HAS American policy with respect to the Panama Canal outlived its usefulness? Changes in technology, in the international power structure and in the climate of world opinion would suggest that it has. In an age when the United States is turning increasingly to international arrangements to protect its interests on other continents, its position regarding the Canal becomes increasingly inconsistent, if not embarrassing. It might well embroil us in a struggle, initially one-sided, in which all Latin America would move to defend the sovereignty of a sister republic and the principles of self-determination and non-intervention. In the altered circumstances of today we need to take a fresh look at our relationship to the Panama Canal. This involves a candid reassessment of the strategic and economic arguments for its control by the United States.


From the outset the strategic value of the Canal to the United States has been regarded by American leaders as of first importance. More than three decades before the Canal was completed President Hayes advised the Senate: "Its relation to our power and prosperity as a nation, to our means of defense, our unity, peace and safety, are matters of paramount concern to the people of the United States."[i] Toward the turn of the century the need for a waterway across the Isthmus was dramatized by the Spanish-American War exploit of the Oregon, steaming at flank speed from Puget Sound to Cuban waters by way of the Magellan Straits, a distance three times what it would have been had the Canal been built. Then came the conquest of the Philippines, bringing new American responsibilities in the Pacific far from the centers of power on the Atlantic seaboard. Long before the Japanese were to threaten American interests in Asian waters, President Theodore Roosevelt declared in a special message to the Congress in 1904 that the Canal "has become, as the result of the recent extension of our territorial domination, more than ever essential to our naval defense. . . . Reasons of convenience have been superseded by reasons of vital necessity."[ii]

The Canal's contribution, as Captain Mahan stressed in 1912, was to provide the Navy with means of communication between the Atlantic and the Pacific. "Communications," wrote the great authority on seapower, "dominates war in all its aspects."[iii] War "in all its aspects," coming in the summer of 1914, a month before the opening of the newly built Canal, confirmed spectacularly the claims which had been made for a trans-isthmian waterway. The efficiency of our Navy was doubled and the supply of key raw materials from abroad was greatly accelerated. So sharp a lesson was not soon to be forgotten by a public already impressed by American engineering prowess.

Two decades later, when war came again in the fall of 1939, naval power was still considered to be our primary defense. Although our forces were divided into three fleets--Atlantic, Pacific and Asiatic--thanks to the Panama Canal, they could rendezvous anywhere in the world in the space of three weeks. The crucial rôle of the Canal seemed obvious and the course of World War II did nothing to lessen the faith of Americans in the paramount importance of the Canal and of United States control of it.

Since World War II, a great deal has happened to depreciate the strategic significance of the Canal. Its military value has been reduced both by technological developments and by new strategic concepts. Although it still facilitates the efficient disposition of the Navy, there now exists a two-ocean fleet, with aircraft carriers whose beam and canted decks are too great for the Gaillard narrows. Without lessening the convenience and economy of the Canal's facilities for bulk cargo, the growth of continental means of transportation on land and in the air has provided a more adequate alternative to meet the needs of swift wartime mobilization. High speed highways and jet-propelled military and civilian air transport link the east and west coasts with rapid services. Continental pipelines transporting oil at a cost comparable to that of tankers have cut into the volume of inter-coastal trade carried by the Canal. Moreover, the industrial development of the west coast has diverted petroleum products to local consumption. Despite apparent obstacles, it is not impossible that the Arctic Ocean may in time provide an alternative strategic route which will cut nearly 5,000 miles from the 11,200 miles separating the ports of Tokyo and London.

