Ancient history

The Panama Canal, technical prowess and financial sinking

Lock of the Panama Canal photographed in 1913 • WIKIPEMEDIA COMMONS

Bringing together the two shores of Central America was a very old project. From the XVI th century, the Spanish conquerors built a road – the “Camino Real”, then the “Camino de Cruces” – to ship gold cargoes from Peru to Spain. We are also thinking of a sea route, but the technical means are lacking.

An engineer's dream

It was only at the beginning of the 19 th century that the German scientist and explorer Alexander von Humboldt imagined to connect the Chagres river and the city of Panama. Competing projects are also emerging in Tehuantepec in Mexico, around Lake Nicaragua or, further south, in the Darién forest. In 1848, the Californian gold rush marked a decisive stage. To reach this new Eldorado more quickly, the Americans built a railway across the isthmus. The works of the Panama Canal Railway Company began in 1850. They were long and difficult – nearly 12,000 workers died there – but the Panama-Colón line (76 km) was opened in 1855. It was therefore the best argument to justify the existence of a canal in Panama.

Things accelerated in the 1870s. French engineer Lucien Napoléon Bonaparte-Wyse (a great-nephew of Napoleon III) led an exploration mission in the isthmus and obtained a concession from the Colombian government. The idea seduced Ferdinand de Lesseps, then crowned with his glory in Suez. In March 1879, the Geographical Society organized an international congress in Paris, where five projects were presented. Despite numerous unfavorable opinions, it was the plan of the level canal defended by Lesseps that prevailed. He then bought the Wyse concession and founded the Universal Company of the Interoceanic Canal of Panama. His eldest son Charles de Lesseps, to whom the financing was entrusted, struggled to raise the planned capital, but the first groundbreaking was given in January 1880.

Malaria and torrential rains

On site, nothing is simple. We have to deal with the hostility of the Americans, who manage the railway and take a dim view of the arrival of the French. But above all, you have to take into account the Panamanian climate. In this region where the rainy season can last nearly eight months, the heat and humidity make the jungle the kingdom of malaria and yellow fever. It is immediately a disaster. The corpses pile up at the Notre-Dame-du-Canal hospital, hastily built by the Company. Jules Dingler, the main engineer, thus sees his daughter, his wife and his son taken away by fever a few months away. Added to this dramatic mortality are natural difficulties. In September 1882, a violent earthquake affected the region.

But it is at the Culebra, a massif in which a trench of 100 meters in altitude must be dug, that the teams come up against the worst obstacles. We work there in terrible conditions, in torrential rains and landslides. In 1884, 20,000 workers were at work on the site, most of them blacks from the West Indies, Cuba and Jamaica. The painter Paul Gauguin committed himself there for a few months in 1887. If the technical obstacles did not prevent the receptions from being linked together at the Hôtel Central, where the Company was based, they were on the other hand to force Lesseps to change strategy:in January 1887, he opted for the construction of locks, the design of which was entrusted to Gustave Eiffel.

The scandal buries the French project

But expenses soared and the Company's stock price fell dangerously. To bail out the coffers, Lesseps called on banker Jacques de Reinach, who in 1888 issued two million lot bonds. It is a new failure, which leads to the withdrawal of the banks. In February 1889, after ten years of disastrous management, the Universal Interoceanic Canal Company was forced into liquidation, dragging thousands of small carriers down with it.

Despite the work that had just resumed, the French canal project is well and truly buried. Three years later, in 1892, a political scandal was added to the financial meltdown. Reinach's suicide and the escape of crooked intermediaries Cornelius Herz and Émile Arton reveal the existence of enormous corruption. If we are not moved by the commissions levied by the banks or the bribes given to the newspapers, the sums paid to parliamentarians so that they vote the law authorizing the issuance of bonds unleash public opinion.

The staggering work and poor management lead to the bankruptcy of the company in charge of the construction of the canal, while a huge political and financial scandal is revealed.

Led with a bang by the nationalist right, which castigates the “chequards” and denounces the monopolization of the Republic by the Jews, the affair exacerbates the anti-parliamentary flame. The street taunts the President of the Council Émile Loubet, nicknamed “Panamá I st », and sings the Grand Complainte fin-de-cheque . The responsibility of the administrators, Lesseps in the lead, is just as crushing. Accumulating disastrous evaluations, technical errors and budgetary negligence, they try to break the impasse by operating a financial pump that delivers the company to market predators. Lesseps died in 1894, the same year that the judicial authorities ordered the liquidation of a new company.

