History of the Panama Canal
During World War II, the canal proved a vital part of the U.S. military strategy, allowing ships to transfer easily between the Atlantic and Pacific. Politically, the Canal remained a territory of the United States until 1977, when the Torrijos–Carter Treaties began the process of transferring territorial control of the Panama Canal Zone to Panama, a process completed on 31 December 1999.
History of Panama (1821–1903)
Throughout the period of turmoil, the United States had retained its interest in building a canal through either Nicaragua or Panama. An obstacle to this goal was overcome in December 1901 when the United States and Britain signed the Hay–Pauncefote Treaty. This treaty nullified the provisions of the Clayton–Bulwer Treaty of 1850 and signified British acceptance of a canal constructed solely by or under the auspices of the United States with guarantees of neutrality.