The changed nature of modern warfare has also deprived the Canal of its original importance. As early as 1948, Rear Admiral Daniel E. Barbey, then Commander of the Caribbean Sea Frontier, pointed out that with the outmoding of face-to-face naval engagements like Jutland or even Midway and the Coral Sea, the two-ocean navy was itself outdated. That left the Canal as a waterway for peacetime shipping and as a route of only secondary usefulness for the wartime transportation of critical materials--hardly a target of prime importance to enemy forces. Since then, the Canal's vulnerability in an atomic-missile war has been demonstrated by the war games of April 1957. Henceforth, the defense of the Canal must be fought far out in the Pacific and the Atlantic or from land bases in continental United States. In the event of a limited war the risk of expanding the conflict is likely to deter the enemy from designating as a strategic target what is no longer a vital supply route.

The danger of sabotage by damaging the locks was recognized even before the Canal was built. A consulting board of engineers reported in 1904 that "it is well-nigh impossible to provide effectually and always against such peril."[iv] In consequence, the dream of a less vulnerable, sea-level canal was never quite forgotten. With the explosion of the first nuclear bomb at Hiroshima in 1945, a comprehensive survey was undertaken by Canal officials to determine what effect the new era of warfare might have. The outcome was yet another recommendation for building a sea-level route. The same position was taken in 1954 by a committee of the National Rivers and Harbors Congress, which held that nuclear attacks would have only a temporary effect upon sea-level traffic. Congress, however, was not convinced. Unfavorable action by Congress in the postwar years has been based less upon objection to the estimated cost of two and a half billion dollars than upon the conviction that any kind of canal must be vulnerable to the new weapons. The Congressional view was expressed by Representative Willis W. Bradley, a retired Naval captain:

As far as I can ascertain, the greatest authorities on modern weapons of war who have given this subject serious attention hold uniformly that any canal would be critically vulnerable to the atomic bomb, regardless of type; that a sea-level canal would be . . . closed for prolonged periods of time beyond any hope of speedy restoration; and a sea-level canal cannot be considered secure in an atomic war.[v]

Leading experts on atomic warfare supported the position taken by Congress and some saw in a sea-level canal the danger of developing an American analogue to the Maginot Line.

Measures to protect the existing Canal have changed with the development of new weapons, but happily they have never been tested by enemy action. Before World War I, defense of the Canal within the Navy's waterborne ramparts was divided into "seacoast fortifications" and "land defense by mobile garrisons." But by 1932 the Isthmian Canal Board of the Army, arguing for a second canal through Nicaragua, declared that no proper military protection of the Canal could be devised. Ten years later Secretary of War Stimson found the means of guarding the Canal to be so inadequate as to suggest that the Isthmus would have been a better target for the Japanese than was Pearl Harbor. The overt threat to the Canal in World War II lasted throughout the six months between Pearl Harbor and the Battle of Midway (June 4, 1942). It was met by concentrating in the Pacific most of the country's remaining naval strength and by stocking extra doors for the canal locks. Local defenses were bolstered by outer and inner patrols of radar-equipped planes and a land-based aircraft warning system.

Since World War II, defense of the Canal has been assigned a low strategic priority. The military is apparently operating on the conclusion expressed by Hanson Baldwin in 1957 that the Canal today is indefensible in total war and short of total war is less defensible and less strategic than ever before. Protection of the Canal is merely skeletal: two anti-aircraft battalions and one infantry regiment, token submarine and surface patrols by the Navy and no permanent units of combat aircraft. Significantly, when Colonel John C. Hickerson, the Army ballistic missile expert convicted of divulging secrets in 1957, was transferred to a Panama Canal Zone billet, The New York Times reported that it was "like a policeman being sent to a beat in the sticks."[vi]

Today, then, even though any enemy attack would bring airborne response from the continental United States, major strategic importance can no longer be attached to the Canal. Adequate defense of the Canal may be impossible and would certainly require a deployment of forces and intelligence units far beyond what is justified by its contribution to the security and welfare of the United States.


