Construction of a lock canal was decided on in 1906. The first three years were spent in the development of construction facilities, surveys, and disease control. The canal was informally opened Aug. 15, 1914; formal dedication took place on July 12, 1920. The total cost was $336,650,000, and c.240 million cu yd (184 million cu m) of earth were evacuated. Madden Dam, which stores additional water for the locks, was completed in 1935.
In 1939 treaty amendments increased Panama's annuity to $434,000 (retroactive to 1934 to offset dollar devaluation), provided for a transisthmian highway, and (at Panama's insistence) abrogated the U.S. guarantee of the neutrality and sovereignty of Panama. Although in the same year Congress authorized construction of a third set of locks, World War II intervened, and the plans were shelved. In 1955 the annuity was raised to $1,930,000, and the United States undertook to build a high-level bridge (completed 1962) over the Pacific side of the canal. The Gaillard Cut was widened in 1969 to permit two-way traffic. The largest modern merchant and fighting ships, however, cannot pass through the canal.