U.S. Acquisition of the Panama Canal Zone Summary

  • Last updated on November 10, 2022

The U.S. agreement to build a transoceanic canal in Panama revolutionized transportation and shipping.

Summary of Event

On November 18, 1903, the minister of the new Republic of Panama, Philippe-Jean Bunau-Varilla, and the U.S. secretary of state, John Hay, signed the Hay-Bunau-Varilla Treaty. Hay-Bunau-Varilla Treaty (1903)[Hay Bunau Varilla Treaty] By the terms of the treaty, the United States agreed to pay $10 million cash and an annual rental fee of $250,000 in return for a canal zone ten miles wide and to grant “to the United States in perpetuity the use, occupation and control” of that zone. The United States took possession of the canal site on May 4, 1904, and, at a cost of $375 million, built the canal that had previously defeated such experienced canal builders as Ferdinand de Lesseps’s Lesseps, Ferdinand de Suez Canal Company. Suez Canal Company In the process, Colonel William Crawford Gorgas Gorgas, William Crawford of the U.S. Army Medical Corps perfected techniques—many of which had originally been developed in Cuba during the Spanish-American War—for the prevention of the dreaded yellow fever. Yellow fever The Panama Canal opened for shipping on August 15, 1914, two weeks after World War I had begun in Europe. Panama Canal Engineering;Panama Canal [kw]U.S. Acquisition of the Panama Canal Zone (Nov. 18, 1903) [kw]Panama Canal Zone, U.S. Acquisition of the (Nov. 18, 1903) [kw]Canal Zone, U.S. Acquisition of the Panama (Nov. 18, 1903) Panama Canal Engineering;Panama Canal [g]Latin America;Nov. 18, 1903: U.S. Acquisition of the Panama Canal Zone[00840] [g]Panama;Nov. 18, 1903: U.S. Acquisition of the Panama Canal Zone[00840] [c]Economics;Nov. 18, 1903: U.S. Acquisition of the Panama Canal Zone[00840] [c]Expansion and land acquisition;Nov. 18, 1903: U.S. Acquisition of the Panama Canal Zone[00840] [c]Science and technology;Nov. 18, 1903: U.S. Acquisition of the Panama Canal Zone[00840] [c]Engineering;Nov. 18, 1903: U.S. Acquisition of the Panama Canal Zone[00840] [c]Transportation;Nov. 18, 1903: U.S. Acquisition of the Panama Canal Zone[00840] Bunau-Varilla, Philippe-Jean Cromwell, William Nelson Hay, John Marroquín, Jose Manuel Marroquín, José Manuel Roosevelt, Theodore;Panama Canal Morgan, John T. Spooner, John Coit

The dream of a canal through the Panamanian isthmus can be traced back to the early explorers of the American continent. Even in Christopher Columbus’s time, the attractiveness of a Central American shortcut to the Pacific was apparent. The strategic desirability of a canal through Panama became obvious during the Spanish-American War (1898), when the battleship Oregon almost arrived too late to take part in the war. The major obstacle to the popular goal of an American canal was the Anglo-American Clayton-Bulwer Treaty of 1850, Clayton-Bulwer Treaty (1850)[Clayton Bulwer Treaty] which forbade either nation to build a canal without the participation of the other. Great Britain, eager to maintain its friendship with the United States, agreed to an all-American canal in the first Hay-Pauncefote Treaty in 1900. The U.S. Senate refused to ratify this agreement because it called for a neutral canal; the Senate demanded the right to defend and fortify the canal. Great Britain reluctantly agreed to that important amendment, and the second Hay-Pauncefote Treaty (1901) Hay-Pauncefote Treaty (1901)[Hay Pauncefote Treaty] was virtually an admission by the British that the United States was the primary power in the Caribbean.

However, the canal battle was just beginning. The major debate concerned the route. Most members of the U.S. Congress and other Americans favored a route through Nicaragua, because they believed a canal could be built there as a sea-level channel without locks. The Isthmian Canal Commission appointed by President William McKinley supported this view, as did Senator John T. Morgan of Alabama, who was a member of the Senate Canals Committee. On January 9, 1902, the House of Representatives approved the Nicaraguan route, and it seemed certain the Senate would follow.