Since it opened in August 1914, more than one billion tons in trade have been carried through the Canal by more than 260,000 vessels of all types. Nevertheless, in volume of traffic, the Panama Canal does not compare favorably with other important manmade water arteries. The 23 ships passing through its locks daily in 1956 were half the number and bore a third of the tonnage carried by the Suez Canal. The Panama Canal does not link together any of the world's leading commercial areas and as a result only 4 to 5 percent of the world's ocean-going traffic uses it. Present tonnage figures are expected to double by the year 1975 and to triple before the end of the century, but these estimates depend quite as much on favorable political factors as they do upon a general trade expansion among the regions served. Our tariff and foreign assistance programs together with such international contingencies as the Iranian oil controversy and the closing of the Suez Canal in 1956 have all increased the postwar Canal traffic.

The American investment in the Canal, excluding defense construction and the suspended work on the third locks, is carried on the Panama Canal Company's books at less than $360 million. The Canal is operated without cost to the American taxpayer, having been put on a pay-as-you-go basis in 1951 at the insistence of Congress. Current toll collections, amounting to $41.8 million in the fiscal year 1958, are applied to operations of the Panama Canal Company, a semi-autonomous agency (40 percent), interest on the United States investment (20 percent), future development fund (9-10 percent),[vii] and annuity payments to the state of Panama (4-5 percent). To support their argument for keeping toll charges at a nominal level, U. S. shipping interests claim that the commercial operations of the Canal have profited the United States by more than $50 million since 1914. They ignore, however, the cost of defending the Canal under U. S. control. Tolls have been kept down to a point where in 1955 they averaged 84 cents a ton as compared with 80 cents a ton for Suez, whose much greater traffic is carried without the expense of operating locks. Allowing for inflation, the average transit costs are 274 percent below the level established in 1912.

The United States merchant marine is the principal user of the Canal. Before World War II it accounted for 42 percent of the traffic. Since the end of the war it ostensibly has dropped to a third, but the change is misleading since to avoid costly government regulations, United States shipowners have transferred vessels to foreign flags, especially Liberian, Panamanian and Honduran, while plying their former routes through the Canal.

Eight trade routes have accounted for more than 75 percent of the traffic during the last few years. Of these, five terminate in American ports while a sixth is made up of United States intercoastal trade; altogether, 62 percent of the trade through the Canal originates or terminates (or does both) in United States ports. Iron and steel manufactures and lumber dominate the inter-coastal trade; the heaviest exports are coal and scrap iron--principally to Japan, and wheat and flour--principally to Europe; the key imports are iron ore from Peru and Chile, oil from Venezuela, sugar from Asia and bananas from Latin America.

Our economic interests in the Canal are relatively slight as compared to those of Panama and other Latin American states. As a former Panamanian president recently put it, "Panama exists by and for the Canal." Panama's transactions with the Zone reached $45.5 million by 1956, about 24 times the $1.9 million annuity payment committed to Panama by the United States under the treaty of 1955. In return for the goods and services it furnishes the Zone, Panama has been able to import and consume far more than it exports. The combined expenditures in Panama of the United States military establishment, the Panama Canal Company, and Zone residents, together with the earnings of Panamanian employees in the Zone, have actually exceeded the country's international payments in some years. More than 8,100 Panamanians are on the payroll of the Canal Company and another 1,168 work for the Zone administration.

Other countries that also depend heavily upon the Canal are those on the west coast of South America; they rely on trade flowing through the Canal for more than half their export income. These Pacific coast countries are heavily dependent upon export trade, and export duties provide a major source of revenue. Countries outside the Western Hemisphere are also deeply involved in the Canal trade, although their dependence is less marked. Nevertheless, ships flying European flags carried almost half of the total tonnage which passed through the Canal in 1957.


The official United States position with regard to the legal status of the Canal and American rights relating to it rests upon Articles 2, 3 and 23 of the Hay-Bunau-Varilla Treaty, signed in 1903 by the United States and the fledgling republic of Panama. The articles read (italics added for emphasis):

Article 2

The Republic of Panama grants to the United States in perpetuity the use, occupation and control of a zone of land and land under water for the construction, maintenance, operation, sanitation and protection of said canal of the width of 10 miles . . . .

