An isthmian canal had been the subject of much discussion long before the Panama Canal was constructed; in fact Admiral Alfred Thayer Mahan in his seminal work, The Influence of Sea Power upon History, had argued that if the U.S. were to become a world power, it would have need of an isthmian canal to shorten travel time between the two oceans.
Construction on the canal was originally begun by the same French company which had dug the Suez Canal; but its efforts were disastrous. The company originally offered to sell all its holdings to the U.S. for $109 million, but lowered its price fo $40 million when a commission appointed by President William McKinley determined that a better route lay through Nicaragua. After McKinley's assassination, Theodore Roosevelt became President and sent a warship to Panama, which was then part of Colombia. The Panamanian people staged a revolt, and Colombian troops were prevented from reaching Panama by the presence of U.S. warships. The U.S. immediately recognized Panamanian Independence, and Roosevelt created a Canal Commission to finish construction. The Canal officially opened on August 15, 1914.
The Canal Zone remained a U.S. possession for which the U.S. paid Panama $250,000.00 per year, until President Jimmy Carter signed an agreement to return sovereignty over the Canal Zone to Panama. Panama assumed complete control on December 31, 1999.