Panama Canal Opens Summary

  • Last updated on November 10, 2022

The completion and opening of the Panama Canal significantly lowered shipping costs and improved transit times.

Summary of Event

Early maps were based as much on beliefs as on facts. When Christopher Columbus searched for a new route to the Orient, he happened to land first in the West Indies. The people there told him stories about a strait through which one might sail westward into waters that led directly to the land he sought. He believed these stories were true and sought that strait, in the process coming closer and closer to the North American continent. His belief in the secret strait is reflected in a map inspired by him, although not published until two years after his death. The map has no Isthmus of Panama, showing in its place a strait permitting direct passage from Europe to India. Panama Canal Transportation;sea Engineering;Panama Canal [kw]Panama Canal Opens (Aug. 15, 1914) [kw]Canal Opens, Panama (Aug. 15, 1914) Panama Canal Transportation;sea Engineering;Panama Canal [g]Latin America;Aug. 15, 1914: Panama Canal Opens[03560] [g]Panama;Aug. 15, 1914: Panama Canal Opens[03560] [c]Transportation;Aug. 15, 1914: Panama Canal Opens[03560] [c]Trade and commerce;Aug. 15, 1914: Panama Canal Opens[03560] [c]Engineering;Aug. 15, 1914: Panama Canal Opens[03560] Grant, Ulysses S. Goethals, George Washington Roosevelt, Theodore [p]Roosevelt, Theodore;Panama Canal

Vasco Nuñez de Balboa followed Columbus with exploration of the isthmus, ultimately discovering the Pacific Ocean. Even at that time, the legend of the strait persisted. Native people told Balboa that a newly discovered isthmus provided a connection between the Atlantic and Pacific Oceans. Balboa also believed these stories. Many explorers and geographers accepted the existence of this unseen strait, and this led to exploration up and down the coast. Explorers never found the mysterious strait, but their work spawned the idea of digging a waterway to connect the two oceans. The Panama Canal therefore is not entirely a project of the nineteenth and twentieth centuries. Its conception lies in a much earlier time, in particular in a proposal given to King Charles V of Spain in 1523. It was, in fact, Hernán Cortés, the Spanish conqueror of Mexico, who first proposed constructing this great waterway after he had failed to find the legendary strait.

Three men stand atop the gigantic lock gates of the Panama Canal in 1913, approximately ten months before the canal began operating.

(Library of Congress)

The creation of the Panama Canal thus represents a historical legacy as well as an unprecedented feat of engineering and design. The canal became a major transportation link, facilitating direct trade and changing the face of the political and economic world. It has critical historic dimensions, as it represented the largest, most costly single effort attempted in modern times. The canal’s construction held much of the world’s attention over a span of forty years, affecting the lives of tens of thousands of people at almost every level of society and of many races and nationalities. The nations involved were much affected by the process: The Republic of Panama was born; Colombia lost its prize possession, the Isthmus of Panama; and Nicaragua was left to wait for some future chance to participate in such a venture.

The construction of the Panama Canal marked significant advances in engineering, in government planning, and in labor relations. Planning focused on the construction of an enduring wonder, a canal of unprecedented length and breadth. Its construction and operation would require extensive government planning and direction as well as an unheralded organization of large numbers of laborers. The canal was born of the conviction that sea power would become the political and economic base for the future. It was judged to be the greatest enterprise of the Victorian era and the first significant demonstration of American power at the dawn of the new century. Its completion in 1914 marked the conclusion of a dream as old as the voyages of Columbus.

The cost of the canal was enormous. Dollar expenditures totaled $352 million, including $10 million paid to Panama for land rights and $40 million paid to the French company that had been involved in an earlier canal project. The cost was more than four times that of the Suez Canal and much higher than that of anything previously built by the U.S. government. Except for wars, the only remotely comparable federal expenditures up to the year 1914 had been for acquisition of new territories. The total price for all U.S. acquisitions as of that date—the Louisiana Purchase, Florida, California, New Mexico, and other western lands acquired from Mexico, Alaska, and the Philippines—was $75 million, or only about one-fifth of the amount spent on the canal. American costs for the canal plus the expenditures of the French companies that had earlier been involved in the canal project, beginning in 1880, totaled almost $639 million.

