The History of the Panama Canal

A brief history on the Panama Canal.  In the 1500’s, King Charles V of Spain studied the feasibility of a canal through the isthmus of Panama.  However, they were unable to create anything substantial with picks and shovels.  So, they settled with a cobblestone trail over which tons of gold was transported.  This trail can still be seen today.  Image author.

Panama Canal trail and map.

Construction begun on the Panama Railway in 1850 which then opened 5 years later.  However, that was only after many hardships, including 10,000 casualties.  Once opened, the canal was a huge success with over 400,000 people crossing the Isthmus in the first 11 years.

Panama Canal Railway. Photo courtesy of Panama Advisory International Group

Panama Canal Railway. Photo courtesy of Panama Advisory International Group

In 1879, Count Ferdinand de Lesseps created the Compagnie Universelle du Canal Interoceanique Panama.  Columbia granted the exclusive privilege to construct the waterway across the Isthmus of Panama.  This was to be a 99 year agreement.

The Compagnie was obligated to pay $750,000 francs to Columbia within 3 years.  Columbia was also to receive the following payments:

  • 5% of the gross revenues the first 25 years
  • 6% for the next 25 years
  • 7% for the 25 years
  • 8% for the final years.

And they added another clause, that no payment was to be less than $250,000 which was what the Panama Railway was earning.

In exchange for all of the above payments, Columbia would concede 1,235,000 acres of land, plus 200 meters of land on either side.  At the end of the 99 years, Columbia would own all of the equipment, land, and the canal.

Unfortunately, the incredible skill of the french engineers could not overcompensate for the many struggles.  This project incurred rough terrain, disease, and hardships.  Sadly, the company was in financial ruin by 1889.  This was after they spent over $285 million and lost over 20,000 lives.

In 1894, a second french company, the Compagnie Nouvelle du Canal de Panama emerged to continue the work.  However, they were unable to obtain funding and were forced to sell the equipment and rights to the United States.

Columbia wanted to raise the fees which President Roosevelt felt were already too high.  The two countries hit the negotiation tables. Panama wanted to ceseed from Columbia and President Roosevelt supported the change.  In exchange, the U.S. receive the rights to build the canal.

It took a decade, more than 75,009 workers, and almost $400 million to complete this project.  They faced unprecedented struggles with the unique geology that caused landslides.  In addition, an enormous amount of excavation was required for the massive size of the locks.  Interesting site on “What it Costs, photo courtesy of this site.”

Canal Construction

Canal Construction

The project was completed under budget and ahead of schedule, opening on August 15, 1914.  About $100 million was been spent annually to ensure it remains fully operational.  From 1979-1999 the canal operated in accordance to the treaty between the Republic of Panama and the U.S.  The transfer to the Republic of Panama occurred December 1999.  The Panama Canal Commission now manages everything, which is composed of 5 U.S. citizens and 4 Panamanians.

In 2007, construction began on two new sets of locks that added a new lane of traffic for large ships called Panamax.  At cost of over $5 billion the new lane opened in June 2016 to the traffic of these giant ships.

Compare old and new locks. Photo courtesy of

Compare old and new locks. Photo courtesy of

Photo courtesy of

Stay tuned for more Panama Canal blogs:

  • How the Panama Canal works
  • Transiting the Panama Canal

We are not historians, as a result, we gathered the information for this blog from several resources including:

  • the Bauhaus guide,
  • wikipedia,
  • and the internet

If you want the United States version of this project visit the History of the Panama Canal.

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