With the press of a button at 2 p.m. on October 10, 1913, President Woodrow Wilson changed the world. The button sent an electrical current through 4,000 miles of telegraph lines, connecting his desk in the Oval Office to an 8-ton pile of dynamite in the Latin American country of Panama.

The explosives were stacked at the base of a dike holding back millions of gallons of water. When Wilson detonated the dynamite, dirt, rocks, and gravel flew sky-high, releasing the pent-up waters into a 51-mile-long canal that linked the Pacific Ocean to the Atlantic for the first time. It turned the centuries-old dream of a maritime shortcut through Central America into reality. Completing the canal—a 17-year undertaking that was one of the biggest building projects ever launched—ushered in a new era of global trade, while helping cement the United States’ dominance as a world power.

“The construction of the Panama Canal was spectacular on every level,” says Julie Greene, a historian and author of The Canal Builders. “It not only asserted the United States’ tremendous power, but it did so in a way that stressed the ideals we most wanted to be associated with: a nation whose strength was built on technological, scientific, and medical know-how.”

On October 10, 1913, President Woodrow Wilson changed the world. He pressed a button that sent an electrical current through 4,000 miles of telegraph lines. The lines connected his desk in the Oval Office to an 8-ton pile of dynamite in the Latin American country of Panama.

The explosives were stacked at the base of an embankment holding back millions of gallons of water. Wilson detonated the dynamite. Dirt, rocks, and gravel flew into the air. Water was released into a 51-mile-long canal that linked the Pacific Ocean to the Atlantic for the first time. Finally, there was a shortcut through Central America. It took 17 years to complete one of the biggest building projects ever launched. It was the beginning of a new era of global trade, and building the canal helped strengthen the United States’ dominance as a world power.

“The construction of the Panama Canal was spectacular on every level,” says Julie Greene, a historian and author of The Canal Builders. “It not only asserted the United States’ tremendous power, but it did so in a way that stressed the ideals we most wanted to be associated with: a nation whose strength was built on technological, scientific, and medical know-how.”

The Panama Canal, which was built and owned by the U.S., cut transit times around South America in half and was a miracle of engineering. At a cost of $350 million (about $11 billion today) and with the loss of at least 5,600 lives to disease and accidents, it was also the most expensive construction project in U.S. history at the time.

Today, some 13,000 to 14,000 vessels—approximately 6 percent of global trade—pass through the canal annually. That includes some 40 percent of all American container traffic, making the U.S. the canal’s top user. And in recent months, the canal has been making headlines because President Trump has said that he wants to take back the canal after the U.S. agreed to hand it over to Panama 48 years ago.

The Panama Canal was built and owned by the U.S. The miracle of engineering cut transit times around South America in half. It was also the most expensive construction project in U.S. history at the time. It cost $350 million (about $11 billion today) and at least 5,600 people lost their lives to disease and accidents.

Today approximately 6 percent of global trade passes through the canal every year. Approximately 13,000 to 14,000 vessels use the canal, including some 40 percent of all American container traffic. The U.S. is the canal’s top user. And in recent months, the canal has been making headlines. President Trump has said that he wants to take back the canal after the U.S. agreed to hand it over to Panama 48 years ago.

The idea of building a canal across the narrow isthmus of land connecting North and South America dates to the early 16th century, when European explorers developed an overland trading shortcut—first by mule, then by train—between the Atlantic and Pacific Oceans. In 1881, a French company tried, and failed, to carve a sea-level canal out of the unforgiving terrain, leaving rusting equipment, scarred earth, and the bodies of thousands of workers who had succumbed to disease and accidents.

In 1901, a new visionary appeared on the scene: Theodore Roosevelt, a brash and ambitious American president who saw in the failed French attempt the opportunity to establish the U.S. as a rising global force.

“Building a canal across Panama was one of Roosevelt’s greatest ambitions,” says Greene. “He believed that the United States was at a point in its history, in its economic strength, that it could take its place as one of the great powers of the world.”

The idea of building a canal across the narrow isthmus of land connecting North and South America dates to the early 16th century. European explorers had developed an overland trading shortcut between the Atlantic and Pacific Oceans. People traveled by mule initially and later by train. In 1881, a French company tried, and failed, to carve a sea-level canal out of the unforgiving terrain. They left rusting equipment, scarred earth, and the bodies of thousands of workers who had died from disease and accidents.

In 1901, Theodore Roosevelt, a brash and ambitious American president, saw an opportunity in the failed French attempt. He felt the project was a way to establish the U.S. as a rising global force.

“Building a canal across Panama was one of Roosevelt’s greatest ambitions,” says Greene. “He believed that the United States was at a point in its history, in its economic strength, that it could take its place as one of the great powers of the world.”

At the time, Panama was an impoverished province of Colombia, which didn’t share Roosevelt’s vision for an American canal carved out of its sovereign territory. Undeterred, the new president threw America’s military weight behind a successful Panamanian independence movement by dispatching warships to the region.

