Panama Canal: - the French Canal Company under Ferdinand de Lesseps began digging a canal in Panama. The company failed because of mosquito diseases and unexpected engineering problems. 1901 - Hay-Pauncefote Treaty - gave the U.S. a free hand in building, controlling and policing a canal that would be open to all nations on equal terms. 1903 – Hay-Herran Treaty 1. 10 million dollar cash lease 2. annual rental of $250,000 3. Columbia holds out for better terms

- Panamanian Independence - U.S. aids Panama in revolution - our naval ships prevent troops from entering Panama 1903 - Hay-Bunau-Varilla Treaty 1. American control of canal zone in perpetuity 2. American intervention in Panama when necessary to preserve order 3. Same monetary agreement offered to Colombia - first ocean vessel steamed through the new waterway

- two new treaties to replace the above 1. “transfer of ownership” a. U.S. transfer ownership and control of the the canal to Panama by 2000 b. Americans will operate the canal but assign an increasing role to the Panamanians c. Soon after ratification, Panama assume control of most of the Zone – those areas not essential for defense or operation of the Canal d. Panama receive $50 million to 70 million annually and extensive U.S. economic aid 2. The Neutrality Treat a. Guarantees the neutrality of the canal b. Gives the right to U.S. to intervene to defend the canal’s neutrality