The canal also involved nonmonetary costs. According to hospital records, more than 5,600 lives were lost to disease and accidents during the canal’s construction. Approximately 4,000 deaths were those of black workers, with only 350 white Americans dying in the process. If one includes earlier French efforts, the total loss of human lives may have been as high as 25,000.

Unlike most government projects, the canal cost less in dollars than had been projected. The final price was $25 million below what had been estimated in 1907, despite a change in the width of the canal and the building of fortifications. Had these additional expenses been calculated into original budgets, Congress might not have approved the project. The Spooner Act of 1902 Spooner Act (1902) approved a $40 million payment to the French company involved in the original canal project, but Colombia, which controlled Panama, stood in the way of further construction. Panama declared its independence from Colombia on November 3, 1903, and construction of the canal by the U.S. team began in 1904.

Even though it was completed at a cost below what was estimated at the midpoint of the project, the canal was opened six months ahead of schedule. The final product came amazingly close to precise engineering targets as to location, structure, and operation, and the process showed no signs of graft, kickbacks, payroll padding, or other corruption. Successful completion of such a vast project is noteworthy, given that most previous and subsequent projects had shortcomings in the dimensions mentioned above. Much of the project’s success resulted from the management and expertise of the director of the project, George Washington Goethals. He exhibited considerable insight in the design of the project, considerable influence in coordinating the various constituencies affected by and involved in the project, and unusual management control techniques in monitoring expenditures and progress. No excessive profits were registered by the thousands of firms involved with a project under the auspices of the Interstate Commerce Commission.

The United States was sole administrator of the Canal Zone until late in the twentieth century. In 1978, President Jimmy Carter oversaw U.S. ratification of a new treaty with Panama that provided for a period of joint Panama-U.S. administration of the Canal Zone, with a gradually increasing share of the leadership positions given to Panama until December 31, 1999, when all U.S. participation and control of the canal ceased.


Much of the history of the world is based on the quest for improved transportation, particularly the discovery of and building of all-water routes connecting bodies of water. With the completion of the Panama Canal came direct and lower-cost transportation from the Atlantic Ocean to the Pacific Ocean. Savings came in terms of both dollar outlays and time. The cost savings that resulted from the canal encouraged businesspeople to explore new markets that now appeared to be profitable.

World War I kept the traffic flow through the canal low, with only four or five ships passing through per day, on average. It was not until July, 1919, that the vision of President Theodore Roosevelt was realized when an American armada of thirty-three ships passed through the canal. The first thirty made it through in only two days. This was an astounding accomplishment given the rigors of the previous route around the tip of South America.

About ten years after it opened, the canal was handling more than five thousand ships a year, traffic approximately equal to that of the Suez Canal. Even then, large British and U.S. carriers squeezed through the locks with only feet to spare. By the late 1930’s, annual traffic exceeded seven thousand ships. Following World War II, that figure more than doubled. Channel lighting was installed in 1966, allowing nighttime transit, and ships were going through the canal at the rate of more than one per hour, twenty-four hours a day, every day of the year. Many of them were giant container and bulk carriers of a size never imagined when the canal was designed and built. The 950-foot Tokyo Bay was the largest container ship in the world at the time it made its first Panama Canal transit in 1972.

By the 1970’s, traffic reached fifteen thousand ships a year, with annual tonnage well beyond 100 million tons, twenty times that of 1915. Clearly, shippers were taking advantage of the improvement in transport speed made possible by the canal. The canal made feasible the opening of Far Eastern markets to the East Coast of the United States. It can be argued that the facilitation of trade allowed by the canal markedly altered the configuration of world industrial patterns.

The Queen Mary, launched in 1934, was the first ship that was too large for the canal’s locks. Many others followed, even though the builders realized at the time of construction that ships of more than 1,000 feet in length and beams of 150 feet could not pass through the canal. As ships grew in size, the canal handled a decreasing proportion of the world’s sea traffic. Proposals to find an alternate route or to build a larger canal were considered. Attention turned to consideration of a route through Nicaragua, as earlier proposals for an isthmus canal had suggested that possibility. However, by the early years of the twenty-first century, no action had been taken to pursue such a route.

