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This Month in Business History

Opening of the Panama Canal

Panama Canal Commission. Maps of proposed Panama Canal between Gorgona and Panama City. c1895. Library of Congress Geography and Map Division.

August 15th marks the anniversary of the opening of the Panama Canal, a tremendous engineering endeavor that has played a major role in trade and commerce over its hundred years. The canal was a feat of endurance, as well as engineering, connecting two oceans in a way that made shipping and commerce faster and more economical.

The desire for a quick route from the Atlantic Ocean to the Pacific Ocean in the area now known as Panama has a long history, but it wasn’t until the 19th century that efforts to develop a route really got underway. In the 1880’s there was an effort by the French to construct a canal in Panama that was ultimately unsuccessful. But the desire for a canal wouldn’t die.

The Panama Canal Act (32 Stat. 481) was passed and then in 1903, the Hay-Herrán Treaty between the U.S. and Panama was signed but not ratified, and lastly the Hay–Bunau-Varilla Treaty (signed on November 18, 1903). This last treaty, along with other events in Panama that year, put the U.S. in a position to eventually build a canal. The United States took control of the canal property on May 4, 1904 and the Isthmian Canal Commission (ICC) was established to oversee construction. President Theodore Roosevelt appointed John Findlay Wallace as chief engineer. Wallace resigned after a brief tenure, at which point John Frank Stevens was appointed. During Stevens’ tenure, he made it a point to address some of the most troubling concerns, one of which was living conditions. After Stevens resigned, U.S. Army Major George Washington Goethals of the U.S. Army Corps of Engineers took over as chief engineer and saw to the Canal’s completion. The cost to the U.S. to build the Canal is estimated to have been $375,000,000, although in some ways the cost was much higher considering the thousands that died of diseases and accidents.

Until 1939 Panama was a protectorate of the United States, but after World War II the relationship between them changed. Control of the Canal Zone, over which the U.S. still maintained authority, became more contentious, and by the 1970’s discussions began regarding control of the Canal Zone. On September 7, 1977 the Torrijos-Carter Treaties were signed, granting full Panamanian control over the Canal effective at noon on December 31, 1999. At that time the Panama Canal Authority (ACP) assumed control.

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Featured Video

This is a May 22, 2008 recording from the Center for the Book. Political events in the United States often have unintended consequences for American politics and for the country as a whole. The long-term consequences of the Panama Canal debates of the 1970s was examined by Adam Clymer, former chief Washington correspondent for the New York Times, who discussed his book, "Drawing the Line at the Big Ditch: The Panama Canal Treaties and the Rise of the Right." Considered one of America's engineering marvels, the Panama Canal sparked intense debates in the 1970s over the decision to turn it over to Panama. Clymer showed how the decision to give up this monument of the "American Century" stirred emotions already rubbed raw by the loss of the Vietnam War and shaped American politics for years. Jimmy Carter made the Panama Canal his first foreign-policy priority and won the battle to ratify the treaties. However, the author revealed, the issue gave Ronald Reagan a slogan that kept his 1976 candidacy alive and positioned him to win in 1980, helped elect conservative senators and create a Republican majority, and fueled the overall growth of conservatism. Clymer's narrative illuminates many aspects of American politics during the Ford and Carter years, offers insight into the "Reagan Revolution" and highlights an overlooked turning point in American political history.

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