In 1903, the U.S. instigated a rebellion in the Colombian province of Panama by inciting nationalists to seek independence. The U.S. promoted this rebellion to ensure a favorable deal from the newly independent Panama for the Panama Canal, which the U.S. had desired for some time but which had met with resistance from the Colombian government. After the rebellion, the U.S. struck a deal with Panama for ownership of the territory surrounding this new canal, territory it held until 1999.

French Attempt

There had been interest in building a canal through Panama to greatly expedite trade with the west coast of the U.S. since the early 19th century. The French company of Fredinand de Lesseps had completed the Suez Canal in 1869, and thus was hired to build a canal through Panama as well. The French attempt, however, failed due to diseases such as yellow fever and malaria, as well as unfamiliarity with the regional terrain, resulting in several hundred thousand dollars wasted, which bankrupted the company in 1889, and left over 20,000 dead.

U.S. Project

In 1901, U.S. President Theodore Roosevelt considered possibilities for a canal across South America, and after toying with the idea of a canal further north through Nicaragua, he decided to purchase the remnants of the French attempt in 1902. The Colombian government, however, controlled Panama, and was wary of allowing the much more powerful U.S. a foothold in its territory. It rejected the treaty that would have allowed the U.S. to take over the canal.

Revolution in Panama

To solve the issue, Roosevelt used a tactic he would return to often, known as gunboat diplomacy. Nationalists in Panama, who had sought to rebel against Colombia for some time, were encouraged by the U.S. to rebel and offered U.S. assistance. When Panama declared its independence from Colombia in 1903, U.S. naval ships stationed nearby were enough of a threat to deter Colombia from engaging the rebels, and independence was accomplished without any significant military engagement.

Panama Canal Zone

In return for assistance with their independence, the Panamanians granted the U.S. a very lucrative deal. For $10 million, the U.S. was given authorization to complete the canal as well as direct control of the territory surrounding the canal, known as Panama Canal Zone. The canal would come to have immense economic significance for the U.S., and the Canal Zone remained U.S. territory until 1999.