ffl THE PANAMA CANAL ITS HISTORY, ITS POLITICAL ASPECTS, AND FINANCIAL DIFFICULTIES BY J. C. RODRIGUES, LL.B. LONDON SAMPSON LOW, MARSTON, SEARLE, AND RIVINGTON CROWN BUILDINGS, 188 FLEET STREET 1885 PREFACE. IN December 1879 I accepted a special commission from my friend, the editor of the New York World, to go to Panama, meet M. de Lesseps, who was expected there, and write my impressions on his canal scheme in its different bearings. In studying the way in which that enterprise was launched I was led into a most mortify- ing disappointment, for the whole project of the great promoter seemed to me to have been undertaken without any serious studies, and indeed without the common pre- cautions taken by any responsible contractor in works of much less magnitude. Without expressing any opinion on the much-debated question, whether the canal by the Panama Railway line is practicable or not, from the en- gineer's point of view, what had become patent to me was, that people were enticed to go blindly into that scheme. I wrote at great length in that sense for the World, and I also contributed at the time some editorial matter on. the subject for the New York Nation. Since then I have accompanied, with the interest of a. iv PREFACE. student, the development of the enterprise of M. de Lesseps, and what in 1880 might have been a first im- pression has ripened into a full-grown conviction. When, therefore, the editor of the London Financial News last May asked me if I would prepare for his paper a series of articles on the Panama Canal, in which I should frankly state what I thought to be the true condition of the company, I was glad to avail myself of the oppor- tunity thus afforded me to put together some observa- tions that I had been noting for the last five years. Those articles are now, with the permission of the editor, collected in this volume. Had I thought that those articles would eventually be given the more permanent form under which they are now reprinted, a somewhat different method in dealing with the subject would have been followed. To re-write them would, however, require more time than I can con- veniently spare, and thus they have been merely revised. The able editorial comments which appeared along with them were not mine, and of course they are not repro- duced in these pages. The task of writing against the management of the successful hero of the Suez Canal is indeed arduous and thanklers. It is therefore very gratifying to me that, since these articles were prepared, the Economiste Francois has published, on August 8th and i5th, a comprehensive study on the Panama Canal, in which the writer, who is M. Paul Leroy-Beaulieu, arrives at some of the con- PREFACE. v elusions that I have been led to. The chief editor of that respectable journal thinks that unless the company is thoroughly re-organized, " we shall see the most terrible financial disaster of the nineteenth century." Analyzing some of the promises of his great countryman, he arrives at the conclusion that " chaque parole de M. de Lesseps est dementie au bout de quelques mois." He shows very lucidly how preposterous it is to compare Suez to Panama, and to expect from the latter a traffic of 6,000,000 net tons, when Suez has but 8,000,000 tons ; and a gross income of ^"3,600,000, when that of Suez was but ^2,600,000 in 1884. Moreover, M. Leroy-Beaulieu finds " obviously absurd" the proposed tariff of i5f. per ton for Panama, against 8f. for Suez, and he thinks that at that rate Panama will attract,if ever completed, but 1,500,000 tons; although in my own estimate of the probable business of the canal, I have taken for granted that M. de Lesseps will have 5,000,000 tons at 1 5f . each that is to say, that his gross receipts will be ^3,000,000, when those of the Suez Canal, sixteen years after its opening, and uniting, as it does, the most populous countries on the earth, and some of the richest colonies of European States, is yield- ing only ^2,600,000. I am sure that if other editors will investigate this subject fearlessly, they will come into perfect agreement with M. Leroy-Beaulieu. What he now finds out has been palpable to every student of the matter for years. But it must require great courage to tell in France the whole vi PREP ACE. truth about the Panama Canal ; for even in foreign countries there is much prejudice to contend with about the energy and great deeds of M. de Lesseps. For my own part, I will bear with equanimity the temporary odium that the result of the present investigation may bring on me. I know that I was right in 1880, and I firmly believe that I am right now. J. C. E. LONDON : 89 NEW BOND ST. Sept. 1885. CONTENTS. CHA.P. PAGE IXTKODUCTION ........ I I. First explorations of the isthmus .... 5 II. Explorations under the United States Government : its attempts to have a canal built . . . .18 III. The surveys of the present company : how they were made. M. de Lesseps becomes interested in the echeme 39 IV. The terms of the concession. The Congress of 1879 in Paris : how Panama was made to appear as the best line 50 V. M. de Lesseps' first and unsuccessful appeal for funds. His trip to America. Another appeal. Success . 60 VI. Formation of the company. Cutting down the esti- mates 70 VII. Study of the first estimates : how that of the Congress should have been made if there had been proper surveys 82 VIII. Continuation of the same subject . . -92 IX. Definitive organization of the company : ji, 800,000 for the promoters. What was done in 1881-82 and 1882-83 I0 7 X. How the work has progressed since 1883. Unfulfilled promises : manipulation of figures . . . .121 XI. Opinions of American correspondents about the condi- tion of the work 135 viii CONTENTS. CHAP. PA6K XII. Opinions of American naval officers about the condition and prospects of the works and the company . . 145 XIII. The finances of the company : minimum total cost ^107,000,000; minimum annual deficit ^3,300,000 158 XIV. Political questions : the " Monroe Doctrine " . . 173 XV. Political questions : the Clay ton-Bui wer Treaty from 1850 to 1860 191 XVI. Political questions : the Clayton-Buhver Treaty from 1861 to 1882 209 XVII. Political questions : views of Mr. Frelinghuysen and Lord Granville. The best solution . . . .221 XVIII. Conclusion . 233 Postscript 241 THE PANAMA CANAL. INTRODUCTION. WE doubt very much whether the truth about the Panama Canal has ever been frankly told. To a certain extent the whole world is interested in the project just because it is most difficult of realization, and because of the blind faith that every one is inclined to place in the indomitable energy of Ferdinand de Lesseps, the hero of Suez. But after all, when we leave aside all that is legendary about that really remarkable financial diplo- matist, the gigantic undertaking of piercing the isthmus in Central America should be studied in the light of plain facts. Faith in M. de Lesseps may prompt us to say to the granite mountain at Culebra, " Be thou re- moved, be thou cast into the sea ; " but there will always be left in the minds of those who are not French a seed of doubt which will prevent them from believing that such thing will come to pass, and that the immense difficulties, physical, financial, and political, will be removed by mere blind faith. And when we come to consider the Panama Canal Company as it is, the manner in which it came into existence, and the destiny that events are preparing for it, if we only keep open the safety-valve of unreason- ing enthusiasm, and free ourselves from the spell of M. de Lesseps' name, we find that, while the scheme is 2 INTRODUCTION. one of gigantic proportions, it is also one of colossal, if not insuperable, difficulties. A fervid imagination may depict M. de Lesseps, in the robes of the High Priest of Civilization, officiating at the " marriage of oceans " or at the " divorcement of conti- nents." But sober judgment will find in him the plain promoter, who never made a serious study of the scheme ; who, encouraged by his own excessive vanity on one side and the fulsome flattery of his countrymen on the other, has allowed himself to be used as a tool in the hands of ambitious people, who, in plain words, bought his name in order that they might enrich themselves out of the savings of the artless and enthusiastic mass of his own countrymen. We propose to give a general review of this matter of interoceanic communication in Central America, and particularly of the Panama Canal Company. The limited space at our disposal will compel us to be much too con- cise ; but we hope, nevertheless, to be able to leave upon the mind of the reader a truthful idea of the whole range of that question in its many-sided phases. After sketching the various efforts for exploring the isthmus wherever a canal was thought practicable, we shall have to treat of the interest that the United States Govern- ment has always shown in such communication, and how that interest has been manifested by repeated utterances of its leading statesmen of all times, and by expensive and exhaustive explorations. We will then accompany our French friends to the isthmus and see what they knew of it, and how they obtained a concession from Colombia, and, having it in their pockets, hired M. de Lesseps' influence, and, in order to attract capital, convened a "congress" to decide iipon the best route the United States officers at that time having pronounced themselves INTRODUCTION. 3 for the Nicaragua route, for which our French promoters had no concession ; and how such a packed congress was made to decide for the route of the organizers of the con- gress. We will then go with M. de Lesseps to America, after his first failure, and see how he played his part there ; and then coming back with him, we shall have to record the triumph of the promoters in getting their much-coveted money. The dealings of the company will then be studied, not only in Panama, but in Paris. We shall show what it has been doing, how much is still to be done, how much money has been spent, and how much is left with which to finish the work if the work is ever to be finished even if money should be forth- coming. In many respects we are at a great disad- vantage in investigating these matters at this distance from Paris. There everybody is enthusiastic ; almost every newspaper is enlisted actively for the canal ; there is no independent criticism of any kind on the subject, and such adverse rumours about the enterprise as are concocted for special effect on the Bourse are usually so weak and senseless as to deserve no consideration from serious people ; or else the strictures found in some of the newspapers are silly stories invented by themselves, so that they may give a literary raison d'etre to their sub- sidized puffing of the maker of canals. We shall, how- ever, do our best to probe the truth through this deep mass of imposition and trickery. But this is not all. A study of the subject would be incomplete without a survey of its political bearings. Every one knows that but a few months ago the Presi- dent of the United States concluded with Nicaragua a treaty by which that Government agreed to undertake the building of a canal through Nicaragua. The treaty was on the point of being ratified by the Senate, where 4 INTRODUCTION. it received the warmest endorsement of its president pro tempore, Senator Edmunds, a man remarkable for his sound and conservative views, and whom the Americans recognize as one of their leading statesmen. The treaty, however, was not ratified. As a question arose as to the expediency of the United States building a canal through a part of Central America, and keeping the preponderat- ing influence therein, in face of the Clayton-Bulwer treaty between the United States and Great Britain, it was thought better to delay a decision with regard to it until the Government at Washington should come to an amicable understanding with Great Britain. Moreover, it must be remembered that the recent revolutionary troubles in Panama, brought about the armed intervention of the United States, and the con- clusion of another treaty at Bogota, by which Colombia is said to have confirmed the treaty of 1846 with the United States ; thus fully establishing the political im- portance which the United States Government attaches to the canal, probably because it foresees great complica- tions in the isthmus if it does not own and absolutely control it. We propose to show how important this matter is to the United States, and how that Government has been consistently declaring its policy in the premises. Happily there is here in England little or no financial interest in the Lesseps enterprise, and we can examine it with a freedom that cannot be said to be tinged with any degree of partiality or prejudice. ( 5 ) CHAPTER I. FIRST EXPLORATIONS OF THE ISTHMUS. The ancient idea of a canal. Galvao, Galistro, and Humboldt. Nicaragua asks the United States in 1825 to build a canal. Lloyd's concession from New Granada. The King of the Nether- lands tries his hand in 1829. President Jackson and Biddle. The Solomon concession : Garella's surveys in Panama. Castel- lon and Louis Napoleon. California and the canal. Hughes and Uarnard's explorations for a railway. The Panama Railway. Vnnderbilt-Wliite's concession. Col. Childs' survey of the Nica- ragua route. Description of Kelley's munificent explorations. Dr. Cullen's scheme in Darien. Gishorne. Strain's expedition. Great interval of quiet. Gogorza's old maps: the Atrato route. THE idea of piercing the isthmus between the two Americas is almost contemporaneous with the first knowledge of the isthmus itself. The early navigators could not help noticing how near to each other were the two oceans, and how comparatively easy would be (they thought) the cutting of a canal through that narrow strip of land between them. The celebrated Portuguese navigator, Antonio Galvao, as early as 1550, wrote an essay on the subject, wherein he suggested four different lines, one of which was through the Lake of Nicaragua and the other by the Isthmus of Panama. Lopes Gomara, the Spanish historian, mentions in 1551 the four routes, of which he very likely learned from the monograph of Galvao. The idea, however, remained dormant for fully two centuries. One of the earliest exploits of Nelson was B 6 THE PANAMA CANAL. the attack on Port San Juan in 1779, with the ulterior purpose, it appears, of controlling the river and lake communications between the two oceans, of which the fort was supposed to be the best debouche ; fever, how- ever, decimated his crew, and he returned to England. In the meantime, Charles III. of Spain sent out the really first exploring expedition under Manuel Galistro, in 1780 ; but the subsequent political complications in European poh'tics diverted attention from the project. In the beginning of our century, Humboldt, who studied on the spot the problem of piercing the isthmus, strongly indorsed its feasibility ; but all Europe was then, and re- mained for many years afterwards, engaged in a great and general political reorganization. Most of the Spanish colonies in America threw off the yoke of the mother country between 1820 and 1825, and although the first survey of any part of the isthmus did not really take place until twenty years later, the well-known configuration of the isthmus strengthened the belief in the possibility of opening a canal, and the question was now and then ventilated. It is to the great credit of the Spanish Central-American republics that, as soon as they had secured their independence, they devoted themselves to the problem of procuring aid to forward the idea interoceanic communication. In 1823, Lacerda, after- wards governor of Nicaragua, called the attention of the Legislature of the republic to the subject. Two years later we find the Minister of the republic in Washing- ton addressing a note to the Secretary of State, Mr. Clay, urging the United States to co-operate for the construction of a canal, which, he says, should have been built long before. That proposal, dated February 8, 1825, really invited the United States to conclude a treaty for a canal, so as to "perpetually secure the posses- FIRST EX PL OR A TIONS. 7 sion of it to the two nations." At that time no sufficient data had been brought to light to warrant Mr. Clay in committing the United States to a policy which other- wise would have been entirely acceptable to President Adams and to the American people. Mr. Clay appointed a new Minister to Central America, and instructed him to further investigate the matter. In 1826 the Mexican Government ordered a survey of the Tehuantepec to be made by General Orbegozo, who, however, only made a ra.Mial examination. In 1828, Bolivar, President of the republic of New < Jnmada, gave to John A. Lloyd and to Falcmar a com- mission for a reconnaissance, with the immediate object of a roadway between the two oceans. They found the mean height of the Pacific at Panama to be 3-52 feet above that of the Atlantic at the Chagres mouth, and that at low water both oceans are the same quantities below their respective mean levels ; and as to interoceanic communi- cation, they seemed to favour the isthmus at its narrowest region, just where there is a depression in the great range of mountains. One year after the return of Lloyd, the King of the Netherlands, as patron of a private association, arranged with Central America for cutting a canal, " to be opened on same terms to all nations." But the political troubles between Belgium and Holland caused the scheme to mis- carry. For five years no eftbrt was made that was deserving of consideration, until the United States Government despatched Charles Biddle to the isthmus as an agent to investigate what plans, surveys, estimates, DU ^> with the exception of that of Professor Mitchell, which will be found in the annual report of the Coast Survey for 1874, appendix 12, they have not been printed in full. All these reports are exhaustively reviewed by Admiral Ammen in his most important work entitled " The American Interoceanic Ship-canal Question," 1880; and also by Lieutenant J. T. Sullivan in his " Problem of Interoceanic Communication," published by order of the Bureau of Navigation, Washington, 1883, to both of which works we are much indebted. It is beyond our scope to give more than a short notice of these different explorations. Nothing was wanting to make them as thorough as possible under the many diffi- culties that present themselves at the isthmus. The naval officers were aided by able scientific assistants ; and the supply of instruments for astronomical, topographical, and hydrographical work was as complete as money could make it. Between 1870 and 1875 Commander Self ridge ex- 22 THE PANAMA CANAL. amined all the routes in the Darien, except the Truando and the Atrato-San Juan. His plan was to make, " first, a barometric reconnaissance ; and afterwards, if the result justified it, to run a level and transit line so as to de- velop a correct profile." If the profile appeared favour- able, then a level and transit survey for actual location was to be made. The Napipi line was the only one of which he made surveys for actual location, all the other lines having been found unfeasible. The hardships of these expeditions were terrible. The men had to carry their own apparel, food, and necessary implements. Every inch of their route was traversed at the expense of great labour. They had to wear wet clothes the whole day long : they had to maintain a regular battle with snakes and insects, and, what was worse, with fever. Among the routes, Commander Selfridge studied the Cullen route, which he thought to be thoroughly imprac- ticable ; he found elevations of 1,000 and 1,500 feet where Cullen had spoken of but 200. He also examined some of the lines of Kelley's engineers, with whom he could not fully agree. From their combined surveys it would appear that a canal through the Mandinga- Mamoni-Bayano would have a minimum length of 33*25 miles, io'68 miles of which would require tunnelling. By another route, the Nercalagua-Namoni-Bayano, a canal would be but 30*97 miles in length, but the length of tunnel required would be 9-37 miles. By still a third route, the Carti-Mamoni-Bayano, the length would be 31-34 miles, and the tunnel only 8-05. In 1871 Commander Selfridge planned a thorough exploration of the Atrato-Cacarica-Tuyra-Cue line, the Atlantic division being under the command of Lull, who had then been promoted to commander, but volunteered INTEREST OF THE UNITED STA TES. 23 to remain under Shufeldt. These explorations lasted six months, including three months of the rainy season. The harbours for this route are excellent, but the line was found to be utterly impracticable. From the mouth of Cacarica, on the Atrato River (which debouches on the Gulf of Darien), to the Tuyra River, a little below the mouth of its tributary the Chucunaqua, the canal would have been 55 miles long, and would have cost 8250,000,000, or ^50,000,000. The studies disposed of the Gogorza-Lacharme lines, as well as that of Du Puydt, whose data were found to be most incorrect. The Atrato River runs northwards towards the Gulf of Darien, on the Atlantic, and parallel to the coast line of the Pacific, from which it is distant 25 to 50 miles. Commander Selfridge next tried to find a communication suitable for the purposes of a canal between the Atrato and the Pacific. After examining the valleys of the Tacundo, Cuya, and Bojaya, he ascended the Doguado to the Napipi, and found that that was so far the best line. From the Atrato to the Bay of Chiri-Chiri the distance is but 28 miles, and a lock-canal by this route would cost r Commander Selfridge thought, but $61,000,000, or ^12,200,000. In 1875, however, Lieutenant Frederick Collins developed this line at Selfridge's request, and found that, although a canal would be entirely feasible, its minimum length would be 30 miles, while it would cost $98,000,000, or ^19,600,000, and would require a tunnel 3^ miles long. The Panama line was studied in 1875 by Commander Lull, who at the request of the Interoceanic Canal Com- mission, under General Humphreys, followed a route in close proximity to the Panama Railway line. Commander Lull was assisted by U.S. Engineer Menocal, who had been surveying the Nicaragua line. A through cut c 2 24 THE PANAMA CANAL. from tide-water to tide-water was deemed impracticable, and the line was drawn for a lock-canal, which was thought possible at a cost of nearly $100,000,000, or ^20,000,000. The length of this line would be 417 miles from sea to sea ; the summit level was placed at 123*75 feet, to be overcome by the use of twenty- four locks, with a lift of 10*3 feet each, in addition to which a tide- lock was to be placed at the Panama terminus. The route would, moreover, necessitate a viaduct sufficiently ele- vated above the floods of the Chagres River to permit the floods to pass under it. Such a viaduct would be 1,900 feet long, and 44 feet above the Chagres bed. For the supply of water to the summit it was proposed to dam the Chagres, so as to raise its waters 36 feet above their ordinary level, and then conduct them by seven tunnels, 13,700 feet in length, and two aqueducts, altogether measuring more than 10 miles. The Nicaragua, route, which was already quite well known, thanks to the explorations of Col. Childs, and also to the fact that it lies on a much-frequented road, the advantages and disadvantages of which are equally apparent, was explored by Commander Hatfield in 1872, and by Lull and Menocalin 1872-3, and Menocal in 1880. The expedition of Commander Chester Hatfield did not go far enough to give definite results, but it made fre- quent reconnaissances. A better line than Childs' one of the Rio Grande was drawn, commencing at the Rio del Medio to Buena Vista, thence to the valley of the Chacalapa. The heavy rains obliged the party to stop all work after ten weeks, except the survey of the lake, which continued throughout the season. In December 1873 Commander Lull assumed the direction of another expedition. After laborious studies INTEREST OF THE UNITED STA TES. 25 he drew up nine different lines, all of which deserve attention, from Nicaragua Lake to the Pacific. One by one he put all aside except two those by way of the LMJIIS and of the Rio del Medio, which routes conjoin about half-way. In 1880 Mr. A. G. Menocal, U.S.N., once more ex amined this route, and made extensive surveys, proposing a canal with the following dimensions : Width at bottom, 72 feet; at the surface, 106, 128, and 165; 26 feet deep ; length of locks, 600 feet ; width, 70. The line to have eleven locks, six on the Pacific and five on the Atlantic slope. The length of the route to be 173*57 miles, of which there were to be 64 miles of river navigation; 56 miles of lake navigation; 53! miles of canal navigation. The canal proper would be, therefore, less than one-third of the total length. Mr. Menocal estimated such a canal to cost, without contingent expenses or interest on dormant capital, $4M93> 8 39> or ^8,382,000. Such, briefly stated, were the systematic explorations which had been undertaken by the United States Government with the view of solving the problem of the best route for a canal. From amongst them the Government selected those which had an appearance of practicability, and despatched commissions to report upon them. The commission appointed by General Grant to report upon the various plans consisted of General A. A. Humphreys, chief of the U.S. corps of Engineers. Mr. C. P. Patterson, superintendent of the Coast Survey ; and Commodore (now Admiral) Daniel Ammen, chief of the Bureau of Navigation. On February 6, 1876, the committee (which had been appointed in 1872 and 26 THE PANAMA CANAL. was following up the developments of the explorations), gave its decision in a careful report, according to which they, "after a long, careful, and minute study of the several surveys of the various routes across the continent, unanimously report (i) That the route known as the Nicaragua route .... possesses, both for construc- tion and maintenance of a canal, greater advantages, and offers fewer difficulties, from engineering, commercial or economical points of view, than any one of the other routes shown to be practicable by surveys sufficiently in detail to enable a judgment to be formed of their relative merits, as will be briefly presented in the appended memorandum." Such was the judgment of competent men, specially fitted to form an intelligent opinion on the subject. Our readers will soon learn how such decision was to be over- ruled by an inexperienced French naval officer after a few days' run over the Panama Railway line. It now remains to show that the interest of the United States in the isthmus, apart from political con- siderations, has been manifested not only through these costly and systematic surveys, but also in several attempts made by that Government to control the building of the canal itself; and nothing else could have been ex- pected from a nation physically and politically situated with respect to the proposed canal as the Great Republic is. We have already referred to the efforts made by Nicaragua to have a canal built by the United States in 1825-6. Mr. Henry Clay, the Secretary of State, wanted first to have an investigation made as to the practicability of a route, before consulting Congress ; and although Secretary Clay appointed a new Minister to Central INTEREST OF THE UNITED STATES. 27 America with the object of making such an investigation, it does not appear that he ever did anything to carry out the object of his mission. We have also alluded to the undertaking in 1830 of William, King of the Netherlands, to have a canal built in Nicaragua by a company of Dutch subjects, whose charter had been obtained through the influence of the Minister for Holland in Guatemala. This grant attracted a great deal of attention in the United States, and the Government at Washington took immediate steps to counteract it. The Secretary of State, Mr. Livingstone, in July 1831, instructed the American Minister in the Netherlands to represent to the Dutch Government that the United States, as the most interested party in the canal, ought to enjoy all advantages that would be con- ceded to any other nation. This was important, inasmuch as the grant gave the Dutch a monopoly of the coastwise trade in Central America. Mr. Livingstone also said that if the grant were not completed the Minister should endeavour to secure for American citizens, or for the Government of the United States, the right of subscribing for the stock. Now, the significance of such instructions is very striking when we reflect on the political situation in the United States at that time. Jackson was President, and since 1829 he had been opposed to the policy of internal movements being carried on by federal power and money, on the ground that it was against the strict interpreta- tion of the constitution. In 1830 but a few months before Mr. Livingstone was drafting the instructions above referred to Jackson was vetoing the celebrated Turnpike Road Bill in Kentucky, authorizing the Government to subscribe for it. The President was also .attacking the National Bank, vetoing the National Im- 28 THE PANAMA CANAL. provements Bill, and taking other measures which did not savour at all of centralization. Yet this matter of a canal in the American isthmus, under the control of a European king, was deemed by him as too important to be consigned to his policy of laisser faire, and he took energetic steps to lay the corner-stone of the true American policy on this canal matter. It has already been shown that Jackson in 1835, and therefore after his re-election, appointed Biddle to go and study the subject of interoceanic communications, and that Biddle obtained for himself a concession from New Grenada, which his Government disallowed. In 1839 the chairman of the Committee on Roads and Canals of the House of Representatives (Mr. C. F. Mercer) presented a voluminous report on this subject of interoceanic communication, concluding with the recom- mendation that the House should adopt a resolution to the effect that the President be requested to consider the expediency of opening negotiations for the protection of a canal, and for securing equal rights to all nations on the payment of reasonable tolls. It is evident that the attempt of the Dutch to get the monopoly of the coast- wise trade was the cause which led to this step. In 1846 the United States concluded with New Grenada, now the United States of Colombia, the treaty of December 12, ratified on June 10, 1848, which is still in force. In fact, it is in virtue thereof that a naval force of the United States has lately occupied Aspinwall and Panama. The treaty was to remain in force for twenty years, and then if neither party should give notice of its intended termination, it was to continue in force for twelve months after such notice. It was the first time that the United States had by treaty assumed rights and obligations regarding a canal through INTEREST OF THE UNITED STATES 29 the isthmus. Art. XXXV. stipulates that American citizens, vessels, and merchandise shall enjoy in New Grenada all immunities and privileges enjoyed at any time by Grenadian citizens, such privileges to be extended to passengers, correspondence, and merchandise in their transit across the territory from one sea to the other. "The Government of New Grenada guarantees to the Government of the United States that the right of way or transit across the Isthmus of Panama, upon any system of communication that now exist or that may be here- after constructed, shall be open and free to the Govern- ment and citizens of the United States, and for trans- portation of any articles " of merchandise of lawful com- merce. " And in order to secure to themselves the tranquil and constant enjoyment of these advantages, and as an especial compensation for the said advantages, and for the favours which they have acquired by Arts. IV., V., and VI. of this treaty, the United States guarantee positively and efficaciously to New Grenada, by the present stipulation, the perfect neutrality of the before- named isthmus, with the view that the free transit from one to the other sea may not be interrupted or embar- rassed in any future time while this treaty exists ; and in consequence the United States also guarantee, in the same manner, the rights of sovereignty on property which New Grenada has and possesses over the said territory." This treaty is of great importance in the study of the political difficulties of this subject of a ship-canal, and we shall have occasion to revert to it. For the moment we will note that for the first and indeed the only time in its history the United States in this case went so far as to guarantee the indivisibility of the territory of a foreign country, in exchange for the free transit of citizens and 30 THE PANAMA CANAL. merchandise through that territory. When it is remem- bered that the United States Government has always adhered to the policy of non-interference in affairs of other countries the far-reaching effect of such a treaty as that of 1846-48 becomes evident. The ratification of the treaty was made only four months after the large increase of territory gained by the United States from Mexico. That matter of the canal, always important to the Americans, then became of the greatest consequence to them. We have shown what private enterprise was trying to do in Nicaragua and elsewhere in the isthmus, and also how the British authorities tried to obtain control of the terminus of the line, supposed already at that time to be the most suitable one for a canal that of Nicaragua. In June 1849 ^ r - Elijah Hise, American Minister in Nicaragua, negotiated with its Government a treaty (the Hise-Selva convention) granting to the United States the exclusive right and privilege to make a canal through the territory of Nicaragua. The American Government might entrust the work to a company. The land and the materials with which to build the canal were to be pro- vided by Nicaragua. The Government or the company was to have the exclusive privilege of conveying pas- sengers and goods. War vessels or other vessels belong- ing to the Governments of the contracting parties, and transporting troops, munitions of war, and public pro- perty, were to have unrestricted use of the canal free of all costs. Art. VI. provides that public armed vessels, letters of marque, privateers, and private merchant and trading vessels, belonging to countries with which the .contracting parties might be at war, should not during the war be suffered to come to the termini of or to enter the canal, nor should the use of the canal be permitted to INTEREST OF THE UNITED STATES. 