The Construction of the Panama Canal

As early as the mid-sixteenth century, interest in a canal across the Central American isthmus began to take root, primarily out of trade interests. The subsequent discovery of gold in California in 1848 further spurred interest in connecting the Atlantic and Pacific Oceans, and led to the construction of the Panama Railway, which began operations in 1855. Several attempts by France to construct a canal between 1881 and 1894 failed due to a combination of financial crises and health hazards, including malaria and yellow fever, which led to the deaths of thousands of French workers.

War in Colombia

Upon becoming president in 1901, Roosevelt was determined to succeed where others had failed. Following the advice that naval strategist Andrew Mahan set forth in his 1890 book The Influence of Seapower upon History, he sought to achieve the construction of a canal across Central America, primarily for military reasons associated with empire, but also for international trade considerations. The most strategic point for the construction was across the fifty-mile isthmus of Panama, which, at the turn of the century, was part of the nation of Colombia. Roosevelt negotiated with the government of Colombia, sometimes threatening to take the project away and build through Nicaragua, until Colombia agreed to a treaty that would grant the United States a lease on the land across Panama in exchange for a payment of $10 million and an additional $250,000 annual rental fee. The matter was far from settled, however. The Colombian people were outraged over the loss of their land to the United States, and saw the payment as far too low. Influenced by the public outcry, the Colombian Senate rejected the treaty and informed Roosevelt there would be no canal.

Figure 2. Map showing the location of the Panama canal, connecting the Caribbean Sea above and the Pacific Ocean below.

Undaunted, Roosevelt chose to now wield the “big stick.” Roosevelt and Hay grew infuriated, although Colombia was acting entirely within its laws and rights. Roosevelt told Hay: “I do not think the Bogotá lot of jackrabbits should be allowed permanently to bar one of the future highways of civilization.” He was prepared to use force, to invade and occupy the future canal zone.

In October 1903, the U.S. Navy sent warships to steam off Panama’s coast. On November 2, their captains were ordered to land marines, seize the Panama railroad, and block any Colombian reinforcements that might be sent to put down a Panamanian rebellion. Within a week, Roosevelt immediately recognized the new country of Panama, welcoming them to the world community and offering them the same terms—$10 million plus the annual $250,000 rental fee—he had previously offered Colombia. On November 6, 1903, Philippe Bunau-Varilla, as Panama’s ambassador to the United States, signed the Hay–Bunau-Varilla Treaty, granting rights to the United States to build and indefinitely administer the Panama Canal Zone and its defenses.

Almost immediately, the treaty was condemned by many Panamanians as an infringement on their country’s new national sovereignty. Several parties in the United States also called this an act of war on Colombia: The New York Times described the support given by the United States to Bunau-Varilla as an “act of sordid conquest.” The New York Evening Post called it a “vulgar and mercenary venture.” The U.S. maneuvers are often cited as the classic example of U.S. gunboat diplomacy in Latin America.

In 1921, Colombia and the United States entered into the Thomson–Urrutia Treaty, in which the United States agreed to pay Colombia $25 million: $5 million upon ratification, and four-$5 million annual payments, and grant Colombia special privileges in the Canal Zone. In return, Colombia recognized Panama as an independent nation.

Once the Panamanian victory was secured, with American support, construction on the canal began in May 1904. For the first year of operations, the United States worked primarily to build adequate housing, cafeterias, warehouses, machine shops, and other elements of infrastructure that previous French efforts had failed to consider. Most importantly, the introduction of fumigation systems and mosquito nets following Dr. Walter Reed’s discovery of the role of mosquitoes in the spread of malaria and yellow fever reduced the death rate and restored flagging morale among workers and American-born supervisors. At the same time, a new wave of American engineers planned for the construction of the canal. Even though they decided to build a lock system rather than a sea-level canal, workers still had to excavate over 170 million cubic yards of earth with the use of over one hundred new rail-mounted steam shovels. Excited by the work, Roosevelt became the first sitting U.S. president to leave the country while in office. He traveled to Panama where he visited the construction site, taking a turn at the steam shovel and removing dirt. The canal opened in 1914, permanently changing world trade and military defense patterns.

Figure 3. Recurring landslides made the excavation of the Culebra Cut one of the most technically challenging elements in the construction of the Panama Canal.

The Roosevelt Corollary

With the construction of the canal now underway, Roosevelt next wanted to send a clear message to the rest of the world—and in particular to his European counterparts—that the colonization of the Western Hemisphere had now ended, and that interference in the countries there would no longer be tolerated. At the same time, he sent a message to his counterparts in Central and South America that should the United States see problems erupt in the region, it would intervene in order to maintain peace and stability in the hemisphere. Specifically, the United States would guarantee fiscal stability of debt repayment, which was a mounting crisis in the early 20th century.

Rising debts to European and American bankers allowed for the inroads of modern life but destabilized much of the region. Bankers, beginning with financial houses in London and New York, saw Latin America as an opportunity for investment. Lenders took advantage of the region’s newly formed governments’ need for cash and exacted punishing interest rates on massive loans, which were then sold off in pieces on the secondary bond market. Creditors could not force settlements of loans until they successfully lobbied their own governments to get involved and forcibly collect debts. The Roosevelt administration did not want to deny the Europeans’ rightful demands of repayment of debt, but it also did not want to encourage European policies of conquest in the hemisphere as part of that debt collection. Roosevelt first tried this in 1902, when Germany and Great Britain launched a naval blockade of Venezuela in order to try and force the Venezuelan government to repay debts. Under threat, Roosevelt compelled both governments to accept arbitration over repayment.

Roosevelt articulated this seeming double standard in a 1904 address before Congress, in a speech that became known as the Roosevelt Corollary. The Roosevelt Corollary was based on the original Monroe Doctrine of the early nineteenth century, which warned European nations of the consequences of their interference in the Caribbean. In this addition, Roosevelt stated that the United States would use military force “as an international police power” to correct any “chronic wrongdoing” by any Latin American nation that might threaten stability in the region. Unlike the Monroe Doctrine, which proclaimed an American policy of noninterference with its neighbors’ affairs, the Roosevelt Corollary loudly proclaimed the right and obligation of the United States to involve itself whenever necessary.

Roosevelt immediately began to put the new corollary to work. He used it to establish a protectorate over Panama, as well as to direct the United States to manage the Dominican Republic’s customs service revenues. Eventually, Presidents Herbert Hoover and Franklin Roosevelt softened American rhetoric regarding U.S. domination of the Western Hemisphere, with the latter proclaiming a new “Good Neighbor Policy” that renounced American intervention in other nations’ affairs. However, subsequent presidents would continue to reference aspects of the Roosevelt Corollary to justify American involvement in Haiti, Nicaragua, and other nations throughout the twentieth century. The map below shows the widespread effects of Roosevelt’s policies throughout Latin America.

Figure 4. From underwriting a revolution in Panama with the goal of building a canal to putting troops in Cuba, Roosevelt vastly increased the U.S. impact in Latin America.