After an aborted attempt to build the canal began in 1881, led by Ferdinand de Lesseps—the builder of the Suez Canal in Egypt, after 9 years and a loss of approximately 20,000 lives, the French attempt went bankrupt.
The Hay-Pauncefote Treaty of 1901 licensed the United States to build and manage its own
canal and on June 19, 1902, the U.S. Senate voted in favor of building the canal through Panama. With the support of U.S. President Roosevelt, Panama declared its independence from Colombia on November 3, 1903.
The newly declared Republic of Panama immediately negotiated the Hay-Bunau-Varilla Treaty of 1903, which provided the United States with a 10-mile wide strip of land for the canal, a one-time $10 million payment to Panama, and an annual annuity of $250,000. The United States also agreed to guarantee the independence of Panama. Work on the Panama Canal began in 1904 and was completed in August 15, 1914, symbolizing U.S.
technological prowess and economic power.
As a result of the Panama Canal Project and 100 year operation, the canal has been a major economic driver for Panama’s economy and has created a unique relationship between Panamanians and Americans. Americans are looked upon very favorably in Panama and the presence of many Americans over the years has influenced culture and life-style.
The U.S. formally took control of the canal property on May 4, 1904, beginning with the remnants of the French work force and poorly maintained equipment. The Americans replaced or upgraded the old, unusable French equipment and the plans to build a sea level canal were changed to one with a lock system that would raise and lower ships 85 feet above sea level with gravity feed water from Lake Gatun.
During the construction over 200,000,000 cubic yards of material was excavated.
401 years had passed since Vasco Núñez de Balboa first crossed the Isthmus of Panama on the old Las Cruces Panama Trail. When the canal was completed in 1914, the U.S. spent about $375 million (roughly equal to $8.6 billion today) to finish the project. It was the largest American engineering project ever undertaken. The Canal is a 77 kilometer (47.8 miles) long waterway linking the Atlantic Ocean and the Pacific Ocean and is a key channel for international marine trade in Panama.
The canal was formally opened on August 15, 1914, with the passage of the cargo ship SS Ancon. Approximately 1,000 ships passed through the canal during the first year of operation. Today the canal handles between 12,000 and 15,000 ships every year – about 40 a day.
The Panama Canal is a major revenue source for Panama, generating Gross Revenue of $2.411 billion and Net Income after expenses of $1.309 billion per year.
All vessels crossing the canal must pay a toll based on their weight. The highest single toll ever charged was in 2008 when a Disney cruise ship paid $330,000.
Conversely, in 1928 American adventurer Richard Halliburton swam the length of the canal and based on his weight his rate came to 36 cents.
The remarkable engineering of the Panama Canal showed exceptional foresight that has enabled the system to function for 100 years. Inevitably cargo ships have increased in size, with 50% of the vessels passing between 2009 and 2012 already using the maximum width of the canal. The canal expansion was begun in 2006 and when completed next year will double the canal’s capacity and enable handling of the new larger than Panamax vessels.