Hay-Pauncefote Treaty, 1901–02, an agreement by which Great Britain recognized the right of the United States to build a canal across Nicaragua or Panama. Secretary of State John Hay and British Ambassador Lord Pauncefote negotiated the treaty. The pact abolished the Clayton-Bulwer Treaty of 1850, under which both countries were to control and protect the proposed canal.
The first draft treaty, drawn up in 1900, provided that the canal could not be fortified and should be open to all ships of all nations in both peace and war. The Senate adopted amendments, which Great Britain would not accept. The second treaty, ratified by both sides, did not forbid the United States to fortify the canal, but stated that ships of all nations should use the canal on equal terms. In 1912 Congress provided that United States ships engaged in domestic commerce should be exempted from canal tolls. In 1914 Congress yielded to British protests and repealed this provision.