting from the French a depleted workforce and a vast jumble of buildings, infrastructure, and equipment, much of it in poor condition. A US government commission, the Isthmian Canal Commission (ICC), was established to oversee construction; it was given control of the Panama Canal Zone, over which the United States exercised sovereignty.[38] The commission reported directly to Secretary of War William Howard Taft and was directed to avoid the inefficiency and corruption that had plagued the French 15 years earlier.

On May 6, 1904, President Theodore Roosevelt appointed John Findley Wallace, formerly chief engineer and finally general manager of the Illinois Central Railroad, as chief engineer of the Panama Canal Project. Overwhelmed by the disease-plagued country and forced to use often dilapidated French infrastructure and equipment,[39] as well as being frustrated by the overly bureaucratic ICC, Wallace resigned abruptly in June 1905.[40] The ICC brought on a new chairman, Theodore P. Shonts, and a new chief engineer was appointed, John Frank Stevens, a self-educated engineer who had built the Great Northern Railroad.[41] Stevens was not a member of the ICC; he increasingly viewed its bureaucracy as a serious hindrance, bypassing the commission and sending requests and demands directly to the Roosevelt administration in Washington, DC.

One of Stevens' first achievements in Panama was in building and rebuilding the housing, cafeterias, hotels, water systems, repair shops, warehouses, and other infrastructure needed by the thousands of incoming workers. Stevens began the recruitment effort to entice thousands of workers from the United States and other areas to come to the Canal Zone to work. Workers from the Caribbean—called "Afro-Panamanians"—came in large numbers and many settled permanently. Stevens tried to provide accommodation in which the workers could work and live in reasonable safety and comfort. He also re-established and enlarged the railway, which was to prove crucial in transporting millions of tons of soil from the cut through the mountains to the dam across the Chagres River.

 President Theodore Roosevelt sitting on a Bucyrus steam shovel at Culebra Cut, 1906 Construction work on the Gaillard Cut is shown in this photograph from 1907.

Colonel William C. Gorgas had been appointed chief sanitation officer of the canal construction project in 1904. Gorgas implemented a range of measures to minimize the spread of deadly diseases, particularly yellow fever and malaria, which had recently been shown to be mosquito-borne following the work of Cuban epidemiologist, Carlos Finlay and American pathologist, Walter Reed.[42] Investment was made in extensive sanitation projects, including city water systems, fumigation of buildings, spraying of insect-breeding areas with oil and larvicide, installation of mosquito netting and window screens, and elimination of stagnant water. Despite opposition from the commission (one member said his ideas were barmy), Gorgas persisted, and when Stevens arrived, he threw his weight behind the project. After two years of extensive work, the mosquito-spread diseases were nearly eliminated.[43] Despite the monumental effort, about 5,600 workers ended up dead via disease and accidents during the US construction phase of the canal.

Besides healthier and far better living conditions for the workers, another benefit given to American citizens working on the Canal was a medal for two years of service. Additional bars were added for each two year period after that. Designed by Victor D. Brenner and featuring the then-current president they were popularly known as The Roosevelt Medal. A total of 7189 were ultimately issued, with a few people receiving as many as 4 bars.[44] Certificates are available today.[45]

In 1905, a US engineering panel was commissioned to review the canal design, which had not been finalized. In January 1906 the panel, in a majority of eight to five, recommended to President Roosevelt a sea-level canal,[46] as had been attempted by the French and temporarily abandoned by them in 1887 for a ten locks system designed by Philippe Bunau-Varilla, and definitively in 1898 for a lock-and-lake canal designed by the Comité Technique of the Compagnie Nouvelle de Canal de Panama as conceptualized by Adolphe Godin de Lépinay in 1879.[47] But in 1906 Stevens, who had seen the Chagres in full flood, was summoned to Washington; he declared a sea-level approach to be "an entirely untenable proposition". He argued in favor of a canal using a lock system to raise and lower ships from a large reservoir 85 ft (26 m) above sea level. This would create both the largest dam (Gatun Dam) and the largest human-made lake (Gatun Lake) in the world at that time. The water to refill the locks would be taken from Gatun Lake by opening and closing enormous gates and valves and letting gravity propel the water from the lake. Gatun Lake would connect to the Pacific through the mountains at the Gaillard (Culebra) Cut. Unlike Godin de Lépinay with the Congrès International d'Etudes du Canal Interocéanique, Stevens successfully convinced Roosevelt of the necessity and feasibility of this alternative scheme.[48]

The construction of a canal with locks required the excavation of more than 17 million cu yd (13 million m3) of material over and above the 30 million cu yd (23 million m3) excavated by the French. As quickly as possible, the Americans replaced or upgraded the old, unusable French equipment with new construction equipment that was designed for a much larger and faster scale of work. 102 large, railroad-mounted steam shovels were purchased, 77 from Bucyrus-Erie, and 25 from the Marion Power Shovel Company. These were joined by enormous steam-powered cranes, giant hydraulic rock crushers, concrete mixers, dredges, and pneumatic power drills, nearly all of which were manufactured by new, extensive machine-building technology developed and built in the United States. The railroad also had to be comprehensively upgraded with heavy-duty, double-tracked rails over most of the line to accommodate new rolling stock. In many places, the new Gatun Lake flooded over the original rail line, and a new line had to be constructed above Gatun Lake's waterline.