Article 3

The Republic of Panama grants to the United States all the rights, power and authority within the zone mentioned . . . which the United States would possess and exercise if it were the sovereign of the territory within which said lands and waters are located to the entire exclusion of the exercise by the Republic of Panama of any such sovereign rights, power or authority.

Article 23

If it should become necessary at any time to employ armed forces for the safety or protection of the Canal, or of the ships that make use of the same, . . . the United States shall have the right, at all times and in its discretion, to use its police and its land and naval forces or to establish fortifications for these purposes.

These provisions of the Hay-Bunau-Varilla Treaty were reaffirmed in 1955 in the preamble of the Eisenhower-Remón Treaty of Mutual Understanding and Coöperation. The point was emphasized in the treaty hearings before the Senate Committee on Foreign Relations, when the Assistant Secretary of State for Inter-American Affairs assured the Senators and other interested parties, such as the President of the Pacific American Steamship Association, that nothing in the 1955 treaty reflected the slightest departure from the traditional American position.

Thus, when Senator Wiley sought assurance that "there is nothing in this present treaty that would in the slightest degree depreciate all the attributes of sovereignty that we possess," Secretary Holland replied:

That is true; and so true is it, that in the course of the negotiations the Panamanians advanced several small requests which, one by one, had considerable appeal, but all of which we refused, because we did not want to leave one grain of evidence that could a hundred years hence be interpreted as implying any admission by the United States that we possess and exercise anything less than 100 percent of the rights of sovereignty in this area.[viii]

Consistent with this position, in 1956 when Panama was excluded from the conference of the Suez Users Association, Secretary Dulles explained that there was no question of sovereignty in the Zone since "the United States has all the rights which it would possess if it were the sovereign."[ix]

These declarations of American rights in the Zone do not mention the legal obligation imposed upon the United States by both the Hay-Bunau-Varilla Treaty with Panama and the Hay-Pauncefote Treaty with Great Britain to maintain in perpetuity the neutrality of the Canal.[x] In practice the United States has made full use of its control over the Canal Zone. For example, in 1950 the Congress authorized the President to issue special security regulations for the Zone when he deemed it to be endangered by reason of subversive activity. By law the Zone authorities are prohibited from selling petroleum products to ships flying the flags of the Soviet Union, Red China and the Soviet satellites except under special permits issued by the Department of Commerce. In 1954 the French liner Wyoming was detained at Cristobal pending investigation of a hidden arms cargo suspected of being shipped from an Eastern European state to Guatemala. More recently, in 1957, Moscow filed a formal complaint when the passage of a Soviet vessel was delayed by Zone officials.

Panamanian authorities, under the influence of a rising tide of nationalism, strongly oppose the position of the United States. To do so is as politically advantageous for them as it is psychologically natural. Sensitive to questions of national pride and dignity, officials and public alike react promptly to real or fancied slights to their country. Public opposition to an agreement extending United States occupancy of certain defense bases led the National Assembly to reject the treaty in 1947. During the Suez crisis in 1956, when Panama failed to receive an invitation to the users' conference, a note was sent to the British Foreign Office recalling that the Panama Canal was on Panama territory and that Panama was titular sovereign in the Canal Zone despite the grant of certain rights to the United States for specified purposes. When Cairo expressed surprise that the United States and other Western powers should favor international control over the Suez Canal, while opposing a similar régime for the Panama Canal, the Panamanian Minister to Egypt was quick to assert that his government would never accept international control over the Panama Canal. When Secretary Dulles explained Panama's absence from the conference by claiming that the United States represented Panama's interests in the negotiations, the Panamanian Foreign Minister promptly challenged his statement. He declared that the provisions of the Constantinople Convention of 1888 regarding neutrality and freedom of transit applied equally to the Panama Canal. "There is no doubt," he said, "that the treaty of 1903 does not grant the United States sovereignty over the Canal. That has been Panama's invariable position since 1904." With the support of press and public for the government's stand, sincere nationalists and political opportunists alike took advantage of the furor for partisan purposes in the presidential campaign of that summer. By the middle of September 1956, The New York Times correspondent in Panama could report: "There appears to be hardly a Panamanian who, deep in his heart, would not be happy to see the United States sent packing from the Canal Zone and have the entire Canal operation placed in the hands of Panama."[xi]

