The time period from 1880-1930 is considered by historians to be a Neocolonialism era in Latin America. The term Neocolonialism can also extend beyond a time period to mean "the state of a poor, third-world country [who] enjoy[s] formal political independence, but continue[s] to remain economically dependent on rich, industrialized countries" (Becker). Even after independence, Latin America was dominated by the United States and Great Britain which left lingering feelings of colonial rule. During this time period, Latin America grew economically but developed much less. Panama, for example, developed many cash crops, constructed a railroad, and built a canal yet the success of these ventures benefited other more developed countries more than Panama itself.

Examples of Resource Extraction or Foreign Intervention during NeocolonialismEdit

All of panama 085

The flower of a banana tree (Family Musaceae)

Banana Republics

Independence was far from achieved when Panama became a separate nation. Neocolonialism continued to suck the country dry of all of its natural resources. Banana republics serve as a prime example of this phenomenon. A banana republic refers to a country that is politically unstable, dependent on limited agriculture, and its plantations are owned by outsiders. A company named United Fruit made many Latin American countries into banana republics. Throughout Panama, for example, United Fruit and other large corporations harvested the land, resources, and labor of the region to create banana republics for the sole purpose of exportation (Chasteen). The problem with the export economy was that nearly all of the country’s raw materials are sold to foreign countries at low costs and the developing country is forced to import manufactured goods and products at much higher costs. This undermined the ideology of independence for Panama, keeping the country in a state of reliance on the established export economy.


United States presence in Panama increased for two reasons: the California Gold Rush and construction of a trans-isthmian railroad using New York Capital and West Indies labor. The California Gold Rush in1849 lead thousands to cross Panama. North Americans who were headed West to find gold often traveled by boat from the East coast to Panama, across the ithmus, and by boat to the West coast because this was easier and faster than traveling by wagon across North America. Panama New York investors of the Pacific Mail Steamship Company obtained a concession to build a trans-isthmian railroad that in effect, cut travel time from three days by mule and boat to three hours. The railroad earned more than $7 million for the New York investors in the first six years of operation (Lindsay-Poland 14). With a New York company building the railroad, Panama profited little and the outside ownership aided again in Panama's dependency.

The creation of the railroad created a false sense of prosperity for the people in Panama. Although there was a lot of income moving in and out of the area along the route this commerce did not make a lasting impact on Panama's economy, nor did it provide economic development. Even though there was a large exchange of money directly around the railroad, the exchange left no lasting improvements for the communities that it filtered through. The only benefits of increased employment along the route and increased revenue were countered by the fact that communities that had previously been on route before the railroad’s development were bypassed, and in effect lost their source of revenue and employment (Conniff).

US Military Interventions (Lindsay-Poland 16)

As military troops increased in the isthmus and established a secure US presence, foreign occupation prevented Panama from developing its lands and economy independently.





September 19-22, 1856

“To protect American interests during an insurrection”

September 17-November 18, 1902

“To place armed guards in all trains crossing the isthmus”

September 27- October 7,1860

Local disturbance; with British participation

November 1903

Colombian military prevented from putting down independence


Political disturbance

November 17-24, 1904

“To protect American lives and property at Ancón at the time of a threatened insurrection”

March 9-10, 1856

“To protect the lives and property of American residents during a revolution”

1908, 1910, 1912

U.S. Troops supervised elections outside the Canal Zone

April 1868

“To protect passengers and treasure in transit during the absence of local police or troops”

1918- 1920

“For police duty, according at Chiriquí during electoral disturbances and subsequent unrest”

May 7-22 and September 23- October 9, 1873

“To protect American interests during hostilities over possession of the government of the state of Panama”

April 1921

U.S. Navel squadrons held maneuvers on both sides of the isthmus during a border dispute between Panama and Costa Rica

March and April 1885

“To re-establish free transit during revolutionary activity”

October 12-23, 1925

Panama City: “Strikes and rent riots led to the landing of about six hundred American troops to keep order and protect American interests”

March 8-9, 1895

“To protect American interests during an attack on the town of Bocas del Toro by a bandit chieftain”

January 9,1964

Panama City, Colón: To stop Panamanian students who sought to raise the Panamanian flag in the Canal Zone, U.S. Soldiers killed twenty-one and wounded more than five hundred

November 20- December 4, 1901

“To protect American property on the isthmus and to keep transit lines open during serious revolutionary disturbances”; with French participation

December 20, 1989

U.S. Invades with twenty-five thousand troops to protect U.S. Lives and the canal, stop drug trafficking, and restore democracy

April 16-22, 1902

Bocas del Toro occupied at request of United Fruit Company

December 5, 1990

Panama City: U.S. Troops intervene to put down a protest by police call for higher wages and political reforms

Quotes from testimony by Secretary of State Dean Rusk in 1962 to justify possible direct intervention in Cuba. (Senate Committee on Foreign Relations, Situation in Cuba; Michael Conniff, Panama and the United States: The Foreced Alliance.)