Philippe Bunau-Varilla, former chief engineer of the canal, then worked to save what could be saved. He approached the Russian and then English governments, before turning to the United States, which was then interested in Nicaragua. In the company of the American lawyer William Cromwell, he multiplies the initiatives to convince of the superiority of Panama.

Handover

In 1902, their efforts led to the vote of the Spooner amendment, by which the American Congress officially committed to taking over the site. The context is indeed favourable. In Cuba, Puerto Rico, the Hawaiian Islands or the Philippines, the Spanish-American War of 1898 had just given the United States an “empire” that the new president, Theodore Roosevelt, intended to strengthen. He instructs Secretary of State John Hay, the man of the “open door” in China, to negotiate with the Colombian government. But the reluctance of Bogotá decides him to support a group of Panamanian notables, who dream of independence.

The coup took place in November 1903. Led by Manuel Amador, it was supervised by Bunau-Varilla and supported by the United States, which immediately recognized the new state. Having become ambassador of Panama, Bunau-Varilla signs a treaty with Hay by which the United States buys the French Company 40 million dollars. They pay another 10 million to Panama, which grants them perpetual sovereignty over the canal and an area of ​​8 kilometers on either side. An annual annuity of $250,000 supplements the dependency of this new rump state.

The United States completes the job

From 1904, American engineers reinvested in the site, which had been abandoned for more than ten years. However, they are unanimous in recognizing the work of the French, particularly in terms of excavations and infrastructure. But the priority is immediately given to the eradication of diseases. Military doctor William Gorgas declares a merciless war against stegomyias and anophelines, the mosquitoes that spread malaria.

The railway line, nerve of the project, is also improved. Equipped with the famous Bucyrus mechanical excavators, US Army engineers set to work. Among them is George W. Goethals, who supervises the project and leads it to completion. Three sets of locks are undertaken, as well as an artificial lake to contain the floods of the Chagres.

The end of the construction of the canal took place in a climate of extreme tension, between strikes, riots and segregation.

However, the business remains difficult. The American authorities have to deal with a restless mass of 45,000 workers, mainly from the Caribbean, but also from China, Mexico and Spain. Racial segregation is the rule there. Housing, food, care and above all salaries differ greatly, depending on the gold roll system reserved for white Americans and the silver roll for blacks and foreigners.

The work took place in a climate of extreme tension, strikes and riots, such as the one that broke out in July 1912 in the Panamanian district of Cocoa Grove. Sanitation measures did not solve all the problems:5,600 workers died during the American construction period, including 4,500 blacks. As for the Culebra and its landslides, it remains until the end the nightmare of engineers and workers.

A masterpiece of President Theodore Roosevelt, who supported the project during his two terms from 1901 to 1909, the canal cost Americans some $352 million. But it immediately stands out as one of the new wonders of the modern world and will remain, until its return to Panama in 2000, the jewel of the American empire. As for the French, they have definitely lost their footing in America.

Find out more
The Illustrated Adventure of the French in Panama, M. de Banville, Canal Valley, 2012.
The Panamá Scandal, J.-Y. Mollier, Fayard, 1991.

Timeline
1513
The conquistador Vasco Núñez de Balboa crosses the isthmus and discovers the “South Sea” (the Pacific).
1519
Foundation of the city of Panama.
1855
Opening of the Panama-Colón railway line.
1879
Ferdinand de Lesseps founds the Universal Company of the Interoceanic Canal of Panama.
1889
Bankruptcy of the Company, which leads to the cessation of work on the canal.
1892
The “Panama scandal” breaks out in Paris.
1902
The United States Congress decides to buy the yard.
1903
Panama declares its independence and separates from Colombia.
1904
Resumption of work by the Americans.
1914
Inauguration of the Panama Canal.

The Panama Scandal
In 1892, the newspaper La Libre Parole reveals that 104 parliamentarians have received large sums to promote a law authorizing the Company to issue new bonds. The case sparked an outbreak of anti-parliamentarianism and anti-Semitism which weakened the regime. Many political figures are involved, sometimes wrongly like Georges Clemenceau, who is cleared by justice.