Robert Kennedy's  United States History Class


Learning Objective V
What was the Panama Canal and the Roosevelt Corollary and its significance to the American Empire

Panama Canal

An important discovery that resulted from the Spanish-American War was America’s need to connect the Atlantic and Pacific Oceans. During the war, ships in the Pacific had to travel around South America in order to join the fleet in Cuba. The U.S. now had to protect and supply its far ranging territories in Guam, Puerto Rico, Hawaii, and the Philippines. The U.S. was also beginning to emerge as a world economic power and needed quicker shipping routes to meet its international business needs. Another significant reason for a quick route between the Atlantic and the Pacific was that the U.S. Navy was fast becoming an important, global military player. President Roosevelt began to swing his “big stick” in order to achieve his dream of building a canal in Central America.

Initially, proponents of the canal considered two sites: Nicaragua and Panama. However, experts quickly concluded that Panama would be a more advantageous and realistic site. Despite Roosevelt’s intentions, there were still several legal challenges to overcome before he could build the canal. The Clayton-Bulwer Treaty of 1850 between the U.S and Britain asserted that the U.S. could not have sole control over an isthmian canal in the Americas. However, the British were engaged in the South African Boer War and were feeling increasingly threatened by their European neighbors, so they were willing to repeal the treaty. In 1901, the British and the Americans signed the Hay-Pauncefote Treaty that allowed the U.S. to build and fortify a canal. England had little to lose by signing the treaty, and in exchange hoped to secure the U.S. as an ally in a conflict with Germany that was beginning to look inevitable.

In addition to legal challenges, there were other significant obstacles to building a canal. Panama was eager to secure the canal project in the hope that it would revive their lagging economy. However, Panama was controlled by Colombia, and the Colombian Senate rejected a treaty that would have allowed the U.S. to lease a six-mile zone in Panama. The offer called for an initial payment of $10 million and an annual disbursement of $250,000, which the Colombians viewed as inadequate. Roosevelt was enraged by Colombia’s refusal to cooperate and he was determined to secure the canal area one way or another. A Panamanian uprising against Colombian rule began on November 3, 1903. This coup was backed by Panamanians who sought the prosperity the canal offered as well as representatives of the company that hoped to sell the land to the U.S. for $40 million. The U.S. did not actively encourage this rebellion, although they viewed it as a fortunate development. 

Colombian soldiers were poised to crush the rebellion, but U.S. naval vessels would not allow them to cross the isthmus and engage the revolutionaries. Using questionable legal precedent, President Roosevelt quickly recognized Panama’s independence three days later. This was a bitter victory for the U.S., as it secured the necessary land for the canal, but hurt foreign perception of America as well as American relations in Latin America. Latin Americans were already concerned about American control in Puerto Rico and Cuba, and now they began to fear their neighbor to the north.

After years of dubious politics and relationships, construction began on the Panama Canal in 1904. Many obstacles were encountered, including landslides, pestilence, and labor problems. However, a team of engineers persisted, and finally in 1914 the Panama Canal was opened and heralded as the greatest technological achievement of its time. The total costs to complete the job were staggering. In addition to $400 million in financial costs, the loss of good will toward America was incalculable. The English author James Bryce referred to the project as “the greatest liberty Man has ever taken with Nature.”

Roosevelt Corollary

Around the turn of the twentieth century, Latin American nations began defaulting on massive loans from European powers such as Germany and England. Many of these “Banana Republics,” including Venezuela and the Dominican Republic, had borrowed heavily and had no way or intention of repaying their debts. This issue came to the forefront in 1903, when German warships sank two Venezuelan vessels and bombarded a Venezuelan town. Their intention was to intimidate Venezuela into paying its debts, but they inadvertently threatened Roosevelt and America’s sense of security as well.

Roosevelt was intent on keeping European nations out of the Americas. He feared that if he allowed Germany and England into the Hemisphere to collect debts, they might decide to set up permanent bases, which would have been a violation of the Monroe Doctrine of 1823. Also, the U.S. did not want the European powers to “extort” Latin American countries, thereby bankrupting them. In order to prevent their presence, Roosevelt devised the Roosevelt Corollary to the Monroe Doctrine, which instituted a policy of “preventive intervention.”

In this clever maneuver, Roosevelt stated that the U.S. would now function as “the policeman of the Caribbean.” Under this arrangement, the U.S. took over the management of tariff collections in 1905. This meant that whenever a Latin American nation was overdue on a debt to a European power, the U.S. would intervene. America would pay off the foreign debt, and then take responsibility for collection, thereby guaranteeing the European loan. The Europeans quickly agreed to this arrangement, as it ensured the prompt payment of the debt, but they were skeptical of America’s motivation. Many people in America, Europe, and Latin America viewed this as yet another imperial move by the United States. Anti-imperialists believed that America was removing the traditional imperialists who were taking advantage of the Banana Republics, for no other reason than to take their place.

The U.S. experienced a number of advantages by assuming control of these customshouses. Corruption and embezzlement were rampant in many of these Latin American countries. The U.S. ran the customshouses fairly and equitably and helped ensure that corruption was minimized. In the short run, several of these Latin American countries began managing their money more efficiently and achieving financial security for the first time. Countries such as the Dominican Republic and Venezuela were able to manage their resources more effectively and were beginning to emerge as viable trading partners. However, over time as the U.S. began to return control to local governments, many returned to their corrupt and inefficient ways, which ended this short era of relative prosperity.

Despite the success of the Roosevelt Corollary, there were also several drawbacks. Essentially this was a perversion of the Monroe Doctrine, which was considered a sacred document in American politics. It also set another negative precedent for U.S. involvement in Latin America. This new policy was used for years as justification for military and political intervention throughout the region. For many decades, the U.S. performed military landings in Central America and stationed Marines in Nicaragua and other countries in semi-permanent bases. Also, Roosevelt’s “cowboy diplomacy” strained relations not only with Latin American nations, but with the rest of the world as well. The Roosevelt Corollary helped give notice that the U.S. was emerging as a significant world power that could not be ignored.