Tolls collected for passage through the Panama Canal in 1915 reached only $4 million. In 1970, they exceeded $100 million, even though rates remained unchanged. In 1973, the Panama Canal’s operating company recorded its first loss, largely as a result of mounting costs of operation. In 1974, tolls were raised for the first time, from $0.90 per cargo ton to $1.08. The Queen Elizabeth II locked through the canal in 1975 and paid a record toll of $42,077.88. The average toll per ship was approximately $10,000, about one-tenth of the cost of sailing around Cape Horn as an alternate direct all-water route. The lowest toll on record was paid by Richard Halliburton, a world traveler who in the 1920’s swam the length of the canal in installments. Although he was not the first to swim the canal, he was the first to persuade authorities to allow him through the locks.

Some changes were made in the design of the canal over time. Parts were widened by up to 500 feet, a storage dam was built across the Chagres River, and the original towing locomotive was retired and replaced by more powerful models. The fundamental characteristics of the canal remained unchanged, however. Only two issues of design have received significant criticisms. First, it has been argued that the two sets of locks should have been replaced by a single unit at Miraflores. Second, it has been noted that Goethals seems to have underestimated the impact of landslides. Slides have posed a continuing problem, affecting the canal on many occasions. In 1914, a slide at East Culebra caused blockage of the entire channel.

In spite of these issues, the all-water passage across Panama is recognized as a supreme achievement. Its completion fulfilled a dream that had been held for hundreds of years. The Panama Canal enhanced East-West trade by shortening transit times (and thus costs), a development that helped to unify political and economic interests in the Eastern and Western worlds. Construction of the canal also served to demonstrate humankind’s dedication to technological improvement in transportation. Panama Canal Transportation;sea Engineering;Panama Canal

Further Reading
  • citation-type="booksimple"

    xlink:type="simple">Brands, H. W. T. R.: The Last Romantic. New York: Basic Books, 1997. Iconoclastic biography of Theodore Roosevelt.
  • citation-type="booksimple"

    xlink:type="simple">Diaz Espino, Ovidio. How Wall Street Created a Nation: J. P. Morgan, Teddy Roosevelt, and the Panama Canal. New York: Four Walls Eight Windows, 2001. Argues that a combination of American imperialist attitudes and the prospect of financial gain led to the building of the Panama Canal.
  • citation-type="booksimple"

    xlink:type="simple">Gause, Frank Ales, and Charles Carl Carr. The Story of Panama. 1912. Reprint. New York: Arno Press, 1970. A comprehensive analysis of the development of the Panama Canal, drawn from materials prepared at the time.
  • citation-type="booksimple"

    xlink:type="simple">Harmon, George M., ed. Transportation: The Nation’s Lifelines. Rev. ed. Washington, D.C.: Industrial College of the Armed Forces, 1968. Offers general comments about the developing role of the transportation infrastructure, including the Panama Canal.
  • citation-type="booksimple"

    xlink:type="simple">Kemble, John H. The Panama Route: 1848-1869. 1943. Reprint. Columbia: University of South Carolina Press, 1990. Covers the entirety of the Panama Canal’s construction and operation process.
  • citation-type="booksimple"

    xlink:type="simple">McCullough, David. The Path Between the Seas. New York: Simon & Schuster, 1977. Offers comprehensive coverage of the building of the canal, including many interesting statistics and helpful perspectives.
  • citation-type="booksimple"

    xlink:type="simple">Mellander, Gustavo A., and Nelly Maldonado Mellander. Charles Edward Magoon: The Panama Years. Río Piedras, P.R.: Editorial Plaza Mayor, 1999. Biography of an early governor of the Panama Canal Zone.
  • citation-type="booksimple"

    xlink:type="simple">Snapp, Jeremy Sherman. Destiny by Design: The Construction of the Panama Canal. With photographs by Gerald Fitzgerald Sherman and Jeremy Sherman Snapp. Lopez Island, Wash.: Pacific Heritage Press, 2000. Photo essay and narrative combine to pay tribute to one of the greatest engineering feats of the twentieth century. Features more than 160 photographs that have never been published before, most taken by Sherman during the canal’s construction.

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Categories: History