At this point, two of the most improbable figures in the canal drama appeared on the scene. One was William Nelson Cromwell, the lawyer for the New Panama Canal Company, New Panama Canal Company which had purchased the assets and rights of the defunct Lesseps company, which had failed to build its proposed canal. The other was Philippe-Jean Bunau-Varilla, an engineer with the Lesseps company, who was hoping to build a canal through Panama in order to vindicate both Lesseps and French engineering ability. Cromwell offered the rights to the Panama route to the United States for $40 million. Because the Panama route offered many engineering advantages and the proposed route through Nicaragua came uncomfortably close to an erupting volcano, and because Cromwell was an assiduous and effective lobbyist, President Theodore Roosevelt, the canal commission, and Congress all reversed themselves. The resultant legislation, known as the Spooner Act Spooner Act (1902) because it was sponsored by Senator John Coit Spooner of Wisconsin, directed the president to build a canal through Panama if the consent of Colombia, Colombia;union with Panama which owned the isthmian site, could be obtained. Otherwise, the act specified, the Nicaraguan route would be taken.





The U.S. government began exerting extreme diplomatic pressure on the Colombian government to sign a canal treaty. Colombia was torn by internal strife that had reached almost revolutionary proportions. Colombia was ruled by José Manuel Marroquín, officially vice president, who had been elevated to the position of chief executive when a coup deposed the president. The diplomatic correspondence between Bogotá and Washington was affected more by the Colombian political situation than by Hay’s insistence on a treaty. Finally, in a tangle of confused instructions and misunderstandings, the Hay-Herrán Treaty Hay-Herrán Treaty (1903)[Hay Herrán Treaty] was negotiated on January 22, 1903. It called for one payment of $10 million and an annual rent of $250,000, beginning in nine years, for rights to a canal zone six miles wide. Colombia also agreed not to ask for any of the $40 million being paid to the French canal company. The U.S. Senate quickly approved the treaty on March 17, 1903, and the U.S. government awaited what it imagined would be automatic approval by the Colombian legislature.

Unfortunately, people in the United States, from the president and the State Department on down, failed to comprehend the serious objections the proud Colombians had to the treaty. The treaty sacrificed Colombian sovereignty at a time when the United States appeared to be in an expansionist mood, it failed to provide enough compensation for a route that had many engineering advantages and a profitable railroad, and it overlooked the fact that the French canal company’s rights would expire in 1904. A slight delay would obviate the U.S. government’s need to pay $40 million for a defunct company’s temporary rights, which contained nothing of substance. The Colombian Senate, with only three dissenting votes, rejected the treaty.

President Roosevelt likened this reasonable exercise of legislative responsibility to a holdup and prepared to proceed in his own way. He invoked an 1846 treaty between the United States and Colombia (then New Granada), one reading of which, suggested by the State Department, could be taken to indicate that the United States had the right to guarantee the neutrality of, and free passage through, the Panamanian isthmus. The State Department and President Roosevelt could now point to the Colombian rejection as a denial of free passage.

The Colombian colony of Panama had long had separatist ambitions; indeed, it had been prevented from revolting on several occasions only by U.S. intervention on behalf of Colombia. The State Department insisted that its intervention had been impartial, although perhaps it had benefited Colombia previously. It was a relatively simple matter for Bunau-Varilla to encourage a Panamanian revolution and to inform Roosevelt that a revolt might be likely. Panama;revolution Revolts;Panama It was equally simple for Roosevelt, under the claim that he was guaranteeing the free transit of the isthmus, to ensure Colombia’s noninterference by dispatching the cruiser Nashville to the scene. Panama City, on the Pacific side of the country, was taken by the revolutionaries on November 2, 1903. The Nashville landed U.S. forces at Colón on the Atlantic side to prevent Colombian troops from passing across Panama to crush the rebels. In addition, engines from the Panama Railroad were parked in the jungle between Colón and Panama City so that Colombian troops could not use them to go to the Pacific side, where the revolution was to occur. When Colombia’s general allowed Bunau-Varilla to bribe him with money into leaving Colón, the revolution was a success. The revolution was primarily peaceful, but, in a feeble attempt to defend Colombian sovereignty, the Colombian gunboat Bogotá fired five or six shells into Panama City, killing a sleeping Chinese shopkeeper and a donkey.

