<P> In 1894, a second French company, the Compagnie Nouvelle du Canal de Panama, was created to take over the project . A minimal workforce of a few thousand people was employed primarily to comply with the terms of the Colombian Panama Canal concession, to run the Panama Railroad, and to maintain the existing excavation and equipment in salable condition . The company sought a buyer for these assets, with an asking price of US $109,000,000 . In the meantime they continued with enough activity to maintain their franchise . Phillipe Bunau - Varilla, the French manager of the New Panama Canal Company, eventually managed to persuade de Lesseps that a lock - and - lake canal was more realistic than a sea - level canal . </P> <P> At this time, the President and the Senate of the United States were interested in establishing a canal across the isthmus, with some favoring a canal across Nicaragua and others advocating the purchase of the French interests in Panama . Bunau - Varilla, who was seeking American involvement, asked for $100 million, but accepted $40 million in the face of the Nicaraguan option . In June 1902, the U.S. Senate voted in favor of pursuing the Panamanian option, provided the necessary rights could be obtained, in the Spooner Act . </P> <P> On January 22, 1903, the Hay--Herrán Treaty was signed by United States Secretary of State John M. Hay and Colombian Chargé Dr. Tomás Herrán . For $10 million and an annual payment it would have granted the United States a renewable lease in perpetuity from Colombia on the land proposed for the canal . The treaty was ratified by the U.S. Senate on March 14, 1903, but the Senate of Colombia did not ratify it . Bunau - Varilla told President Theodore Roosevelt and Hay of a possible revolt by Panamanian rebels who aimed to separate from Colombia, and hoped that the United States would support the rebels with U.S. troops and money . Roosevelt changed tactics, based in part on the Mallarino--Bidlack Treaty of 1846, and actively supported the separation of Panama from Colombia and, shortly after recognizing Panama, signed a treaty with the new Panamanian government under similar terms to the Hay--Herrán Treaty . </P> <P> On November 2, 1903, U.S. warships blocked sea lanes for possible Colombian troop movements en route to put down the rebellion . Panama declared independence on November 3, 1903 . The United States quickly recognized the new nation . On November 6, 1903, Philippe Bunau - Varilla, as Panama's ambassador to the United States, signed the Hay--Bunau - Varilla Treaty, granting rights to the United States to build and indefinitely administer the Panama Canal Zone and its defenses . This is sometimes misinterpreted as the "99 - year lease" because of misleading wording included in article 22 of the agreement . Almost immediately, the treaty was condemned by many Panamanians as an infringement on their country's new national sovereignty . This would later become a contentious diplomatic issue among Colombia, Panama, and the United States . </P>

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