After early explorations failed to uncover a natural waterway across Central America from the Atlantic to the Pacific Ocean, numerous plans, schemes, and financial arrangements were developed for digging a canal. In 1869, President Ulysses S. Grant instructed the Chief of the Bureau of Navigation to organize expeditions for surveying possible isthmian canal routes. These surveys were made during the period 1870-1875 by Navy personnel, and on March 15, 1872 the President appointed an Interoceanic Canal Commission to appraise the survey reports. On February 7, 1876, the Commission announced a unanimous decision in favor of a route across Nicaragua.

In 1881, the Republic of Nicaragua awarded to the Provisional Interoceanic Canal Society the right to construct a canal which, after 99 years, would revert to Nicaragua. This concession was allowed to lapse, but another was obtained in 1887 in favor of the Nicaragua Canal Association, which was in turn assumed by the Maritime Canal Company of Nicaragua, a privately financed company incorporated by the United States Congress on February 20, 1889. The latter company was directed to report annually to the Secretary of the Interior, but its work was suspended in 1893 when funds were no longer available.

President Grover Cleveland then appointed a United States Nicaragua Canal Board, popularly known as the Ludlow Commission (its Chairman was Lieutenant Colonel William Ludlow), to investigate and report on the technical and financial aspects of constructing a Nicaraguan canal. The Board advised a re-examination of the canal route. On July 29, 1897, President William McKinley appointed a Nicaragua Canal Commission, which completed its surveys of various routes in February 1899. On June 10, 1899, he created the Isthmian Canal Commission to decide which of several possible canal routes would be most feasible. At first the Commission reported in favor of the Nicaragua route, but when the French, after futile attempts to construct a canal, offered the United States their rights and property in Panama for $40 million, the Commission reversed its decision in favor of the route across Panama.

It was in 1876 that the Societe Civile Internationale du Canal Interoceanique was organized in Paris to make surveys and explorations for a canal across the Isthmus of Panama. In May 1879, an international congress under the auspices of Ferdinand de Lesseps, builder of the Suez Canal, met in Paris and decided to build a sea-level canal in Panama. On March 3, 1881, the Compagnie Universelle du Canal Interoceanique, headed by de Lesseps, was incorporated under French law. Further investigation showed that a sea-level canal could not be built in Panama and plans for a lock-type canal were approved, but the Compagnie Universelle was soon bankrupt and a liquidator was appointed early in 1889. He was empowered to continue the construction work if possible, or to cede the assets to any new company. Work was finally suspended on May 15, 1889.

On October 20, 1894, the Compagnie Nouvelle du Canal de Panama was incorporated with the assets and property of the old Compagnie Universelle. By 1898, however, the new company was ready to give up the seemingly insurmountable task and its work had practically ceased. It was in the following year that the French offered to the United States their rights and property in Panama. The Spooner Act of June 28, 1902 (32 Stat. 481), authorized the United States President to purchase the assets of the Compagnie Nouvelle de Canal de Panama including its shares in the Panama Railroad Company, at not more than $40 million, and to appoint a new Isthmian Canal Commission to construct the canal and necessary works.

The Hay-Bunau-Varilla Treaty between the United States and the new Republic of Panama, which granted in perpetuity to the United States the use, occupation, and control of a 10-mile wide strip across Panama, was proclaimed on February 26, 1904, and on May 4 of that year the United States took possession of the canal site. A new Isthmian Canal Commission was then named.

On January 8, 1908, Lieutenant Colonel George W. Goethals was appointed Engineering-Chief and Chairman of the Isthmian Canal Commission, subject only to the Secretary of War and the United States President. Under his leadership construction steadily advanced and the Panama Canal was opened to commercial traffic on August 15, 1914.

The Panama Canal Act of 1912 (37 Stat. 560) provided that the 10-mile wide strip of land be designated the Canal Zone and the canal within it the Panama Canal. The act authorized the United States President, when he believed the canal sufficiently near completion, to discontinue the Isthmian Canal Commission and to establish the government for the canal and the Canal Zone. Effective April 1, 1914, an Executive order abolished the Commission and put into effect the organization provided for by the 1912 act. The Commission Chairman, Lieutenant Colonel Goethals, became the first Governor of the independent government agency known as The Panama Canal and the President of the Panama Railroad Company.

The act of September 26, 1950 (64 Stat. 1038) provided that the Panama Canal be henceforth known as the Canal Zone Government, and that its functions be limited to maintaining the civil government (including health, sanitation, and protection) of the Canal Zone. The operation and maintenance of the canal itself was charged, by the same act, to the Panama Canal Company, which replaced the Panama Railroad Company and continued its functions of conducting business operations incident to the operation and maintenance of the canal and incident to the civil government of the Canal Zone. The Governor of the Canal Zone was also president of the Panama Canal Company.

In the 1960s there was increasing agitation in Panama to achieve greater Panamanian control over the canal, resulting in the negotiation of a new treaty (1967) which failed, however, to gain ratification by the Panamanian government. In 1977 negotiations were successful, and a new treaty was signed. It returned the Panama Canal Zone to Panama while setting up joint United States-Panamanian control of the canal until the end of 1999, when Panama gained full control. A separate treaty (1979) guarantees the permanent neutrality of the canal.

written by Aida Cuevas

1899:

President William McKinley appointed the Isthmian Canal Commission on June 10th.

1902:

The Spooner Act of June 28 (32 Stat. 481) authorized the United States President to purchase the assets of the French Compagnie Nouvelle de Canal de Panama for $40 million.

1904:

The United States took possession of the canal site on May 4th.

The Hay-Bunau-Varilla Treaty between the United States and the Republic of Panama was proclaimed on February 26th, granting to the United States the use, occupation, and control of a 10-mile wide strip across Panama in perpetuity.

1908:

Lieutenant Colonel George W. Goethals was appointed Engineering-Chief and Chairman of the Isthmian Canal Commission on January 8th.

1914:

The Panama Canal was opened to commercial traffic on August 15th.

Lieutenant Colonel Goethals became the first governor of the independent government agency known as The Panama Canal and the President of the Panama Railroad Company on April 1st.

1950:

The act of September 26th (64 Stat. 1038) provided that the Panama Canal be henceforth known as the Canal Zone Government.

The Panama Canal Company replaced the Panama Railroad Company.

1977:

The Torrijos-Carter Treaty was signed, returning the Panama Canal Zone to Panama while setting up joint U.S.-Panamanian control of the canal until the end of 1999, when Panama gained full control.

1979:

The Panama Canal Commission replaced the Panama Canal Company and Canal Zone Government as the administrative authority of the Panama Canal on October 1st.

1999:

Control of the Panama Canal transferred to the Republic of Panama on December 31st.