“No single great material work which remains to be undertaken on this continent is of such consequence to the American people.”
By this time the U.S. had acquired both Hawaii and the Philippines and set up a base in Cuba. The race of the battle ship Oregon was fresh in memory.
In 1850, the U.S. and Great Britain had signed the Clayton-Bulyer Treaty, an agreement that the two nations together would control a canal in Nicaragua, and it was assumed that would apply to Panama. But by 1901 Great Britain was involved in the Boer War and thoroughly aware of the French problems in Panama. A revised treaty, the Hay-Pauncefote, signed in 1901, left the U.S. free to construct a canal in either area and to defend it.
The decision to build in Panama instead of Nicaragua was settled in June 1902, with a postage stamp probably determining the decision.
The choice between a sea level canal or lock construction was not settled until 1906.