Nicaragua Canal, proposed waterway between the Atlantic and the Pacific oceans. It would be 172.8 mi (278 km) long and would generally follow the San Juan River, then go through Lake Nicaragua near the southern shore and across the narrow isthmus of Rivas to the Pacific Ocean. First proposed by Henry Clay, the U.S. secretary of state in 1826, the route was an important factor in negotiation of the Clayton-Bulwer Treaty (1850). In more recent times the route has been considered as an adjunct to the Panama Canal; it would shorten the water distance between New York and San Francisco by nearly 500 mi (805 km).
Under the Bryan-Chamorro Treaty (1916), the United States paid Nicaragua $3 million for an option in perpetuity and free of taxation, including 99-year leases to the Corn Islands and a site for a naval base on the Gulf of Fonseca. Costa Rica protested that Costa Rican rights to the San Juan River had been infringed, and El Salvador maintained that the proposed naval base affected both it and Honduras. Both protests were upheld by the Central American Court of Justice. The court rulings were ignored by Nicaragua and the United States. The action was bitterly criticized by Latin Americans and others as an example of U.S. imperialism.