Immediately following this action the Panama Canal Company was organized under the general laws of France, with Ferdinand de Lesseps as its president.  The concession granted in 1878 by Colombia was purchased by the company, and the stock was successfully floated in December, 1880.  The two years following were devoted largely to surveys, examinations, and preliminary work.  In the first plan adopted the Canal was to be 29.5 feet deep, with a ruling bottom width of 72 feet.  Leaving Colon, the Canal passed through low ground to the valley of the Chagres River at Gatun, a distance of about 6 miles; thence through this valley, for 21 miles, to Obispo, where, leaving the river, it crossed the continental divide at Culebra by means of a tunnel, and reached the Pacific through the valley of the Rio Grande.  The difference in the tides of the two oceans, 9 inches in either direction from the mean in the Atlantic and from 9 to 11 feet from the same datum in the Pacific, was to be overcome and the final currents reduced by a proper sloping of the bottom of the Pacific portion of the Canal.  No provisions were made for the control of the Chagres River.

In the early eighties after a study of the flow due to the tidal differences, a tidal lock near the Pacific was provided.  Various schemes were also proposed for the control of the Chagres, the most prominent being the construction of a dam at Gamboa.  The dam as proposed afterward proved to be impracticable, and this problem remained, for the time being, unsolved.  The tunnel through the divide was also abandoned in favor of an open cut.

Work was prosecuted on the sea-level canal until 1887, when a change to the lock type was made, in order to secure the use of the Canal for navigation as soon as possible.  It was agreed at that time that the change in plan did not contemplate abandonment of the sea-level Canal, which was ultimately to be secured, but merely its postponement for the time being.  In this new plan the summit level was placed above the flood line of the Chagres River, to be supplied with water from that stream by pumps.  Work was pushed forward until 1889, when the company went into bankruptcy; and on February 4th that year a liquidator was appointed to take charge of its affairs.  Work was suspended on May 15, 1889.  The new Panama Canal Company was organized in October, 1894, when work was again resumed, on the plan recommended by a commission of engineers.

This plan contemplated a sea-level canal from Limon Bay to Bohio, where a dam across the valley created a lake extending to Bas Obispo, the difference in level being overcome by two locks; the summit level extended from Bas Obispo to Paraiso, reached by two more locks, and was supplied with water by a feeder from an artificial reservoir created by a dam at Alhajuela, in the upper Chagres Valley.  Four locks were located on the Pacific side, the two middle ones at Pedro Miguel combined in a flight.