31 neutral vessels carrying contraband of war for or from the enemy of either party. It is furthermore provided in another article that Nicaragua was not to levy any duties or taxes except on goods brought in through the canal, which would be left in Nicaragua for consumption. Article X. grants to the United States, or to the company that might be formed, three square miles at each end of the canal to form free municipalities under the qualified dominion and government of Nicaragua. Art. XI. stipulated that the United States should enjoy, among others, the right to send ofiicers, troops, and munitions of war at all times through the Nicaraguan territory. By Art. XII. the United States agree to protect and defend Nicaragua in the possession and exercise of the sovereignty within the true limits of her boundaries, the United States to employ military and naval force, if necessary, to maintain that obligation, should Nicaragua become involved in war within her own territory. Although it is claimed that this treaty was negotiated without any knowledge or power from the President of the United States, his Secretary of State, Mr. J. M. Clayton, declared that he would not hesitate to submit it to the Senate for approval if the British Government per- sisted in holding, as it did, the port of San Juan. The Clayton-Bulwer treaty was concluded in the following year, and the Hise treaty was not ratified. The Govern- ment of j that time was very glad to avoid a collision with Great Britain upon the Mosquito question pending between her and Nicaragua. The Hise convention went indeed further than the United States Government wanted to go. In 1856 President Franklin Pierce sent a mission to the United States of Colombia to negotiate a treaty for the better protection of the transit of the isthmus. In 32 THE PANAMA CANAL. view of the riot at Panama in April of that year, which the Colombian authorities could not or were not willing to restrain, the United States proposed the creation of a belt of territory along the Panama Pvailway, ten miles on each side of it, the government of which was to be in the hands of two municipalities, the United States acquiring the possession of some islands in the harbours at each terminus, where the Government could main- tain naval stations. In the instructions to the special commissioners, Mr. Marcy, the Secretary of State, says that they should ask for the transfer to the United States of the Colombian reserved rights in the charter of the Panama Railway. They were told that Colombia had failed to take effective measures to guard against the recurrence of riots. The Government of Colombia was to be offered a liberal compensation in cash for the island of Taborga, and those of Ilenao, Flamingo, Perico, and Culebra, all in the harbour of Panama. This proposal was not acceptable to the Colombian authorities, and was not pressed. In the following year, while Nicaragua revived the American, Atlantic, and Pacific concession to which we referred in a previous chapter, the Secretary of State, Mr. Lewis Cass, negotiated in Washington with the Nicaraguan envoy, Mr. A. J. de Yrisarri, a treaty of commerce and navigation by which Nicaragua grants to the United States and their citizens the right of transit through the territory, or any route or line of communication, by land or water, natural or artificial. The United States guarantee the neutrality of such route, and agree to employ their influence with other nations to the same effect. It is also provided that there will be free ports, &c. The treaty had only a political bearing, as Nicaragua revived to an American INTEREST OF THE UNITED STA TES. 33 company a charter which gave it all rights which would otherwise have been reserved. It was unneces- sary for the Government at Washington to claim any monopoly when that charter had secured all that was requisite to an effective preponderance of the United States on the canal. In 1864, Honduras having granted a concession to an " International Railway Company," the United States Government concluded with that republic a treaty, dated July 4, in which the right of way and other favours were conceded to the United States, and in compensation that Government guaranteed " positively and efficaciously the entire neutrality of the same " sovereignty of Hon- duras over the line of the railway. " And when the proposed road shall have been completed, the United States equally engage, in conjunction with Honduras, to protect the same from interruption, seizure," or unjust confiscation. Nevertheless, in according its pro- tection to the said route, the United States were free to withdraw it if any unfair discrimination should be made by the railway authorities in favour of any other nation. In 1867 a new treaty was made with Nicaragua, con- taining precisely the same provisions as in the Honduras treaty regarding the interoceanic communication. That was the Dickinson- Ayon treaty. Nicaragua again in 1877 opened negotiations in Wash- ington through a special envoy, Sr. Cardenas, to facilitate the work of a canal across her territory. The Secretary of State, Mr. Hamilton Fish, proposed the draft of a convention, the preamble of which stated that the treaty of June 21, 1867, contains several stipulations regarding :i canal which it was now deemed " indispensable " to change in some respects and extend in others, in order to 34 THE PANAMA CANAL. facilitate new efforts for the commencement and com- pletion of the work. The Nicaraguan envoy proposed many alterations which were wholly inadmissible by the United States. The draft of the treaty was published afterwards, and bears testimony to the moderation of the Washington Government. If Nicaragua had not been so short-sighted the convention would have been concluded and the canal begun. In the meantime the United States Executive had also concluded with Colombia a treaty which is of the greatest importance to our subject. In 1866 Admiral Ammen had proposed a systematic survey of the isthmus, and Mr. Seward was authorized in the following year to approach the authorities at Bogota in order to arrange for permission for the surveys on the Darien and Panama sides of the isthmus, and also to regulate the whole matter of interoceanic communication. Such importance was attached to this negotiation that Caleb Gushing, the great lawyer, who had been Attorney-General of the United States during two administrations, was sent to Bogota to aid the Minister-Resident in procuring a good treaty. After a prolonged exchange of views, the treaty was concluded at Bogota on January 14, 1869, and was sent to the United States Senate on the following Feb- ruary 15, in the last days of the Johnson administration. This treaty, which was at the time sent to the Senate in a confidential manner, was published only a few years ago, and is not generally known in Europe. We will therefore make a few extracts from it. The first articles provide for the surveys and location of the canal, Colombia appropriating lands as required by the plans, and besides that ten miles of unsettled lands on each side of the canal throughout its entire length r INTEREST OF THE UNITED STA TES. 35 lands to be measured into equal lots, each lot having no greater frontage on the canal than 3,300 yards, the lots to be equally distributed between the two Governments, the United States to have the first selection. Colombia is not to allow any other canal. The canal to be con- structed by the United States, which may maintain a military force during construction, not to exceed 1,000 men, except through consent of Colombia. The control and government of the canal is invested in the United States, Colombia being, however, at liberty to maintain a committee of agents for inspection of books and accounts, but not to interfere with the working of the canal. Art. VII. provides for the tolls to be fixed by the United States on a basis "of perfect equality for all nations, whether in time of peace or war." .... "Twelve years after the canal be brought into operation the Government of Colombia shall be entitled to an annual 10 per cent, of the net proceeds of the undertaking," that proportion to be increased to 25 per cent, as soon as the United States shall have been reimbursed for the capital invested in it ; it being, moreover, stipulated that the annual expenses shall in no case exceed 30 per cent, of its annual receipts. Art. VIII. retains for Colombia the "political so- vereignty and jurisdiction over the canal and territory appertaining thereto ; " but Colombia " shall not only allow but guarantee to the United States of America .... the peaceable enjoyment, control, direction, and management of the same." Art. IX. provides that in time of peace the United States shall have the right to use the canal for troops, munitions of war, 20 i> 3>2o8 2I ii 5 i> 554 5 1 ii 10 347 ii I01 ii 20 ! THE FORMATION OF THE COMPANY. Si 142 had from 201 to 300 shares. 29 301 400 37 ii 401 >i 5 ii 7 ,i 5i 600 12 601 700 2 ii 701 800 3 ii 801 900 8 901 1000 14 more than 1001 Besides the subscriptions of families including women, 16,000 women were inscribed as shareholders. The im- portance of the minute division of the shares of this Panama Company becomes more striking when one observes that such a strong company as the Paiis- Lyon-Mediterranee Railway, with a capital valued at i,2oo,ooo,ooof., and with 800,000 shares, has but 33,000 shareholders. Now, the 600,000 shares of the Panama Company were divided among 102,000 persons. Nothing could more forcibly prove the undisputed hold of M. de Lesseps on the imagination of French people than the above result. No man in the world could com- mand such unmistakable evidence of personal confidence, and it is touching and grand to record this rush to invest in Panama shares. Whether M. de Lesseps deserved that confidence of the people of the 16,000 women full of faith in him is another question, which we leave to our readers to decide in view of the evidence we are bringing before them. This is a long story, full of detailed and concatenated facts, which can be tested by any reasoning man who may seek after truth, and with- out the silly appeal to what M. de Lesseps did at Suez. 82 THE PANAMA CANAL. CHAPTER VII. ESTIMATES OF THE COST OF THE CANAL NO. I. are aware that it is most difficult to estimate even approximately what would be the cost of an undertaking of such magnitude as the Panama Canal. Even works .of a less problematic character cannot be valued with absolute accuracy. Unexpected emergencies arise which frustrate the most careful calculations of the engineer and the financier, and it is for this reason that all great enterprises should first be carefully studied in all their aspects. As there is great difficulty in closely estimating the ultimate cost of a gigantic undertaking, proper care should be taken at the start in collecting all the elements which will help in making an estimate. If you want to build a palace in a certain locality that you have never inspected, but over which somebody else has walked and has then written about it some perfunctory remarks, you first dispatch a competent man to report to you about the locality, so that you at least may start with a tolerable knowledge of the ground if you have first to fill up or to dig the soil, or even to blow up some granite quarry. And if your surveyor finds some stream crossing the intended site of your palace a stream which every year is known to swell to the proportions of a torrent you first study how to control that stream. These and other elements are properly weighed in your mind, and even when they do not offer any great diffi- ESTIMATES OF COST OF THE CANAL. 83 culty to your engineer or architect, you take into account what they cost, because their great cost may be an in- superable difficulty to you. Now, what has been the case of the Panama Canal 1 MM. "VVyse and Co. see that the Nicaragua people are trying to go on with their scheme ; MM. Wyse and Co. snatch a concession from Colombia, and secure the name of a great promoter, to whom they sell their concession. The great promoter at once takes the business up. He is contented with the surveys made by incompetent men in a few days. He imagines that he must have his canal without tunnel. Through his influence some men of science meet in a Congress which is packed by himself with his retainers, so that his own scheme may be given the benefit of the endorsement of an apparently scientific and international council. He even causes the Congress to estimate the cost of the work, of the feasibility of which the Congress was not satisfied. The estimate is given with reservations enough to make him despair. He then goes over the ground, and in a little over a month his new instrument of " science " gives a new estimate almost doubling the quantity of soil and rock to be excavated. He then, without any new " studies," cuts clown the cost estimated by his own men. Is it any wonder, then, that the great promoter to-day admits that the total excavation to be made is nearly three times as much as that which his first Congress had in view when it estimated the total ,cost of the canal at about DOUBLE the amount which is now .claimed by the great promoter to be the expected outlay 1 Can you believe what he says ? Would you have under- taken a work in which in a few days you find that there are 75,000,000 of cubic metres to excavate instead of 46,000,000, and which in a few months more you find amount to 125,000,000? Would you have touched 84 THE PANAMA CANAL. that business at all 1 and, in your own selfishness and vanity as a renowned contractor, would you persistently and recklessly assure your capitalists that the work will only cost a trifle over one-half of the estimate made when you thought there were only 46,000,000 of metres 1 Well, that is what M. de Lesseps has been doing. At the Paris Congress, M. Wyse estimated a Panama Canal with no tunnel at 427,000,000^, divided thus : Excavations, 46,150,000 cubic metres . 36i,6oo,ooof. Chagres, lock at Panama, breakwater, and other works 65,900,000^ For a canal ivith tunnel he had presented an estimate making its total cost 38o,ooo,ooof. no contingent ex- penses being added in either case. But the sub-committee on estimates was far from satisfied with his calculations. Adding 25 per cent, for unforeseen expenses to the Wyse project for a canal with tunnel, the cost would be 475,ooo,ooof. ; and the other one, with a through open-air cut, would come to something like 535,ooo,ooof. At the meeting of May 21, M. Cotard, giving some results arrived at by the sub-committee composed of himself; M. Favre, the contractor of the St. Gothard tunnel ; M. Lavalley, contractor-general of the Suez Canal, and representing the Paris Society of _Civil Engineers ; M. Ruelle, general director of construction of the Paris-Lyon-Mediterranee Railway; M. Garay, a Mexican C.E. ; and M. C'ouvreux reported that the sub-committee estimated the cost of t_he Wyse canal, loith a tunnel, at 747,884,812^, including 25 per cent. for contingencies, BUT NOT RECKONING [we quote] " i. The expenses necessary not only to place the works of excavation beyond danger of the water, but also to affect excavations under water. ESTIMATES OF COST OF 7 HE CANAL. 85 "These expenses cannot be estimated even approxi- mately, but they will be very great ; most likely they will exceed ioo,ooo,ooof. "2. The interest during time of construction, which should be put down as ten years. " 3. The several liabilities of the company ; among them the indemnity to the Panama Canal Company." M. La valley, speaking immediately after the presen- tation of the report, called attention to the immense diffi- culties of the work in the valley of the torrential Chagres ; to the obstacles, almost insuperable (" sur les embarras presque insurmontables"), to doing the work dry. He be- lieved that it was of absolute necessity to deviate waters from the Chagres at one or more points. These are difficulties of the first order, which add to those already inherent in the work itself, and which will increase still more heavily the total cost of that canal. (' Toute la depense importante augmentera encore tres peniblement le cout total de ce canal.") M. Cotard, addressing the meeting, once more (we are quoting from the Compte Rendu, pages 261, 262) "calls attention to the importance of the reserve made by M. Lavalley. . . . There is an unknown which we must confront seriously, remembering the risings of the torrent, and consequently its irruptions. That unknown would be still further increased if, as M. Wyse suggests, the t\innel be suppressed, and enormous cuttings be made " in the Culebra section. That, we repeat, is the opinion of two gentlemen who are extremely friendly to M. de Lesseps. This estimate of the sub-committee, be it remembered, was for a sea- level canal with a tunnel, and M. Cotard said that " the unknown will be still further increased " if the tunnel were suppressed. Now, that is exactly what has been G 86 7 HE PANAMA CANAL. done. We have to add to that total the difference between the solid rock excavation for a tunnel, estimated by the sub-committee at 297,22o,ooof., or pi 1,888,000, and the cost of deep cutting so as to make the canal an open-air one. Remember that in two kilometres of the Culebra section there are 25,000,000 cubic metres to be taken out; whereas by the Wyse tunnel project there were to be only for the whole tunnel 6,044,670 cubic metres (" Rapport de la Commission International," page 54), and you may only have but a faint idea of the increased expense. M. de Lepinay, a member of the second sub- committee, read before it a paper (Compte Rendu, pages 293-9), in which he said that the " sea-level scheme for a canal in Panama brings about an expense of more than i, 000,000, ooof. . . . The reason of this exaggerated cost is that they want this canal to be made after the model of the Suez Canal that is to say, with no locks and yet its natural conditions are so very different. In Suez there is no water, the soil is soft, the country is almost on the level of the sea; in spite of the heat, the climate is perfectly healthy. In tropical America there is too much water, the rocks are exceedingly hard, the soil is very hilly, and the climate is deadly. Now, to thus act after the same fashion under such different circumstances is to try and do violence to nature instead of aiding it, which is the principal purpose of the art of engineering ; and in the present case, when the cost is really doubled, we might very well go beyond the limits of what is possible." But in spite of the reluctance with which Messrs. "Wyse and Reclus modified their project with a tunnel, it was necessary to yield to the whims of M. de Lesseps who insisted that the canal should have no tunnel, and that a deep cutting should be made in the Culebra mountains, so as to render the canal an open-air one. ESTIMATES OF COST OF THE CANAL. 87 They therefore presented on May 22 an entirely new scheme for a tide-level canal costing 427,ooo,ooof. The report of the sub-committee under M. Cotard had established the prices for the units of work. Under such prices the scheme of the tide-level Panama Canal, such as is now being carried out, was estimated at i,044,ooo,ooof., including: Francs. Damming the Chagres 25,000,000 Rectifying it 17,000,000 25 percent, on 6i2,3oo,ooof. for con- tingencies 1 S3) O TS) OO Administration and banking, 5 per cent, on 765,375,ooof 38,268,000 3 per cent, interest on capital for twelve years 241,000,000 But the sub-committee in making out that estimate added that the " execution of such works, and principally that of such deep cuts, the stability of which is pro- blematical, as well as the operations relating to the course of the River Chagres, CONSTITUTE A COMPLICATION OP DIFFICULTIES THAT IT IS IMPOSSIBLE TO ESTIMATE." (Compte fiendu, page 311.) M. Dauzats, whose opinion otherwise has no value whatever, attempted to impeach the figures given by the sub-committee of the Congress convened by M. de Lesseps. He remarked that in 1864 and 1865, when " those eminent engineers, Messrs. La valley and Couvreux undertook the work of the Suez Canal, there was only, out of 75,000,000 of cubic metres, which was the total to be done, about one-third that was ready ; 56,000,000 of metres were done in three years, and 34,000,000 of them were excavated in the last nineteen months." a 2 S8 THE PANAMA CANAL. M. Lavalley himself was present, and he immediately replied as follows : "M. Dauzats has endeavoured to establish a com- parison between the time that was spent in the construc- tion of the Suez Canal and the estimate made for the present project. Messrs. Lavalley and Couvreux ex- cavated from 70,000,000 to 75,000,000 of cubic metres in five years and a half ; but one should not forget that all the installation had been already made, the bed of the canal all cleared and partly open, and, besides, there was a considerable amount of material in hand. Then you cannot compare the soil of Suez to the 50,000,000 of cubic metres of the American hard rock. The estimate of twelve years is indeed a minimum." (Compte Eendu, pages 325 and 567.) It should not be forgotten that M. Lavalley was taking M. Wyse's basis of 50,000,000 cubic metres. What would he not have said if he then knew that, as M. de Lesseps admits now, there are 125,000,000 1 As M. Lavalley spoke the words that we have quoted, a member of the Congress rose and suggested that a calculation should be made of the cube of the whole excavation to be made. " I think/' he continued, " that the twelve years will be found totally insufficient by the engineers who will study the question thoroughly. We have here persons of the greatest competence, like M. Favre, for instance, who worked wonders in the St. Gothard tunnel : he might enlighten us as to the means of execution. M. Favre calculates the price for excavating hard rock in Panama at 1 8 f., while we paid only 2'5of. in Suez, which means that in Panama the work is about eight times as dear ; and yet you want to do that work in twelve years ! " (Compte Eendu, page 568.) M. de Lesseps did not answer these remarks. He ESTIMATES OF COST OF THE CANAL. 89 contented himself with protesting that the ix years calculated for Nicaragua were too little, to which M. Lavalley answered that to him " it seemed less difficult to do the work in Nicaragua in six years than that of Panama in twelve." Later on, we find the same gentleman stating that " when the company is formed it must make its budget. I entreat it to depend upon it that in the three first years it will do nothing, and that when it does begin to work it will have been paying three years' interest for the capital." (Compte Rendu, p. 570.) Of course, that is exactly what has come to pass ; nor w;is it necessary to be a M. Lavalley, a practical man, the .contractor-general of the Suez Canal, to perceive that. If M. de Lesseps had not already pledged his name to Panama, he would have said precisely the same thing. But returning to the cost of the tide- level canal, we must say in justice to the sub-committee of the technical committee that it was forced to give an estimate on insufficient data. The matter was also ventilated at the plenary committee and then at the plenary Con- gress, and even there, where M. de Lesseps had a compact majority, the whole truth did not fail to appear. The great cost of a tide-level plan, with its deep cuttings, was brought to the notice of the full committee by M. Ruelle after the passing of the resolution selecting the Panama route; and when the chairman proposed another resolution endorsing the sea-level plan, M. Ruelle submitted the following significant amendment : " The technical committee recommend, as preferable, a sea-level canal, if its execution be not found too difficult" There followed a very lively discussion, which is not reported in full in the stenographic Compte Rendu of the meeting. But even M. Larousse (an intimate friend 90 THE PANAMA CANAL. of M. de Lesseps) remarked that if the cost were not heeded by the technical committee, how could this committee be justified in " recommending the canal that would cost dearer than any other ] " At the evening meeting on May 20 a desultory dis- cussion was going on about little details of the construction, when M. Cotard, formerly an engineer of the Suez Canal, stated the gist of the whole difficulty in the following terms : " The creation of the interoceanic canal should above all be a profitable undertaking. The expenses should be productive. The question is not to find out whether in theory it is better to have a canal which is sea-level, or one with locks or tunnels. There is only one way to think about this matter : a sea-level canal would be preferable, but the question is how much would it cost, and how long would it take to build it? The cost and length of time in the construction are the two essential points which we should investigate here. We are dealing with hundreds of millions. We ought to know what we are going to undertake, and we should be able to come within 5o,ooo,ooof. of the money to be spent, and within two years of the time required; or else it would be better for us to adjourn our congress and then come back again." (Cotnpte Rendu, p. 257.) But, as we said, per fas et nefas, the Lesseps clique was bound to have a sea-level canal, and the Congress made an estimate for it of i,o44,ooo,ooof., with the noted reservation that it could not be accurate because of the " unknown " of the Chagres. Such figure, low as it is, was nevertheless a blow to M. de Lesseps. The programme was to select Panama, a tide-level canal, and 6oo,ooo,ooof. or 7oo,ooo,ooof. as the outside cost. M. de Lesseps failed in the latter. M. Wyse, without loss of time, began to correct his ESTIMATES OF COST OF THE CANAL. 91 own estimate once more, according, he said, to the same basis as the sub-committee, and by a stroke of the pen he put it down at 78o,ooo,ooof., including 50 per cent, for contingent, banking, and administrative expenses. M. de Lesseps now appealed to the public, but the public failed to bring him funds. The true impression prevailed, that the estimate of the cost of the work was a myth, as the ground had not been properly surveyed, and, moreover, that the United States Government was bound sooner or later to offer strenuous opposition to the building of the canal. M. de Lesseps then took with him to Panama the " International Technical Commission," of which worthy organization we have already written. The commission was employed to say that the Chagres was " all right," and that the work was even easier than thought of at first. It was also to furnish a new estimate. In the next chapter we will show the development of the transaction. 92 THE PANAMA CANAL. CHAPTER VIII. ESTIMATES OF THE COST OF THE CANAL NO. II. THE so-called " International Technical Commission," which M. de Lesseps took with him to the isthmus, decided that the whole work could be done in eight years instead of twelve, as estimated by the Congress, and made the following calculation of the work itself and its cost : Excavation. Cubic metres. 1. Underwater: Soft soil 12.105,000 Hard soil 300,000 Hard rock ..... 6,786,000 2. Above water: Soft soil 27,350,000 Hard soil 825,000 Hard rock 27,734,000 Total 75.100,000 Cost. r raiics. 1. Excavations 570,000,000 2. Damming the Chagres 100,000,000 3. Canalization of rivers 75,000,000 4. Tide lock 12,000,000 5. Breakwater in Aspinwall 10,000,000 767,000,000 10 per cent, for contingencies . 76,700,000 Total cost 843,700,000 That sum is equivalent to ^33,748,000. ESTIMA TES OF COST OF THE CANAL. 