The Panama CanalEdit

Panama 207

A boat moving through the Miraflores lock system of the Panama Canal. The Canal allows a ship to get from the Atlantic to the Pacific in about 8 hours

The Panama Canal has a long history of constant disputes over both its construction and ownership. Beginning in 1880, French diplomat Ferdinand de Lesseps started building the Panama Canal, but to disastrous results. One problem he encountered was the difference in tides between the Atlantic and Pacific Oceans which he had forgotten to take into consideration before building the sea-level canal. The French continued to work on the canal until 1889 when they abandoned the project, at which time over 25,000 people had died from malaria and yellow fever (French 6).

In the late 1800s, the U.S. began taking more interest in Latin American affairs. Because Latin America aspired to become a colonial power, like their European counterparts, they needed to find an easier way to have colonies on both coasts of the continent. Central American countries, owing to their close proximity to the United States, became a natural place to obtain colonies (Chasteen 203). In order to maintain a colony on either side of the continent, a canal would be needed to decrease the traveling time from the Atlantic Ocean to the Pacific Ocean. In 1898, the United States declared war on Spain and occupied Spanish territories in Latin America including Puerto Rico and Cuba (Chasteen 203). Afterwards, the United States gained the Philippines and Puerto Rico and annexed Hawaii. For the U.S. to gain an easier access to their new territories, Theodore Roosevelt proposed to complete the canal that the French had begun through Panama. At the time, Panama was a part of Columbia, so Roosevelt stepped in and helped Panama separate from Colombia, resulting in the Panamanian government allowing him to “buy the rights to build and control a canal” (Chasteen 204).

The U.S. began construction on the Panama Canal in 1904 with George Washington Goethals as the chief engineer (Greene). Goethals took many precautions so that the U.S. would not end in failure like the French. He designed a canal that operated by a lock system to address the problems associated with the original sea-level canal. In addition, Goethals did his best to eliminate disease, which was mainly being transferred by mosquitoes. To do this he drained, filled in, or sprayed ditches where mosquitoes are likely to breed to control transmission of malaria and yellow fever.

During the time of canal construction, the Panama Canal Zone was under U.S. control. Despite Panama's recent independence from Columbia, Panama was for the most part continuing to operate under outside control. Since the Zone was U.S. owned and operated, there inequality between U.S. citizens and local citizens (as well as other Latin American workers) working on the canal. These inequalities were reminiscent of colonial rule in Panama before its independence.

In 1904, President Theodore Roosevelt helped outline a policy with secretary of war, William Taft, towards relations the United States and Panama would have in regards to the Canal Zone (Storrs, 1977). This agreement, along with the 1903 Hay-Herrán treaty would be upheld for many years. In 1924, ten years after the completion of the canal, Panamanian President Porras was worried that the new Washington negotiations over the canal would betray the Taft Agreement and allow competing comercial colonies within the Canal Zone (Storrs, 1977). Porras had reason to worry as 1924 was the year that the 1903 treaty was abrogated by the United States (Woolsey, 1937). Eventually a convention was signed in 1926. Panama rejected the convention and the U.S. senate consequently failed to pass it (Woolsey, 1937).

The Panama Canal, after the negotiations in 1924 failed went through a variety of treaties concerning the canal. These treaties include modifications to the Hay-Bunau-Varilla Treaty of 1903 in 1936 and 1955. It also ends with the ratification of the Torrijos-Carter Treaty in 1977 that eventually led to the transition of the Canal and Canal property to the country of Panama on December 31, 1999. The Canal served as a large source of dependency for Panama on the United States for goods and revenue. This aspect was constantly debated in the treaties between the United States and Panama and led to much hostility throughout the last 100 years. See United States and Panamanian Treaties for more information.

The massive construction of the canal became motivation for a massive immigration of migrant workers, especially from the British colonies of the West Indies. Like previous foreign involvement, after its completion Panama was left with an overabundant workforce in an area that was already lacking enough economic development to support its own population. From Crosby, "the negro in Panama has multiplied exceedingly in a proportion inverse to the amount of work there is for him to perform" (130). It was suggested that the immigrants be repatriated to their native countries after the formation of the canal, however, the Panamanian Government did not force repatriatism, and many immigrants remained in Panama. After the completion of the canal many were left with out employment or purpose. "For the rising generation especially, there can in most instances, apart from the Canal Zone, be no future in a land where the prospects of employment are so meager, and where they are so plainly being given to understand that they are no longer wanted" (Crosby 25). Panama was once again used for its resources and left in a worse state than it had been in originally.


Becker, M. (n.d.). Latin American History - Terms and Definitions. Retrieved April 22, 2010, from