Panama Canal
Early proposals in Panama

The earliest record regarding a canal across the Isthmus of Panama was in 1534, when Charles V, Holy Roman Emperor and King of Spain, ordered a survey for a route through the Americas in order to ease the voyage for ships traveling between Spain and Peru. The Spanish were seeking to gain a military advantage over the Portuguese.

In 1668, the English physician and philosopher Sir Thomas Browne speculated in his encyclopedic work, Pseudodoxia Epidemica, that "some Isthmus have been eaten through by the Sea, and others cut by the spade: And if the policy would permit, that of Panama in America were most worthy the attempt: it being but few miles over, and would open a shorter cut unto the East Indies and China".

Given the strategic location of Panama, and the potential of its narrow isthmus separating two great oceans, other trade links in the area were attempted over the years. One early example of this was ill-fated Darien scheme, launched by the Kingdom of Scotland in 1698 to set up an overland trade route. Generally inhospitable conditions thwarted the effort, and it was abandoned in April 1700. In 1788, Americans suggested that the Spanish should build the canal, since they controlled the colonies where it would be built. They said that this would be a less treacherous route for ships than going around the southern tip of South America, and that tropical ocean currents would naturally widen the canal after construction. During an expedition from 1788 to 1793, Alessandro Malaspina outlined plans for construction of a canal.

Numerous canals were built in other countries in the late 18th and early 19th centuries. The success of the Erie Canal through central New York in the United States in the 1820s and the collapse of the Spanish Empire in Latin America resulted in growing American interest in building an inter-oceanic canal. Beginning in 1826, US officials began negotiations with Gran Colombia (present-day Colombia, Venezuela, Ecuador, and Panama), hoping to gain a concession to build a canal. Jealous of their newly gained independence and fearing domination by the more powerful United States, president Simón Bolívar and New Granada officials declined American offers. After the collapse of Gran Colombia, New Granada remained unstable under constant government intrigue.

Great Britain attempted to develop a canal in 1843. According to the New-York Daily Tribune, 24 August 1843, Barings Bank of London and the Republic of New Granada entered into a contract for the construction of a canal across the Isthmus of Darien (Isthmus of Panama). They referred to it as the Atlantic and Pacific Canal, and it was a wholly British endeavor. Projected for completion in five years, the plan was never carried out. At nearly the same time, other ideas were floated, including a canal (and/or a railroad) across Mexico's Isthmus of Tehuantepec. That did not develop, either.

In 1846, the Mallarino–Bidlack Treaty, negotiated between the US and New Granada, granted the United States transit rights and the right to intervene militarily in the isthmus. In 1848, the discovery of gold in California, on the West Coast of the United States, generated renewed interest in a canal crossing between the Atlantic and Pacific oceans. William Henry Aspinwall, who had won the federal subsidy to build and operate the Pacific mail steamships at around the same time, benefited from the gold discovery. Aspinwall's route included steamship legs from New York City to Panama, and from Panama to California, with an overland portage through Panama. This route with an overland leg in Panama was soon frequently traveled, as it provided one of the fastest connections between San Francisco, California, and the East Coast cities, about 40 days' transit in total. Nearly all the gold that was shipped out of California went by the fast Panama route. Several new and larger paddle steamers were soon plying this new route, including private steamship lines owned by American entrepreneur Cornelius Vanderbilt that made use of an overland route through Nicaragua, and the unfortunate SS Central America.

In 1850, the United States began construction of the Panama Railroad (now called the Panama Railway) to cross the isthmus; it opened in 1855. This overland link became a vital piece of Western Hemisphere infrastructure, greatly facilitating trade. The later canal route was constructed parallel to it, as it had helped clear dense forests. An all-water route between the oceans was still the goal. In 1855, William Kennish, a Manx -born engineer working for the United States government, surveyed the isthmus and issued a report on a route for a proposed Panama Canal. His report was published as a book entitled The Practicability and Importance of a Ship Canal to Connect the Atlantic and Pacific Oceans.

In 1876, Lucien Napoléon Bonaparte Wyse and his chief assistant Armand Réclus, both officers and engineers of the French Navy, explored several routes in the Darien-Atrato regions and made proposals including the construction of tunnels and locks. A second Isthmian exploratory visit began on 6 December 1877, where two routes were explored in Panama, the San Blas route and a route from Limon Bay to Panama City, the current Canal route. The French had achieved success in building the Suez Canal in the Middle East. While it was a lengthy project, they were encouraged to plan for a canal to cross the Panamanian isthmus. Wyse went to Bogotá and on 20 March 1878, signed a treaty, in the name of the Société civile internationale du Canal interocéanique par l'isthme du Darien headed by general Étienne Türr, with the Colombian government, known as the Wyse concession, to build an interoceanic canal through Panama.
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