From 1903 to 1979, the territory was controlled by the United States, which had purchased the land from its private and public owners, built the canal and financed its construction.

Although King Charles I was enthusiastic and ordered preliminary works started, his officials in Panama soon realized that such an undertaking was beyond the capabilities of 16th-century technology.

The road came to be crucial to Spain's economy, as treasure obtained along the Pacific coast of South America was offloaded at Panama City and hauled through the jungle to the Atlantic port of Nombre de Dios, close to present-day Colón.

[citation needed] In 1836, U.S. statesman Charles Biddle reached an agreement with the New Granadan government to replace the old road with an improved one or a railroad, running from Panama City on the Pacific coast to the Chagres River, where a steamship service would allow passengers and freight to continue to Colón.

In 1841, with Panama in rebellion again, British interests secured a right of way over the isthmus from the insurgent regime and occupied Nicaraguan ports that might have served as the Atlantic terminus of a canal.

[5][6] In 1846, the new US envoy to Bogotá, Benjamin Bidlack, was surprised when, soon after his arrival, the New Granadans proposed that the United States be the guarantor of the neutrality of the isthmus.

The resulting Mallarino–Bidlack Treaty allowed the United States to intervene militarily to ensure that the interoceanic road (and when it was built, the Panama Railroad as well) would not be disrupted.

The French efforts eventually failed, but with Panama apparently unavailable, the United States considered possible canal sites in Mexico and Nicaragua.

During the war, American warships in the Atlantic seeking to reach battle zones in the Pacific had been forced to round Cape Horn.

Influential naval pundits, such as Captain Alfred Thayer Mahan, urged the construction of a Central American canal.

A Frenchman who had worked on his nation's canal efforts, Philippe Bunau-Varilla, represented Panamanian insurgents; he met with Roosevelt and with Secretary of State John Hay, who saw to it that his principals received covert support.

When the revolution came in November 1903, the United States intervened to protect the rebels, who succeeded in taking over the province, declaring it independent as the Republic of Panama.

The Panamanians were minded to disavow the treaty, but Bunau-Varilla told the new government that if Panama did not agree, the United States would withdraw its protection and make the best terms it could with Colombia.

The Panamanians agreed, even adding a provision to the new constitution, at US request, allowing the larger nation to intervene to preserve public order.

[18] A number of departments were specified in the order, with others to be established as needed by the Governor of the Panama Canal with approval of the President and under the supervision of the Secretary of War.

[19][20] The US Secretary of War stated that the air forces and anti-aircraft artillery covering the Canal Zone must be greatly augmented.

In 1952, the Panama Canal Company was required to go on a break-even basis in an announcement made in the form of the president's budget submission to the United States Congress.

[26] Though company officials had been involved in previewing the requirement, there was no disclosure in advance, even though the Bureau of the Budget directed that the new régime become effective on March 1.

[27] Rate adjustments in housing and other employee services would be required and a form of valuation, compared to a property tax, would be used to determine each division's contribution to the Canal Zone Government.

Over time, though, the existence of the Canal Zone, a political exclave of the United States that cut Panama geographically in half and had its own courts, police, and civil government, became a cause of conflict between the two countries.

The origins of this system are unclear, but it was the practice on the 19th-century Panama Railroad to pay Americans in US gold and local workers in silver coin.

[33] In the early days of the system, bosses could promote exceptional workers from silver to gold, but this practice soon ceased as race came to be the determining factor.

As a result, the Panama Canal West Indian Employees Association (PCWIEA) was created in 1924 to fill this vacuum of representation.

[37] The PCWIEA did not garner much support on the Canal Zone because of its restrictive membership policies and the haunting of the 1920 strike and its damaging consequences.

The government furnished power, water, coal for cooking, ice for iceboxes, lawn care, groundskeeping, garbage disposal, and, for bachelors only, maid service.

The functions of the Commissary quickly grew, generally against the will of the Panamanian government, which saw more and more goods and services provided in the Zone rather than in Panama.

Employees and dependents of the Panama Canal Company/Government were not allowed to use the commissaries, exchanges, package stores, theaters, gas stations, and other facilities on the U.S. military installations.

For most nationality purposes under U.S. federal law, the Canal Zone was by considered to be foreign territory and the status persons acquired at birth was governed by Sec.

[52] When John McCain, born in the Zone in 1936 to U.S. parents, became the 2008 Republican Party presidential nominee, there was minor debate over whether he met the presidency's "natural-born Citizen" requirement.

Amateur radio licenses were issued by the United States Federal Communications Commission and carried the prefix KZ5, the initial 'K' indicating a station under American jurisdiction.