Skip to Main Content
Have library access? Log in through your library
The Big Ditch

The Big Ditch: How America Took, Built, Ran, and Ultimately Gave Away the Panama Canal

Copyright Date: 2011
Pages: 438
  • Cite this Item
  • Book Info
    The Big Ditch
    Book Description:

    On August 15, 1914, the Panama Canal officially opened for business, forever changing the face of global trade and military power, as well as the role of the United States on the world stage. The Canal's creation is often seen as an example of U.S. triumphalism, but Noel Maurer and Carlos Yu reveal a more complex story. Examining the Canal's influence on Panama, the United States, and the world,The Big Ditchdeftly chronicles the economic and political history of the Canal, from Spain's earliest proposals in 1529 through the final handover of the Canal to Panama on December 31, 1999, to the present day.

    The authors show that the Canal produced great economic dividends for the first quarter-century following its opening, despite massive cost overruns and delays. Relying on geographical advantage and military might, the United States captured most of these benefits. By the 1970s, however, when the Carter administration negotiated the eventual turnover of the Canal back to Panama, the strategic and economic value of the Canal had disappeared. And yet, contrary to skeptics who believed it was impossible for a fledgling nation plagued by corruption to manage the Canal, when the Panamanians finally had control, they switched the Canal from a public utility to a for-profit corporation, ultimately running it better than their northern patrons.

    A remarkable tale,The Big Ditchoffers vital lessons about the impact of large-scale infrastructure projects, American overseas interventions on institutional development, and the ability of governments to run companies effectively.

    eISBN: 978-1-4008-3628-4
    Subjects: Economics, History

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
    (pp. vii-viii)
    (pp. ix-xii)
    (pp. xiii-xviii)
    (pp. 1-12)

    From a distance, in North America, the Panama Canal seems like an imperialist anachronism, a historical leftover from a discreditable and nearly forgotten chapter of U.S. history. Up close, however, it is immediately apparent that the Panama Canal is one of the world’s great waterways, the highly efficient economic engine for a rather prosperous Latin American country. Both of these interpretations of the Panama Canal are correct. This book was written to reconcile these seemingly conflicting points of view.

    There is a stylized narrative many Americans learn about the history of the Panama Canal. In the late nineteenth century, so...

    (pp. 13-54)

    Centuries before the Panama Canal was built, commercial traffic used the Isthmus of Panama to cross between the Atlantic and Pacific Oceans. In fact, Panama experiencedtwoeconomic booms in the pre-canal era. The first economic boom occurred practically right after the Spanish established Panama City in 1519. A geopolitical event, the Spanish conquest of Peru, triggered the boom. The sailing ships of the sixteenth century had a difficult time navigating the Strait of Magellan; there were only nine successful passages of the Strait in the sixty years after Magellan’s discovery.¹ Peruvian silver therefore passed through Panama on its way...

    (pp. 55-96)

    From the perspective of the early twenty-first century, the Panama Canal stands as a singular accomplishment, a triumph of smokestack technology and muscular diplomacy. To its contemporaries, however, the Panama Canal as we know it was the sole survivor of a bewildering array of failed proposals, failed counterproposals, failed treaties, and one major failed attempt at construction. For economic historians, these failures are an invaluable source of data for understanding the institutional and economic constraints that had to be overcome to build a project that would primarily benefit the United States across territory controlled by independent Latin American republics.


    (pp. 97-138)

    The construction of the Panama Canal was a very large project in a very small economy. It created a management nightmare. It ran significantly over budget by any standard. It generated interest groups that captured canal policies to their own ends. It magnified the sins of the time: the American administration imported a Jim Crow system of racial discrimination during its construction where none had previously existed, and it locked Panamanian firms and workers out of the construction boom. In one very disturbing episode, the American administration even engineered the removal of a sitting Panamanian president because of his race....

    (pp. 139-188)

    The Panama Canal was an engineering marvel. Many people also predicted the Panama Canal would be an economic marvel. Nearly all the early boosters and promoters of an isthmian canal believed that a canal would be a godsend for world commerce. In 1903 the British vice-consul in Colombia presented a Colombian estimate of the canal’s economic value to the U.S. Congress. It concluded that an isthmian canal would produce benefits worth $1.2 billion when capitalized, or 4.7 percent of United States GDP at the time.¹

    Other observers were not so optimistic about the Panama Canal’s economic utility. The costs and...

    (pp. 189-211)

    Before the opening of the Panama Canal, it was widely believed that a canal across the Panamanian isthmus would transform Panama into one of the great commercial centers of the world. Bolívar compared Panama to Corinth, which owed its success in the ancient world to its commanding position on the isthmus between the Ionian Sea and the Aegean Sea. Early twentieth-century Panamanian politicians often used the wealthy Hanseatic cities of medieval Europe which controlled the Baltic Sea trade as their point of comparison.¹ Panama’s ambassador to Washington waxed enthusiastic about the canal in 1913, as he travelled the United States...

    (pp. 212-263)

    In 1939, ownership over the Panama Canal seemed to be a cornerstone of national security and economic prosperity for the United States. Six years later, by 1945, that characterization was no longer as clear—in the aftermath of World War II, the canal appeared to have become more of a strategic liability than a military asset. Twenty-five years later, by 1964, the same had happened to the economic benefits of ownership over the Panama Canal as the costs increasingly outweighed the benefits. The social savings of the canal faded under the triple impact of the Interstate Highway System, the dieselization...

    (pp. 264-312)

    The year 1978 was a watershed year for the Panama Canal. On March 16, the U.S. Senate ratified the Neutrality Treaty. A month later, on April 18, it ratified the parallel Panama Canal Treaty. Under the terms of the treaties, the Canal Zone would disappear in 1979, Panamanians would slowly take over the duties of the new Panama Canal Commission, and finally, in 1999, the United States would hand the canal over to Panama.

    The American public greeted the Panama Canal agreements with a mixture of apathy and disappointment. The handover’s supporters had little reason to celebrate. The economic and...

    (pp. 313-332)

    On May 3, 2009, Panamanian supermarket magnate and New York Yankees fan Ricardo Martinelli defeated former Panamanian housing minister Balbina Herrera of the incumbent Partido Revolucionario Democrático by 22 points. By Latin American standards, the candidates were strongly pro-business; for example, both the conservative Martinelli and the left-wing Herrera supported the U.S.-Panama Free Trade Agreement. Nonetheless, Martinelli’s reputation as a successful businessman was more than enough to counter the PRD’s faltering cachet as a provider of public goods and services in the wake of the continuing Great Recession. Clearly, the majority of Panamanians in 2009 thought that the proper business...

  15. NOTES
    (pp. 333-400)
  16. INDEX
    (pp. 401-420)