The Panama Canal, the American-built waterway across the Isthmus of Panama, connecting the Atlantic and Pacific oceans, is inaugurated with the passage of the U.S. vessel Ancon, a cargo and passenger ship.

The rush of settlers to California and Oregon in the mid 19th century was the initial impetus of the U.S. desire to build an artificial waterway across Central America. In 1855, the United States completed a railroad across the Isthmus of Panama (then part of Colombia), prompting various parties to propose canal-building plans. Ultimately, Colombia awarded rights to build the canal to Ferdinand de Lesseps, the French entrepreneur who had completed the Suez Canal in 1869. Construction on a sea-level canal began in 1881, but inadequate planning, disease among the workers, and financial problems drove Lesseps’ company into bankruptcy in 1889. Three years later, Philippe-Jean Bunau-Varilla, a former chief engineer of the canal works and a French citizen, acquired the assets of the defunct French company.

By the turn of the century, sole possession of the isthmian canal became imperative to the United States, which had acquired an overseas empire at the end of the Spanish-American War and sought the ability to move warships and commerce quickly between the Atlantic and Pacific oceans. In 1902, the U.S. Congress authorized purchase of the French canal company (pending a treaty with Colombia), and allocated funding for the canal’s construction. In 1903, the Hay-Bunau Varilla Treaty was signed with Columbia, granting the U.S. use of the territory in exchange for financial compensation. The U.S. Senate ratified the treaty, but the Colombian Senate, fearing a loss of sovereignty, refused.

In response, President Theodore Roosevelt gave tacit approval to a Panamanian independence movement, which was engineered in large part by Philippe-Jean Bunau-Varilla and his canal company. On November 3, 1903, a faction of Panamanians issued a declaration of independence from Colombia. The U.S.-administered railroad removed its trains from the northern terminus of Colón, thus stranding Colombian troops sent to crush the rebellion. Other Colombian forces were discouraged from marching on Panama by the arrival of U.S. warship Nashville.

On November 6, the United States recognized the Republic of Panama, and on November 18 the Hay-Bunau-Varilla Treaty was signed with Panama, granting the U.S. exclusive and permanent possession of the Panama Canal Zone. In exchange, Panama received $10 million and an annuity of $250,000 beginning nine years later. The treaty was negotiated by U.S. Secretary of State John Hay and Bunau-Varilla, who had been given plenipotentiary powers to negotiate on behalf of Panama. Almost immediately, the treaty was condemned by many Panamanians as an infringement on their country’s new national sovereignty.

In 1906, American engineers decided on the construction of a lock canal, and the next three years were spent developing construction facilities and eradicating tropical diseases in the area. In 1909, construction proper began. In one of the largest construction projects of all time, U.S. engineers moved nearly 240 million cubic yards of earth and spent close to $400 million in constructing the 40-mile-long canal (or 51 miles long, if the deepened seabed on both ends of the canal is taken into account). On August 15, 1914, the Panama Canal was opened to traffic.

Panama later pushed to revoke the Hay-Bunau-Varilla Treaty, and in 1977 U.S. President Jimmy Carter and Panamanian dictator Omar Torrijos signed a treaty to turn over the canal to Panama by the end of the century. A peaceful transfer occurred at noon on December 31, 1999.