The Panama Canal was conceived of in the 16th century. The French were the first people to attempt to construct a canal through Panama. America originally wanted to build a canal in Nicaragua instead of Panama. Construction occurred in two stages.
In 1513, Spanish explorer Vasco Nunez de Balboa discovered that the Isthmus of Panama was a slim land bridge separating the Atlantic and Pacific oceans. In 1534, Charles V of Spain ordered a survey to determine if a waterway could be built. Surveyors eventually decided that construction of a ship canal was impossible.
The French attempt to build a canal through Panama was initiated by Ferdinand de Lesseps, who constructed the Suez Canal. The French canal project began in January 1881 and ended in 1889 after spending $287 million and losing an estimated 22,000 lives to disease and accidents. Lesseps was later tried and convicted of misappropriation of funds.
America originally thought a canal through Nicaragua would be a much more plausible route. Philippe-Jean Bunau-Varilla, a French engineer, persuaded the Americans that Panama was a better alternative. The American Congress approved the purchase of French assets in Panama. The United States then negotiated the Hay-Bunau-Varilla Treaty, which gave America the right to a zone of more than 500 square miles in which it could construct a canal.