On November 6, 1903, the U.S. recognized the newly independent Republic of Panama. Two weeks later, Roosevelt’s representatives met with a Frenchman serving as Panama’s envoy. They negotiated a treaty granting the U.S. the permanent “use, occupation, and control” of a 10-mile-wide strip of land stretching from coast to coast across the isthmus for “the construction, maintenance, operation, sanitation, and protection” of a canal. In exchange, Panama got a U.S. guarantee to protect their independence, a $10 million upfront payment, and $250,000 in annual rent.

“The new president of Panama nearly fainted when he learned what had been given away,” says Greene.

At the time, Panama was an impoverished province of Colombia. The Colombian government didn’t share Roosevelt’s vision for an American canal built in its sovereign territory. Undeterred, the new president sent warships to the region to support a successful Panamanian independence movement.

 On November 6, 1903, the U.S. recognized the newly independent Republic of Panama. Two weeks later, Roosevelt’s representatives met with a Frenchman serving as Panama’s envoy. They negotiated a treaty granting the U.S. the permanent “use, occupation, and control” of a 10-mile-wide strip of land stretching from coast to coast across the isthmus for “the construction, maintenance, operation, sanitation, and protection” of a canal. In exchange, Panama got a U.S. guarantee to protect their independence. They also received a $10 million upfront payment and $250,000 in annual rent.

“The new president of Panama nearly fainted when he learned what had been given away,” says Greene.

Not only did Panamanians lose power over a trading route that they’d controlled since the 16th century, they were also forced from the Canal Zone—a busy crossroads that had been home to towns, villages, and fertile farmland, says Panamanian historian Marixa Lasso, author of Erased: The Untold Story of the Panama Canal. Lasso estimates that 40,000 people were evicted to make room for the canal.

“It was a great achievement for the Americans,” she says. “But for Panamanians, it also meant dispossession and dislocation.”

Construction started on May 4, 1904. Laborers dug most of the canal’s 51-mile span through coastal lowlands. But an 8-mile traverse through the rugged mountains of the interior required the construction of a series of locks designed to lift ships 85 feet above sea level to a man-made lake and then back down again on the other side.

Building the locks, the dams, and the canal required more workers than Panama could provide. Roughly 40,000 laborers, mostly from British colonies in the Caribbean, were brought in, overseen by American engineers and foremen. They worked 10-hour days under extreme conditions, drenched by rain, assaulted by heat, and exposed to malaria. Accidents were so common that American prosthetic limb manufacturers competed for contracts. By the time Wilson pressed the button that connected the two oceans in 1913, construction costs had more than doubled from the original estimate.

With the deal the Panamanians lost power over a trading route that they’d controlled since the 16th century. The people were also forced from the Canal Zone—a busy crossroads that had been home to towns, villages, and fertile farmland, says Panamanian historian Marixa Lasso, author of Erased: The Untold Story of the Panama Canal. Lasso estimates that 40,000 people had to move to make room for the canal.

“It was a great achievement for the Americans,” she says. “But for Panamanians, it also meant dispossession and dislocation.”

Construction started on May 4, 1904. Laborers dug most of the canal’s 51-mile span through coastal lowlands. But an 8-mile traverse through the rugged mountains of the interior required the construction of a series of locks. They were designed to lift ships 85 feet above sea level to a man-made lake and then back down again on the other side.

The construction of the locks, the dams, and the canal required more workers than Panama could provide. Roughly 40,000 laborers were brought in—mostly from British colonies in the Caribbean. They were overseen by American engineers and foremen. They worked 10-hour days under extreme conditions. They endured heavy rain, high heat, and malaria exposure. Accidents were so common that American prosthetic limb manufacturers competed for contracts. By the time Wilson pressed the button in 1913, construction costs had more than doubled from the original estimate.

For the Americans, at least, the canal was worth it, supercharging trade between the West and East Coasts. George Washington University business professor Noel Maurer, who co-wrote an economic history of the canal, estimates that by 1939, the canal had increased U.S. gross domestic product by 4 percent, or the equivalent of $32 billion today. The Panamanians, however, saw almost no benefit at all.

But the boom years eventually ended. Widespread use of diesel train engines and the expansion of the U.S. interstate highway system in the late 1950s made it cheaper to ship goods to the West Coast by truck and rail. And, like most state-run monopolies, the canal was poorly run and plagued by inefficiencies. By the 1960s, the canal’s economic impact on the U.S. was negligible, says Maurer.

Meanwhile, the moral cost of keeping the canal was rising. In 1956, Egypt nationalized the Suez Canal, seizing control from the French and the British and sparking a wave of anti-colonial protests around the world. In Panama, Egypt’s action inspired a movement to reclaim the Canal Zone. Deadly anti-American riots broke out among Panamanians in 1964. To tame resentment, the U.S. channeled increasing amounts of foreign aid, dwarfing whatever cash the canal produced for the U.S. Treasury, according to Maurer. Politicians on both sides of the aisle were clamoring to get rid of the canal, calling it a drain on resources.