93 Now in this estimate no provision whatever was made (i) for banking expenses nor for administration expenses during the supposed eight years of construc- tion ; (2) for interest on capital during the same period ; (3) for rebate in the issue of obligations, nor for the preliminary expenses, price of the concession to be paid to the Societe Civile, and cash to be handed over to the Colombian Government. M. Wyse, the author of the project, had calculated the cost, excluding the above items, at 427,000,000^, which was, it will be seen, almost precisely one-half of the price estimated by the " technical commission " got together by the transferee of M. Wyse's concession. The International Congress, as we showed in the previous article, fixed the expenses at i,o44,ooo,ooof., including interest during construction and administrative expenses, and in this connection it is interesting to see how the two estimates those of the congress and of the commission differed. It is enough to present side by side the figures, as we do below : Congress. Total cubic metres . . Total ditto soft soil . . hard soil . ,, ,, solid rock . Cost of excavations f. . Damming the Chagres f. Rectifying rivers f. . . Tide locks and improvements in Panama f 23,000,000 Contingencies 25 per cent. Total expenses, without in- terest, administration, banking, &c. f. . . . 765,375,000 46,150,000 17,300,000 5,650,000 23,200,000 506,300,000 25,000,000 17,000,000 Commission. 75,000,000 39>455> 000 1,025,000 34,520,000 570,000,000 100,000,000 75,000,000 12,000,000 i o per cent. 843,700,000 Basis for prices per c. m. f. 2.50, 5, 7, 13, 1 8 same. 94 THE PANAMA CANAL. Now, this comparison is most interesting. M. Dauzats, a blind unreasoning follower of M. de Lesseps, burst forth in indignation at the Congress against the " omis- sions and exaggerations " of the technical committee, which had prepared the estimates ((Jompte Rendu, page 321). He scolded the committee for exaggerating the cubic contents of the cuttings to be made in the hard- rock section, and went so far as to say that the committee did not know enough to allow for the unevenness of the Culebra's summit (ibid, page 323). Our readers will now be interested in learning that this same Dauzats was one of the master-minds that signed the report of the technical commission which in a few days found at the isthmus that there were 75,000,000 metres instead of 46,000,000 to excavate, and that of hard rock alone the technical committee of the Congress, taking Wyse's estimate (and not its own), had put down 23,200,000 cubic metres, while Dauzats' own commission found not less than 34,520,000 cubic metres. Leaving aside M. Dauzats' criticism, and rather praising him for having the manliness to sign a report by which the cost of the Panama Canal (deducting interest, &c.) is higher than the estimate against which he had warmly protested but a few months before, we will call attention to the following remarks : i. The Panama route was selected in view of the imaginary surveys of Messrs. Wyse and Reclus, which are at once found to be totally inaccurate. In the canal scheme there were two main things to be considered (once admitted the feasibility of a sea-level canal) viz., the cube to be excavated and the possibility of solving the Chagres problem, and the expense connected with it. Now, in both those essential things M. Wyse's plan was worthless and baseless. He estimated 46,000,000 cubic EST1MA TES OF COST OF THE CANAL. 95 metres ; his own Congress, with no technical data sufficiently comprehensive, was obliged to take the same number ; but a few months later the more than friendly commission of his own men found 75,000,000. As to the Chagres, the commission found, "after the special studies of M. Dauzats," that the stemming of that torrent was to be done by the construction of a dam and subsidiary channels. What the opinion of Dauzats is worth we have already seen ; but as to the price of these works of diverting the Chagres and regulating its flow, while the Congress had estimated it at 42,ooo,ooof., the commission now put it down at i75,ooo,ooof. M. de Lesseps' own commission therefore found (a) that there was 63 per cent, more excavation to be made than M. Wyse had calculated; (b) that the Chagres would cost 400 per cent, more than was estimated by the Congress. 2. The second observation which we wish to make regards the estimate of contingent expenses. The Con- gress had put down 25 per cent, for contingencies ; but the commission, which had just now more than quadrupled the price of the Chagres improvement as estimated before, was content with a meagre 10 per cent. The United States technical committee, appointed by the Government to revise the estimates for the different schemes of an interoceanic canal, added 100 per cent, to all for con- tingencies and expenses not foreseen. The friendly Congress selected by M. de Lesseps added only 25 per cent, for that purpose on the estimates ; and now M. de Lesseps' commission, while finding that the Congress had greatly underestimated the cube of the excavations to be made, as well as the expense with the Chagres, put down only 10 per cent. This tells its own story as to the utter partiality, incompetence, and carelessness of such a commission. 96 THE PANAMA CANAL. But we will now revise the Congress estimate of the total cost of the canal according to the commission's own findings, such as they were : Francs. Prime cost,, without unforeseen expenses, as per commission 767,000,000 To be added : i. Unforeseen expenses, same low per- centage adopted by M. de Lesseps' Congress viz., 25 per cent . . 191,150,000 958,150,000 2. For expenses of banking and ad- ministration, same as adopted by M. de Lesseps' Congress viz., 5 per cent 47,907,500 1,006,057,5 3. Interest during construction (twelve years, as adopted by M. de Lesseps' Congress), 30 per cent, for the twelve years, as also adopted 301,817,200 That is the estimate, not our own, but which the Con- gress of 1879 would have made if M. de Lesseps had presented it with the results of even some commission like his own, which in 1880 spent forty days at the isthmus. Every one can see why it did not occur to him to send such a commission before the assembling of the Congress, in order that the Congress, which was to decide that his own route was the best, might at least estimate on a somewhat more approximate number of cubic ESTIMA TES OF COST OF THE CANAL. 97 metres, and with a clearer idea of the tremendous un- solved problem of the Chagres. Forty days run fast enough, and M. de Lesseps, if he wanted to find out the real truth about the Panama Canal, would have done what any careful contractor does everywhere : he would have sent his own reliable engineers to see whether he could honestly give his name to the enterprise. If a contractor gives his time and prestige to any raw scheme such as the Wyse-Reclus, it is because his own profits are secured beforehand, or it is because his own excessive vanity is engaged in it, without regard to the success of the enterprise and to the losses of the multitude who contribute their savings to what they suppose to be a perfectly legitimate undertaking. The Congress, while estimating the cost at i,o44,ooo,ooof., stated that it had had no sufficient information on the matter. We therefore blame the Congress for having given an estimate at all. However, in justice to its sub-technical committee, we should not forget that it declared in the most solemn manner that it had not data enough on which to base a reliable estimate. But we repeat, if the Congress had had before it at least the more than perfunctory figures of M. de Lesseps' own commission, representing the 75,000,000 instead of the 46,000,000 cubic metres which it was obliged to Assume from Wyse's report, the Congress would have had to estimate the cost of the Panama Canal at Now we shall proceed to show that this total is alto- gether inadequate, and such an estimate too low too friendly to the promoters of the Congress and of the Panama scheme. Let us take up each item. i. The prime cost, as given by the commission in 9 8 THE PANAMA CANAL. which Dauzats was a brilliant light, comprehends only 75,000,000 cubic metres, of which 34,500,000 were in solid rock. Now, at the last annual meeting of the com- pany, in July 1884, M. de Lesseps admitted that there was at that date 120,000,000 cubic metres of excavations to be made, including the work of deviating the Chagres, and the company had already, in May 1884, taken away, according to the same report, 5,243,302 cubic metres. If therefore we take 125,000,000 of cubic metres, we shall not err on the side of any attempt to exaggerate the total number. On the contrary, if M. de Lesseps, having first accepted 46,000,000, then 75,000,000, now accepts 125,000,000 as the correct figure when the real work is barely commenced, we may take as most certain that we shall soon see the last sum considerably raised. What, then, we assert firstly is, that if the technical committee had had before it the scanty facts even at this moment collected, it would have had to base its estimate on 125,000,000 instead of 46,000,000 or 75,000,000 cubic metres. To the above estimate let us therefore add the difference bet ween the cost of 75, 000,000 and 125,000,000; that is to say, let us add two-thirds to the cost of excava- tion, assuming that the material to be excavated is kept up in the same proportion of soft and hard soil and hard rock. The commission of 1880 estimated the cost of 75,000,000,000 at 57o,ooo,ooof. This total should in our corrected estimate read 570 plus two-thirds equal to 950,000, ooof. 2. We have now the item of unforeseen expenses. The Lesseps Congress fixed the percentage at 25 per cent.; the Lesseps commission, nine months later, fixed it at 10 per cent.; M. de Lesseps himself, a few clays after the latter estimate, reduced it to 5 per cent. By and bye, if we wait long enough, we shall see the item disappear- ESTIMATES OF COST OF THE CANAL. 99 ing, and per contra we shall have a gradual cropping up of something like unforeseen gains. We need not say that all this way of handling figures, to the manifest disadvantage of the public, is in keeping with the spirit which has presided over this scheme of the Panama Canal. The celebrated commission, as we have seen, had to more thanquadrupleihe estimated price of the works of the River Chagres; it found that 75,000,000 metres instead of 46,000,000 had to be excavated, and yet the commission reduces the item of unforeseen and contingent expenses from 25 to 10 per cent. ! "Yes," it may be said, " but now that the ground had been carefully looked over, there were fewer contingencies to expect." But this we emphatically deny. The commission was a humbug. It was pledged beforehand to M. de Lesseps, who owned the concession, and who had been unsuccessful in launch- ing his company on the ground that the line had not been sufficiently studied. Besides, except as regards two of its members, the commission was thoroughly unreli- able, as the French ought to know by looking over the names of the young men who composed it. But, as if that unjustifiable reduction were not enough, M. de Lesseps, by an ukase of his pen, decided that even 10 per cent, was too much, and made it 5 per cent. Our readers will not be astonished to hear that even to this day the great financial diplomatist affirms that the canal will cost only the original sum that he made up soon after the so-called report of his " commission " was pre- sented to him. That is to say, he is still putting down 5 per cent, for unforeseen expenses, while, instead of 46,000,000 and 75,000,000 cubic metres, he admits that there are 125,000,000 ! The 25 per cent, allowed by the Congress seems to us ioo THE PANAMA CANAL. to be hardly sufficient. The Suez Canal, comparatively easy of construction, and properly surveyed, cost 457,ooo,ooof. instead of the estimated 2oo,ooo,ooof. Here there was an increase of 128^ per cent, over and beyond the original estimate. The United States Government Committee, who examined and revised the isthmus explorations and estimates, made (be it remembered) by the most compe- tent officers, some of whom spent years in the isthmus, added ioo per cent, to all estimates. This is what a careful contractor should do in dealing with a work of such magnitude in such an inhospitable country, so far from Europe, and having to deal with problems, such as the damming of the Chagres, which have never been properly studied. Not wishing, however, to be taxed as exaggerating any estimate that should have been made by any set of careful engineers, we will put down as tmforeseen and contingent expenses 25 per cent. only. The Chagres problem is still unsolved. Nobody knows what is to become of the work that may be done if there should be two heavy freshets during the construction of the pro- posed dam. Nobody knows what is to become of the canal between Aspinwall and Gatun if (as is assumed by all competent authorities) the swampy land will again flow into the canal. There are thousands of contingen- cies in such immense undertakings; 25 percent, is less than one-fifth of the percentage of unforeseen expenses that befell the Suez Canal. We, in short, will correct the estimate of the commission by writing 25 per cent, instead of 10 per cent. 3. The Congress allowed 5 per cent, for banking and administrative expenses. That was meant to cover ad- ministration in France and Panama, and banking com- ESTIMATES OF COST OF THE CANAL. 101 missions, which include the discount offered on securities of the company. Such sum amounted in the Congress estimate to a little over 38,ooo,ooof. Now, that sum was ivholly inadequate, and there is no difficulty in prov- ing it to be so. Looking over the inventaire general of the year ending June 30, 1883, and furnished to the shareholders at their last general meeting, on June 19, 1884 (these inventaires, or balance-sheets, are always produced twelve months after the expiration of each fiscal year of the company), we find the following items : Francs. Administration in France and Panama . 6,182,707 Comite Americain 1,500,000 Various expenses for the service of the securities of the company . . . . 8,089,103 A total in these items of .... 15,771,810 Now, it must be remembered that the company has only begun to get money for its needs. But even if that amount of i5,ooo,ooof. per annum should not be exceeded for ten or twelve years, it is clear that the sum fixed upon by the Congress is ridiculously small, for it would not cover the expenses for three years. The Panama Canal Company at its very start spent ^904,000 before it ordered a pickaxe. That sum com- prehended the following expenses : (a) The first issue of 1879, which was unsuccessful. (6) The cost of M. de Lesseps' travels to the isthmus, with his "commission," and the fees and percentages given to the " propagateurs," or promoters, in France and abroad. These two items amounted alone to 10,801,577-59^ or say ^432,000. H 102 THE PANAMA CANAL. Besides that, the company paid n,8oo,ooof. as (we translate from the official report) " a remuneration stipulated to be delivered to the members of the Inter- national Syndicate which had advanced the necessary funds before the constitution of the company." That is equivalent to ^472,000 ; making altogether, as we have stated, ^"904,000, or 22,6oo,ooof., of which 2,ooo,ooof. were paid to M. de Lesseps and the other fondateurs. That does not include, however, the 5,ooo,ooof. in cash nor the 5,ooo,ooof. in paid-up shares which were handed over -to M. Wyse and his socie'te civile as part of the price of the concession. So that the company started with an outlay of 32, 6oo,ooof., or ;i, 304,000. But that is not all. M. de Lesseps, in order to stifle opposition in the United States, created in New York a huge fund, and placed at the head of it an ex-Minister of the Navy, Mr. Thompson, thereby compromising the company to the extent of i2,ooo,ooof. payable thus : 3,ioo,ooof. at once, i,4oo,ooof. one year after the formation of the company, and i,5oo,ooof. for each of the five following years. These i2,ooo,ooof., together with the 32,6oo,ooof., make 44,600,000^, or ^1,784,000 not a small liability to start with. Accord- ing to the balance-sheet for June 1881 only four months after the formation of the company the sum of 4o,444,ooof. had been spent, of which only 1,03 2, goof. in " work." The administration in France and Panama had already cost 1,306,972^, or ^52,240. But as if all those expenses with syndicates, pro- moters, and administration were not enough, the rebate on the company's securities that have been issued forms a tremendous liability. The Panama Canal Company has made the following issues : ESTIMATES OF COST OF THE CANAL. 103 8ept. 1882 . i25,ooo,ooof. discount . 16,42 5, ooof. Oct. 1883 . 3oo,ooo,ooof. . J2o,ooo,ooof. Sept. 1884 . i93,692,5oof. . 64,693,295^ Total capital 618,692, soof. ,, 201,118,295^ Therefore, if in the corrected estimate, as it should have read at the time, we place 30 per cent, of the cost for preliminary expenses, including the concession for syndi- cates, for the New York Corruption Fund, for rebates on issues of bonds, for administration in Paris, for hospital and administration in Panama, we shall not have ex- aggerated the true facts. 4. We have now to consider the interest during con- struction. Let us admit the hypothesis, that no insuper- able difficulties had been anticipated at the time of making a proper estimate, and that the company had been thought capable of executing nothing less than 20,000,000 cubic metres of excavation each year, against 7,600,000, which is all that it did from June 1884 to May 1885 ; as the total amount excavated to May was about 12,500,000, there are still left to be excavated 112,500,000 cubic metres, according to M. de Lesseps' own statements, in which we place no confidence, for, we once more repeat, he first mentioned 46,000,000, then 75,000,000, and now 125,000,000 cubic metres. But even the 112,500,000 cubic metres will take say six years from last April, which is just ten yea^s from the establishment of the company. The best possible show- ing would have been to reckon the interest during con- struction for ten years at the average rate of 4 per cent, on sums spent. In fact, the company is paying 30,497, 74of. a year on the sum of 768,693,500^ that lias been raised, which is about 4 per cent. Adding a half per cent, more for amortization, we shall have 4^ per cent, to charge. 104 THE PANAMA CANAL. On the sums already raised the Panama Canal Com- pany will have paid in 1891 about 3oo,ooo,ooof. of interest and sinking fund. The present estimate of the' total cost of the canal works comes to 2, 364,000, ooof., more than 200 per cent, beyond what has already been raised. Even supposing that the company should raise the remaining i,6oo,ooo,ooof. so as to pay the 4^ per cent, charge only for the average of three years on the whole sum, we should have to add 2i6,ooo,ooof. to the item of interest and amortization during construction, making altogether 5i6,ooo,ooof.,or, if we deduct counter-interest on dormant capital, say 500,000, ooof. Let it be borne in mind that we have not taken into account the compound interest on the money raised to pay interest with, ivhich involves a tremendous outlay. Now that we have collated all the elements for our calculation, we will present here, not our own estimate, but the estimate that the Paris Congress should have made if it had even the scanty facts arrived at after a few months' study by M. de Lesseps. Estimate of cost of the Panama Canal, such as should have been made by the Congress 0/1879. Francs. 1. Excavation, 125,000,000 cubic metres (number admitted by the company) 950,000,000 2. Damming the Chagres and canalizing the river (according to M. de Lesseps' Technical Commission of 1880) 175,000,000- 3. Tide lock in Panama end (ditto) . . 12,000,000 4. Breakwater in Aspinwall (ditto) . . 10,000,000 Carry forward 1,147,000,000 ESTIMATES OF COST OF THE CANAL. 105 Francs. Brought forward 1,147,000,000 5. Unforeseen expenses, 25 per cent. (The Lesseps Congress in 1879 fixed 25 per cent., the Commission of 1880 only 10 per cent.; the United States Government Com- mission fixed for the different pro- jects 100 per cent. The Suez Canal cost i28| per cent, more than esti- mated.) We leave for Panama 25 per cent., or 286,750,000 i>433>75> 000 6. Administration, banking, cost of con- cession, preliminary expenses, dis- count on bonds, fcc., 30 per cent, say 430,250,000 1,864,000,000 7. Interest and sinking fund during con- struction 500,000,000 Total 2,364,000,000 Such should have been the estimate of the cost of the Panama Canal, taking for granted that 1. It might be completed in ten years from the com- mencement of the company ; 2. That there were only 125,000,000 cubic metres of .excavations as the basis of the present calculation ; 3. That the "unknown" problem of the Chagres can be dealt with properly a problem which is as unsolved at this clay as it was when the sub-committee of the Con- gress of 1879 stated that nothing was known about it. If, then, that Congress had known that there were io6 7 HE PANAMA CANAL. the 125,000,000 cubic metres at present admitted, and if it had taken into proper consideration the expenses with price of concession, administration, banking, financ- ing and interest during construction, it would have estimated the cost of the canal, not at i,o44,ooo,ooof. but 2,364,ooo,ooof., or ^94,560,000, instead of ^41,760,000. We will show hereafter that even that sum is inadequate, to judge from facts as ascertained at present. CHAPTER IX. DEFINITIVE ORGANIZATION OF THE COMPANY THE WORK FOR THE FIRST TWO YEARS. M. clc Lesseps exults over his success. First general meeting of tho shareholders. Preliminary expenses, amounting to j 1,800,000, provided for. The founders', banking, and other commissions. A singular "Comite" Americain." M. de Lesseps' programme of operations for 1881-2 and 1882-3. Death of MM. Tiionne and Blanchet. M. de Lesseps fails to keep his promises: the "in- stallations' 1 only commenced, not finished. The general meeting of the company in 1882 ; comparing promises with facts. M. Dingier, a new director-general of construction. The work by contract ; great delays, but always new reassurances. IT cannot be denied that M. de Lesseps' great financial success produced an excellent effect abroad. If the hero of the Suez Canal could raise money so easily without any studies, every one began to ask whether the Panama Canal was an undertaking so difficult as had been repre- sented. Of course M. de Lesseps took advantage of that state of doubt to assert more positively than ever that he could do the work easily in six or seven years, arid at a cost of not more than 6oo,ooo,ooof. ; and the majority of the 102,000 subscribers believed it. The Lesseps party became so infatuated that the Journal des Debats in January 1881, a few days after the allotments, referred to M. Menocal, the celebrated explorer of Nicaragua and Panama, as " un jeune ingenieur American qui affirme avoir fait des etudes. ... II est permis de croire . . qu'il reussirait a faire un escalier en spirale mais jamais io8 THE PANAMA CANAL. un canal." This reference to the United States engineer, whose work on the isthmus "Wyse had declared to be in- dispensable to all who have any studies to make on it, and whose Nicaragua project was the nightmare of the Lesseps party, illustrates to what a pitch of infamy triumph in a bad and desperate cause is capable. The first general meeting of the company was held on January 31, 1881. M. de Lesseps presented a report, the greater and more prominent part of which is taken up with the Suez Canal, and then with a succinct review of the formation of his new company. " All problems have been solved," he says, " and all difficulties smoothed over." The opposition in America had been quashed by the formation of a committee in virtue of the following agreement : " The coinite shall represent in the United States of America the interests of the company in everything that concerns the observance of the neutrality of the canal as defined in Art. V. of the law of the United States of Colombia, granting the concession for the said canal ; and, moreover, the comite shall represent the company in any other matter for which the company, through the Board of Administration, may request its co-operation, not only during the construction, but also during the working of the canal." M. de Lesseps then says that the general meetiug was now to appoint commissioners, who, according to law, were to appraise the value of the concession, and also to examine and report upon the preliminary expenses which were to be defrayed, and finally to fix the amount to be paid yearly to the board of directors, according to Art. XXVIII. of the statutes of the company. M. de Les- seps, in explaining the nature of these expenses, says that instead of allowing the American and European ORGANIZATION OF THE COMPANY. 109 financiers 4of. to 5 of. in each share issued, and thus issue the shares at a premium, lie preferred to offer these at par, having arranged beforehand with the financiers for the remuneration due them. He boasts that such expenses did not exceed 5^ per cent, on the " capital d'execution," that is to say, on the whole capital of 6oo,ooo,ooof. As only 290,000,000^ were offered, that 5 \ per cent, really meant n per cent, on the subscrip- tions ! That is the outlay of which M. de Lesseps said : " Les commissionaires que vous allez nommer vous diront sans doute combien la depense est modeste." On March 3, 1881, the second general meeting of the company took place, and, according to law, the company now became definitely organized. M. de Lesseps read another report, beginning by congratulating himself for the " energy " displayed at the first meeting, " energy which moved everybody profoundly" whatever that might mean. Speaking of the intentions of the direc- tors, he begins by saying that "the problem of the American isthmus is comparatively easy " much easier than that of the Suez Canal. " It is an operation the exact mathematics of which are perfectly well known, and the grandeur of the effort to be made does not at all trouble the enterprising contractors to whom you will supply the means of carrying out the effort." The contractors alluded to are Messrs. Couvreux and Hersent, and if our readers take into consideration that the said contractors to this day have never entered into any firm contract at all with the Panama Canal Company, they will be better able to appreciate the assurance of M. de Lesseps. They had merely said that the work could be done for 5i8,ooo,ooof. The report goes on to refer to the " International Technical Commission" of 1880, which was composed 1 10 THE PANAMA CANAL, " of the most competent engineers." That Commission came to the conclusion that the damming of the Chagres was " a very simple solution of the only doubtful question about the execution of the work of opening the canal." He then says that the total number of cubic metres to be excavated is 72,986,000, of which 44,536,000 in alluvious and semi-hard soil, and 28,450,000 in hard rock. The canal proper, M. de Lesseps adds, will cost 430,000, ooof., including the side channels to dispose of the waters of the Chagres and of the Rio Grande. The other expenses with the canal, such as the " barrage " of the Chagres, the culverts from the artificial lake, the improvements of the ports, will come to 46,ooo,ooof., and the tide-lock, lighthouses, reservoirs, &c., will amount to 36,ooo,ooof . more ; thus making a total for all works of 5 1 2,000, ooof., or ^20,480,000. The programme for the year (1881) was to clear the line of the canal from vegetation, to study the hydro- graphy of Colon and Panama bays, their tides, currents, winds, &c. ; to build houses for the accommodation of employes and hospitals for the sick ; to select localities, and to mount the workyards and seats for the different sections. " In about October, all preliminary work being finished (toutes les installations etant terminees), the great deep cutting at Culebra will be attacked, while towards the end of the year, in November or December, the first dredges will begin excavating the soft soil in the lower part of the line, and in Colon or Aspimvall a sea- dredge will be at work. Thus in January 1882 the work will be going on in several points of the canal ; and the experience acquired by a few months' work will enable the company to order the whole of the needed machinery with full knowledge of its usefulness ; and before the ORGANIZATION OF THE COMPANY. in end of 1882 the whole definitive material will be in the isthmus, and in 1888 the canal will be inaugurated." Such were the promises of the promoter, and his endorsement of the " Technical Commission " of whose composition and work our readers have already got the true inside view We beg them to bear in mind what were the promises of M. de Lesseps, and also to satisfy themselves whether, from the studies made at the isthmus, M. de Lesseps was justified in making those bold promises to his shareholders. After the reading of that report the commissioners appointed in the previous meeting presented their own report on the several matters sub- mitted to them. " Your company," they said, " has been formed in the first instance by persons who have made advances of money (a thing thought at the tinle to be very risky) necessary to the preparations for its constitution ; and in the second place by those who, under another form, lent to M. de Lesseps the aid without which it would have been impossible for him to bring the whole business to a happy conclusion." These founders, besides 2,coo,ooof. in cash, will have 15 per cent, of the net profits of the enterprise. The directors will have 3 per cent, of such profits, but while the profits are not declared, they will have 24o,ooof. (^9,600) per annum as fees. As to the " expenses which M. Ferdinand de Lesseps has been forced to incur, in order to arrive at the forma- tion of your company," the commissioners reported as follows : " In the first place, there are the expenses for the first issue made in 1879 ; for the propaganda which preceded the formation of the syndicate of that subscription ; the outlay made on account of the different expeditions sent to the isthmus ; and finally, the expense with the recent 112 THE PANAMA CANAL. issue of 590,000 shares, including placarding, advertising, postage, the transportation and the centralizing of funds, the expenses with the personnel, as well as all commissions due to the bankers, intermediaries, and promoters, not only in France but abroad. The total under this head .amounts to 1 0,801,5 7 7^- 59 c -> which represents i'8o per .cent, of the total capital necessary for building the canal. " To that sum .... we must add the remuneration stipulated as profit for the members of the international syndicate which was kind enough to make advances of considerable funds necessary for the formation of your .company sums which would have been lost by them had the public failed to respond to their appeal. That remuneration amounts to n,8oo,ooof " There is still an agreement made with the American financial group which has charged itself with the task of representing the company's interest in the United States. .... Such agreement brings us a liability of six .annual payments, as follows : 3,ioo,ooof. soon after the organization of the company; i,4oo,ooof. payable one year after; and five payments of i,5oo,ooof. at the end .of each of the five following years. Such expenses should appear in your annual budgets." Such was the report of the first finance committee of the Panama Canal Company. The poor 16,000 women .and other shareholders were called upon, not only to pay ^400,000 for the concession, but also to defray the expenses of the first fiasco of M. de Lesseps and the "propaganda that preceded" it that is to say, the " International Congress," the lecturing tour of M. de Lesseps, the bribing of newspapers, the " technical commission " and travels of M. de Lesseps to the isthmus and to America, and commissions due to intermediaries .of all classes. Then besides that there were commissions ORGANIZATION OF THE COMPANY, 113 due to the " international syndicate," greedy and useless middle-men. As to the American syndicate, it is one of the most shameful corruption funds ever recorded in the history of financial enterprises. Imagine this ex- penditure of ^480,000, so that a few men in New York might represent the company in America and co-operate with it when requested ! To that fund is due the success which attended M. de Lesseps' invitation to the then Secretary of the Navy of the United States to accept the presidency of the syndicate, and no respectable bankers should ever have participated in that costly fraud upon the shareholders of the Panama Canal Company as three firms in New York did. These men are challenged to show that they ever did anything for the company except lend their names, so that here in Europe M. de Lesseps might say that " America was all right." The three houses deserve the hearty reprobation that will be visited some day upon all who have intrigued and plotted to obtain the money from the poor French people. The corruption fund is in New York still : it ia doing its work of bribery and of systematic chicanery ; and the Americans, who are considered so shrewd, whose press claims to throw light on all the dark corners of finance, have been bearing this insult to their good sense with singular equanimity. Imagine now a company in England formed on the basis of the Panama Canal, paying ^904,000 for pre- liminary expenses, besides ^480,000 for an American corruption fund altogether, ^1,384,000, not including; ^400,000 for the concession ! The total amount called on the shares up to this time had been ^5, 000,000, and yet out of that sum nearly ^1,800,000, or 30 per cent. r was spent at once on, or set aside for, the concession and preliminary expenses ! ii4 THE PANAMA CANAL. In a small enterprise requiring little capital, 7^- per cent, of the latter is not too great a proportion for the preliminary expenses ; but in an undertaking said to cost ^24,000,000, that percentage is enormous, especially when the result of the Panama Canal construction is so problematical, and when no proper care had been taken to make it less problematical. But we must take leave of this first accounting of M. de Lesseps' enterprise, and follow up the history of his company. The programme that he announced, we repeat, was : In October 1881 all preparations for work were to be completed ; In December 1881 work to be commenced all along the canal, including the hard-rock mountain of Culebra ; During 1882, obtaining all the necessary machinery according to the experince acquired in the latter part of 1 88 1 and first part of 1882. Such were the promises made by the president at the general meeting on March 3, 1881. The month of October came very quickly, and except the despatching of 200 or 300 Europeans and some machinery to the isthmus, but little was done. In the isthmus the fever raged as violently as ever, in spite of the daily assurances in Paris that the health in Panama was excellent. M. Henri Bionne, the right-hand man of M. de Lesseps, caught it, and died on board of the steamer on his way to New York. Later on, M. Gaston Blanchet, the engineer of Messrs. Couvreux and Hersent, and a most excellent man, died also of the Chagres fever, while surveying the Upper Chagres. As to work, the line of the proposed canal was cleared, THE WORK IN 1881-82. 