As early as the 16th century, people were considering the possibility of a natural or man-made water route through this area known as Panama. Explorations and plans continued through the 19th century, and reached a height after the United States had been established and was rapidly expanding from coast to coast. With this expansion the need for a western waterway became increasingly important.

Original plans to create a waterway began in Nicaragua rather than Panama, and conflicts arose between the United States and Great Britain over it's control. It was then that the Anglo-American Clatyon-Bulwer Treaty of 1850 provided that neither country would seek exclusive control over the ithmus or over any ship canal across it.

While the United States was recovering from the Civil War, the French began to engineer and finance the canal project. In 1881 excavations began for a sea-level canal, and then revised in 1887 to a lock canal. But due to the heat, disease, costly mistakes, and financial difficulties the French company declared bankruptcy and the plan was abandoned.

Interest continued, but it was not until 1903 that a deal was made with the newly formed Republic of Panama to build a canal in return for a payment of $10 million. On May 4, l904 the United States took possession of the 10 X 50-mile strip of land and construction began on three intricate sets of high-level locks. Numerous treaties, discussions, meetings, and agreements took place before, during, and after the creation of the canal, and the first ship traveled through it on January 7, l9l4. The first ocean steamer passed through on August 3, and the canal was officially opened on August 15, l9l4.

As a result of a treaty agreed upon by involved parties and ratified by the Senate, operation, defense, and ownership of the Panama Canal will be transfered to Panama on December 31, 1999.