Fully Armed and Operational: The U.S. Government and the Panama Canal

The Panama Canal has largely been the domain of social and diplomatic historians. However, business historians have seldom broached the subject seriously. Nevertheless, the federal government’s direct engagement with the construction from 1904 to 1914 demonstrated a sharp departure from its historically silent and hidden role in the development of large-scale infrastructure, domestically or abroad. For all intents and purposes, the federal government became more concretely a firm in 1904, as it assumed all the powers necessary to complete the canal’s construction efficiently. The American state directly hired, imported, and managed its West Indian labor force; enforced a strict sanitary regime on the Canal Zone; and operated the canal through the Isthmian Canal Commission. In this paper, I explain why the federal government assumed these responsibilities instead of contracting the majority of the work to a private firm. And in the process, I also make the case for seeing the federal government as a firm. Business history has all but overthrown the hard distinction between the public and private spheres, demonstrating quite effectively the ways many economic players straddle the line and occupy both spaces. By analyzing the records of the Executive and Legislative branches of the U.S. government, I demonstrate how officials in the federal government understood their traditional roles and the roles they were innovating.