115 some soundings were made, while special hydrographic studies were carried out at both bays forming the termini. Some wooden houses were put up along the line, and some machinery arrived. October had come, and M. de Lesseps had failed to complete the work with the first establishment which in March he had so confi- dently promised to do. Anybody can see from the detailed, diary of operations, published in No. 5 1 of the Bulletin du Canal that the " installation " and the studies were only commenced! We do not say that these six months were thrown away, but we only wish to remark that M. de Lesseps has always been promising much more than he can do. Even Dauzats the great Dauzats in a report to the Consulting Technical Committee dated November 23, stated that " the studies were not ended" while only " a great part " of the arrangements necessary for the lodging of the employes and workmen " was ready." Meanwhile M. Armand Reclus, who had been agent- general of the company in the isthmus, and who had come to Paris for a few months, returned to his post in December, in order to inaugurate what is bombastically called the " second campaign." The programme of that " second campaign " was pub- lished in the number of the Bulletin above referred to. It was as follows : Continuation of indispensable studies of the level- lings, and of the hydrography of Aspimvall and Panama ; plans for the ports to be settled. The definitive plans for the dam or " barrage " and for the subsidiary channels to be deeply studied and settled ; The work of excavation to begin forthwith ; In January 1882 the first sea-clredges to open a Ii6 THE PANAMA CANAL. maritime communication between Aspimvall and Gatun, following up the axis of the canal ; The excavators and dredgers were then to open the bed of the canal between Gatun and Buena Vista ; Two brigades of from 500 to 1,000 working men were to be established for that work, with inter- communication by tramway ; The massive rock section of the Emperador-jCulebra was to be attacked simultaneously, so that from December 1881, when the programme was made, up to June 1882, the end of the "second cam- paign," 4,000,000 or 5,000,000 cubic metres should be extracted from that section alone ; A service bridge near Gamboa to be built ; Machine shops to be put up near that point ; A complete telegraph and telephonic system to be established ; All machinery to be completely ordered. Let us now see how that magnificent programme was carried out. At the third general meeting of the company, on June 29, 1882, M. de Lesseps presented his annual report. We might expect to see the account of the excavations : just in the Culebra section alone he had promised us from 4,000,000 to 5,000,000 cubic metres excavated until June; and that being the hardest sec- tion, we might expect to see at least as much more in the other sections. Our readers ivill be surjirised to learn that, instead of any such number of cubic metres of soil and rock /laving been excavated in June 1882, on March 1883 there were but 660,000 cubic metres removed ; and on May i, 1884, two years later on, the total cube ex- cavated amounted to only 5,243,302 metres. What M. de Lesseps promised in October 1881 he THE WORK IN 1881-82. 117 "knew perfectly wdl at the time there was no possibility of accomplishing. We will show also how most of the other promises were equally unfulfilled. In January 1882 the sea- dredges were to open salt-water communication between A spin wall and Gatun. In his report of June 1882 M. de Lesseps announces that many landing wharves had been put up in Aspinwall, and that the line between Gatun and Aspinwall was being cleared of vegetation, so that in the following August the excavations should com- mence, according to a contract with Huerne, Slaven and Co. of San Francisco. As to excavations between Gatun and Buena Vista nothing whatever had been done. The studies of the damming in of the Chagres and the barrage at Matachin were to be completed also in June 1882. Now, M. de Lesseps announces that "we will complete in a thorough manner our studies on the barrage of Gamboa, the Chagres channels, and the hydro- graphy of Panama." Even as late as January 27, 1883, the Paris consulting technical committee, in answer to a report from the administration of the company, gave as its opinion that the problem of the barrage of the Chagres was not sufficiently studied for the committee to give its approval to certain suggestions of M. Dauzats, and it was then recommended that the new director of the works, M. Dingier, should apply himself to further studies of the problem. M. Dingier had succeeded to Commander Bichier, who himself had succeeded Com- mander Armand Reclus at the isthmus as representa- tive of the company. But it may be said that if there were delays in the first year, the work progressed at a great pace in the following one. Let us hear what M. de Lesseps had to I Ii8 THE PANAMA CANAL. say on July 17, 1883, when the fourth general meeting of the shareholders took place. He dilates on the manner in which the massive rock sections Paraiso, Upper Rio Grande, Culebra, Emperador, and Obispo were attacked " vigorously." But the total number of cubic metres that had been excavated from the beginning of the canal works until March 31, 1883 that is to say, in two years did not exceed 659,703, out of a total of 125,000,000. The total cube excavated at those four sections was but 240,773 metres! That had been the work done in the section whence M. de Lesseps had promised to have 4,000,000 to 5,000,000 one year before. In the meantime he is, as ever, full of promises. "Workyards ivill be soon established near Matachin, at Gorgona, Mamei, San Pablo, Tabernilla, and Buhio Soldado." The first dredge of Messrs. Huerne, Slaven and Co. had arrived in April, and was to commence excavating the canal between Aspinwall and Gatun in June 1883. That work was to have been ready in 188.", according to M. de Lesseps' previous promise ; and even after it had been resolved to do that work by contract there was a great waste of time. The contract with Huerne, Slaven and Co. for excavating six millions was signed on February 20, 1882, and that firm was to com- mence work in six months, or in August 1882 ; whereas it is stated that they only commenced to work regularly on October 8, 1883, or fourteen months later on. The complete work of excavating 9 kilometres, or about 5 1 miles, was to be finished in three years at most that is to say, not later than August 1885 ; and yet we hear nothing at all concerning the fulfilment of that expec- tation. The report also says that the workyards of Buhio Soldado, Tabernilla, and San Pablo were not ready, THE WORK SJV 1881-82. 119 whereas they were expected to be ready by the end of 1 88 1. Those at Culebra and Emperador were much advanced. Those at Rio Grande had not been begun, for there was first a preliminary work to do with regard to deviating the course of the river. Let the reader compare this state of affairs with that promised in June of 1881. The report gives in detail the amount of material that was then at the isthmus, two years and a half after the formation of the company. It comprised 4 dredges, 6 boats, 1 8 excavators, 29 locomotives, 444 waggons for excavated soil, i o portable steam-engines, and a few other things; not a great show, indeed, for eighteen months. However, M. de Lesseps says that orders for locomotives, waggons, &c., had been rapidly given out. The number of workmen had been growing from 3,000 to 6,844 persons in July 1883 ; but in October following M. de Lesseps expected to see 15,000 men at work. Towards the end of 1882 the company had begun to enter into contracts for excavation a policy which is certainly to be commended, for the French alone would never do much towards pushing that work. Besides the Huerne contract already referred to, the company made an arrangement with the American Trading Company, and another with the Franco-Colombian firm of Millet, Sosa and Company of Panama, for cutting the Culebra above line 75, comprising about 3,500,000 cubic metres. That work was to be completed in thirty months after the signing of the contract. As the contract was dated November 6, 1882, the work ought to have been completed by May 6, 1885. It would be interesting to hear now that it has even been half-done. We may hope that the contract system has been .adhered to with advantage to the company, although it I 2 120 7HE PANAMA CANAL. seems that not a single contractor has fulfilled his obliga- tions to the letter, everything being late in this canal enterprise. From March to May 1883, the director, M. Dingier, a man of great talent and executive ability, signed seven- teen contracts, not only for excavation, but also for the introduction of labour, 3,000 men in October following, and 2,000 before January 1884. Among the contracts for excavation we will note the following : For cutting at Matachin, between kilometres 43 and 45 from Aspinwall, about 1,500,000 cubic metres of rock and hard soil, the work to be done in eighteen months. For excavating, between kilometres 45 and 48, in the lower Obispo, about 2,000,000 cubic metres, within twelve months. For excavating 1,200,000 cubic metres in Gorgona, 500,000 in Obispo, 1,400,000 in Buhio Soldado, between kilometres 23-45 and 25'9o. Altogether these contracts were for 6,700,000 cubic metres in the period of eighteen months at the outside. We have no means of testing whether the contractors have carried out their obligations. In September a contract was entered into with "Wiesler and Legrot for dredging 260,000 cubic metres in La Trinidad, the work to be all done by August 1884. Later in the same month another contract was signed with Keroman and Carcenac for 1,000,000 cubic metres near Pedro Miguel, and up to line 1 5 of the average tide- level of the sea, the work to be ready in eighteen months i.e., March 1885. Altogether these contracts represented 20,500,000 cubic metres, besides the excavations already done and to be undertaken by the company directly. CHAPTER X. PROSECUTION OF THE WORKS. Preparations for the loan of 1883. M. de Lesseps promises to in- crease excavations at the rate of from 2 to 5, from 5 to 10, and from 10 to 20, all within six months. How he kept his promises; to this date the proportion is kept between 6 and 7. The reason of the systematic misrepresentation. The fiction of the canal being finished in 1888 and to cost but .24,000,000 steadily main- tained. Total cubic excavation up to last May. Unreliable figuring. M. Simonin's utterances in La France. The general meeting of the company in 1884: fresh promises. The Chagres problem " studied vigorously." Still another loan. The question heretofore quite easy. The Chagres and the money difficulties to begin soon. WE have shown in a previous chapter how the company was definitely organized in compliance with the require- jnents of the French law. We have also heard what M. de Lesseps promised to accomplish in the two first seasons of work at the isthmus, and then we have shown how the execution of it fell far short of his promises. We will now see how the great financial im- presario prepared himself for what he called the " cam- paign " of 1883-4, and what he has done since then, until May 1885, according to his own reports and official publications. In September of 1883 M. Ferdinand de Lesseps announced that he was about to issue a three per cent, loan. It was therefore time for still larger promises ; .Also for liberal subsidies and for nauseous puffs. We 122 THE PANAMA CANAL. will leave these aside, and consider only what M. de' Lesseps said at the time about the " Situation d'Ensemble," or general review of the work as it was then. The number of cubic metres excavated at that time (two years and eight months after allotment) did not exceed 1,700,000, out of a total of 125,000,000, or about \\ per cent, of that total. Yet, says M. de Lesseps' official organ : > " We have now excavators and dredges and machinery all along the line of the future canal, the bed of which is being attacked by 11,000 labourers. Last month (August 1883) the excavated cube was 210,000 metres, which was more by 25 per cent, than in the previous month. " The total output is going to increase every month, and in December next " (i.e., within three months) " will attain 500,000 cubic metres, when the dry season will have set in. " The accumulated material and the more favourable weather will then permit us to have a total monthly out- put of 1,000,000 cubic metres, which we will then in- crease to a normal output of 2,000,000 a month until the canal shall have been finished in 1888." Here we have again an example of the peculiar pro- cesses of M. de Lesseps. In August an exceptionally good month as compared with July the total output was 210,000 cubic metres. He wants to raise some money, and he begins by asserting that in three months the number will be 500,000 metres, and soon after 1,000,000, and then 2,000,000. His manoeuvres are really astonishing. The " more favourable weather " in Panama to which he refers is December, January, and February ; and what he wanted to convey to his supporters was, that although the canal company had PROSECUTION OF THE WORKS. 123 begun operations two years and eight months before, and the total excavations up to that time had not exceeded the sum of 1,700,000 cubic metres out of 125,000,000, and although in the previous month only 210,000 metres had been taken out, yet he expected (always full of expectations] to double that number in three months, and then double again the latter number, and then once more double the result of the last doubling, all in a few months ! That is the same kind of reasoning or reckoning that the great promoter followed as to the estimated cost of the canal, only reversed ; for, although the scientific congress of his own composition had in 1879 calculated the cost at the ridiculously low figure of i,o44,ooo,ooof., he by degrees reduced it to the maximum of 6oo,ooo,ooof. Of course, the whole thing was an outrageous mis- representation. Up to last month (May 1885) that is to say, twenty months after the above-quoted promise was made on the eve of the issue of 3 per cent, bonds the Canal Company never had as much as 700,000 cubic metres excavated in any month, except in two months, one of which was last April (1885). The total output from June 1884 to May 1885 was 6,844,016, instead of the promised 24,000,000 ! But, it will be asked, why does M. de Lesseps so per- sistently misrepresent the facts, or advance promises that he knows to be wholly untenable ? The answer is very simple. From the beginning M. de Lesseps knew very well that the Panama Canal, if possible from an engineering point of view, was financially impracticable, if the work itself should cost too much, or if the construction should last too long, thus equally increasing its cost. That is why M. de Lesseps has always bee^ insisting that the canal will not cost more than 6oo,ooo,ooof., and that it will be . 124 THE PANAMA CANAL. ready for traffic in 1 888, although he knows better. Now, how could he consistently say in September 1883 that the canal would be ready in five years and a half, unless he could manage to excavate thenceforth 2,000,000 cubic metres of soil and rock ? He was bound to keep up the fiction of 1888 and, of course, to say that, although only 2 1 0,000 metres were now being taken out monthly, he expected soon to raise the number to 500,000, and soon afterwards to 1,000,000, and then to 2,000,000. The whole thing is a humbug, and has been so from the be- ginning. In the same " Situation d'Ensemble," written to catch the sous of the French peasants, we read that Aspinwall has become a city, " very clean and coquette." Surely enough, that will be news to some foreign correspondents of the New York papers who lately visited that town, just before it was reduced to ashes by the local revolu- tionists. We learn also that the studies on the holding back of the Upper Chagres were still going on. In 1 88 1 it was assured that the studies would be completed in June 1882. M. de Lesseps in his annual report (as we showed) ex- pected to have 15,000 labourers by October. This new edition of the report says that the highest number reached had been 11,000 in July, but that at the com- mencement of " next campaign " there will be from 15,000 to 16,000 men at work. However, the issue of debentures was successful. M. de Lesseps had raised up to this time i5o,ooo,ooof. in shares; I25,ooo,ooof. in 5 per cent, bonds; and now 3oo,ooo,ooof. in 3 per cent, bonds ; a total of 575,ooo,ooof., or within 25,ooo,ooof. of the estimated price of the canal. In October 1883 the consulting committee was called PROSECUTION OF THE WORKS. 125 upon by the director of the works, M. Dingier, to give its opinion about his plans. The committee approved all his suggestions, including the creation of an immense reservoir to retain the waters of the upper Chagres to the extent of 1,000,000,000 cubic metres by means of a barrage made with the detritus from the excavations, the reservoir to be furnished with a surface deservoir, and with a culvert open in the rock, so as to regulate the dis- charge of the water to a normal flow of 400 m.c. for each second ; and also to construct side by side of the proposed canal some channels for drainage. As M. de Lesseps had clearly stated that in December 1883 the cubic excavation would amount to 500,000 metres, it will be interesting to hear now that in Novem- ber it had been 333,500, and in December 395,000. We are so accustomed, however, to promises so extravagantly wide of the mark, that in this instance we can almost congratulate M. de Lesseps on his comparative correct- ness he was wrong by only 20 per cent. At the end of the year 1883 the total number of cubes excavated was 2,427,034 (Bulletin du Canal, No. 1 08, February 15, 1884). Having thus reviewed whatever progress had been made by M. de Lesseps in the actual work of canal-digging from 1 88 1 to 1883, and the preparations for the next "cam- paign " of 1883-4, we will now see what he has accom- plished in 1884, and in the first five months of the current year. We need not repeat that the facts that we have detailed have become known to us from the company's official publications, from which we have quoted them. We have prepared from the monthly telegraphic re- ports received in Paris from the isthmus the following 126 THE PANAMA CANAL. statement of the total number of cubic metres taken away in the isthmus. Between the total on last May i, such as we find it, and the total now declared by the company, there is a discrepancy. The fault is certainly not on our side. Number of Cubic Metres excavated. End of 1883 .... January 1884 .... 580,000 February ,, .... 600,000 March ,,.... 615,000 April ,,.... 650,000 May . . . . 660,000 June . . . . 711,992 July . . . . 650,000 August . . . . 600,372 September,, .... 600,182 October . . . . 673,818 November .... 565,652 December . . . . 500,000 Total at end of 1884 . . . January 1885 .... 550,000 February .... 590,000 March .... 627,000 April . . . . 775> Total up to May i, 1885 . . . 2,427,034 7,407,016 9,834,050 2,542,000 12,376,050 The average per month in 1884 was therefore only 617,333 cubic metres, and for the first four months of the current year has been but 635,500. How different, indeed, from the 2,000,000 cubic metres per month which M. de Lesseps promised for the dry season of PROSECUTION OF THE WORKS. 127 1883-4 But, then, there is nothing new in the non- fulfilment of his engagements. It seems that M. de Lesseps is rather tired of his own figures. Before January 1885 his Bulletin published regularly the returns for excavations as telegraphed from Panama, and the monthly return was added to the grand total of cubic metres taken away previously. That practice has since been given up. In no case have we found this year the total excavated up to date. The figures for December 1884 to April 1885 are mentioned only incidentally in the Bulletin for May 15. Evidently M. de Lesseps is dissatisfied with the total sum. His energy is now directed to showing, not how he has kept up his forecasts and what is the total of work yet to be done and of money at his disposal to do it, but in making announcements of contracts for tremendous numbers of cubic metres to be completed in such and such a time. In the case of Huerne and Slaven, who undertook the excavations in the easiest part of the canal, we have seen what these contracts mean. It is another way of making promises, brilliant, but never meant to be kept. The game is this : M. de Lesseps is very backward in his work, and cannot be confronted with his own repeated assertions as to completing it in 1888. In order, then, to dispose of the cubic metres still untouched, and to show his countrymen that he can do so very soon, he parades a grand contract with such and such a firm, who have undertaken to finish so many millions of cubic metres in a short period. In that way he gets out, or expects to get out, of the responsibility of reiterated misstatements made solely by himself. But what is the value to be attached to those con- tracts 1 Are the contractors subject toany fine or penalty 128 THE PANAMA CANAL. for non-fulfilment of their stipulations? Has any one of the previous contracts been carried out? Is it not true, as we showed in the previous chapter, that Huerne, Slaven and Co., who in February 1882 undertook to finish 6,000,000 cubic metres by August 1885, had hardly done any in January 1884, when their second dredge (!) which hadjwstf arrived at the isthmus, caught fire and became useless? However, it cannot be denied that during 1884 much activity prevailed throughout the whole line. The work certainly progressed at a greater pace than in 1883, and what the French call "installation," especially in every- thing that regards administration, housing of labourers and employes, and hospitals, was as nearly perfect as possible ; while material worth perhaps ^3,000,000 had been accumulated along the line of the canal. And yet the great problem of the Chagres was left untouched. In February 1884 there were but five excavators at the Culebra (hardest) section, and the improvements of the port of Panama and those at Aspinwall, so far as the breakwater is concerned, have been postponed. In La France of April 12, 1884, M. Simonin, that unreliable writer of whom we have already spoken, gravely assured the readers of that paper which dis- putes with the Journal des Debats the palm of dissemi- nating the greatest number of misstatements as to the Panama Canal that, " a partir du mois de Mai prochain il sera fait 2,000,000 a 2,500,000 de metres cubes par mois, soit 25,000,000 de metres cubes par an, tout en tenant compte de la saison de pluies, qui va de Mai a Novembre. Cela permettra de finir les travaux de Panama en 1888, et peut-etre un peu avant cette date, omme le croit M. de Lesseps. . . . Le canal sera sans PROSECUTION OF 7 HE WORKS. 129 donte, grace a 1'energie constante de M. de Lesseps, entierement acheve dans quatre ans." This is how the intimate friends of the "Grand Fra^ais " have been writing, and will continue to write. When M. Simonin says that the canal will be finished in four years from April 1884 he may of course expect that we must wait and see. When, however, he says that from May 1884, henceforth, the output of excavations will be at the rate of 25,000,000 cubic metres per annum, we have only to say that the total from May 1884 to April 1885 was not 25,000,000, but exactly 7,504,016. We may also add that when M. Simonin wrote the above he knew as well as we did that M. de Lesseps could not possibly do what he had promised ; for he had made the very same promise six months before, to have effect in January 1884, and the article in La France was published three months afterwards, when the writer KNEW that the cube for any one of the three previous months had not exceeded 615,000. M. Simonin's article was quoted in the Bulletin, the journal of the company, in its number for May 15, just a few days previously to the announcement of the general meeting of June. Soon after that, the shareholders had a statement made to them of the condition of the work in March 1884, in which we see that the American dredging machine belonging to Huerne, Slaven and Co. had during that month excavated 20,670 cubic metres not overmuch, all will agree. The average for twenty-five days was only 826 cubic metres for each, or less than one- fourth its alleged power. The statement also says that the " work of the surveys for the holding of the Upper Chagres basin still continues," and pathways had been opened in the valleys of the Gatuncillo, Limon, and Chagres, between the Chilibri and the Limon (March 1884). 130 THE PANAMA CANAL. In the Culebra section three excavators had been a't work, and the .output had been 72,282 cubic metres. The capacity of each of these excavators in the best weather is 500 cubic metres per day (see No. 104 Bulletin). It seems that in this month each excavator only dug out 288 metres daily during the twenty-five days. The general meeting of 1884, which was to take place in June, was only held on July 23. The number of the Bulletin published just previously to the meeting is an extra double number, with five illustrations, and glowing accounts of the progress of the work. M. de Lesseps is quoted as declaring that " rien jusqu'ici ne permet de supposer que le canal de Panama ne sera pas acheve dans de dclai prevu, 1888." Further- more, he says as to the resources of the company that "it still has at its disposal i5o,ooo,ooof. of the share capital, and i29,ooo,ooof. in debentures." At the meeting M. de Lesseps' annual report was pre- sented to the 104,230 shareholders, of whom 19,143 held from six to twenty shares, and 80,839 held from one to five. After reviewing the financial situation, he states that the average number of employes during the year was about 13,000. The sanitary condition was declared to be good. The cost of each patient at the Aspinwall hospital was 7'5of. per day, and in Panama 5'75f. Besides these two large hospitals there were thirteen ambulances. M. de Lesseps then refers to M. Dingler's mission in the isthmus and to his programme of work, which was approved by the consulting committee in Paris. The work of excavation will consist of 110,000,000 cubic metres in the canal proper, and 10,000,000 more for the channels of the Chagres. The greater quantity of exca- vation, he adds, is compensated by the fact that the total PROSECUTION OF THE WORKS. 