Between 1912 and 1914 there was a controversy about the tolls for the canal.[49]

Goethals replaces Stevens as chief engineer  General George Washington Goethals, who completed the canal.

In 1907, Stevens resigned as chief engineer.[50] His replacement, appointed by President Theodore Roosevelt, was US Army Major George Washington Goethals of the US Army Corps of Engineers. Soon to be promoted to lieutenant colonel and later to general, he was a strong, West Point-trained leader and civil engineer with experience in canals (unlike Stevens). Goethals directed the work in Panama to a successful conclusion in 1914, two years ahead of the target date of June 10, 1916.[51]

Goethals divided the engineering and excavation work into three divisions: Atlantic, Central, and Pacific. The Atlantic Division, under Major William L. Sibert, was responsible for construction of the massive breakwater at the entrance to Limon Bay, the Gatun locks, and their 3+1⁄2-mile (5.6 km) approach channel, and the immense Gatun Dam. The Pacific Division, under Sydney B. Williamson (the only civilian member of this high-level team), was similarly responsible for the Pacific 3-mile (4.8 km) breakwater in Panama Bay, the approach channel to the locks, and the Miraflores and Pedro Miguel locks and their associated dams and reservoirs.[52]

The Central Division, under Major David du Bose Gaillard of the United States Army Corps of Engineers, was assigned one of the most difficult parts: excavating the Culebra Cut through the continental divide to connect Gatun Lake to the Pacific Panama Canal locks.[53]

 Nautical chart of 1915 showing the canal shortly after completion

On October 10, 1913, President Woodrow Wilson sent a signal from the White House by telegraph which triggered the explosion that destroyed the Gamboa Dike. This flooded the Culebra Cut, thereby joining the Atlantic and Pacific oceans via the Panama Canal.[54] Alexandre La Valley (a floating crane built by Lobnitz & Company and launched in 1887) was the first self-propelled vessel to transit the canal from ocean to ocean. This vessel crossed the canal from the Atlantic in stages during construction, finally reaching the Pacific on January 7, 1914.[55] SS Cristobal (a cargo and passenger ship built by Maryland Steel, and launched in 1902 as SS Tremont) on August 3, 1914, was the first ship to transit the canal from ocean to ocean.[56]

The construction of the canal was completed in 1914, 401 years after Panama was first crossed overland by the Europeans in Vasco Núñez de Balboa's party of conquistadores. The United States spent almost $500 million (roughly equivalent to $14.6 billion in 2022)[57] to finish the project. This was by far the largest American engineering project to date. The canal was formally opened on August 15, 1914, with the passage of the cargo ship SS Ancon.[58]

The opening of the Panama Canal in 1914 caused a severe drop in traffic along Chilean ports due to shifts in maritime trade routes,[59][60][61] despite the closure of the canal for nearly seven months after a landslide in the Culebra Cut on September 18, 1915.[62] The burgeoning sheep farming business in southern Patagonia suffered a significant setback by the change in trade routes,[63] as did the economy of the Falkland Islands.[64]

Throughout this time, Ernest "Red" Hallen was hired by the Isthmian Canal Commission to document the progress of the work.

In 1914, steam shovels from the Panama Canal were purchased and put to use in Chuquicamata copper mine of northern Chile.[65]

Later developments  USS Missouri, an Iowa-class battleship, passes through the canal in 1945. The 108' 2" (32.96 m) beams of the Iowas and preceding South Dakota class were the largest ever to transit the Canal.

By the 1930s, water supply became an issue for the canal, prompting construction of the Madden Dam across the Chagres River above Gatun Lake. Completed in 1935, the dam created Madden Lake (later Alajuela Lake), which provides additional water storage for the canal.[66] In 1939, construction began on a further major improvement: a new set of locks large enough to carry the larger warships that the United States was building at the time and planned to continue building. The work proceeded for several years, and significant excavation was carried out on the new approach channels, but the project was canceled after World War II.[67][68]

After World War II, US control of the canal and the Canal Zone surrounding it became contentious; relations between Panama and the United States became increasingly tense. Many Panamanians felt that the Zone rightfully belonged to Panama; student protests were met by the fencing-in of the zone and an increased military presence there.[69] Demands for the United States to hand over the canal to Panama increased after the Suez Crisis in 1956, when the United States used financial and diplomatic pressure to force France and the UK to abandon their attempt to retake control of the Suez Canal, previously nationalized by the Nasser regime in Egypt. Panamanian unrest culminated in riots on Martyr's Day, January 9, 1964, when about 20 Panamanians and 3–5 US soldiers were killed.[70]

A decade later, in 1974, negotiations toward a settlement began and resulted in the Torrijos–Carter Treaties. On September 7, 1977, the treaty was signed by President of the United States Jimmy Carter and Omar Torrijos, de facto leader of Panama. This mobilized the process of granting the Panamanians free control of the canal so long as Panama signed a treaty guaranteeing the permanent neutrality of the canal. The treaty led to full Panamanian control effective at noon on December 31, 1999, and the Panama Canal Authority (ACP) assumed command of the waterway. The Panama Canal remains one of the chief revenue sources for Panama.[71][72]

Before this handover, the government of Panama held an international bid to negotiate a 25-year contract for operation of the container shipping ports located at the canal's Atlantic and Pacific outlets. The contract was not affiliated with the ACP or Panama Canal operations and was won by the firm Hutchison Whampoa, a Hong Kong–based shipping interest owned by Li Ka-shing.[73]