Europeans had dreamed of a Central American canal for ages; even Pres. Ulysses Grant sent 7 feasibility expeditions. As travel and trade in the Western hemisphere increased, a canal became essential. To sail from Atlantic to Pacific, ships sailed Cape Horn, the treacherous South America tip. A New York-San Francisco trip took c21,000 ks!
The isthmus separating Gulf of Panama
from the Caribbean Sea
In Feb 1881, driven by patriotism and capitalised by mainly small investors, the Panama Company began work on a canal that would cross the Colombian isthmus of Panama and unite the Atlantic & Pacific Oceans. This canal would make its stockholders rich, just as the Suez did for its investors. Ferdinand de Lesseps (1805-94) showed the tiny cross-Panama railway had made $7+ million in 6 years although building that railroad HAD cost 6,000+ lives.
Even though he knew little about finance, De Lesseps handled promoting and money-raising for the canal project. His enthusiasm for the project, and his faith in technology, attracted many stockholders. Frenchmen keenly invested because public loans were backed by the French government, thus a patriotic public service.
Even though he knew little about finance, De Lesseps handled promoting and money-raising for the canal project. His enthusiasm for the project, and his faith in technology, attracted many stockholders. Frenchmen keenly invested because public loans were backed by the French government, thus a patriotic public service.
French share certificates
signed by de Lesseps
When work started in 1881, digging progressed slowly but steadily. The French controlled modern equipment, from locomotives to tugboats & dredges, while their crew was made mostly of West Indian & Indian labourers. Then the rains began. De Lesseps, who’d visited Panama only in the dry season, had disregarded the warnings of men who knew Panama intimately. Now his crew discovered impassable jungle, torrential rain, insects, snakes, swamps, hellish heat and smallpox. In 1881 the French recorded 60 deaths from disease. In 1882 deaths doubled. In 1883 420 died mainly from malaria and yellow fever, but the Co. often fired sick labourers to reduce medical costs. Doctors at the French hospital at Ancon worked hard but 3 out of 4 men hospitalised there died.
Chagres River crossed the canal route 14 times! De Lesseps' decided to dam and divert the river, ignoring engineers’ advice re the impossible task. But in the rainy season, this River rose to a monstrous torrent that swept everything away. Chest deep in mud, the French force continued. The rain and Chagres often destroyed what engineering and hard labour won; mudslides buried men, supplies, machines.
In 1887 Gustave Eiffel agreed to build Panama Canal's locks. This was his biggest contract AND the riskiest. So he was granted major financial advantages and solid guarantees, allowing him to collect his profit as soon as the work began.
When the Canal Co failed in Dec 1888, French investments were lost and Panama meant fraud; c$287 m had been spent, 50 million cubic ms of rock were moved, 11 miles of canal dug & 20,000 men killed. The money ended and shareholders voted to dissolve the Co, placing it in legal receivership.
The worthless Canal Co. stock made investors furious, demanding the French government conduct an 1893 Inquiry which named many individuals and institutions. The bribes, slush funds and influence peddling also proved that many legislators were involved!! Key financiers Baron de Reinach and Cornelius Herz allegedly gave bribes to targets. The public claimed that the VERY REASON for their confidence, government backing of loans, was the key factor in the crisis. And although some culprits were imprisoned or fined, de Reinach died before he was sentenced. Ferdinand & Charles de Lesseps, and Gustave Eiffel, were sentenced to (non-enforced) prison terms. Herz fled to England. Eventually the burden was born ONLY the c800,000 French citizens who saw their investments eliminated.
So President Roosevelt took up the cause. In 1901, Roosevelt passionately spoke of the Panama Canal to Congress. In 1902 the U.S agreed to buy rights to the French canal property and equipment for c$40 mill and U.S Dept of War began negotiating a Panama treaty with Colombia.
When Colombia slowed negotiations, Roosevelt & Panamanian business interests collaborated on a revolution lasting briefly. Colombian soldiers in Colón were each bribed $50 to down arms; USS Nashville cruised off the Panamanian coast in support. In Nov 1903, the nation of Panama was born.
The U.S took control. Americans had written the Panamanian Constitution in advance, after a payment of $10 million secured a canal zone and rights to build. The pro-canal lobbyist Phillipe Bunau-Varilla, installed as Panamanian minister to the U.S., signed a treaty favourable to US interests. The $40 million given to J.P Morgan for distribution to French stockholders faded amid rumours of larceny.
The Americans' first year in Panama (1904) replicated the French disaster. The chief engineer, John F Wallace, developed no action plan; the food was putrid and living conditions abysmal. Disease struck, 3 out of 4 Americans went home, and Wallace soon followed. The Americans had poured $128 useless millions into the swamps of Panama.
Wallace's replacement was clever John Stevens who’d built the Great Northern Railroad across the Pacific NW. He ultimately saved the troubled canal with a new action plan i.e a well-housed, well-fed, disease-free labour force. Dr William Gorgas, who’d earlier eradicated yellow fever in Havana by killing mosquitoes, organised sanitation. Workers drained swamps, swept ditches, paved roads, installed plumbing and sprayed pesticides. Towns rose with housing, schools, churches, shops and halls.
Pres. Roosevelt visiting the Canal
1906, PBS
After 9 months of Capitol Hill lobbying, the push for Roosevelt’s favoured Lake and Lock Canal succeeded and the canal's engineering was changed. Stevens planned to dam the Chagres to create the vast Gatun Lake in Panama's interior where a series of locks could raise ships from the Atlantic side to the level of the lake. The boats could cross the lake, then descend by another set of locks to the Pacific. This plan was nearly identical to one proposed by French engineer Godin de Lépinay in 1879 when M de Lesseps promoted his sea-level plan. With sanitation complete, gigantic steam shovels scooped tons of earth, and railroad cars ran on double tracks, dumping tailings on the Chagres dam.
By Dec 1905 yellow fever had been eradicated. In Nov 1906 Roosevelt happily visited the canal. In Feb 1907, Chief Engineer Stevens resigned and Col. George Goethals, an Army engineer who built lock-type canals, quickly took over.
First ships ready to test the Canal, 1913
At Gatun Locks on the Atlantic side, workers poured concrete for a wall 8' wide, 12' high and 133 miles long. They built culverts/railroad tunnels to channel water from Gatun Lake into the locks. Pittsburgh's furnaces roared as 50+ mills, foundries and machine shops churned out the metalwork. There were lost equipment and deaths, but progress!
In May 1913, steam shovels broke through the Culebra Cut and the last cement was poured at Gatun locks. The Chagres filled Gatun Lake, and engineers prepared for the canal's first trial run in Sept. The end was near! The Panama Canal opened officially on Aug 1914. The world scarcely noticed this truly great engineering project because German troops were driving across Belgium to Paris.
In May 1913, steam shovels broke through the Culebra Cut and the last cement was poured at Gatun locks. The Chagres filled Gatun Lake, and engineers prepared for the canal's first trial run in Sept. The end was near! The Panama Canal opened officially on Aug 1914. The world scarcely noticed this truly great engineering project because German troops were driving across Belgium to Paris.
A cruise ship sails down the completed Canal
Many thanks to PBS
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