The Hay-Bunau-Varilla Treaty and the Panama Canal resulted from the revolution, as did a series of so-called good neighbor policies aimed at assuaging Latin American pride, which had been wounded by the apparent high-handedness of the United States in the entire transaction. The treaty was signed in Washington, D.C., by John Hay, U.S. secretary of state, and Philippe-Jean Bunau-Varilla, the French engineer who had been appointed minister of the Republic of Panama and had been given authority to negotiate until a delegation from Panama could be dispatched to Washington. Ironically, not one citizen of Panama was in attendance at the signing. A group of Panamanians were en route from New York to Washington for the event, but they arrived late—two hours after the treaty was signed. This fact created considerable embarrassment and anger among the Panamanian diplomats in the delegation, but in the end nothing was changed.


The bitterness that Panamanians felt toward the United States as a result of the events of 1903 lingered for decades, until the negotiation of the new Panama Canal Treaty in 1977, Panama Canal Treaty (1978) which was ratified by the United States in the following year. This treaty called for the complete U.S. handover of the canal to Panama that took place on December 31, 1999.

The negotiations for the Panama Canal Zone mark one of the most controversial and colorful episodes in American diplomatic history. The real and perceived participation of the United States in the revolution that brought about the separation of Panama from the sovereign nation of Colombia has been debated since it occurred. Critics of the treaty and of U.S. involvement in the revolution have much ammunition for their argument, and much of their criticism is aimed at President Theodore Roosevelt, who in later years boldly stated, “I took the Canal Zone.” In 1921, the U.S. Senate voted compensation to the government of Colombia in the amount of $25 million in return for Colombian recognition of Panama. This was, in effect, a goodwill indemnity to Colombia for the “big stick” diplomacy employed by Roosevelt in 1903. The revolution—which was, at the very best, sanctioned by the United States—not only deprived Colombia of the province of Panama but also denied that nation a $10 million outright payment for the opportunity to build the canal. Panama Canal Engineering;Panama Canal

Further Reading
  • citation-type="booksimple"

    xlink:type="simple">Bunau-Varilla, Philippe-Jean. Panama: The Creation, Destruction, and Resurrection. London: Constable, 1913. Bunau-Varilla’s own memoir and history.
  • citation-type="booksimple"

    xlink:type="simple">Cooper, John Milton, Jr. The Warrior and the Priest: Woodrow Wilson and Theodore Roosevelt. 1985. Reprint. Cambridge, Mass.: Belknap Press, 2004. Argues that it is impossible to understand the history of the Panama Canal without understanding Theodore Roosevelt.
  • citation-type="booksimple"

    xlink:type="simple">Kitchel, Denison. The Truth About the Panama Canal. New Rochelle, N.Y.: Arlington House, 1978. A look at the history of the Panama Canal from a conservative point of view.
  • citation-type="booksimple"

    xlink:type="simple">LaRosa, Michael, and Germán R. Mejía, eds. The United States Discovers Panama: The Writings of Soldiers, Scholars, Scientists, and Scoundrels, 1850-1905. Lanham, Md.: Rowman & Littlefield, 2003. Collection of articles about Panama published from 1850 to 1905 in two of the most influential American periodicals of the time, Harper’s Monthly Magazine and The Atlantic Monthly. Illustrates the evolution of debates about Panama in the United States and how Americans came to view control of the isthmus as vital to U.S. economic and political well-being.
  • citation-type="booksimple"

    xlink:type="simple">Mack, Gerstle. The Land Divided: A History of the Panama Canal and Other Isthmian Canal Projects. 1944. Reprint. New York: Octagon Books, 1974. A wide-ranging look at the history of the Isthmus of Panama, including the building of the canal, the establishment of the railroad, and other events.
  • citation-type="booksimple"

    xlink:type="simple">Miner, Dwight C. The Fight for the Panama Route. New York: Octagon Books, 1940. Examines the controversy surrounding the acquisition of the Canal Zone and Roosevelt’s role in it.
  • citation-type="booksimple"

    xlink:type="simple">Roosevelt, Theodore. Autobiography. New York: Macmillan, 1913. Includes Roosevelt’s defense of his Panama policy.

Panama Declares Independence from Colombia

Gorgas Develops Effective Methods of Mosquito Control

Construction Begins on the Panama Canal

Panama Canal Opens

Categories: History