131 excavation in hard rock is not so extensive (which we roundly deny, having in view the company's own figures). In short, he sees nothing to lead him to believe that the canal may not be open for traffic in 1888. As to the Chagres, he says that the studies, which had been carried on vigorously, were very satisfactory. The work needed to restrain the water was less important than expected. The proposed basin was much larger than contemplated. The total result of the campaign of 1883-84, is that up to May i, 1884, from the beginning of the company, 5,243,302 cubic metres had been taken away. M. de Lesseps says that in Suez they excavated 50,000,000 in two years, and that the shareholders should not mind his being so backward just yet. The Panama Canal was really easier than the Suez Canal. There is no need, as on the Nile, to bring fresh water by a special canal, nor to cause the canal to traverse a swampy lake or two sand mountains, nor to create a port on an inhospitable shore. In Panama the whole matter is excavation, pure and simple. The problem is merely to have mechanical means enough to dig out a stated quantity of soil in a given period. Even if the works had not begun on dry soil before January i, 1885, and the dredging in January 1886, the canal could be ready on January i, 1888 ; but M. de Lesseps already gives the whole year 1888 away, and says that the work will be finished on January i, 1889. In the isthmus there were 79 excavators, 20 transports, 256 pumps, 122 locomotives, 8,961 waggons, 418 kilometres of rails, 21 dredges, 72 portable steam- engines, &c. Of course, in comparing Suez to Panama, M. de Les- seps did not quote M. Lavalley, the contractor of the Suez Canal who stated at the Congress of Paris in 1879 132 THE PANAMA CANAL. that the latter was not nearly so difficult of execution as the Panama. Indeed, in Suez there were not subsidiary channels to take away the Chagres water ; nor was there the problematical barrage or dam to create the greatest artificial lake in the world, as it is proposed to do ; nor was there any need of straightening the course of a mighty torrent ; nor was a breakwater to be built such as is required in Aspinwall, nor a solid granite (not sand) mountain like the Culebra to be cut, 755> o o Company's offices in Paris, including furni- ture, fec 72,800 Company's offices in Panama, including furniture, &c 227,200 Financial service on shares and debentures for 1882-83 880,000 (For 1881-82 we have no exact data.) Administration for 1882-83 in France and Panama . .' 248,000 Probable expenses with finances (interest, tfcc.) and administration up to Ju,ne 1882 400,000 Carry forward 7,9 7 2,000- ,62 THE PANAMA CANAL. Brought forward .... ^7,972,000 Expenses with the works of the canal proper : Machinery, tools, buildings ,6 40,000 Other expenses (salaries, &c.) 152 ,000 792,000 Cash on hand 2,320,000 ^11,104,000 Thus in about fifteen or sixteen months M. de Lesseps had managed to spend in round figures upon Preliminary administration and financing expenses ^3,910,000 Panama Railway 3>755> 000 Offices in Paris and Panama 300,000 Machinery and other expenses of the canal proper 800,000 ,8,765,000 In his expose, presented at the meeting of July 23, 1884, M. de Lesseps makes the expense about ^300,000 less. The difference is, that some of the money due to the Comite Amtricain was not paid as yet, and some accounts were due, but not fully settled. It must be confessed that, in a formidable work like the Panama Canal, the preparatory 'expenses are very heavy. But, on the other hand, it must also be admitted that to have thus disposed of more than one-third of the proposed cost of the canal, and to have nothing to show for it except 1,000,000 cubic metres of excavations in the way of canal building proper, is a poor show, to say the least. Less than 10 per cent, of the money thus spent went into the canal proper. THE FINANCES OF THE COMPANY. 163 The Panama Railway was acquired at a price that leaves the Canal Company a deficit of about ^60,000 a year beyond the service of the loan raised for the pur- chase. Considering the usefulness of the road to the company, and its having the right of way in Panama, the purchase, however, was wise. The material which the company had acquired, and already in the isthmus, consisted of 4 dredges, 10 scows, 1 8 excavators, 29 locomotives, 15 remorqueurs, 10 portable, steam-engines, 42 kilometres of rails (for 30 kilometres of railway), 190 waggons for Panama Railway, 561 excavation waggons. Besides these, the company had prdered i dredge, 52 boats, 46 excavators, 69 locomotives, 1,190 waggons of all classes, 43 kilometres of rails, and 7 portable engines, all of which were then in construction. Not a great deal indeed for the enormous amount of money which had already been spent. Thus, in July 1883 there were 1,103,703 metres ex- cavated, out of a total now fixed at between 125,000,000 and 150,000,000 ; and there was hardly enough material to commence the works vigorously. At that date any man might already see that it was impossible that the canal should cost only ^24,000,000. The expense already incurred was, roundly ^8,800,000 Adding to that : 1 24,000,000 cubic metres at the low average of 6s 37,200,000 The cost, it is evident, would greatly surpass the total put down by M. de Lesseps. In July 1883 any one could see that the price of mere excavation alone supposing the total amount to be 125,000,000 cubic metres would be 50 per cent, more then than the whole sum put down by M. de Lssseps as the ultimate cost of the canal, which, we repeat, was but ^24,000,000. 164 THE PANAMA CANAL. Such was the condition of the company in June 1883. Let us now see what money has been raised sincer On September 15, 1883, M. de Lesseps asked for 3oo,ooo,ooof. at 3 per cent, in 5oof. debentures, to be issued at 285^ He issued ^1 2,000,000 in obligations, which brought him ^6,840,000, the payment being extended over nearly one year. At the price of issue these debentures yield a revenue of 5! per cent., and as they are redeemable at par there is a bonus of ;8 128. per debenture. The subscription was open on October 3, and met with great success. On September 25, 1884, M. de Lesseps applied for another loan, this time for ^5,160,000, or i29,ooo,ooof.,- in Four per Cent. Debentures, redeemable at par in sixty- five years. The interest of 1 6s. per annum per debenture, having in view the price of issue (which was 333f-)^ is equal to 6 per cent, per annum. So that in September 1884 the company had raised 50 per cent, on 590,000 shares .... ^5, 900,000 5 per cent, loan of September 7, 1882 . 4,375,000 3 per cent, loan of October 3, 1883 . . 6,840,000 4 per cent, loan of September 25. 1884 . 5,160,000 Making a total of ^22, 275,000 This, we repeat, is merely cash raised, and not the total sum for which the company is liable. That sum is as follows : 50 per cent, on share capital ^5>9oo,ooo Loan of 1882 5,000,000 Loan of 1883 12,000,000 Loan of 1884 7,747,740 Total ;3> 6 47>74<> THE FINANCES OF THE COMPANY. 165 The interest that the company is paying for this capital is as follows : 5 per cent, on ^5,900,000 ; 2 95. oo 5 per cent, on ^5,000,000 250,000 3 per cent, on ;i 2,000,000 360,000 4 per cent, on ^7,747,740 39>99 Total interest ^1,214,909 Adding half of i per cent, on loans for amortization 123,369 Total annual charge . . . . ^1,338,278 That is the total sum that has been raised, and the interest and amortization charged on it. We have to wait until July 1885 in order to obtain an idea of the finances of the company, with some detail, up to June 1884. Since June 1884 the only data that M. de Lesseps has given out to his shareholders as to the condition of his company are those contained in the short statement which accompanied his circular of September 5, 1884, previously to the issue of the 387,387 Four per Cent. Debentures, just referred to. But the statement does not say anything that would throw light on the real condition of the company ; it contents itself with showing what are its resources, which are placed at 233,ooo,ooof., or ^9,320,000, of which ^3,420,000 were in cash, and ^5, 900,000 in the uncalled 50 per cent, on the shares. Let us now see what is the probable position of the company at present, and its prospects for the future. In his statement made in September 1884 M. de Lesseps said that he had in cash at that time ^3, 4 18,400. Now, he had raised up to that time the following sums, including the loan issued in that month : 166 THE PANAMA CANAL. 50 per cent, on shares . 147,500,000^ or 5,900.000 Loan of 1882 . . ' , . 125,000,000 5,000,000 Loan of 1883 .... 300,000,000 ,, 12,000,000 Loan of 1884 .... 193,692,500 7,747,700 Total . . . 766,192, 5oof. or ^30,647,700 In the issues of debentures, amounting altogether to 618,692, 5oof., there had been a rebate of 201,218,295^ ; so that the company only realized 417,474,205^, or ^16,698,968, which, added to the ^5,900,000 of the called-up share capital, makes up ^22,598,968, which represents the available net cash resources placed at the disposal of M. de Lesseps up to September 1884 inclusive. In order to express a judgment as to the prospective condition of the company when the canal will be thrown open : supposing that the Chagres will offer no insur- mountable difficulty, and that money will be forthcoming whenever M. de Lesseps asks for it in short, that every- thing will run smoothly for him : we must first find what is the amount of work left undone in September 1884, and add its cost, together with the cost of finding the money and interest, administration, &c., to the above ^30,647,700, less whatever he had in hand in that month. In the beginning of it M. de Lesseps had raised alto- gether 572,500,000^, or ^2 2, 900,000, of which he had still in cash ^3, 4 18,000, and therefore the total amount issued and spent, or disposed of, was ^19,482,000. During the month M. de Lesseps issued his loan for ^7,747,700, which added to that balance on hand, makes the total gross amount at his disposal at the end of September 1884, ^11,165,700. THE FINANCES OF THE COMPANY. 167 Now, in September of last year there were still to bo disposed of no less than 116,905,420 cubic metres of excavations. The excavations hitherto done are among the easiest ; and yet, in face of repeated promises of M. de Lesseps to have 2,000,000 cubic metres a month, the average for the first (and best) five months of this year (1885) has been 668,000 metres per month, or 8,000,000 a year. In the opinion of experts who have visited the isthmus, the company is now removing as much earth and rock as it will ever remove. M. de Lesseps has had all the money required, and he boasts that he finds easily any thousands of labourers he may require ; in fact, he bewilders us with the large multitude of workmen he now employs. However, we will assume that the total excavation henceforth will be increased by 50 per cent, beyond its amount in the past. Let it not be supposed that anything like that increase is to be expected. A year ago some wonderful increase had been promised from 210,000 metres a month to 2,000,000 (see pages 122 and 128). We have just seen that the average in the first five months of 1885 has been only 668,000 a month, and from the table in page 126 our readers may see that the average for the five months April to August of last year (1884) was 654,472 metres ; so that there has been hardly any increase in the work since last year. However, we will assume that M. de Lesseps will be able for the future to take away the annual average of 12,000,000 metres, beginning from September 1884. As at that time there were 116,905,420 metres to b3 disposed of, it follows that there will be work for nine years and nine months, commencing from September last. We will now calculate what will be the position of the M 2 168 THE PANAMA CANAL. company at the end of that period of construction. Let us see how much the canal will have cost. Raised and disposed of up to September 1884 ^19,482,000 Cash on hand, same month . ^3,418,000 Fresh loan, ditto (nominal) . 7,747,700 Resources in Sept. 30, 1884 ^11,165,700 EXPENSES TO FINISH THE CANAL : (a) Excavations,n6,()o5,40o c.m. at even such low price ass-s. each ^29,221,355 (b) Other ivories: subsidiary channels, Chagres problem , improvements in Panama and Aspinwall, as low as . 8,000,000 37,221,355 (c) Interest on sums already raised in Sept. last, or ^1,338,647 per annum for pf years 13,051,806 (d) Administration in Paris and at the Isthmus, ,320,000 a year . . . 3,120,000 16,171,806 The works, interest on sums already issued, and ad- ministration, will require ;53>393> in cash. With the discount at which the debentures will be issued, that total will be raised to ^72,400,000. Carryforward ,72,875,161 THE FINANCES OF THE COMPANY. 169 Brought forward .... ^72,875,161 OTHER EXPENSES : (e) Discounts, premium, and expenses of issuing new capital : say 40 per cent, on ^"53,400,000, less the ^5,900,000, the uncalled amount on shares, on which there will be no discount, or 40 per cent. on 47,500,000 . . . 19,000,000 (f) Interest and amortiza- tion on sums to be raised (72,400,000), say 5^ per cent, for four full years on the whole sum 15,928,000 TOTAL GROSS COST OF THE CANAL 107,803,161 Contingent expenses in our calculation. ^000, 000,000 Gross sum still to be raised .... 77,155,461 Gross sum already raised 30,647,700 Let us see now what will be the financial outlook of the company. And here we have first to consider the expected traffic of the canal. The Paris Congress took as the basis 6,coo,coo tons, but it seems to us that there is exaggeration in that estimate. Here is an instance of it. At the Congress of 1879, Admiral Ammen, U.S.N., presented a paper (prepared by the Bureau of Statistics of Washington) showing that the movement between the Atlantic and Pacific coasts of the United States, and 170 THE PANAMA CANAL. the commerce of the latter country with all nations or colonies in the Pacific comprised 971,455 tons only, whereas Mr. Szarvady at the same time was " demon- strating " that there were 3,443,000 tons, which num- ber M. Levasseur consented to lower to 2,000,000 by a process of figuring which is only too analogous to that of all the figuring of this Panama Canal business. In order to show how curiously these figures were handled it is enough to mention the fact that M. Levasseur, the reporter of the committee on statistics, gravely said (Compte Rendu, page 78) that " M. Mendes Leal (the Portuguese Minister in Paris), an exposant la situation commercial du Bresil a temoigne de 1'interet que le grand Empire de 1'Amerique du Sud avait aussi au percement de 1'isthme." Now, Senhor Mendes Leal, whose expose is published alongside, does not say any such nonsense ; for Brazil, indeed, has no interest what- ever in the canal ; on the contrary, her interest is the other way. Vessels going to the west coast of South America and to the Cape of Good Hope now pass by Brazil ; henceforth they will not. Brazil has no direct trade with Australia, and has hardly any with California. In the second place the numbar of tons is not so important to our purpose as the reasonableness or un- reasonableness of the dues. At the Congress of 1879 M. Gauthisb, Secretary of the Society of Commercial Geography, brought to its notice that while a ship of 4,500 tons would pay only 45,ooof. to pass the Suez Canal, she would be required to pay i20,ooof. according to the tariff proposed by M. Wyse and Colombia, nearly three times as much. Now, can the Panama Company maintain that high tariff and attract the 3,000,000 or 6,000,000 tons, as the case may be ? Every one is aware of the extreme com- THE FINANCES OF THE COMPANY. 171 petition in prices of all leading prpducts, and there are products, such as the guano, the phosphates and nitrates, and the copper of Peru and Chile, that are stated by eminent authorities not to be able to bear the i5f. tonnage by the canal. They are goods that may as well be transported in sailing vessels. And we must not forget that the Panama Company is placing too exaggerated a reliance on the growth of California, so far as business by the canal is concerned. The official publications speak of the growth of California as if the exports from that State were entirely dependent on water transportation. M. de Lesseps forgets, so far as the United States are concerned, that there are numerous lines of railway competing with each other and carrying goods from the West to the Atlantic coast at ridiculously low rates, and, as Mr. Edward Atkinson has just shown in his latent publication, the tendency is towards a still further reduction in the tariffs. However, allowing 5,000,000 tons for the business of the canal, and admitting the high price of 1 2s. per ton, as it has been proposed, the company would have an -annual revenue of ^3, 000,000. Let us see now what charges will have to be deducted : 5! per cent, on ^107,903,000 for interest and amortization ;5>934> Running expenses, say 400,000 ^6,334,000 Revenue ^3,000,000 Annual deficit 3,334,000 Even 10,000,000 tons would not pay expenses and the fixed charges on the capital, with shares and debentures 172 THE PANAMA CANAL. That seems to us to be the best possible showing for M. de Lesseps, and that is, we once more repeat, assum- ing that the difficulties of holding the Chagres at the height, during great freshets, of 100 feet above the canal, do not prove to be, as stated by impartial experts,, truly insurmountable ; for we really think that the annual deficiency of ^3,300,000 is not so important as the Chagres, which may in twenty-four hours destroy nearly all the work of the canal, or, at the very best, may re- quire a tremendous annual outlay in dredging the canal from the detritus brought by it with the force of a tropical torrent. Such, we think, is the financial outlook of the Panama Canal Company. Is it pleasant to contemplate 1 ( 173 CHAPTER XIV. POLITICAL QUESTIONS. NO. I. " THE MONROE DOCTRINE." I'arninount interest of the United States in the canal. Control of tlie canal the settled policy of that Government. The Clayton- Hulwcr treaty an exception that proves the rule. The Monroe doctrine, its English origin. Opinion of the Saturday Review. Jackson and the King of the Netherlands. The treaty of 1846-8 Itetween the United States and Colombia, its principal pro- visions. Instances in which America has intervened. The new treaties proposed in 1868 and 1869 : their political provisions. OUR task with the study of the Panama Canal enterprise may be considered at an end, since -we reviewed its financial prospects in our last chapter. But, as we said at the start, the consideration of this question of inter- oceanic communication would be incomplete without our taking into account its political bearings, and that is what we now propose to do. The matter is deserving of a long and detailed study, which, we regret to say, is alien to our present purpose in these pages. We shall have to rest contented with pointing out the various utterances of the United States and of Great Britain at different- times ; considering these political chapters merely as in- cidental to the main work of studying how the Panama Canal Company was formed, how it is working, and how it will probably end. Whether this Panama Canal of M. de Lesseps fails or is completed under French auspices, the Government of the United States is bound, by the enormous interests of 174 THE PANAMA CAtfAL. what may be truly described as its Pacific empire, to try and obtain the preponderating control in it ; and if that aim should be found to be difficult or impossible, then we think that that Government will try to construct another canal under its own absolute control. The idea of having a canal under its own control has been more or less a fixed one in the history of the Government. The Clayton-Bulwer treaty is an exception, and, rightly or wrongly, the United States maintain that England has broken that treaty. And if England insists that the treaty is still in force, it is claimed that nothing can prevent the United States from arranging for its formal revocation ; for indeed, whether the treaty is in force or is not in force, it seems certain that the United States Government do not want any " joint " or " multiple " control, which even here in Europe is the source of so many troubles. It is common in Europe to laugh at the pretensions of the so-called " Monroe doctrine;" and to assert that the United States cannot get rid of the Bulwer-Clayton stipulations ; and that the only way to get clear of all the difficulties is to neutralize the canal of Panama or any other American canal by the joint guarantee of all the Powers. We will try to show that those ideas are unwelcome, and indeed should be unwelcome, to America, and have as a rule been so from 1823 up to 1884, when the authorities at Washington negotiated a new treaty for building through Nicaragua a canal that should be under their own control. We may at once begin by stating that it is the settled policy of the United States to have, as President Hayes said in 1880, "a canal under American control. The United States cannot consent to the surrender of this control to any European Power, or to any combination of THE MONROE DOCTRINE. 175 European Powers. . . . No European Power can inter- vene," for protection of capital of its citizens, " without adopting measures on this continent wholly inadmissible." This is no new theory. It is but a development of the well-known " Monroe doctrine," thus called because it is not a principle of international law, but a doctrine which such a powerful nation as the United States is bound to enforce, and will enforce, should occasion arise.' Soon after the purchase of the Wyse concession by M. de Lesseps, such a Conservative paper as the Saturday Review, which is never over-favourable to anything con- cerning the United States, wrote on July 19, 1879, in relation to the canal, the following very just remarks : "According to old rules of international law, there is no reason why the United States should claim a special concern in an undertaking which will be carried on at a distance of 1,000 miles from the nearest point of its ter- ritory ; but the Americans have on former occasions suc- cessfully asserted a primacy on their own continent which they are strong enough to maintain. Napoleon III., in the apparent height of his power, was compelled, by the mere remonstrances of the American Government, to withdraw his army of occupation from Mexico, and no private adventurer will be allowed, without the per- mission of the United States, to prosecute an enterprise on American soil which may involve political conse- quences. The canal is to be placed under the protection of the Government of Colombia, which may perhaps not always be able to guarantee the security of the works, and which can certainly not maintain its own independence against any considerable foreign Power. In his former undertaking M. de Lesseps was only pre- vented by the vigilance of Lord Palmerston from obtain- ing possession of a considerable territory in Egypt, which 1 76 THE PANAMA CANAL. would have become a colony and dependency of France. At a later time he threatened, by his own authority, to close the canal after it became the highway between Europe and Asia. A European proprietary under a vigorous chief might soon become practically independent of a petty South American Government. Those who are interested in the commercial success of the Darien Ganal will act wisely in making early arrangements with the Government of the United States It is more likely that the United States may obtain an undue pre- ference in the use of the canal than that they will suffer from a European intrusion. If capital is forthcoming for the work, and if M. de Lesseps is justified in his belief that it is both practicable and easy, no time ought to be lost by the Governments of Europe in concerting measures with the United States for free and equal use of the canal. The application and frequent extension of the so-called Monroe doctrine may as well be recog- nised because it cannot be resisted. The precedent of Mexico is conclusive as to the power of the United States, and plausible arguments may be urged in favour of the justice of the claim. The semi-barbarous Govern- ments of Mexico and Central America cannot become rivals for supremacy in the Western hemisphere ; and the Americans contend that the vicinity of any more powerful neighbour might compel them to undergo the burden of maintaining an army on the European scale. They have for the present ceased to covet extension of terri- tory, but they insist on the exclusion of European influence from the petty states beyond their Southern border." These words are eminently apposite and wise. The "Monroe doctrine" is not a mere sentiment; it is rather the settled policy of a continent powerful enough to enforce it. It is impossible to imagine the THE MONROE DOCTRINE. 177 enormous interests of the United States at the mercy of the protection afforded by Colombia or by European Powers bound up in some treaty. Every one knows that the most solemn compacts for the settlement of the greatest European questions have been torn to shreds at the breaking out of war, and even without war. What Russia did in 1870 is what Great Britain was preparing herself to do in the Bosphorus should the late difficulties with that Power have culminated in war a few weeks ago. Treaties are grand things in smooth and normal times ; when, however, they are most to be enforced they are torn to pieces at a moment's notice. The so-called " Monroe doctrine," strange as it may appear, owes its origin indirectly to an English states- man, and next to him, not to Mr. Monroe, but to his Secretary of State, Mr. John Quincy Adams. When the Spanish provinces in America revolted against the rule of the mother-country, and succeeded in checking the attempt of Spain to retain them under her dominion, President Monroe, in his Message to Congress on March 8, 1822, declared that those provinces " ought to be recognized." In July 1823 Mr. John Quincy Adams, Secretary of State, in a letter to Mr. Middleton, declared that the claim then pressed by Russia to possessions in the north-western coast of North America was not conducive to the peace of the world. " With the exception of the British establish- ments north of the United States, the remainder of both the American continents must henceforth be left to the management of American hands." At the same time Mr. Adams said, in a despatch to Mr. Rush, American Minister in London : " The appli- cation of colonial principles of exclusion therefore cannot be admitted by the United States as lawful upon any part 178 THE PANAMA CANAL. of the north-west coast of America, or as belonging to any European nation." A month later on, Mr. Rush wrote to Mr. Adams that in an interview with Mr. Canning, the British Foreign Minister, he (Rush) having referred to a note of the Foreign Office to the British Ambassador in Paris, in which England disclaims all intentions to interfere in the late Spanish possessions in America, and expected also that France would make no attempt to bring them under her dominion, Mr. Canning proposed to him a concerted action between the two Governments, and protested that Great Britain would never again lend her aid towards bringing the colonies under the rule of Spain. Still, a month later on (in August 1823), Mr. Can- ning, in a private and confidential note to Mr. Rush, sets forth his views in a more distinct form. He does not disguise the fact that the recovery of the colonies by Spain was hopeless, and that, although the recog- nition of them as independent States was a matter of time and circumstances, England " could not see any portion of them transferred to any other Power with indifference." Mr Canning was really afraid of the intentions of France. Mr. Rush on his part answered that he " would regard as highly unjust and fruitful of disastrous consequences any attempt on the part of any European Power to take possession " of those colonies, " by conquest or by cession, on any ground or pretext whatsoever." It was only three months later on that President Monroe, in his annual Message to Congress, dated December 2, 1823, giving an account of the claims of Russia on the north-west, and of Spain on her late colonies, declared that "the occasion had been judged THE MONROE DOCTRINE. 179 proper for asserting, as a piinciple in which the rights and interests of the United States are * involved, that the American continents, by the free and independent condition which they have assumed and maintained, are henceforth not to be considered as subjects for future colonization by any European Powers." Alluding then to the proposed interference of the allied Powers on behalf of the Spanish dominion over her late colonies, the President declared that " it is equally impossible, therefore, that we should behold such interposition in any form with indifference." In January 1824 Mr. Canning, upon hearing the declaration of principle by Mr. Monroe, declined to act conjointly with the United States, because, said Mr. Rush in his dispatch of the gth of that month, Great Britain does not accede to the principle adopted by the United States of not considering the American continents as subjects for future colonization by any of the European Powers. On the contrary, on August 12, 1824, Mr. Rush again notifies his Government, " that Great Britain considered the whole of the unoccupied parts of America as being open to her future settlements in like manner as heretofore." The " Monroe doctrine " had thus originated in the attempt, first of France and then of the allied Powers, to restore the revolted provinces of Spain in America to the Spanish yoke. But while England did not want to see France taking advantage of Spanish weakness, neither did she agree to the assertion of the United States, that Europe should not look any more to America as a further field of colonization in any form. A " doctrine " is not enforced by international law ; and the Monroe declaration, it must be confessed, has been more respected than a principle. European nations i So THE PANAMA CANAL. may have protested against it, but the fact is, that they have not dared to act against it except in a few instances in which they got worsted, or they have withdrawn their claims in the end. We will now show how that doctrine has been con- sistently repeated, and how, in pursuance of its enforce- ment, the United States Government has several times tried to control in a direct way the interoceanic com- munication. We have already spoken of the attempts to build the canal independently of the political phases of the question; we shall now deal exclusively with political facts, and show what the United States have been doing in Colombia and Nicaragua, after which we hope to dwell specially on the Clayton-Bulwer treaty that, as an exception a very striking exception to the settled American policy, corroborates the main principle of exclusion of European domination on the isthmus consecrated by Monroe. We have already referred to the attempt of the King of the Netherlands to patronize the building of a canal 'across the isthmus, and the declaration of Secretary Livingston, dated July 20, 1831. The scheme, however, miscarried. President Jackson, under whom that sec- retary served, sent to Congress in 1838 a long report about the affairs of the isthmus, which was the basis of the long report of Mr. Mercer, dated March 3, 1839, of which the keynote is contained in the following sen- tence: "The United States, whose territory extends from the Atlantic to the Pacific, cannot but regard with solicitude any enterprise which, if practicable, will so greatly approximate their eastern and western frontiers." Mr. Mercer's idea was not to secure an exclusive control for the United States, but free and equal right of navi- gation to all nations on the payment of proper tolls. It THE MONROE DOCTRINE. 