For the Americans, at least, the canal was worth it. Trade between the West and East Coasts became supercharged. George Washington University business professor Noel Maurer, who co-wrote an economic history of the canal, estimates that by 1939, the canal had increased U.S. gross domestic product by 4 percent. (This is the equivalent of $32 billion today.) The Panamanians, however, saw almost no benefit at all.

The reliance on the canal eventually ended. Diesel train engines and the expansion of the U.S. interstate highway system in the late 1950s made it cheaper to ship goods to the West Coast by truck and rail. The canal was also poorly run and plagued by inefficiencies. By the 1960s, the canal’s economic impact on the U.S. was negligible, says Maurer.

Meanwhile, the moral cost of keeping the canal was rising. In 1956, Egypt nationalized the Suez Canal, seizing control from the French and the British. This move sparked a wave of anti-colonial protests around the world. Egypt’s action inspired a movement in Panama to reclaim the Canal Zone. In 1964,  deadly anti-American riots broke out among Panamanians. To ease tensions, the U.S. sent increasing amounts of foreign aid. According to Maurer, the aid dwarfed the cash the canal produced for the U.S. Treasury. Politicians on both sides of the aisle wanted to get rid of the canal, calling it a drain on resources.

On September 7, 1977, President Jimmy Carter signed a new pair of treaties, agreeing to hand control of the canal to Panama by the millennium in exchange for a guarantee of neutrality. Lasso says the handover on New Year’s Eve 1999 was a moment of extreme happiness for Panamanians.

“We finally got the backbone of our country back, and we could reclaim our role as a crossroads for the world,” she says.

Within a few years of taking over, the Panama Canal Authority, an autonomous government agency, had transformed the passageway into a vibrant economic engine. It invested in long-needed repairs, streamlined the fee structure, and changed the route schedule to eliminate the risk of costly collisions. In 2016, it invested $6 billion to double capacity. The canal is now a strategic hub for maritime trade, generating $4.8 billion in transit fees for the Panamanian economy in 2023—4 percent of the country’s GDP.

On September 7, 1977, President Jimmy Carter signed a new pair of treaties. He agreed to hand control of the canal to Panama by the millennium in exchange for a guarantee of neutrality. Lasso says the handover on New Year’s Eve 1999 was a moment of extreme happiness for Panamanians.

“We finally got the backbone of our country back, and we could reclaim our role as a crossroads for the world,” she says.

Within a few years of taking over, the Panama Canal Authority, an autonomous government agency, had transformed the passageway into a vibrant economic engine. It invested in long-needed repairs, streamlined the fee structure, and changed the route schedule to eliminate the risk of costly collisions. In 2016, it invested $6 billion to double capacity. The canal is now a strategic hub for maritime trade. It generated $4.8 billion in transit fees for the Panamanian economy in 2023—4 percent of the country’s GDP.

However, the canal faces new challenges to its long-term viability. Prolonged drought caused by climate change has reduced the amount of water available to flood the locks, limiting the number and size of boats that can traverse the canal. The authority has had to raise prices to stay profitable, even as it reduces traffic. The best solution, a new reservoir, would displace thousands of people, cost more than $1.5 billion to build, and take several years to complete.

President Trump recently accused Panama of charging U.S. ships “exorbitant” transit fees, though according to the Panama Canal Authority, all ships pay tolls based on their size and cargo. He has also said that the Chinese have taken over canal operations. While China doesn’t control the passageway, a Hong Kong-based private company manages ports on either side of the isthmus, which some experts say raises security concerns for the U.S. because of China’s authority over Hong Kong.

At one point, Trump raised the threat of retaking the canal through military force. Last month, a U.S. investor group agreed to buy the Hong-Kong-managed ports, bringing down the tension. Still, the president’s comments have rattled Panamanians.

“Giving [the canal] back to Panama righted an historic wrong, and created a new and good relationship between both countries,” says Lasso, the Panamanian historian. “I hope that relationship continues to benefit both the U.S. and Panama, as well as the world, with the benefits of efficient trade.” 

However, the canal faces new challenges to its sustainability. Prolonged drought caused by climate change has reduced the amount of water available to flood the locks. This limits the number and size of boats that can travel through the canal. The authority has had to raise prices to stay profitable, even as it reduces traffic. The best solution is a new reservoir. However, this is a costly option. It would displace thousands of people, cost more than $1.5 billion to build, and take several years to complete.

President Trump recently accused Panama of charging U.S. ships “exorbitant” transit fees. The Panama Canal Authority says all ships pay tolls based on their size and cargo. He has also said that the Chinese have taken over canal operations. While China doesn’t control the passageway, a Hong Kong-based private company manages ports on either side of the isthmus. Experts say this raises security concerns for the U.S. because of China’s authority over Hong Kong.

At one point, Trump raised the threat of retaking the canal through military force. Last month, a U.S. investor group agreed to buy the Hong-Kong-managed ports. The tension was relieved, but the president’s comments have rattled Panamanians.

“Giving the [canal] back to Panama righted an historic wrong, and created a new and good relationship between both countries,” says Lasso, the Panamanian historian. “I hope that relationship continues to benefit both the U.S. and Panama, as well as the world, with the benefits of efficient trade.”