Panama Canal construction began on 4 May 1904.
On August 15, 1914, the Panama Canal was opened to traffic. Panama later pushed to revoke the Hay-Bunau-Varilla Treaty, and in 1977 U.S. President Jimmy Carter and Panamanian dictator Omar Torrijos signed a treaty to turn over the canal to Panama by the end of the century.
Following the failure of a French construction team in the 1880s, the United States commenced building a canal across a 50-mile stretch of the Panama isthmus in 1904. The project was helped by the elimination of disease-carrying mosquitoes, while chief engineer John Stevens devised innovative techniques and spurred the crucial redesign from a sea-level to a lock canal. His successor, Lt. Col. George Washington Goethals, stepped up excavation efforts of a stubborn mountain range and oversaw the building of the dams and locks. Opened in 1914, oversight of the world-famous Panama Canal was transferred from the U.S. to Panama in 1999.
Linking the Atlantic and Pacific Oceans
The idea of creating a water passage across the isthmus of Panama to link the Atlantic and Pacific Oceans dates back to at least the 1500s, when King Charles I of Spain tapped his regional governor to survey a route along the Chagres River. The realization of such a route across the mountainous, jungle terrain was deemed impossible at the time, although the idea remained tantalizing as a potential shortcut from Europe to eastern Asia.
France was ultimately the first country to attempt the task. Led by Count Ferdinand de Lesseps, the builder of the Suez Canal in Egypt, the construction team broke ground on a planned sea-level canal in 1880. The French soon comprehended the monumental challenge ahead of them: Along with the incessant rains that caused heavy landslides, there was no effective means for combating the spread of yellow fever and malaria. De Lesseps belatedly realized that a sea-level canal was too difficult and reorganized efforts toward a lock canal, but funding was pulled from the project in 1888.
Teddy Roosevelt and the Panama Canal
Following the deliberations of the U.S. Isthmian Canal Commission and a push from President Theodore Roosevelt, the U.S. purchased the French assets in the canal zone for $40 million in 1902. When a proposed treaty over rights to build in what was then a Colombian territory was rejected, the U.S. threw its military weight behind a Panamanian independence movement, eventually negotiating a deal with the new government.
On November 6, 1903, the United States recognized the Republic of Panama, and on November 18 the Hay-Bunau-Varilla Treaty was signed with Panama, granting the U.S. exclusive and permanent possession of the Panama Canal Zone. In exchange, Panama received $10 million and an annuity of $250,000 beginning nine years later. The treaty, negotiated by U.S. Secretary of State John Hay and French engineer Philippe-Jean Bunau-Varilla, was condemned by many Panamanians as an infringement on their country’s new national sovereignty.
Seemingly not grasping the lessons from the French effort, the Americans devised plans for a sea-level canal along the roughly 50-mile stretch from Colón to Panama City. The project officially commenced with a dedication ceremony on May 4, 1904, but chief engineer John Wallace encountered immediate problems. Much of the French equipment was in need of repair, while the spread of yellow fever and malaria was frightening off the workforce. Under pressure to keep construction moving forward, Wallace instead resigned after a year.
Although construction was on track when President Roosevelt visited the area in November 1906, the project suffered a setback when Stevens suddenly resigned a few months later. Incensed, Roosevelt named Army Corps engineer Lt. Col. George Washington Goethals the new chief engineer, granting him authority over virtually all administrative matters in the building zone. Goethals proved a no-nonsense commander by squashing a work strike after taking charge, but he also oversaw the addition of facilities to improve the quality of life for workers and their families.
Panama Canal Dangers
Goethals focused efforts on Culebra Cut, the clearing of the mountain range between Gamboa and Pedro Miguel. Excavation of the nearly 9-mile stretch became an around-the-clock operation, with up to 6,000 men contributing at any one time. Despite the attention paid to this phase of the project, Culebra Cut was a notorious danger zone, as casualties mounted from unpredictable landslides and dynamite explosions.
Construction of the locks began with the pouring of concrete at Gatún in August 1909. Built in pairs, with each chamber measuring 110 feet wide by 1,000 feet long, the locks were embedded with culverts that leveraged gravity to raise and lower water levels. Ultimately, the three locks along the canal route lifted ships 85 feet above sea level, to man-made Gatún Lake in the middle. Hollow, buoyant lock gates were also built, varying in height from 47 to 82 feet. The entire enterprise was powered by electricity and run through a control board.
Impact of the Panama Canal
Bolstered by the addition of Madden Dam in 1935, the Panama Canal proved a vital component to expanding global trade routes in the 20th century. The transition to local oversight began with a 1977 treaty signed by U.S. President Jimmy Carter and Panama leader Omar Torrijos, with the Panama Canal Authority assuming full control on December 31, 1999. Recognized by the American Society of Civil Engineers as one of the seven wonders of the modern world in 1994, the canal hosted its 1 millionth passing ship in September 2010.
More than a century ago, the opening of the Panama Canal revolutionized international trade by making it much quicker and easier to travel between the Atlantic and Pacific Oceans. But, write Stephan Maurer and Ferdinand Rauch, the canal’s opening also had a significant impact on the economic geography of the US. By examining county level data from 1900 to 2000, they find that those places that enjoyed better market access because of the canal also saw greater population growth, higher manufacturing wages and increased out of state immigration.
In the early 20th century a ship travelling from San Francisco to New York or on to Europe first had to travel over 13,000 miles around the entirety of South America. That all changed in August of 1914 with the opening of the Panama Canal, bridging the Atlantic and Pacific Oceans. And while the new canal cut the distance which needed to be travelled to just over 5,000 miles, it also had huge effects on the United States itself in the years which followed.
Having easy access to a large number of trading partners is an important determinant of where economic activity is located. For example, pioneering research has shown how the division of Germany after World War II reduced the market access of West German cities along the new border with East Germany. These cities lost part of their previous economic hinterland in East Germany, and were left with fewer trading opportunities compared to other West German cities. As a consequence, border cities grew more slowly than comparable cities elsewhere in West Germany during the time of division.
The effect of changes in market access on how attractive a place is to locate more economic activity is an old question in the literature. It is also of practical importance to policy makers who consider investing in transportation infrastructure. Typically, this question is addressed by case studies that consider the effects of railroads, highways, ports and other changes in transport infrastructure. For example, a 2016 study examined the impact of the expansion of railroads in the United States between 1870 and 1890 on agriculture. It found that the value of agricultural land doubled due to the presence of the railroad network. Several other contributions have looked at the impact of roads or air links.