181 was then that Jackson sent Biddle to the isthmus, as we have already stated in a previous chapter. Although the diplomatic correspondence of the United States is almost silent on canal affairs for the next seven years, the subject was not allowed to drop, and we are next confronted with a most important treaty, which by itself was a strong declaration of policy. We refer to the treaty with New Grenada, now the United States of Colombia, dated December 12, 1846, but ratified on June 10, 1848. By this treaty the United States secure the right of transit by the Isthmus of Panama, and in com- pensation " the United States guarantee positively and efficaciously to New Grenada by the present stipulation the perfect neutrality " of the isthmus. The stipulation is important in canal politics, and we will transcribe here the whole Article XXXV. of the treaty containing it. " The United States of America and the Republic of New Grenada, desiring to make as durable as possible the relations which are to be established between the two parties by virtue of this treaty, have declared solemnly and do agree to the following points : " ist. For the better understanding of the preceding articles, it is and has been stipulated between the high contracting parties that citizens, vessels, and merchandize of the United States shall enjoy in the ports of New Grenada, including those of the part of the Grenadian territory generally denominated Isthmus of Panama, from its southernmost extremity until the boundary of Costa Rica, all the exemptions, privileges, and immunities concerning commerce and navigation whiph are now or may hereafter be enjoyed by Grenadian citizens, their vessels and merchandize ; and that this equality of favours shall be made to extend to the passengers, correspondence, and merchandize of the United States in their transit across the said territory from one sea to the other. The Government of New Grenada guarantees to the Government of the United States that the right. 182 THE PANAMA CANAL. of way or transit across the Isthmus of Panama, upon any modes of communication that now exist or that may be hereafter constructed, shall be open and free to the Government and citizens of the United States, and for the transportation of any articles of produce, manufac- tures, or merchandize, of lawful commerce, belonging to the citizens of the United States ; that no other tolls or charges shall be levied or collected upon the citizens of the United States, or their said merchandize thus passing over any road or canal that may be made by the Govern- ment of New Grenada, or by the authority of the same, than is, under like circumstances, levied upon and collected from the Grenadian citizens ; that any lawful produce, manufactures, or merchandize belonging to citizens of the United States, thus passing from one sea to the other, in either direction, for the purpose of exporta- tion to any other foreign country, shall not be liable to any import duties whatever ; or, having paid such duties, they shall be entitled to drawback upon their exportation ; nor shall the citizens of the United States be liable to any duties, tolls, or charges of any kind to which native citizens are not subjected for thus passing the said isthmus. And, in order to secure to themselves the tranquil and constant enjoyment of these advantages, and as an especial compensation for the said advantages, and for the favours they have acquired by the fourth, fifth, and sixth articles of this treaty, the United States guarantee positively and efficaciously to New Grenada, by the present stipulation, the perfect neutrality of the before-mentioned isthmus, with the view that the free transit from the one to the other sea may not be interrupted or embarrassed in any future time while this treaty exists ; and, in consequence, the United States also guarantee, in the same manner, the rights of sovereignly and property which New Grenada has and possesses over the said territory." Prior to 1846 the policy of the United States had been to obtain free passage for its citizens and mer- chandize on equal footing with all other nations, and to THE MONROE DOCTRINE. 183 prevent any one getting the preponderating influence on the canal. Now, that policy became accentuated, and that Government went further than it had ever gone before ; that is to say, it agreed to guarantee in a positive and efficacious manner the perfect neutrality of Colombian territory. In virtue of that treaty, the United States have been called upon to interfere in the isthmus several times, prin- cipally in 1856, i862 f 1864, 1865, and 1885. In 1856 there was a riot in Panama, which the Colombian Govern- ment could not or would not repress. The Secretary of State, Mr. Marcy, explained that the local government at Panama was thoroughly incompetent to protect the transit of the isthmus, and he dispatched a mission to Bogota for the purpose of negotiating a new treaty. In his instruc- tions to the negotiators the Secretary explains the chief points of ihe2^rojet of the convention that was to be urged upon Colombia. He proposed that a district of country twenty English miles in width, equidistant, or nearly so, from the line of the Panama Railway, from ocean to ocean, and including Aspinwall and Panama, should be under the exclusive jurisdiction of two municipalities to be created, Colombia to retain a nominal sovereignty the municipalities to govern themselves, and guarantee right of suffrage, religious freedom, and trial by jury. Colombia was to agree to pay indemnification for losses of life and property in the riot of April 15, 1856 ; and, on the other hand, was to cede to the United States several islands in the harbour of Panama, including that of Taboga, in consideration of which the latter Govern- ment would pay Colombia a sum to be agreed upon. Furthermore, it was proposed that the United States were to have in regard to the Panama Railway Company all the right and authority in and over the said road that K2 1 84 THE PANAMA CANAL. Colombia had at any time enjoyed, they having also the right of modifying or extending the charter, and to make any agreement with it in relation to the use of the said railway. The projected treaty was unacceptable to Colombia, and was not pressed. In June 1862 the Colombian Minister at Washing- ton applied to the Government of the United States, then engaged in the tremendous civil war with its own Southern States, to prevent Mosquera, a revolutionary chief, from subverting the Colombian Confederation. The President instructed the American naval commander at that port to protest, and guarantee at all hazards, and at whatever cost, the safet} 7 of the railway transit across the isthmus. But the Colombian Minister asked for the interposition of land forces, especially some cavalry. Mr. Seward, Lincoln's Secretary of State, did not comply at once with the request. The country at the time being in danger from an internecine war, and from foreign, principally English and French, ill-will if not open enmity, the Secretary departed from the true line of policy of his country, and instructed the Ministers in London and Paris to consult with the British and French Governments as to the probable occupation, and even inviting their co-operation. Mr. Seward was anxious to show to those two Governments that he wanted to avoid taking special advantages in Colombia, and thus excite their hatred for the United States to the point of open hostilities at a time when, without such hostilities, the safety of the Union was in great danger. Both Governments, while promising co- operation should the necessity arise, contended that thus far they did not see any such necessity ; and here the matter dropped. In 1864, Spain, then at war with Chili and Peru, THE MONROE DOCTRINE. 185 wanted to force war material into the isthmus in transitu to the South Pacific. The United States' interference was invoked by Colombia, whose neutrality was thus threatened, and although the necessity for intervention ceased, the Attorney-General gave it as his opinion that it should, if necessary, be granted. Then again, in 1865, the intervention of the United States was asked for by Colombia for putting clown a revolution, which that Government, however, refused, as the transit had not been impeded, and as the guarantee applied only as against foreign enemies and not against internal troubles. The intervention in 1884-5 is too recent to need any comments. In 1866. as we have already stated in a previous chapter, it was thought necessary to enter into some treaty with Colombia for the surveys and studies of a canal to be built under the auspices of the United States, and in 1868 the negotiations were opened by Mr. Seward. In February 1869 one of the last im- portant acts of President Johnson was to send to the Senate the treaty of Bogota, of January 14, as arranged between the plenipotentiaries. The tariff in the canal was to be on a basis of perfect equality for all nations. Colombia was to retain her political sovereignty over the canal and her territory, but she was to guarantee to the United States the peaceable enjoyment, control, and direction of it. The United States were to have the right to use the canal for the passage of troops, muni- tions and vessels of war in time of peace ; in time of war the canal to be closed to troops, vessels, and muni- tions of the belligerents. This treaty was not ratified by the Senate at Washington. In 1869 another effort was made to negotiate an 186 THE PANAMA CANAL. acceptable treaty, through. Minister Hurlbut, who signed, on January 26, 1870, the new treaty of Bogota, which General Grant submitted to the Senate on March 31 following. It consents that the United States shall make the necessary explorations. Art. III. reads thus : " Nothing contained in the two preceding articles shall be understood to mean that the United States of Colombia will forbid other explorations within her territories which may be undertaken for the same purpose, .... but only that they will decline to make any concession whatever for the excavation of such canal to any except to the United States of America, until the latter party shall have declared that they con- sidered the work impracticable, or the term of three years, expressed in Art. XXIV., shall have expired without the United States of America having declared their determination to commence the works." Both parties reserved the right of passing their ships of war at all times, but the canal will be closed against the flag of all nations which may be at war with either of the contracting parties. Art. XXY. provides that both parties mutually agree to use all efforts to obtain from other nations a guarantee in favour of the stipulations of immunity and neutrality mentioned in Art. XI., and also in favour of the sovereignty of Colombia over the isthmus; and the United States for their part recognise and renew the stipulations in regard to same guarantee contained in Art. XXXV. of the treaty of June 10, 1848. Those nations which, by treaties entered into with Colombia and the United States, shall unite in the guarantee of the neutrality of the canal, and of sovereignty over the territory, were to be relieved from tonnage over their ship of war. THE MONROE DOCTRINE. 187 By Art. XI., alluded to, the United States guarantee to Colombia that the canal and its dependencies shall be exempt from all hostile acts from other nations, and shall ally themselves to Colombia to aid in repelling any such acts at their own expense. Such were the principal provisions of a treaty that does honour to its negotiators. But upon being sub- mitted to the Colombian Legislature it was subjected to so many amendments as to become unacceptable to the United States. What Colombia wanted was a joint protectorate over the canal, all nations having equal control with the United States. Answering a memorandum from Minister Hurlbut in which that idea was ventilated, the Secretary of State, Mr. Hamilton Fish, said in a note to him, dated Sept. 4, 1869: "In the present state of inter- national law, such joint protectorate would be the source of future trouble, .... and might probably prove an obstacle to the ratification by the United States Senate of a treaty on the subject." Mr. Fish expounded the true American doctrine that a canal at the very door of the United States should not be under joint protectorate with European nations whose interests in it are so different and so remote AS compared with those of the United States. The principal modification made by the Colombian Congress was an addition to Art. XI. excluding both parties, when at war with any other nation, from exer- cising the rights of belligerents within the limits of the canal and dependencies, except when such nation had not joined the gviarantee of neutrality of Colombia. In the Wyse Concession of 1878, Colombia expressed her views more fully. The political articles of that con- cession are as follows : 1 88 THE PANAMA CANAL. " Art. Y. The Government of the Republic hereby declares the ports at each end of the canal, and the waters of the latter from sea to sea, to be neutral for all time ; and consequently, in case of war among other nations, the transit through the canal shall not be interrupted by such event, and the merchant vessels and individuals of all nations of the world may enter into said ports and travel on the canal without being molested or detained. In general, any vessel may pass freely without any discrimination, exclusion, or pre- ference of nationalities or persons, on payment of the dues and the observance of the rules established by the company for the use of the canal and its dependencies. Exception is to be made of foreign troops, who shall not have the right to pass without permission from Congress, and of the vessels of nations who, being at war with the United States of Colombia, may not have obtained the right to pass through the canal at all times, by public treaties wherein is guaranteed the sovereignty of Colombia over the Isthmus of Panama and over the territory whereon the canal is to be cut, besides the immunity and neutrality of the said canal, its ports, bays, and dependencies, and the adjacent seas. " Art. VI. The United States of Colombia reserve to themselves the right to pass their vessels, troops, am- munitions of war at all times, and without paying any dues whatever. The passage of the canal is strictly closed to war vessels of nations at war with another or other nations, and which may not have acquired, by public treaty with the Colombian Government the right to pass by the canal at all times." The two provisions above quoted are most objection- able to the United States. Colombia, the protege of that Government, according to the treaty of 1846-48, did not consult with it before granting the concession. Imagine the United States asking permission of the Colombian Congress, at a distance of fifteen days' trip from Panama, to pass a few troops from New York to California! The idea of the French and of Colombia THE MONROE DOCTRINE. 189 is to place the canal under the joint protection of all Powers which will acknowledge the sovereignty of Colombia over the isthmus, as well as the neutrality cf the canal and of the adjacent seas. Such an idea may be very acceptable to Europe ; but it is entirely in- admissible by the United States, and the reasons are to be found in the special message sent by President Hayes to Congress 011 March 8, 1880 (when M. de Lesseps was visiting Washington), to which we have already alluded, and the declarations of which we will now transcribe in full : " The policy of this country is a canal under American control. The United States cannot consent to the sur- render of this control to any European Power, or to any combination of European Powers. If existing treaties between the United States and other nations, or if the rights of sovereignty or property of other nations stand in the way of this policy a contingency which is not apprehended suitable steps should be taken by just and liberal negotiations to promote and establish the American policy on this subject, consistently with the rights of the nations to be affected by it. " The capital invested by corporations or citizens of other countries in such an enterprise must in a great degree look for protection to one or more of the great Powers of the world. No European Power can intervene for such protection without adopting measures on this continent which the United States would deem wholly inadmissible. If the protection of the United States is relied upon, the United States must exercise such control as will enable this country to protect its national interests and maintain the rights of those whose private capital is embarked in the work. " An interoceanic canal across the American isthmus will essentially change the geographical relations between the Atlantic and Pacific coasts of the United States, and between the United States and the rest of the world. It will be the great ocean thoroughfare between our Atlantic 190 THE PANAMA CANAL. and our Pacific shores, and virtually a part of the coast line of the United States. Our merely commercial interest in it is greater than that of all other countries, while its relations to our power and prosperity as a nation, to our means of defence, our unity, peace, and safety, are matters of paramount concern to the people of the United States. No other great Power would, under similar circumstances, fail to assert a rightful control over a work so closely and vitally affecting its interest and welfare. " Without urging further the grounds of my opinion, I repeat, in conclusion, that it is the right and the duty of the United States to assert and maintain such super- vision and authority over any interoceanic canal across the isthmus that connects North and South America as will protect our national interests. This I am quite sure will be found not only compatible with, but promotive of, the widest and most permanent advantage to commerce and civilization." The resolution offered in the Senate by Senator Burn- side, of Rhode Island, of which we have spoken in a previous chapter, was, it will be remembered, of the same general tenor. Mr. Hayes' successor was the unfortu- nate General Garfield, who in his inaugural message reiterated the same ideas, as did also General Arthur. CHAPTER XV. POLITICAL QUESTIONS. NO. II. THE CLAYTON-BULWEB TREATY, FROM 1850 TO l86o. England controlled the termini of the proposed canal through Nicaragua. American convention (Rise's) with the latter. Excitement against England. Sir H. L. Bulwer negotiates a treaty with Mr. Clayton. lleservatioos. Misunderstanding: Americans lack proper care. Opposition to the treaty. Secre- taries Marcy and Cass against the English interpretation. England, annoyed at the source of trouble, is for a time ready to revoke the treaty. She makes arrangements with Central America. After breaking the treaty, she revives it by giving np protectorates and possessions. The United States Government declares itself satisfied. have shown what has been the true American policy with regard to a joint guarantee of a canal, and in fact to any settlement by. European Powers in the close proximity of the United States. But it was only when California was acquired by the American Union that it looked into this question of control of the isthmus with any special interest. Since the eighteenth century England has made efforts to have a footing in Nicaragua, because it was thought to offer the easiest means of communication between the two oceans. We do not attempt to give a history of those efforts. For our purpose it is enough to say that in 1848, when California assumed the importance at- tached to a part of the United States territory, and 192 THE PANAMA CANAL. therefore when the problem of a canal became a matter of close concern to the Union, England had certain claims on the territory of Nicaragua claims which were utterly untenable in themselves, but which, whether tenable or not, were most disagreeable to the Govern- ment of the United States and offensive to its people. England not only occupied the points thought to be the best termini for the supposed canal, but threatened others. It was under these circumstances that Mr. Elijah Hise, United States Minister to Nicaragua, signed, on June 21, 1849, a "special convention having in view the grand design of opening and establishing through the territories of the latter State a passage and commu- nication between the Caribbean Sea and the Pacific Ocean." The treaty confers upon the United States, or " to a company of the citizens thereof," the exclusive right to construct and exploit a canal through Nicaragua, whose Government cedes absolutely all the land that may be required for it or for its dependencies. The articles re- ferring to the neutrality of the canal are the following : " Art. V. The Government of the United States shall have the right to erect such forts and fortifications at the ends and along the lines of said works, and to arm and occupy the same in such manner and with as many troops as may be deemed necessary by the said Government for the protection and defence thereof, and also for the preservation of the peace and neutrality of the territories of Nicaragua, to whom pertains equal rights as inherent to her sovereignty. "Art. VI. The public armed vessels, letters of marque, and privateers, and the private merchant and trading vessels belonging either to the Governments or the subjects or citizens of nations, kingdoms, or countries THE CLAYTON-BULWER TREATY. 193 with which either of the contracting parties may be at war, shall not, during the continuance of such war, be suffered or allowed to come in the ports at the termina- tions of said canals, nor be allowed to pass on or through the same, on any account whatever ; neither shall the vessels of neutral nations, whether public or private, be allowed to convey by means of said canal articles con- traband of 'war, to or for the enemies of either of the contracting parties, or to or for other nations or states who may be at war with each other ; nor shall the vessels of countries which are engaged in war with each other, owned or employed and armed by them to carry on such war, during its continuance be allowed to pass through the said canals. The public and private vessels of all nations, kingdoms, and countries which are at peace with both the contracting parties and with each other, shall be permitted to enter said ports, and to pass or be conveyed through the said canals, but they shall be subject, however, to the payment of such duties, charges, and tolls as may be estab- lished by the proprietors of the said works." It is, moreover, provided that Nicaragua cedes two square leagues of land at each terminus of the canal for sites of two free cities, to be, " of course, under the qualified dominion" of Nicaragua, " not to be exercised in violation of their rights and immunities as herein specified." In consideration of these favours the United States agree to protect and defend Nicaragua in her dominions and sovereignty, the former Government even employing military forces, if necessary, to preserve the peace and neutrality of Nicaragua, provided that no hostility shall first be commenced by Nicaragua without the consent of the Nicaragua and the United States Governments, given according to their constitutions. This " Hise convention " was never submitted to the United States Senate. It found its way into the Ameri- 194 THE PANAMA CANAL. can press, and the public applauded it heartily; but General Taylor and his Secretary of State, Mr. Clayton, did not approve of some of its provisions, principally that for the protection of and alliance with Nicaragua, and also that Article which gives to the United States authority to create two free cities. Then, as Great Britain at that time claimed authority over the mouth of the San Juan River, which was deemed indispensable for the canal, as proposed, the treaty virtually brought Great Britain into collision with the United States. The President wanted to avoid that collision (which otherwise was popular in the United States), and at the same time he wanted to have the canal built, and as there was no money to be had in America, he wished to have the work Tindertaken with the goodwill of the British Government, so that British investors should embark in it. In the meantime, on August 27, also of 1849, Nica- ragua granted to an American company, named "The American Atlantic and Pacific Ship Canal Company," the privilege of building the canal, the concession being somewhat different from the Hise convention, but still containing its general features. The company was com- posed of Cornelius Vanderbilt, Joseph L. White, Nathaniel H. Wolfe, and others, all of whom were Americans. On September 15, thrqe months after the conclusion of the Hise treaty, Mr. Crampton, British Minister at Washington, giving an account of the views of the President and of Mr. Clayton, wrote to Lord Palmerston that the Government of the United States was in an embarrassing position ; it had a majority in the Senate, and the general opinion in America was adverse to the claim of Great Britain's protege, the Mosquito King, to THE CLAYTON-BULWER TREATY. 195 any part of the territory of Nicaragua. " You can form an idea," Mr. Clayton is reported as saying, " of the eagerness with which the party opposed to the Govern- ment will avail themselves of the opportunity of either forcing us into collision with Great Britain on this subject, or of making it appear that we have abandoned, through pusillanimity, great and splendid advantages fairly secured to the country by the treaty." A few days later on Mr. Crampton reports another conversation, held at greater length, with the American Secretary. Mr. Clayton is reported as stating that what his Government desired was not to secure, as the Hise treaty did, any exclusive advantages to the United States with regard to the proposed canal, but that Great Britain should make a treaty with Nicaragua, by which no exclusive advantage should be secured to any party, and that Great Britain should " consent to make arrangements with regard to the Mosquito claim as would prevent its being an obstacle to the design in question " that of building a canal. If that were not done, the situation in America would be embarrassing. The Hise treaty was no secret. " The xiniversal feeling would be for its adoption ; and a reason fer clamouring for its instant ratification would be that this might defeat what would be represented and believed to be a plan on the part of Great Britain to secure for herself a monopoly of the most eligible passage between the two oceans." Said Mr. Crampton further on : " Mr. Clayton considered that this question could never be settled amicably unless both Great Britain and the United States withdrew all claim to the territory of Nicaragua and Costa Rica" Sir Henry L. Bulwer arrived in Washington, as British envoy, in the latter part of 1849. 196 THE PANAMA CANAL. despatches to Lord Palmerston is dated January 6, 1850. He says that the great interest of the Americans in the Mosquito claim is derived from the fact that the pro- posed canal is expected to pass through the Lake of Nicaragua and the River San Juan. He therefore pro- poses to consider the expediency of a convention between the United States and Great Britain et having for its object to facilitate the construction of the desired passage between the Atlantic and the Pacific" On February 3, Sir Henry Bulwer, writing again to the Foreign Office, enclosed the project of a convention respecting the Isthmus Canal, and in order to make clear its spirit and intention, stated his own views on the questions which it was proposed to settle. Kail or water communication, he said, by Central America, from ocean to ocean, would always have been of great interest to the United States, but since the possession of California and Oregon " it is now almost a matter of necessity." Now, it was supposed in America that " Great Britain had placed the Mosquitos in possession of Greytown expressly in order to get hold of this en- trance to the canal passage for itself, and at all events to prevent its falling into the possession or being subser- vient to the views of any other Power. On this ground has arisen all the excitement here touching the British protectorate of Mosquito." In view of the case Sir Henry thought that " all that seemed to be required in order to bring Great Britain and the United States to a perfect understanding is, that both should abandon every particular advantage the one such as might be derived from the protectorate over the Mosquitos, and the other such as might be derived from any contract or treaty with Nicaragua, .... and dropping as a point of controversy those disputes as to the Nicaragua, THE CLAYTON-BULWER TREATY. 197 '/// f .Ifosquito territory on which it is next to impossible that they should come to any agreement." The British Minister further explains that there are stipulations which extend further than the mere engage- ment to use the best efforts to secure the free transit of the River San Juan, inasmuch as Great Britain agrees not to occupy or colonize any part of Central America ; but in consenting to that provision Sir Henry Bulwer says he knew he was merely carrying out the views of the British Government. Lord Palmerston, on March 8, entirely approved of the course of Sir Henry, and authorized him to sign the proposed convention ; and on April i o the since celebrated Clayton-Bulwer treaty was signed in Wash- ington. The -preamble states that the two countries were desirous of " setting forth and fixing in a convention their views and intentions with reference to any means of communication by ship canal which may be con- structed between the Atlantic and Pacific oceans by the way of the River San Juan de Nicaragua and either or both of the Lakes of Nicaragua or Managua." The two Governments agree in Art. I. that neither the one nor the other will ever obtain for itself any exclusive control over the said ship canal, or erect and maintain fortifications in its vicinity, " or occupy, or fortify, or colonize, or assume, or exercise any dominion over Nica- ragua, Costa Rica, the Mosquito coast, or any part of Central America ; nor will either make use of any pro- tection which either affords or may afford .... for the purpose of erecting or maintaining any such fortifications, or of occupying, fortifying, or colonizing Nicaragua, Costa Rica, the Mosquito coast, or any part of Central America, .... nor will .... take advantage of any intimacy or o igS THE PANAMA CANAL. use any alliance, connection, or influence that either may possess with any State or Government through whose terri tory the said canal may pass, for the purpose of acquiring or holding, directly or indirectly, for the citizens or subjects of the one, any rights or advantages, in regard to com- merce or navigation through the said canal, which shall not be offered on the same terms to the citizens or sub- jects of the other." Several provisions follow about the facilitating of the construction of the said canal. Then, by Art. V. both parties engage to protect the said canal from interruption, seizure, or unjust confiscation, and will guarantee its neutrality ; this protection and guarantee being granted conditionally iipon the persons controlling the management not making unfair discriminations in favour of the commerce of one of the contracting parties. By Art. VI. the two Governments engage to invite the other friendly Powers to enter into similar treaties to this. And they likewise agree to enter into stipula- tions with such of the Central American States as they may deem advisable for the purpose of maintaining the neutrality of the canal and protecting it on equal terms for all nations. By Art. VII. the contracting parties promise sup- port and encouragement to such persons or company as should already have contracted for the construction of such canal. (The American Atlantic and Pacific Com- pany had that contract.) Art. VIII. cannot be well understood in view of the fact, that the treaty of 1846-8, between Colombia (then New Grenada) and the United States, to which we referred in our previous chapter, was then in force, and is in force to this day. It says: "The Govern- ments of the United States and Great Britain having THE CLAYTON-BULWER TREATY. 