The provisions of the Hay-Bunau-Varilla Treaty came under fire again at a conference on international law held under the auspices of the University of Panama in the spring of 1957. Octavio Fábrega who, as Foreign Minister, had negotiated the 1955 treaty with the United States, attacked Panama's grant of the Canal Zone to the United States in perpetuity as inconsistent with the sovereignty of a nation. He argued that a treaty should have a reasonable period of duration or else be subject to periodic revision. Another exponent of the Panamanian point of view, Professor Cesar A. Quintero, contended that a perpetual treaty could be denounced if such an action had the support of the other Latin American countries. He argued further that any substantial change in the Canal or the construction of a new one would require a new treaty agreement. A number of the participants distinguished between "titular sovereignty" enjoyed by Panama and "jurisdictional sovereignty" enjoyed by the United States. Some went so far as to assert the treaty itself was invalid because of the circumstances in which it was negotiated. For, it will be remembered, Bunau-Varilla, though a duly named envoy of the two-week-old republic, was by nationality a Frenchman; and the treaty, which was accepted in Panama without having been read, was rushed through the United States Senate for approval and then ratified a few hours before the expected arrival in Washington of Panamanians sent to assist Bunau-Varilla.

The question whether these arguments are valid is perhaps less important than whether they reflect a situation destined to grow worse as time passes. Panamanian students commemorate the anniversary of the signing of the Hay-Bunau-Varilla Treaty as a day of mourning. It is frequently marked by burning in effigy the French author, whose memory is not cherished in the land, though it owes its independence in part to his operations. Panama's discontent with her position of dependence on the United States is fed by particular grievances. Economic difficulties, the Panamanians feel, would be solved if only a larger annuity were paid from the Canal's earnings. They resent the slowness with which the United States Congress has moved to implement provisions of the 1955 treaty. Not until October 1957 was real estate valued at $25 million finally turned over to Panama and not until July 1958 did United States legislation provide for equal working conditions of Panamanians and United States employees in the Zone. Finally, construction of a high bridge across the Canal at the Pacific entrance is still to be started. Such grievances may seem small but they rankle.


A storm is building up in Panama. Appropriate measures taken soon can protect the real as distinguished from the illusory United States interests in the Canal, while a policy of drifting along may jeopardize our interests far beyond Central America.

The conflict cannot be resolved on a national basis, either American or Panamanian. Control of the Canal by the United States, though supported by law, tradition and vast military power, will not be able to withstand the pressures of modern nationalism. The use of force by the United States is out of the question; today, even carefully veiled intervention in the general interest of the Western Hemisphere evokes angry protests, as we saw in the case of Guatemala in 1954. Control of the Canal is already exacting a toll in terms of Latin American resentment. This is likely to soar with each new nationalistic demonstration on the Isthmus. For the time being, the Panamanian leaders may control and exploit the nationalistic sentiment to enhance their bargaining power with the United States. But in the long run the United States will confront a situation not unlike that faced by the British in Suez.

Yet, to concede to the tiny population of Panama the power to control a vested interest of the whole community of nations would be no more justifiable than to try to continue the present arrangement. To set up under the Organization of American States a hemispheric agency for operating the Canal, a waterway which serves all maritime powers directly and all others indirectly, would open it to the same objections which can be charged against a Danube Commission made up only of riparian powers. There remains the alternative of establishing under the United Nations a specialized agency, the Panama Canal Commission, serving and responsible to the community of nations, and including representatives of the Canal's principal users.

