The treaty’s principal provisions (Articles I–VII)
The treaty’s principal provisions, as recorded in the Yale Avalon text, are a straightforward transfer of canal-zone rights from Panama to the United States. Article II grants “the use, occupation and control of a zone of land and land under water for the construction maintenance, operation, sanitation and protection of said Canal of the width of ten miles extending to the distance of five miles on each side of the center line of the route of the Canal to be constructed; the said zone beginning in the Caribbean Sea three marine miles from mean low water mark and extending to and across the Isthmus of Panama into the Pacific ocean to a distance of three marine miles from mean low water mark”: a ten-mile-wide Canal Zone, three miles into the sea at each terminus [1].
Article IV gives the U.S. “all the rights, power and authority within the zone” that the U.S. would have if it were sovereign, while explicitly reserving Panama’s sovereignty over the territory. Article III authorises the U.S. to acquire by purchase, lease, or other means any additional lands or waters outside the Canal Zone that might be needed for the canal’s construction or operation; Article V grants the U.S. the right to fortify the zone and to police it; and Article VII commits the U.S. to compensate private property owners in the zone at the rate of the canal-zone’s assessed value [1].
Article XIV provides for a one-time payment of $10 million by the United States to Panama, and Article XV provides for an annual annuity of $250,000, beginning nine years after ratification. Article XXIII commits the U.S. to maintain the neutrality of the canal and treat traffic on it equally with traffic on U.S. railroads, the basis of the canal’s later neutrality regime [1].
The grant of the Canal Zone was made “in perpetuity”, the treaty’s Article II uses that exact word, and the perpetual, open-ended character of the U.S. concession was the provision that generated the most political conflict over the following seven decades. The same Article II carried a carve-out: although the ten-mile Zone was drawn so as to encompass the urban centers at each terminus, the treaty expressly provided that “the cities of Panama and Colon and the harbors adjacent to said cities, which are included within the boundaries of the zone above described, shall not be included within this grant.” The cities themselves therefore remained nominally Panamanian sovereign territory, but Article III immediately granted the United States, “within the limits of the cities of Panama and Colon and their adjacent harbors,” the right to acquire by purchase or by the exercise of eminent domain “any lands, buildings, water rights or other properties necessary and convenient” for the canal, and to carry out works of sanitation in those cities, including “the collection and disposition of sewage and the distribution of water.” The practical effect was that Panama retained legal title to its two principal cities while the United States acquired the substance of municipal authority over the water, sewerage, and land use that determined whether the cities could function. The combination (perpetual U.S. control of the Zone, a carve-out that left the cities Panamanian in name, and broad U.S. authority over the cities’ land, water, and sanitation in practice) was the legal architecture that made the Canal Zone a U.S.-administered territory in everything but formal sovereignty for the next seventy-six years [1].
The treaty is short (twenty-six articles covering territorial rights, payments, jurisdiction, and neutralisation) and it transferred rights to the United States substantially broader than the Hay–Herrán Treaty that Colombia had rejected in August 1903. The Hay–Herrán Treaty would have created a six-mile-wide Canal Zone; the Hay–Bunau-Varilla Treaty created a ten-mile-wide Canal Zone with full U.S. rights within it. The Hay–Herrán Treaty was never signed by Panama; the Hay–Bunau-Varilla Treaty was signed by a plenipotentiary whose authority was not ratified by the Panamanian government until after the canal was already underway [2].
Why Bunau-Varilla signed without a Panamanian delegate
The unusual circumstance of the treaty’s signature, that it was signed by a French plenipotentiary acting on behalf of a Panamanian government that had not yet authorised his signature, was a product of the 3 November 1903 declaration’s tight timing. The Republic of Panama was declared on 3 November; Bunau-Varilla arrived in Washington on 13 November; the treaty was signed on 18 November. There was no time, in this five-day window, for a Panamanian delegation to travel from Panama to Washington and negotiate. The compromise that Bunau-Varilla, Hay, and the Roosevelt administration accepted was that Bunau-Varilla would sign in his capacity as plenipotentiary, that the Republic of Panama would ratify the treaty on receipt of the cable, and that the canal construction would begin while the ratification was being formalised [2].
