The boundary of Alaska next became a subject for arbitration. Since the valley of the Yukon had attracted its first great migration in the summer of 1897 the mining-camps had steadily increased in importance. Many of these were on the Canadian side of the meridian of 141°, and all were reached either by the river steamers or the trails from the south. The most important ports of entry were Dyea and Skaguay, at the head of the Lynn Canal, a long fiord projecting some ninety miles into the continent. From these ports the prospector plunged inland, climbed the Chilkoot or the Chilkat Pass, and followed one of several overland trails to the Upper Yukon.
The importance given to Dyea and Skaguay revived the question of their ownership and with this the boundary of Alaska. When Seward bought Alaska for the United States in 1867 he received it with the boundaries agreed upon at St. Petersburg between England and Russia in 1825. These followed the meridian of 141° from Mount St. Elias to the Arctic Ocean, and followed the irregularities of the shore-line southeast from that mountain to the Pacific at 54° 40´, North Latitude. The narrow coast strip was described as following the windings (sinuosités) of the shore, bounded by the shore mountains if possible, but in no case to be more than thirty miles wide. The narrow Lynn Canal pierces the thirty-mile strip, and the dispute turned chiefly upon interpretation: whether the canal should be regarded as a sinuosité of the shore, around which the boundary must go, or as a stream which it might properly cross.
For thirty years after 1867 the British and Canadian government maps treated the Lynn Canal and other similar fiords as American, but it became convenient for Canada, after 1897, to urge that the boundary should cross the canal and leave Dyea and Skaguay on British soil. A Canadian and American Joint High Commission, meeting in 1898, had been unable to adjust the controversy. In 1903 it was submitted to a tribunal, three to a side, which sat in London. It was doubtful whether the three American adjudicators, Root, Lodge, and Turner, were all "jurists of repute," as the treaty provided, but the arguments of the American counsel convinced Lord Chief Justice Alverstone, one of the British adjudicators, and his vote, added to the American three, gave a verdict that sustained most of the claims of the United States.
In Cuba and Venezuela, at The Hague, and in the Alaskan matter, Roosevelt and Hay showed at once a firmness and a reasonableness that attracted European attention to American diplomacy as never before. The subject of American diplomacy became a common study in American universities. England and Germany appeared to be desirous of conciliating the United States. The German Emperor bought a steam yacht in the United States, sent his brother, Prince Henry of Prussia, to attend the launching, and sent as Ambassador a German nobleman who had long been a personal friend of the President. The reputation for firmness was enhanced, but that for fairness was lessened by the next episode, which involved the Colombian State of Panama.
The dangerous voyage of the Oregon in 1898 completed the conviction of the United States that an isthmian canal must be constructed, and that the Clayton-Bulwer Treaty was no longer adequate. The activity of De Lesseps and his French company at Panama had raised the question about 1880, but nothing had been done to weaken the treaty that obstructed American construction and control until Hay undertook a negotiation under the direction of McKinley in the fall of 1899. Congress was in the midst of a debate over a Nicaragua canal scheme when it was announced that on February 5, 1900, Hay and Lord Pauncefote had signed a treaty opening the canal to American construction, but providing for its neutralization. The treaty forbade the fortification of the canal or its use as an instrument of war. It was killed by amendment in the Senate, but on November 18, 1901, Lord Pauncefote signed a second treaty, by which Great Britain waived all her old rights save that of equal treatment for all users of the canal, and left the future waterway to the discretion of the United States. With the way thus opened,—for the Senate promptly confirmed this treaty,—a new study of routes and methods was hurried to completion.
An Isthmian Commission, created by the United States in 1899, was ready to report upon a route when the second Hay-Pauncefote Treaty was concluded. The practicable routes had been reduced in number to two, at Panama, and through Nicaragua. The former was under the control of the French company, which placed so high a price upon its concession that the commission recommended the Nicaragua route as, on the whole, more available. In Congress there was a strong predisposition in favor of this same route, but during 1902 this was weakened. Senator Hanna preferred the Panama route and worked effectively for it. The French Panama Company, frightened by the popularity of the Nicaragua route, reduced its price. The earthquake and volcanic eruption on the Island of Martinique reminded the world that Nicaragua was nearer the zone of active volcanic life, and hence more exposed to danger, than Panama. In June Congress empowered the President to select the route and build a canal at once.
Negotiations with Colombia for the right to build at Panama dragged on through 1902 and 1903. Weakened by continuous revolution, that Republic realized that the isthmian right of way was its most valuable asset. Only after prolonged discussion did its Government authorize its Minister at Washington to sign a treaty reserving Colombian sovereignty over the strip, but giving to the United States the canal concession in return for $10,000,000 in cash and an annuity of $250,000. This treaty was signed in Washington in January, 1903, and was received as a triumph for the diplomacy of Hay and Roosevelt. It was ratified in March by the Senate, in spite of a last filibuster by the friends of Nicaragua, but the Colombian Congress rejected the treaty and adjourned.
By the autumn of 1903 Roosevelt had determined upon the route at Panama, the French company had become eager to sell, and the Colombians living on the Isthmus were anxious to have the negotiations ended and the digging begun. In October the President wrote to an intimate friend hoping that there might be a revolt of the Isthmus against Colombia, though disclaiming any intent to provoke one. The friend made the wish public over his own name, but before it appeared in print the revolt had taken place. It was known in advance to the State Department, which telegraphed on November 3, 1903, asking when it was to be precipitated. It took place later on this day, the independence of the Republic of Panama was proclaimed, the United States prevented Colombia from repressing it by force, recognized the new Republic by cable, and on November 18 signed at Washington a treaty with Panama granting the canal concession. "I took Panama," boasted President Roosevelt some years later, when critics denounced his policy as a robbery of a weak neighbor.
The construction of a canal proceeded rapidly, once the diplomatic entanglements had been brushed away. The incidental problems of sanitation, labor, supplies, and engineering were solved promptly and effectively. Congress poured money into the enterprise without restraint, the first boats were passed through the locks in 1914, and in 1915 the formal opening of the canal was celebrated by a naval procession at the Isthmus and an Exposition at San Francisco.
Vigor and certainty of purpose marked the conduct of domestic affairs as well as foreign, but the necessity for the concurrence in these by Congress made the former results less striking than the latter. The appointments of President Roosevelt were such as might be expected from one who had himself devoted six years to the Civil Service Commission. Few of them met with opposition from the reform element. In the South he became involved with local public opinion, especially in the cases of a negro postmistress at Indianola, Mississippi, and the negro collector of the port of Charleston, in which he maintained that although federal appointments ought generally to go to persons acceptable in their districts, the door of opportunity must not be shut against the negro. Within a few weeks of his inauguration he precipitated a severe discussion upon the status of the negro by entertaining Booker T. Washington at the White House. He disciplined Republican leaders in the South who endeavored to exclude negroes from the party organization and to build up a "lily-white" Republican machine.