129. Memorandum From the Director of the Bureau of the Budget (Hughes) to the Special Assistant to the President (Adams)1


  • Sea level canal in Panama

This is in response to your memorandum of February 82 requesting information as to whether or not there are any plans which indicate the interest of this Administration in a sea level canal in Panama.

[Page 264]

The most recent and complete study of the merits of constructing a sea level canal along the existing route was completed in 1947.3 The report also considered several alternatives. The Governor of the Canal Zone at that time4 recommended construction of the sea level canal at an estimated cost of about $2.5 billion. The report containing this recommendation was submitted to the Congress on December 1, 1947, by President Truman without comment or recommendation. The Bureau of the Budget subsequently obtained the views of interested agencies on the proposal, all of which were generally non-committal. No action has been taken by the Congress and the report has not been printed.

In February 1955, the Bureau of the Budget recommended adversely on legislation (H.R. 3335, 84th Congress)5 to create an Interoceanic Canals Commission for the purpose of making a comprehensive investigation and study of all problems involved in interoceanic canals. The recommendation was based on the fact that the results of a lengthy study of this subject were available in the 1947 report. Further study of the question on the scale contemplated in the legislation did not appear to be necessary.

You will recall that the subject of a sea level canal was brought up by the President in April of last year. Shortly thereafter, you requested that the cost estimates and traffic forecasts presented in the 1947 report be brought up-to-date and that we obtain the current views of the other interested agencies. This information has recently become available and is highlighted below:

Panama Canal Company

Present estimate of cost is $3.6 billion as compared with $2.5 billion in the 1947 report. Level of traffic in year 2000 presently estimated at 65 million net tons as compared with 86.3 million net tons in 1947 report. Present lock canal, with improvements now underway, will be adequate until last decade of this century except for “Queen” vessels, one ore carrier, and Forrestal and modified Essex class aircraft carriers.

Department of Defense (Joint Chiefs of Staff)

Panama Canal is strategically important. Its uninterrupted use is necessary to conduct of a war for movement of troops and strategic commodities. However, conversion to sea level canal should be [Page 265] considered of lower priority than military projects and activities required for security of nation. Entire question should be considered by Presidential Commission.

Atomic Energy Commission

A sea level canal with adjacent terrain appropriately graded would be less vulnerable to the effects of nuclear weapons than the present lock canal.

Department of Commerce

If sea level canal involved an increase in present toll structure, there might be serious economic dislocations and it would be exceedingly harmful to the intercoastal segment of the American Merchant Marine Industry.

Department of State

Negotiations with Republic of Panama would be required if changes in boundary between that country and the Canal Zone are involved, but relations with other countries would not be significantly affected by the sea level canal project.

On the basis of information presently available and particularly in the light of the expressed views of the Joint Chiefs of Staff on relative priorities, we do not believe that the Administration has an active interest in a plan for a sea level canal at Panama at this time. Furthermore, since any decision to build a sea level canal would necessarily stem almost entirely from defense considerations, we believe that creation of a Presidential Commission, as suggested by the Joint Chiefs of Staff, would serve no useful purpose in arriving at the decision. If, however, a Presidential Commission is considered desirable for other reasons, the scope of the duties of the Commission should be limited to consideration of conversion of the present canal to a sea level waterway, taking full advantage of data contained in the 1947 report.

  1. Source: Eisenhower Library, Project Clean Up Records, Panama Canal. Top Secret.
  2. Not found in Department of State or Eisenhower Library files.
  3. Reference is to a report by the Joint Chiefs of Staff, JCS 1778, “Security Aspects of Possible Canal Routes in Central America,” dated May 16, 1947. (JCS Records, CCS 821.1 (5–12–47))
  4. J.C. Mehaffey.
  5. For additional information on this proposed bill, see Congressional Record, 84th Cong., 1st Sess., p. 3607.