Internationalization would leave unimpaired the real interests of the United States, namely, the preservation of the Canal and access to it, good service at low cost, and a voice in the operation of the Canal. The security of the Canal would be, if anything, enhanced. Already hopelessly vulnerable, an internationalized Canal might seem to a potential aggressor a less attractive target than one under the exclusive jurisdiction of the United States. In any case, the United States would be entitled to come to the defense of the Canal, if defense were feasible, by acting within the United Nations under Article 51 of the Charter or the "Uniting for Peace" procedures. Such action in defense of an international agency would enjoy moral and practical support which the defense of an exclusive interest claimed by the United States could not evoke. The same principle would apply in the event of limited warfare, where, again, the United States would be in a better moral position to attract the support of the world community.

Good service at a reasonable cost could also be expected from an international agency. Indeed, from a strictly economic standpoint internationalization would offer every hope of bringing an improvement. Less exposed to special-interest pressures than is the United States Congress, a Panama Canal Commission could more readily determine an optimum toll schedule for facilitating the flow of traffic and yet building up reserves for needed improvements. And finally, participation in the operation of the Canal would be ensured as long as the United States remained one of the principal users.

It might be argued that internationalization would be injurious to certain interests claimed by Panama, which stands in a special relationship to the Canal. Under international jurisdiction, Panama could expect little support for grandiose schemes for third locks or a sea-level channel. But that, as we have seen, is the present situation. Then, too, Panama's bargaining power, derived from pitting the claims of nationalism against those of the United States colossus, would be lost. Yet this would be more than compensated for by the more effective support which Panama would obtain from Latin American representatives on the Panama Canal Commission. Finally, Panama would lose to the international agency powers heretofore claimed (but not exercised) by itself with respect to the Canal, but by the same measure it would render itself more secure from the arbitrary exercise of power by others.

More than ten years have elapsed since President Truman proposed to the Potsdam Conference that the Panama and Suez Canals and other waterways vital to maritime commerce be placed under the United Nations. He was not heeded. Since then the Danube has succumbed to international Communism and the Suez to Arab nationalism. In many other quarters claims to exclusive national control over waters hitherto regarded as high seas are being pressed with growing insistence. To reverse the tide will take inspired statesmanship and the initiative of a great power. Will history record that the United States was the power and the Panama Canal its instrument?

[i]U. S. Congressional Record (46th Cong., 2nd Sess., 1880), v. 10, pt. 2, p. 1399.

[ii] "Papers Relating to the Foreign Relations of the United States, 1904," p. 260-78.

[iii] Alfred T. Mahan, "Armaments and Arbitration" (New York: Harper, 1912), p. 184-5.

[iv] U. S. Congress, Senate, Report of the Board of Consulting Engineers for the Panama Canal, (59th Cong., 1st Sess., 1906), Senate Doc. No. 231, p. 35.

[v]U. S. Congressional Record (80th Cong., 2nd Sess., 1948), v. 94, pt. 10, p. A2451-52.

[vi]The New York Times, July 26, 1957.

[vii] A four-year, $19,000,000 project begun in August 1957 will make possible 24-hour service and cut the time of transit by three hours by widening the Canal and providing night lighting.

[viii] U. S. Congress, Senate, Committee on Foreign Relations, Hearings, The Treaty of Mutual Understanding and Coöperation with the Republic of Panama (84th Cong., 1st Sess., 1955), p. 164.

[ix]The New York Times, Aug. 29, 1956, p. 4.

[x] It was Mr. Dulles himself who said (in 1912), "If it means anything that the Canal is affected with an international use, it means that the Canal is open to all without discrimination."

[xi]The New York Times, Sept. 16, 1956, p. 24.

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  • MARTIN B. TRAVIS, Associate Professor of Political Science, Stanford University; co-editor of "Control of Foreign Relations in Modern Nations"; JAMES T. WATKINS, Professor of Political Science, Stanford University; Director, Institute of World Affairs, Pasadena; co-author of "General International Organization"
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