The constitutional legitimacy of Bunau-Varilla’s signature was contested in Panama City from the start. The provisional government of Panama’s first president, Manuel Amador Guerrero, cabled the U.S. State Department on 18 November 1903 the same day the treaty was signed, accepting the terms; but the wider Panamanian public, and many members of the provisional cabinet, felt that the canal-zone terms were not what the declaration of independence had called for. The complaint, that the canal-zone concession was too wide and the annuity too low, was the basis of recurring political tension between the Republic of Panama and the U.S. for the next seventy years [1].
The treaty’s ratification in Panama and early criticism
The Republic of Panama’s National Assembly ratified the treaty on 2 December 1903, two weeks after the signature, by a vote that the contemporary U.S. and Panamanian press reported as decisive but that several opposition members said they had signed under pressure. The ratification cleared the way for the U.S. to begin canal work, but the treaty’s political legitimacy in Panama remained contested. Three substantive criticisms appeared in the contemporary Panamanian press and in the correspondence of the U.S. State Department: (1) the Canal Zone was wider than the Hay–Herrán Treaty that Colombia had rejected, and the comparison to a “giveaway” of Panamanian territory was common; (2) the $10M one-time payment and the $250,000 annual annuity were lower than the figures the Isthmian Canal Commission had previously suggested; (3) Bunau-Varilla, a French national who had not been in Panama for fifteen years, was the wrong person to negotiate on behalf of the new republic. None of these criticisms affected the treaty’s legal force under international law, but all three became recurring themes in Panamanian domestic politics through the 1920s and 1930s [2].
The treaty’s text was not made fully public in Panama until early 1904, and the full extent of the U.S. rights within the Canal Zone (including the rights to fortify, to police, and to expropriate private property) became the basis of Panamanian protests through the 1920s, 1930s, and 1940s. The 1964 Flag Riots (covered in The US Invasion of Panama: December 1989) were the largest single episode of Panamanian protest against the canal-zone arrangement; they were triggered by an incident involving the Canal Zone’s flag rules but were the immediate expression of an accumulated grievance over the 1903 treaty that had built up over six decades [1].
The canal-zone concession and the 1979 transition
The Hay–Bunau-Varilla Treaty did not set an end date for the Canal Zone concession; it gave the U.S. “the use, occupation and control” of the zone “in perpetuity”, while the canal itself was to be neutral “in time of war as in time of peace”. The permanence of the U.S. concession, and the failure of the 1903 treaty to provide for reversion, was the basis of the diplomatic effort between 1964 and 1977 to renegotiate the canal’s status. The 1977 Carter–Torrijos Treaties (covered in The Torrijos Era) superseded the Hay–Bunau-Varilla Treaty and transferred the canal and the Canal Zone to Panama on 31 December 1999, ending ninety-six years of U.S. control [2].
The 1903 treaty is still on the books as the legal foundation of the Canal Zone and the canal, but it has been effectively superseded. It remains the document on which most U.S. legal claims to the canal were based during the first three-quarters of the twentieth century, including the 1989 U.S. invasion of Panama, whose legal basis rested on an interpretation of the 1903 treaty’s neutrality commitments that was challenged by UN General Assembly Resolution 44/240 (adopted 29 December 1989 by a vote of 75-20-40) and by the Organization of American States in subsequent resolutions [1].
Where to take this next
The Hay–Bunau-Varilla Treaty was signed fifteen days after the declaration of independence, and it set the legal frame for everything that followed. For the moment of the declaration itself and the U.S. Navy’s role, see Separation from Colombia: November 3, 1903. For what the treaty authorised and what the actual construction looked like, see Canal Construction Era: 1904–1914. For how the treaty was eventually superseded by the Carter–Torrijos Treaties and the canal was transferred to Panama in 1999, see The Canal Transfer Era (1990–1999).
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