199 not only desired, in entering into this convention, to accomplish a particular object, but also to establish a genercd principle, they hereby agree to extend their pro- tection, by treaty stipulations, to any other practicable communications, whether by canal or railway, across the isthmus which connects North and South America, and especially to the interoceanic communications, should the same prove to be practicable, whether by canal or railway, which are now proposed to be established by the way of Tehuentepec or Panama. In granting, however, their joint protection to any such canals or railways as are by this article specified, it is always understood by the United States and Great Britain that the pai-ties constructing or owning the same shall impose no other charges or con- ditions of traffic thereupon than the aforesaid Govern- ments shall approve of as just and equitable ; and that the same canals or railways, being open to the citizens and subjects of the United States and Great Britain on equal terms, shall also be open on like terms to the citizens and subjects of every other State which is willing to grant thereto such protection as the United States and Great Britain engage to afford." Now, on June 29, 1850, prior to the exchange of the ratifications of the treaty, Sir Henry Bulwer made a declaration to the effect that " Her Majesty does not understand the engagements of that convention to apply to Her Majesty's settlements at Honduras or to its dependencies." And Mr. Clayton on July 5 said that he " understood British Honduras was not embraced in the treaty." These declarations were never submitted to the American Senate, and therefore are not to be considered as part of the treaty, having never been ratified. Such were the provisions of the Clayton-Bulwer con- O 2 200 THE PANAMA CANAL. vention of April 19, 1850, which we consider one of the most brilliant triumphs of Lord Palmerston. England, indeed, yielded absolutely nothing. What the Americans wanted was that England should withdraw the Mosquito claim to any portion of Nicaragua a claim, indeed, which was absurd, as Mr. Lawrence, United States Minister in London, demonstrated most fully in a dispatch to his Government, bearing the same date as that in which his unpopular Government was signing in "Washington the convention with Sir Henry Bulwer. Mr. Lawrence's dispatch is an exhaustive dissertation, in which he shows historically that the Mosquitos were not an independent nation, and that therefore all acts done by them are null and void. The British protection over the so-called " King " of those Indians was the cause of what Sir Henry described as " excitement," and Mr. Clayton wanted Great Britain to ivithdrato all claim to the territory of Nicaragua. Sir Henry Bulwer had the happy idea of meeting the views of the indolent (to say the least) American Secretary by displacing the question. He said : " You wish to have the canal built, and have got a company with a concession, and you wish England to withdraw from Nicaragua. England will not withdraw, but promises not to use her influence with the Mosquito King to embarrass you, promises to protect the canal, and furthermore promises not to occupy, fortify, or colonize Nicaragua, or even the Mosquito coast." Mr. Clayton yielded easily. The wording of Art. I. is rather ambiguous. England would not exercise any dominion in the Mosquito coast, but at the same time England promises that she will not "make use of any protection which either affords or may afford " to bring about that dominion, fortification, or colonization. There THE CLAYTON-BULWER TREATY. 201 is not the least doubt that the treaty recognizes that one or both of the contracting parties at the time afforded, and miykt still afford, protection " to any State or people" for the purposes aforesaid. It was the clear intention of Sir Henry Bulwer that the Mosquito protectorate should continue, of course under certain reservations as specified. In his note to Lord Palmerston, dated February 3, 1850, explaining the intent of the convention, as already quoted, he stated that the understanding was, that Great Britain should abandon every particular advantage, " such as miyht be derived from the protectorate over the Mosquitos," and dropping the disputes about such pro- tectorate on which it was next to impossible that Great Britain and the United States should ever agree ; and he added that the purpose of the proposed convention was " to exclude all question of the disputes between Nica- ragua and the Mosquitos, but to settle, in fact, all that it was essential to settle with regard to those disputes, as far as the ship communications .... were concerned." On April 24, a week after the conclusion of the con- vention, Sir Henry Bulwer, after giving an account of some slight differences, says that he embodied in the treaty the substance of the declaration given by Lord Palmerston to Mr. Lawrence on November 13, 1849, viz. : '* that the British Government has no intention to make use of the protection which Great Britain affords to the people of Mosquito for the purpose of doing, under the cover of that protection, any of the things the intention to do which is disclaimed." (See Lord Palmerston to Sir Henry Bulwer, March 8, 1850.) Sir Henry says there- fore, that " as the case now stands it is clearly understood that Her Majesty's Government holds its own opinions, already expressed, as to Mosquito;" and he adds: "I need not say that should your lordship wish to make any 202 THE PANAMA CANAL. further statement as to the views of Her Majesty's Government with respect to the protectorate of Mosquito, that statement can still be made : nothing in the pre- sent convention is affirmed thereupon, but nothing is abandoned." Nothing indeed was abandoned. The purpose of the able diplomatist was to cause the Americans to give up the substantial convention arranged by Hise, and to quiet the " excitement " about Mosquito, not by abandoning the protectorate, but by the promise that it would not be used so as to put obstacles in the way of the construction of a canal. It seems almost incredible that the Senate should have been satisfied with the terms of the treaty. How could Great Britain continue a protectorate and at the same time engage from ever fortifying the Mosquito coast ? A protectorate was exactly that thing to which the people of the United States objected, and yet nothing was given up by Great Britain in that respect. It may be said that what Sir Henry Bulwer wrote to Lord Palmerston is not of consequence ; but the first article of the treaty is very dear in not deciding anything about the protectorate, and, on the contrary, in affirming that such protectorate might continue. At any rate, the Clayton-Bulwer con- vention appeased for some time the agitation in the United States. Colonel Childs was commissioned to make surveys in Nicaragua, and his plans having been approved of by an American commission of army engi- neers, were submitted to English engineers, although that had no effect on the public, for the "American Atlantic and Pacific Company " was unable to raise the money. But the good understanding between Great Britain and the United States was not to last long, as might be THE CLAYTON-BULWER TREATY. 203 expected. Lord Palmerston had been gaining a too easy victory through his cleverness and that of his special envoy. The ratification of the treaty was certainly due to a misunderstanding of the intents of the former Power a misunderstanding that does not speak well for the watchfulness of the Americans of that period. Two years after the ratification, Mr. Webster, Secretary of State, agreed with the British Minister, Mr. Cramp- ton, upon a proposal to Costa Rica and Nicaragua for the adjustment of their disputes, as well as for the settle- ment of the controversy between Great Britain and Nicaragua in regard to the territory claimed by the Mosquitos, who were to give up Greytown to Nica- ragua. That instrument does not refer to the protection afforded by Great Britain, and only to claims between the Mosquitos and Nicaragua; but the joint negotiations with Nicaragua failed, and nobody who appreciates patriotism can blame Nicaragua for it. A great discussion was raised soon afterwards about the " declarations " of Sir Henry Bulwer and of Mr. Clayton, and the whole subject was reopened. In December 1853, the American Secretary of State, Mr. Marcy, instructed the Minister to Central America, Mr. Bosland, to take the treaty as " meaning what the American negotiator intended when he entered into it, and what the Senate must liave understood it to mean when it was ratified " viz., that by it Great Britain came under engagement to the United States to recede from her asserted protectorate of the Mosquito Indians, or to cease to exercise dominion or control in any part of Central America. If she had any colonial possessions therein at the date of the treaty, she was bound to abandon them, and equally bound to abstain from colonial acquisitions in that region. 204 THE PANAMA CANAL. Referring to the object of the " declaration " of Sir Henry Bulwer i.e., the settlement of Belize or British Honduras Lord Clarendon, on May 2, 1854, made a statement to Mr. Buchanan, the American Minister in London. He says that that settlement is not properly in " Central America," or in the territory of the former republic of that name, and now forming five distinct governments. This declaration was made in order to avoid misconception. The Belize here alluded to is the settlement of Belize as established in 1850, and where in 1847 the United Statos had sent a consul, who re- ceived the British exequatur, the United States thus recognizing the sovereignty of the latter ; not the Belize of 1786, as Mr. Buchanan seemed to imply. Between 1854 and 1856 Nicaragua annulled the charter of the " Atlantic and Pacific Ship Canal Com- pany," and Great Britain concluded a treaty with Hon- duras for the protection and neutrality of any means of communication through its territory from ocean to ocean. In 1857, on May 6, Lord Napier, British Minister in Washington, wrote to Lord Clarendon, that " the Presi- dent denounced the Clayton-Bulwer treaty as one which had been fraught with misunderstanding and mischief from the beginning. It was concluded under the most opposite constructions by the contracting parties. If the Senate had imagined that it could obtain the interpreta- tion placed upon it by Great Britain, it would not have passed. If he had been in the Senate at the time, that treaty never would have been sanctioned." Of course, there is abundant historical proof that there was a misapprehension on the side of the Americans as to the construction of the stipulations. But the fault was their own. They did riot pay proper attention to the treaty, and they meant what was not specified in it, THE CLAYTON-BULWER TREATY. 205 directly or indirectly. They had only to thank them- selves for the misunderstanding. General Cass, Secretary of State, wrote to Lord Napier on May 29 of the same year, and, referring to these different constructions, goes so far as to say that, had the British interpretation been made clear, no President and no Senate would have ratified it. But General Cass does not show it. He and his predecessors and successors speak of what must have been the feeling of their country, but not of what the treaty itself clearly says. General Cass is stronger in his contention about the' Bay Islands, Honduras, which were formally annexed to Great Britain on July 17, 1852 (two years after the conclusion of the Clayton-Bulwer treaty), by the follow- ing proclamation : "OFFICE OF THE COLONIAL SECRETARY, "BELIZE, July 17, 1852. " This is to give notice, that Her Most Gracious Majesty the Queen has been pleased to constitute and make the islands of Roatan, Bonacca, Utilla, Barbarat, Helene and Morat to be known and designated as a colony of the Bay Islands. " AUGUSTUS FREDERICK GORE, " Colonial Secretary. " God save the Queen." That was, said General Cass, and always has been considered, " a violation of the treaty" of 1850, "even under the British construction of it." On June 22, also of 1857, Lord Napier writes again to Lord Clarendon, that "an attempt will be made in the next session of Congress to set aside the Clayton-Bulwer treaty There can be no doubt of the views of the President and Cabinet on this matter." 206 THE PANAMA CANAL. Four months later, General Cass, acknowledging a communication from Lord Napier concerning the rela- tions between Nicaragua and Costa Rica, hoping that those two countries may enjoy prolonged peace, and referring to the Clayton-Bulwer treaty as contemplating harmony, reminds Lord Napier that that treaty did not heal the differences between the two countries. Those differences, he says, "still remain unsettled, while the treaty itself has become the subject of new and em- barrassing complications." Indeed, Lord Napier, writing soon afterwards to Lord Clarendon (October 22, 1857), stated that he had heard the President say that " that treaty had never been acceptable to the people of the United States, and would not have obtained a vote in the Senate had the least suspicion existed of the sense in which it was to be construed." In his message to Congress in December 1857, the President (Mr. Buchanan, ex- Minister to England) de- voted much space to this subject, stating what the United States believed to be the position of Great Britain when the treaty of 1850 was ratified. That Power, he says, contends that the treaty does no more than simply pro- hibit them from extending their Central American pos- sessions beyond what they were at that time. "The universal conviction," says the President, "when our Government consented to violate its traditional and time-honoured policy .... was that the consideration for this sacrifice was that Great Britain, in this respect at least, should be placed in the same position as ourselves." Buchanan adds that the British colonization of Hon- duras was "in direct opposition and meaning of the Clayton and Bulwer treaty." Even as late as 1856, when on August 27 Great Britain proposed a convention THE CLAYTON-BULWER TREATY. 207 to Honduras, by which she " cedes " to the latter the Bay Islands " a free territory under the sovereignty of the Republic of Honduras" it deprived Honduras of rights without which sovereignty scarcely exists. The question remained open, and on March 22, 1858, Lord Napier, communicating to Lord Malmesbury what was being done with regard to the different ways of settling pending controversies in Central America, said that " these modes both involve the maintenance of the Clayton-Bulwer treaty in its essential principle viz., the neutrality of the Central American region " and the exclusion of both parties from territorial acquisitions there. Lord Napier adds that the British Government, " prompted by an impression, derived from many sources, that the obligations of the Clayton-Bulwer treaty were repugnant to the people of the United States, .... authorized me to inform General Cass that Her Majesty's Government would not decline the consideration of a proposal for the abrogation of the treaty by mutual concert." Furthermore, says the Minister, " I had no information of the intentions of Her Majesty's Govern- ment beyond the bare fact that they would entertain a proposal to cancel the engagement of 1850 In reply to my observations, the Secretary of State remarked that he would reserve the subject He added, as a personal impression, that he was in favour of a naked unqualified repeal of the Clayton-Bulwer treaty without conditions." Lord Malmesbury, writing to Lord Napier on April 8, 1858, admits that "the Clayton-Bulwer treaty has been a source of unceasing embarrassment to this country." On July 25 Mr. Cass sent a long memorandum to Mr. Lamar, reviewing the whole dispute in a very lucid manner. In December, Lord Malmesbury, referring to 208 THE PANAMA CANAL. the note, speaks of " the accuracy with which General Cass has recapitulated the circumstances under which the controversy has been sustained." But the abrogation of the treaty was not really palat- able to England ; she therefore resolved upon adhering to the American interpretation of it by means of arrange- ments made with the several Central American Govern- ments to whose territory England had, directly or indirectly, any claim. In April and November 1859, an( ^ January 1860, Great Britain concluded treaties with Guatemala, Hon- duras, and Nicaragua respectively, for regulating the questions pending with them ; among other things pro- viding for the cessation of the protectorate over the Mosquitos three months after the ratification of the treaty. These conventions gave satisfaction to the United States Government ; and on December 3, President Buchanan, announcing their conclusion, said that " the discordant constructions of the Clayton and Bulwer treaty .... have resulted in a final settlement entirely satisfactory to this Government." That seemed to terminate the first period of discussion of the celebrated convention which, during the first ten years, had given rise to so much irritation. ( 209 ) CHAPTER XVI. POLITICAL QUESTIONS. NO. III. THE CLAYTON-BULWEE TREATY FROM l86o TO 1882. President Buchanan's declaration. Secretaries Seward and Fish consider the treaty as binding. What the French concession by Colombia proposes to do. President Hayes' objections : his message on the subject. Mr. Elaine's protests, and Lord Gran- ville's answer. A European guarantee inadmissible by the United States. Mr. Elaine's views as to the treaty. Lord Granville's criticism. WHATEVER may have been the infringements on the Clayton-Bulwer treaty on the part of Great Britain up to 1860, there can be no doubt that the United States Government considered the discordant constructions of that convention, up to that time, to " Jutve resulted in a final settlement entirely satisfactory to this Government," as President Buchanan solemnly says in his annual message to Congress in December 1860. Buchanan had been the Minister to England who protested so strongly against the English construction of the treaty* and it was he who now declared that the Government at whose head he was placed was entirely satisfied. And he explains why : England had given up the Bay Islands and the Mosquito protectorate, which she had not wanted to relinquish in 1856-7, when the American Senate had insisted on it, in deciding on the Dallas convention of Oct. 17, 1856. The United States had accepted a treaty without 210 THE PANAMA CANAL. proper attention to its wording, and although it cannot be denied that the general feeling in the country would have prevented its ratification should the British and literal construction, of it have been made manifest, the fact is, that it was ratified, and that Great Britain adhered to its letter so far as the Mosquito protectorate was con- cerned, and strained (to say the least) the declaration of Lord Bulwer as to Honduras so as not to appear to have broken the treaty, as in the opinion of many persons she undoubtedly did. But England withdrew from whatever untenable posi- tions she had taken, and the United States declared in a most formal manner that they were entirely satisfied. The Clayton-Bulwer treaty therefore was, so to say, re- established in its entirety ; the two Governments agree- ing to give it the American construction so far as regarded the colonizing of, or protectorates on, the isthmus. The great civil war for the disruption of the Union broke out soon after Mr. Buchanan went out of office. After the termination of the conflict, Mr. Seward, the Secretary of State, had occasion, hi 1866, to write to the Minister in London about the proposed acquisition by the United States of the island of Tigre, in Fonseca Bay, Honduras an island which in 1849 Honduras had ceded to the United States as a coaling station, although the cession, negotiated by Mr. Squier, was not confirmed by the United States. Fonseca Bay is that into which the Estero Real empties itself, and it is well known that that stream was supposed by many to offer the best route for a ship-canal. Mr. Seward wrote at length about the expediency of the United States acquiring what he calls a " coaling station under our own flag, for naval observa- tion and police," and he instructed Mr. C. F. Adams to "sound Lord Clarendon as to the disposition of his THE CLAYTON-BULWER TREATY. 211 Government to favour us in acquiring coaling stations in Central America, notioitJistanding the stipulation contained in the Clayton-Bulwer treaty? Nothing could show in a clearer way that the United States Administration considered the Clayton-Bulwer treaty was still in force. The position of Mr. Seward was really this : Prior to 1850, when the Clayton-Bulwer treaty was negotiated, England had possessions in Central America ; these she meant to keep, but as the Americans objected, and stated that they had only entered into the treaty in consideration of England's withdrawal, England withdrew. Now the United States propose to modify the treaty by asking, as a favour from England, that, as the conditions of the United States had changed, they may be allowed to acquire a naval station in Central America. Mr. Adams approached Lord Clarendon on the subject, but only in a very general and vague way (as he had been instructed to do) ; and giving an account of the conver- sation held with his lordship, he wrote to Mr. Seward on June 2, 1866, that he had said to Lord Clarendon that there was " the possibility that the terms of the Clayton- Bulwer treaty might interpose difficulties in the way of securing the most convenient point ' that we might desire." It therefore remains an undoubted fact, that in 1860 and 1866 the United States recognized the Clayton- Bulwer treaty as binding upon themselves. Throughout the administration of General Grant, and up to 1880, these views had not changed. Indeed, the Secretary of State, Mr. Hamilton Fish, who in 1870 had written a very elaborate report accompanying the President's message to the Senate of July 14 a report in wliich the Secretary makes a lucid explanation of the 212 THE PANAMA CANAL. " Monroe doctrine " now wrote an important dispatch to Minister Schenck in London, dated April 26, 1873. In this dispatch he complains that the British Government did not altogether abide by the Clayton-Bulwer treaty in its convention with Nicaragua of January 28, 1860 ; and Mr. Fish, moreover, says that he had information to the effect that when the British Commissioners went to mark the boundaries of the British settlement at Belize, in conformity with the treaty of April 30, 1859, entered into with Guatemala, they found, upon reaching the Sarstoon Biver, that British subjects were trespassing upon that river, whereupon they refused to proceed, and the treaty, if not virtually cancelled, has at least been suspended. Mr. Fish adds that the Minister from. Gua- temala at Washington tells him that his Government considers the treaty at an end. Should these facts prove to have been correct, concludes Mr. Fish, " you " (the American Minister in London) " will then formally re- monstrate against any trespass by British subjects, with the connivance of their Government, upon the territory of Guatemala as an infringement of the Eulwer-Clayton treaty which will be very unacceptable to this country." Now, whether the British Government broke the treaty or not in either or in both of the above cases in Mosquitia and at the Sarstoon River the fact is, that the United States, in April 1883, considered the Clayton- Bulwer treaty as in force. That is enough for our present purpose. But did the British break the treaty first in Mosquitia ? Mr. Fish's complaint is very weak indeed. He says the treaty with Nicaragua assigned boundaries probably be yond the limits which the Mosquitos had ever seen. Of course there is nothing in such complaint when it is con- sidered that the United States Government, after having THE CLAYTON-BULWER TREATY. 213 full knowledge of the treaty, declared itself entirely Kdtlxfied with it. It is hardly dignified to that Govern- ment to say, thirteen years afterwards, that what was then arranged and approved of was probably not what had been meant. As to the second grievance, namely, the settlement of British subjects beyond the admitted frontier between Belize and Guatemala, it would have been an infringe- ment of the Clayton-Bulwer treaty had such settlement been made with the connivance of the British Govern- ment. That, however, has not been proved. At any rate, here we have an American Secretary of State, as conservative, learned, and patriotic as any of his prede- cessors, making complaints (vague and groundless as they were) against " an infringement of the Clayton-Bulwer treaty," and this is very important as coming from one who, a few years before, wrote a most interesting and strong defence of the " Monroe doctrine." In June, 1881, President Garfield's Secretary of State, Mr. J. G. Blaine, hearing that the great European Powers might possibly be considering the subject of jointly guaranteeing the neutrality of the interoceanic canal now projected across the Isthmus of Panama, sent a circular note to the United States Ministers in Europe, stating what he said to be the American view on that point. The United States Government, he laid down, recognizes the necessity of a guarantee, but it has already guaranteed " positively and efficaciously " the neutrality of the isthmus canal and the sovereignty of Colombia, and that guarantee " does not require re-enforcement, or accession or assent from any other Power Sup- plementing the guarantee .... would necessarily be regarded by this Government as an uncalled-for intrusion into a field where the local and general interests of the 214 THE PANAMA CANAL. United States of America must be considered before those of any other Power save those of the United States of Colombia." Mr. Elaine further explains that the Government does not want to interfere with the commercial management of the enterprise ; but as to its political control, it must speak with both directness and emphasis. " The passage of armed vessels of a hostile nation through the canal of Panama would be no more admissible " in case of war, to which the United States or Colombia should be a party, " than would be the passage of the armed forces of a hostile nation over the railway lines joining " the oceans through Colombia. " And the United States of America will insist upon their right to take all needful precautions against the possibility of the isthmus transit being in any event used offensively against their interest upon the land and upon the sea." The Secretary then shows how immense are those interests, how vast is the Pacific Empire of the United States, and goes on to say that if the proposed canal were a channel for trade near countries of Europe, the influence of European Powers therein would be com- mensurate with their interest, and the United States would find no fault with it. " The case, however, is here reversed, and an agreement between the European States to jointly guarantee the neutrality and, in effect, control the political character of a highway of commerce, remote from them and near to us, forming substantially a part of our coast-line, and promising to become the chief means of transportation between our Atlantic and Pacific States, would be viewed by this Government with the gravest concern." " Any attempt," continues Mr. Elaine, " to supersede that guarantee by an agreement between European THE CLAYTON-BULGER TREATY. 215 Powers which maintain vast armies and patrol the seas with immense fleets, and whose interest in the canal and its operations can never be so vital and supreme as ours, would partake of the nature of an alliance against the United States It is the long-settled conviction of this Government, that any extension to our shores of the political system by which the great Powers have con- trolled and determined events in Europe, would be at- tended with danger to the peace and welfare of this nation." Of course Mr. Elaine confined himself to a declaration of the views of his Government, without regard to exist- ing stipulations with Great Britain. President Garfield was shot on July 2, and Lord Oranville delayed answering Mr. Elaine's note until November 10, when he very curtly said that, while he was glad that Mr. Elaine had no intention to initiate discussion on the "joint guarantee for the isthmus," he wished to point out that "the position of Great Britain and the United States with reference to the -canal, irrespective of the magnitude of the commercial relations of the former Power with countries to and from which, if completed, it will form the highway, is determined by the engagements entered into by them respectively in the convention .... commonly known as the Clayton-Bui wer treaty ; and Her Majesty's Govern- ment rely with confidence upon the observance of all the engagements of that treaty." England really said to the United States : " All you say of your paramount interests is very fine ; but thirty- one years ago I got some promise that neither you nor I would take any exclusive advantage in Central America. You have grown stupendously, but I do not care for that ; you must abide by what you contracted with me when you were comparatively poor and weak." P 2 216 THE PANAMA CANAL. Before Lord Granville's note reached Washington, Mr. Blaine, tired of waiting, sent a very long dispatch to Mr. Lowell, this time about the Clayton- Bulwer treaty. The theory of the Secretary is this : the remarkable development of the United States has created new duties for that Government, the complete discharge of which requires some essential modifica- tions in the Clayton-Bulwer treaty. " The operation of the treaty practically concedes to Great Britain the con- trol of whatever canal may be constructed " on account of her vast navy. While " the treaty binds the United States not to use its military force in any precau- tionary measure," it leaves the naval power of Great Britain "perfectly free and unrestrained." To put both Governments on the same footing it would be necessary to prohibit war vessels of Great Britain from passing through the canal. The United States want what Great Britain has been obtaining every- where. Great Britain holds and fortifies all strategic points that control the route to India : Gibraltar, Malta, Cyprus, a controlling interest in Suez Canal, fortifications at Aden and at the Perin Island, all serve that purpose. It is therefore not more " un- reasonable for the United States to demand a share in these fortifications, or to demand their absolute neu- tralization, than for England to demand the same in perpetuity from the United States with respect to the transit across the American continent." England guards the route to her colonies ; the United States want to guard the route to some of their own territory comprising nearly 800,000 square miles, an area larger than Germany and the four Latin countries of Europe put together, and inhabited, not by people of alien races, but by "bone of our bone, and flesh of our flesh." THE CLAYTON- BULWER TREATY. 