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How did the Panama Canal boost commerce?

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Quick Answer

The Panama Canal boosted commerce because it opened up a shorter route between the Atlantic and Pacific oceans. This allowed the transportation of goods to be more cost-efficient not only for the United States but also for the world.

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Full Answer

The Panama Canal became the largest and most expensive engineering project of its time. In 1880, the French, led by Ferdinand de Lesseps, saw the potential economic gains that a canal in Central America could bring. They began excavation, but the working conditions, along with tropical diseases, pushed the French project into bankruptcy. In the years that followed, more and more American businessmen and politicians realized the economic potential of a Panama Canal. In 1904, the United States, under president Theodore Roosevelt, bought the excavation and equipment from the French. After helping Panama win independence from Columbia, Roosevelt began new construction on the canal.

The project was completed and the canal officially opened for use on Aug. 15, 1914. The canal significantly reduced the amount of time and cost it took to travel between the Atlantic and Pacific oceans. This opening allowed for the West Coast of the United States and other Pacific nations to become integrated into the world economy. Commodities such as timber and petroleum were commonly brought through the canal from the West Coast. It caused a significant drop in the prices of goods in services throughout the world.

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