To make my writing go a little easier, I have copied some excerpts from the History chapter of the Lonely Planet – Panamá:
Panama’s future forever changed from the moment that the world’s major powers learned that the isthmus of Panama was the narrowest point between the Atlantic and Pacific Oceans. In 1846 Colombia signed a treaty permitting the US to construct a railway across the isthmus, though it also granted them free transit and the right to protect the railway with military force.
At the height of the California gold rush in 1849, tens of thousands of people traveled from the east coast of the US to the west coast via Panama in order to avoid hostile Native Americans living in the central states. Colombia and Panama grew wealthy from the railway, and the first talks of an interoceanic canal across Central America began to surface.
The idea of a canal across the isthmus was first raised in 1524 when King Charles V of Spain ordered that a survey be undertaken to determine the feasibility of constructing such a waterway. In 1878, however, it was the French who received a contract from Colombia to build a canal.
Still basking in the warm glory of the recently constructed Suez Canal, French builder Ferdinand-Marie de Lesseps brought his crew to Panama in 1881. Much like Napoleon before him, Lesseps severely underestimated the task at hand, and over 22,000 workers died from yellow fever and malaria in less than a decade. By 1889, insurmountable construction problems and financial mismanagement had driven the company bankrupt.
The US, always keen to look after its investments, saw the French failure as a lucrative business opportunity that was ripe for the taking. Although they had previously been scouting locations for a canal in Nicaragua, the US pressured the French to sell them their concessions. In 1903 Lesseps’ chief engineer, Philippe Bunau-Varilla, agreed to the sale, though the Colombian government promptly refused.
In what would be the first of a series of American interventions in Panama, Bunau-Varilla approached the US government to back Panama if it declared its independence from Colombia. On November 3, 1903, a revolutionary junta declared Panama independent, and the US government immediately recognized the sovereignty of the country.
Although Columbia sent troops by sea to try to regain control of the province, US battleships prevented them from reaching land. Columbia did not recognize Panama as a legitimately separate nation until 1921, when the US paid Columbia US$25 million in ‘compensation’.
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