Journal of Economic History


What T. R. Took: The Economic Impact of the Panama Canal, 1903–1937


a1 Associate Professor of Business Administration, Business, Government, and the International Economy unit, Harvard Business School, Soldiers Field, Boston, MA 02163–9986. E-mail:

a2 Research Associate, Harvard Business School, Soldiers Field, Boston, MA 02163–9986. E-mail:


The Panama Canal was one of the largest public investments of its time. In the first decade of its operation, the canal produced significant social returns for the United States. Most of these returns were due to the transportation of petroleum from California to the East Coast. The United States also succeeded in leveraging the threat of military force to obtain a much better deal from the Panamanian government than it could have negotiated otherwise.

“I took the Isthmus.” President Theodore Roosevelt, 1904

“Why, it's ours, we stole it fair and square.” Senator Samuel Hayakawa, 1977


We would like to give special thanks to Alan Dye, Steve Haber, Aldo Musacchio, and Kris Mitchener for their willingness to read and extensively comment on earlier versions of this article. We would also like to thank Eric Hilt, Claudia Goldin, Jonathan Liebowitz, Bill Summerhill, Peter Temin, Jeff Williamson, and the other participants in Harvard University's Economic History Workshop for their comments and criticisms. In addition, special thanks are due to Phil Hoffman and two anonymous referees from this JOURNAL. Their comments and suggestions went far above and beyond the norm, and this article is immeasurably improved for them. Any and all remaining errors are, of course, fully our own.