Early in the nineteenth century, the Government of the United States became interested in the possibility of building a transisthmian canal. It was equally concerned with the problem of assuring to American citizens the free use of any canal which might be built. A treaty concluded with New Granada in 1846, stipulated "that the right of way or transit across the Isthmus of Panama upon any modes of communication that now exist, or that may be hereafter constructed, shall be open and free to the Government and citizens of the United States," in return for which the United States guaranteed the neutrality of the isthmus and the freedom of transit there, as well as the rights of sovereignty and property of New Granada therein.
In 1850, after a controversy arising from the activities of Great Britain on the Mosquito Coast, the United States entered into the Clayton-Bulwer Treaty, which provided that neither the American nor the British Government would seek any exclusive control over a canal through Nicaragua. Other agreements regarding the proposed waterway were made from time to time with Nicaragua and with Costa Rica. A commission created by Act of Congress in 1872 gathered information regarding the various routes proposed and reported in 1876 that a canal through Nicaragua offered greater advantages with fewer difficulties than any other project thus far studied. Further investigations in Nicaragua were made by commissions appointed in 1895 and 1897.
Several unsuccessful attempts to construct a canal had been made by private companies, both American and European. Repeated efforts were made in Congress to obtain official assistance for the Maritime Canal Company of Nicaragua, an American concern which had obtained a concession from Nicaragua in 1887, but which ceased work because of financial difficulties in 1893. Meanwhile, a French company had been endeavoring to construct a canal in Panama, under a concession granted by Colombia in 1878. The company had failed after some years because of financial mismanagement, but a new company had taken up the work, and the Colombian Government had thrice granted extensions of the time within which the canal was to be completed. The first company had done a very large amount of excavation, but its successor, unable to obtain capital, was obviously unable to make further progress. It had become evident by the end of the century that the canal would be built only if the power and resources of the United States Government itself were devoted to the task. During the Spanish-American War, the spectacular voyage of the Oregon around South America strikingly demonstrated the necessity for a canal from the standpoint of national defense, and stimulated American interest in the project. An Act of Congress, approved March 3, 1899, authorized a full investigation of all practicable canal routes, including particularly those in Nicaragua and Panama, with a view to the construction of a canal by the United States.