Final answer:
Nicaragua was geographically suitable for a canal due to its narrow land bridge between two bodies of water, but it was rejected due to political unrest. The U.S. opted for Panama after assisting its independence, based on a mix of stability, geopolitical strategy, and the facilitation of international trade.
Step-by-step explanation:
Nicaragua presented geographical suitability for the construction of a canal, offering a shortcut between the Caribbean and the Pacific, with only twelve miles of land separating the Pacific Ocean, Lake Nicaragua, and the river that flowed to the Atlantic. This route would significantly cut the travel time from the East Coast to the West Coast of the United States.
The idea of a Nicaraguan canal was ultimately rejected due to political unrest. The filibustering of William Walker in Nicaragua concerned American businessmen like Cornelius Vanderbilt and demonstrated the instability of the region. Moreover, in Panama, the US saw a more stable option after aiding its independence from Colombia and quickly securing a deal for the Canal Zone. Thus, despite Nicaragua's geographical advantage, concerns over political stability steered the United States to choose Panama for the construction of the canal. Later developments, such as the return of the Panama Canal Zone to Panama by President Carter, showed sensitivity to international law and paved the way for Panama to manage the canal, encouraging economic globalization for the country.