217 Should a hostile movement be made against the Pacific States of the Union the Government would feel as if it had been neglectful towards its own citizens if it permitted itself to be bound by a treaty which gave the same right through the canal to a war-ship bent on an errand of destruction that is reserved to its navy sailing for the defence of the coast and protection of the citizens. And Mr. Elaine goes on : "A mere agreement on paper between the great Powers of Europe might prove ineffectual to preserve the canal in time of hostilities. The first sound of a cannon in a general European war would, in all pro- bability, annul the treaty of neutrality, and the strategic canal would be held by the first Power that would seize it," to the incalculable loss of the United States. .For these reasons the isthmus should be placed " under the control of that Government least likely to be en- gaged in war, and able, in any and every event, to enforce the guardianship which she shall assume. For self-protection to their own interests, therefore, the United States, in the first instance, assert their right to control the isthmus transit ; and, secondly, they offer, by such control, that absolute neutralization of the canal as respects European Powers which can in no other way be certainly attained and lastingly assured." Mr. Blaine then endeavours to show that, while both countries, the United States and Great Britain, are tied down in common helplessness, a third or fourth Power, or a combination of them, may step in and assume control of the canal. The Clayton-Bulwer treaty, he says, originated in the American desire for British capital in the construction of the Nicaragua Canal ; now there is no more any such need. In conclusion, he hopes that the modifications of the treaty decreed by the United States 2i8 THE PANAMA CANAL. will be conceded in a friendly spirit, and lie enumerates what are the changes so desired. They are (i) regarding the prohibition of the United States fortifying the canal, and holding political control of it in conjunction with the country in which it is located ; (2) regarding the pro- hibition to the United States to acquire territory in Central America : " The acquisition of military and naval stations necessary for the protection of the canal, and voluntarily ceded to the United States by the Central American States not to be regarded as a violation of the provisions " of the treaty ; (3) the eighth article of the treaty to be null and void ; (4) the clause defining the distance from either end of the canal in time of war captures to be made as liberal as possible. Not contented with this manifesto, Mr. Elaine sent another dispatch to Mr. Lowell, on November 29, 1881, this time having in view Lord Granville's reply, already referred to. He quoted profusely, though very incom- pletely, from the diplomatic correspondence between 1850 and 1859, in order to show what he called "the historical objections to the Clayton-Bulwer treaty, and the very decided differences of opinion between the two Governments to which its interpretation has given rise." As Mr. Elaine stopped his extracts from the corre- spondence in December, 1858, his whole despatch becomes of no more importance than any story that falls through before the end is reached. We have already stated that in 1860 President Buchanan pronounced himself as entirely satisfied with the negotiations of the British Government with Nicaragua, Guatemala, and Honduras for the purpose " of carrying the Clayton-Buhver treaty into execution according to the general tenor of the interpretation put upon it by the United States," if we put it in the words of Lord Napier at that time. THE CLAYTON-BULGER TREATY. 219 If Mr. Elaine does not follow up his historical narra- tive to the end, it is clear that he has weakened his own case. The only important part of his dispatch is that in which he considers whether Article VIII. of the treaty applies at all to the Panama Canal, which is certainly ;i delicate point of great interest. But even here Mr. Elaine does not make as good a case as he undoubtedly could. Lord Granville, in answer to Mr. Elaine, sent a dispatch t" .Mr. West, British Minister at Washington, dated January 7, 1882. He recognizes the vast development of the United States, but he says that the proposed canal does not concern only that country, but the whole civilized world. Her Majesty's Government are anxious that, while all nations should enjoy the canal, no single country should acquire a predominating control over it. Lord Granville further says that it would not be agree- able or convenient to any of the Central American republics through which the canal might pass to find itself called upon to admit a foreign Power to construct fortifications in its territory, for if any of them allowed this, independence would virtually be lost. The British Government holds that the principles of the treaty of 1850 "are intrinsically sound, and continue to be appli- cable to the present state of affairs." The conventions of Great Britain with Nicaragua and Honduras in 1856 and 1860, those of the United States with the same countries in 1864 and 1867, and of Nicaragua with France in 1859, show, Lord Granville says, that some progress has been made in that direction. In another dispatch, dated January 14, Lord Granville shows that Mr. Elaine's extracts were imperfect, and that he did not quote Buchanan's solemn declaration already referred to. 220 THE PANAMA CANAL. Mr. Elaine's position was perhaps perfectly correct so far as he explained the true American feeling in the matter. The tone of his dispatches, however, was not good, owing to his personal peculiarities and his lack of training. He spoiled his case, too, by defending it from its most vulnerable point. That he was mainly correct in expounding the American doctrine as to the Clayton- Bulwer treaty is seen from the fact that his successor, the late Mr. Frederick T. Frelinghuysen, who reversed many of the most important steps taken by Mr. Elaine during his short tenure of the American Foreign Office, not only corroborated Mr. Elaine's views, but developed them with remarkable vigour as well as great skill. His attitude we shall describe in the next chapter. ( 221 ) CHAPTER XVII. POLITICAL QUESTIONS. NO. IV. BRITISH AND AMERICAN VIEWS. THE BEST SOLUTION. Mr. Frelinghuysen follows Mr. Elaine's arguments. Lord Granville B exposition of the British views. Weakness of the American position in the correspondence and strength of its case on general grounds. A second canal under American exclusive control the best solution for a difficult position. ON May 8, 1882, Mr. Frelinghuysen replied to Lord Granville's despatches to Mr. Elaine, dated January 7 and 14, already sketched in Chapter XVI. He repeats the previous American declarations that for the United States it is " unnecessary and unwise, through an invita- tion to the nations of the earth, to guarantee the neu- trality of the transit of the isthmus, or to give their navies a pretext for assembling in waters contiguous to our shores, or to possibly involve this Republic in conflicts from which its natural position entitles it to be relieved." Treaties are harmless or useless in time of peace ; but when wars come it is impossible to enforce them. Such agreements, moreover, would lead to political interven- tion in American affairs, "which," says Mr. Frelinghuysen, " the traditional policy of the United States makes it impossible that the President should either consent to or look upon with indifference The formation of a protectorate by European nations over the isthmus transit would be in conflict with a doctrine which has been for many years asserted by the United States .... which 222 THE PANAMA CANAL. opposes any intervention by European nations in the political affairs of American republics." Entering upon the discussion of the questions con- cerning the Ciayton-Bulwer treaty, the Secretary writes at a very great length to show that the convention was made for a particular object which has since ceased to exist ; that Great Britain to this day, and, contrary to its provisions, maintains a colony in Honduras, so that the treaty is voidable at the pleasure of the United States, as it has been broken by Great Britain ; and, finally, that Art. VIII. refers merely to the lines of railway or canal which were proposed at the time of the treaty. We should like to be able to dispose of space enough to transcribe at least ample extracts from this exceedingly able and cogent State Paper, which reminds one of the better days of American diplomacy. We must, however, content ourselves with only a few sentences which we quote in order to show the line of argument of Mr. Frelinghuysen. He contends that the Clay ton -Bulwer treaty had for its primary object not only to aid the immediate con- struction of the proposed Nicaragua Canal, but also to dispossess Great Britain of settlements in Central America, whether under cover of Indian sovereignty or otherwise. And yet, he says, " Great Britain exercises dominion */ ' */ 7 over Belize or British Honduras, the area of which is equal to that of Massachusetts, Connecticut, and Ehode Island." Such dominion seems to be inconsistent with the treaty of 1850. At that time the English privileges on Belize, conferred by treaties with Spain, " were con- fined to a right to cut wood and establish saw-mills," in a defined territory. Even if the so-called " declarations " of Sir Henry L. Bulwer, acknowledged by Mr. Clayton, regarding British "settlements" in Honduras were valid, the British Government has unlawfully ex- THE CLAYTON-BULWER TREATY. 223 tended a " settlement " to cut wood into a r,",Milar colony. But, says Mr. Frelinghuysen, the Bulwer declaration after the conclusion of the treaty was not made nor accepted by the President and the Senate. That declaration is not considered as part of the treaty. According to Mr. Frelinghuysen, the solemn declaration of President Buchanan in 1860 referred to the disposses- sion of Great Britain from one of the ends of the canal route through Nicaragua, which was accomplished by means of the treaties of 1859 and 1860. Those treaties had nothing to do with the colonization of British Honduras. The Clay ton- Bulwer treaty was entered into in view particularly of the construction of the Nicaragua Canal, for which American citizens held a concession, upon which it was meant to act when they were confronted with the British occupation of one of its ends. Mr. Frelinghuysen calls attention to the significant fact that one of the most important alterations made in the draft that Sir Henry Bulwer sent to Lord Palmerston was the addition to Art. VII. referring particularly to " any persons or company " which should at the time have made a contract for the construction of the canal with the State through which it might pass. The provisions of the first article of the treaty, regarding fortifications, control, &c., and of the second and the third up to the sixth article, refer only to that particular canal. And here Mr. Frelinghuysen calls attention to Art. VII. of the treaty wherein it is said to be understood that " if at the expiration of the aforesaid period " (a yr.ir after ratification) " such persons or company be not able to commence and carry out the proposed enterprise, then the Governments of the United States and Great Britain shall be free to afford their protection to any other persons that shall be prepared to commence and proceed 224 THE PANAMA CANAL. with the construction of the canal in question." Mr. Frelinghuysen interprets this provision in this way : " If under .... the seventh article the claims of the holders of this particular concession should be set aside, then each Government reserved to itself the, right to determine whether its interests required it to afford pro- tection to the holders of any other concession" The Nicaragua concession was acted upon : surveys were made by Childs, and were then submitted to a commission of Royal Engineers, and only afterwards through the lack of money the concession expired. The treaty, therefore, has, it may be argued, become obsolete. Before the Clayton-Bulwer treaty was negotiated the United States had already the treaty of 1846-48 with Colombia, That treaty, says the late Secretary, " created a relation that cannot be superseded A pro- tectorate of this kind is .... necessarily exclusive in its character." Great Britain cannot join that protec- torate, created years before the Clayton-Bulwer treaty, without the consent both of Colombia and of the United States. And should Great Britain claim the right to join in the protection of the existing railway company, or in any future Panama Canal, " the United States would submit that experience has shown that 110 such joint protectorate is requisite," and " that the Clayton- Bulwer treaty is subject to the provisions of the treaty of 1 846 with New Granada, while it exists, which treaty obliges the United States to afford, and secures to them the sole protectorate of any transit by the Panama route.'' In short, " the United States esteem themselves com- petent to refuse to afford their protection jointly with Great Britain," and, of course, as to inviting other nations to guarantee the canal. Mr. Frelinghuysen ends by declaring solemnly that " the United States would look THE CLAYTON-BULWER TREATY. 225 with disfavour upon an attempt at a concert of political action by the other Powers in that direction." Lord Granville answered these arguments in a de- spatch, dated December 30, 1882. He denies that the treaty refers only to the particular route or routes then proposed, and points out once more the " general prin- ciple " of Art. VIII., wherein protection is promised to " any other practicable communications," and then "specially" to those "which are now proposed to be established by the way of Tehuantepec, or Panama." As to the treaty of 1846-48 between the United States and Colombia, there is nothing in it that confers on the United States any exclusive right of protection, or which is inconsistent with the joint protection of Great Britain and the United States. The treaty means no more than the treaties of Great Britain, France, and the United States with Honduras and Nicaragua. Lord Granville then refutes the arguments of Mr. Frelinghuysen on the violation of the treaty of 1850 on account of the British colony of Belize. British Honduras, he says, was acquired by conquest before 1850, and the United States have formally recog- nized the colony in 1869 as a dependency of Great Britain. That is so ; but we hardly think that Lord Granville makes good his case. The recognition of that fact does not mean that the Clayton-Bulwer treaty has not been violated by Great Britain, which seems to be the un- doubted fact. It is not unintentionally that Lord Gran- ville does not dwell long on the subject. In his dispatch to Mr. West of August 17, 1883, Lord Granville returns to that point, and this time he cannot see with what justice the United States claim that the arrangement as to Honduras is a violation of the treaty 226 THE PANAMA CANAL. when President Buchanan expressed himself as entirely satisfied. From the summary of the correspondence on the political control of the canal in the three last chapters, it appears that the so-called " Monroe doctrine " is not a mere vague sentiment, but a conviction deeply imbedded in Americans of all parties, and we have seen that, although they have been growing very fast as a nation, and are most prosperous, their prosperity, which has corrupted some of their political ideas, has not yet touched the " principle " that Europe is not to meddle in the political affairs of American republics. It makes no difference whether Great Britain or all the rest of the world do not admit the doctrine of Monroe ; it is still cherished by the United States, and as long as they are powerful it cannot help being respected. Great Britain would not dare to take possession of Cuba although it is still a colony of another Power at the expense of a war with the United States. And if France should attempt to take Panama she would soon be expelled, as were the troops of Napoleon III. when he tried to found an empire in Mexico. The " doctrine," however, has not been followed very closely in several instances, all of which are regretted by the true friends of the United States. The Clayton- Bui wer treaty is the most striking exception. Clayton wanted to dislodge Great Britain from the terminus of what was then supposed to be the only available line for a ship canal across Central America. And the considera- tion that he gave for that dispossession was to bind his Government by admitting Great Britian to a control in the canal and in promising to ask the different Powers of Europe and America to join in its protectorate. Yet THE CLAYTON-BULGER TREATY. 227 England was not dislodged from Greytown until 1860; neither Clayton nor the Senate took proper precautions with the wording of the treaty, and the Americans were astonished to find out that Great Britain had never meant to be dislodged. But, after all, Greytown was left to Nicaragua, although two years after that cession Great Britain created a colony in British Honduras, and to this day still keeps ;i colony there on the strength of an appendix to the treaty, which has never been approved by the President and the Senate that is to say, by the United States and therefore is no part of the treaty. The Lesseps enterprise revived all these questions, and although Messrs. Blaine and Frelinghuysen have defended the views of their Government with ingenuity and ability, both have been more than matched by Lord Granville. The reason is very plain. The American Secretaries have followed a very bad line of attack, as the readers may see from the extracts we have given. They have tried to show that the treaty was not meant to apply to all cases of interoceanic communication, or that the treaty is voidable at pleasure because of Honduras, or that the United States treaty with Colombia conflicts with the Clayton-Bulwer, &c. Now, from all these standpoints the Foreign Office has had no difficulty (except in the Honduras case) in retorting and getting the better in the discussion with the two Secretaries. Even supposing that Great Britain is not violating the treaty to this day, it is difficult to see why the United States should not ask for a formal abrogation of it on the general grounds that the treaty made thirty-five years ago is most unsatisfactory to the United States of this present day. Because an arrangement was made at that time and was made against the general feeling of the country does it follow that it should be kept up for ever ] 228 THE PANAMA CANAL. A dual control of the canal, as that arrangement pro- vides for, is as objectionable to the American Union as a joint guarantee of all nations. But even a dual con- trol would be impossible. Europe can understand why the great Republic wishes to have exclusively the guardianship of a canal across the Isthmus of Panama ; but France or Germany, for instance, would not consent to see England joining the protectorate without their also claiming a voice in it. If, therefore, the United States uphold the Clayton-Bulwer treaty they will have at their door a concert of nations of rival nations which, with their powerful navies, will compel the United States to maintain a great navy, and thus depart from their settled policy. The canal would become the most sensitive part in the political organism of the United States, and for a long time to come it will tinge their foreign policy even more than the Suez Canal has been tinging the whole foreign policy of England since it has been open. It is impossible to conceive that the United States should rest contented with a joint guarantee of countries with which they have so little in common. As to the treaty of 1846-48 with Colombia giving the United States any particular advantages of a protectorate over the isthmus transit, it is simply an American illusion. Nothing prevents Colombia from making identical treaties with England, France and other Powers, and when the troops from Washington will one of these days land in A spin wall, they may find French or English troops already " defending the passage " in virtue of treaty stipulations. If the canal is ever to be finished, we may be very sure that France, whose citizens will have acquired such momentous interests in Panama, will not leave them unprotected by her own guns. AMERICAN CONTROL. 229 Panama, and in fact Colombia, is much weaker than Egypt. The canal company will virtually control the whole State. One of the late directors of the Panama Railway told the writer of these lines that Colombia was often in debt to his company : what will not be the case with an immense enterprise such as the canal ? And what will be said of the intrigues of the French on the isthmus 1 Panama wants to be independent of Colombia, and at best is torn by frequent internal revo- lutions. Must the canal be left to French and Colombian protection 1 The more this matter is studied, the more difficult of solution it seems to be for the United States, unless they, having denounced the Clayton-Bulwer treaty, should manage to have a canal of their own, over which they may have absolute control. It is the only way to reduce to a minimum the danger of European complications in America. The late attempt to pass through the American Senate the treaty negotiated last year with Nicaragua a treaty which was heartily supported by such an eminent states- man as Senator Edmunds seems to display a true appreciation of that fact. One of the New York papers wrote strongly against the United States owning land in a foreign country, as Nicaragua, subject to internal commotions and inhabited by so different a race. Indeed, it is not very desirable for any one to meddle with Central America ; but the question which that paper should have asked itself was, which of the evils was the least the confronting of French and European intrigues as well as native intrigues in Panama, or the owning of a belt of land along the pro- posed Nicaragua Canal 1 ? A Government such as that of the United States, watching over so many and such Q 230 THE PANAMA CANAL. varied interests, cannot help having trouble of some kind ; but trouble will come ; and to let things run as they please may meet the views of self -satisfied people, who believe in their own transcendent wisdom, but it is not government. For our part we cannot believe that the United States will completely reverse their policy regarding European intervention in America at this late day, a policy which the writer of these lines, who is not American, thinks both wise and indispensable to their happiness. A second canal will be undertaken one of these days. We are aware that the control of an interoceanic canal falls really to the nation that has the strongest navy, and the United States at present have no navy. But not only that condition of things may not last indefinitely, but whatever disadvantage the American Union has now in that respect is counterbalanced by the great advantages of neighbourhood to the future canal a canal held and fortified under its auspices. On the other hand, we do not see how Great Britain can give up to the United States the absolute control of the Panama route. She has perhaps as great a com- mercial interest in the canal as the United States, and be- sides that, she has whatever ad vantages accrue to her from her powerful navy and from the Clayton-Bulwer treaty. When, therefore, we weigh the interests of Great Britain and those of France with the interests, political and commercial, of the United States, Ave cannot help coming to the conclusion that the United States, having by the indolence of their statesmen let this canal question assume a disagreeable form, should do .their best now to counteract their past errors by con- structing and assuming exclusive control of a canal of their own. AMERICAN CONTROL. 231 In January 1880, Senator Bayard, the present Secre- tary of State, warned the country that the American canal " must be under the control of the Government of the United States. Our power" he continued, " may be questioned, but it ivill be maintained. Every counsel of wisdom, therefore, exhorts us to seize the day, and in time of peace prepare for war, for it is the surest mode to avert it." (See the New York Nation, No. 762, February 5, 1880.) It is not likely, we repeat, that Secretary Bayard will think differently from Mr. Bayard, the Senator. The idea of a second canal, even supposing that M. de Lesseps might finish the Panama, is by no means a novel one, and it occurred to such an authority as the Economiste Franr s ais as early as July 1879, just when M. de Lesseps had bought M. Bonaparte- Wyse's conces- sion from Colombia. The Economist (London, July 26, 1879), referring to that article of its Paris namesake, wrote as follows : " The dark point in the present plan is that another practical line can be made further to the north, which is not included in the concession to M. de Lesseps' company. This is the line through the republics of Nicaragua and Costa Rica. It is nearly four times as long as the other line, and it requires twenty-one locks. At neither end are there good harbours, but it can be con- structed without any tunnel, and the River San Juan and the lakes of Nicaragua and of the Rio Grande can be utilized. To compare estimates of the cost of the rival routes seems of little use, as the expense of these immense undertakings is very uncertain. The Econo- miste Francais looks forward to seeing both enter- prises carried out, in which case it appears impossible to calculate beforehand which of the two lines may obtain the principal part of the traffic. But whether either or both of these lines are made, it appears certain 232 THE PANAMA CANAL. that American shipping, and not European, will be the gainer. The economy of time in the transit from the two sides of the vast continent of America, now con- ducted vid Cape Horn, will be an enormous gain to American shipping. In the transport of goods to the Pacific coast from the ports which open into the Atlantic the gain to American ships will be very great. At pre- sent the voyage by steamer from New York to San Fran- cisco, to Callao, to Valparaiso, to the Sandwich Islands, takes but little more time on an average than the voyage from the Channel to those ports. But when the canal is constructed the American ports will be far nearer than Caupi, as far as length of transit is con- cerned, than even the nearest European ports. The work, however, when completed, must be left to produce its own results. We shall accept it in England as one of the inevitable consequences of the increasing desire for increasing intercommunication, and we do not question that though, owing to the fact that American trade on the Atlantic and the Pacific coasts will benefit so largely by the improved means of transit, it is hardly likely that the proportion of English shipping will be as great as in the case of the Suez Canal, we have equally as little doubt that English enterprise will find full employment in utilizing the opportunity given it, and that England will reap the full advantage from the economy in transport which may be expected to result from the completion of the plan." 233 CHAPTER XVIII. CONCLUSION. OUR investigation of the Panama Canal must now be brought to an end. As we stated at the beginning our purpose was to study how the enterprise was brought to life by M. de Lesseps, how he has used the resources placed at his command by his fellow-countrymen, and what future is in store for the whole undertaking. We will now recapitulate the conclusions to which we have been led by this investigation. i. Since the last century the project of building a <;anal through the American isthmus has been often discussed, but it was only in 1851 that the first semblance of a regular survey took place under the auspices of the United States. Other surveys followed, but the enormous difficulty of the work, which entails so much expenditure of life and money, and which, even if satisfactorily solved in its engineering aspects, was considered as promising but doubtful financial results, contributed to the delay of a systematic and comprehensive study of the whole question. Lately, however, the Government of the United States undertook that task, and organized a series of surveys by proficient officers and engineers, their -studies being submitted to a superior committee of re- vision, which, after the most careful examination, decided that, taking everything into consideration, the Nicaragua route was the best. 234 THE PANAMA CANAL. In the meantime some Frenchmen conceived the idea of undertaking to build a canal, and of securing the ser- vices, the experience, and the honoured name of M. de Lesseps. They went to Central America, and obtained, in the last days of the administration of President Parra of Colombia, a concession from that State to cut a canal through its territory. The Panama line had been studied by the United States officers and abandoned. The two French naval officers examined it in eighteen days, and resolved to take it up. Those eighteen days were deemed sufficient for the organization of a plan, or rather of two plans, for a canal with no locks nor tunnel, and for one with a tunnel. M. de Lesseps lent his name to the enterprise, and in order to impress a scientific stamp upon the survey of eighteen days, and upon the " choice " of a route for which he and his associates held a concession, he called together a "Congress " of scientific men and non -scientific men most of them French, and persons invited by himself or through his suggestion, including thirteen employes of the Suez Canal Company. The " Congress " met in May 1879 one y ear a ^ er the date of the Wyse concession. The transactions were planned by M. de Lesseps, who organized the committees to suit himself that is to say, to select the Panama line, which had only been properly studied to be condemned. In spite of his. care in packing the committees, everything did not run smoothly for M. de Lesseps. Admiral Ammen and Mr. Menocal, delegates from the United States, demonstrated the absurdity of the Panama line and the perfect adapta- bility of the Nicaragua line. Their lucid report shook the credulity of many friends of M. de Lesseps on whom he depended. But the Congress was composed of men who, either through respectful deference, genuine admi- CONCLUSION. 235 ration for and confidence in M. de Lesseps, or from some other motive, were bound to follow him blindly; and although such men as MM. Lavalley, the constructor of the Suez Canal, Cotard, Buelle, and others, showed in their committees 'that the Panama project was a great " un- known " (as M. Cotard said), and although in fixing upon the details of the scheme the committees did not alto- gether suit M. de Lesseps' purposes, the Congress selected the Panama project as the best, and declared that the canal, exclusive of the contingencies of the " unknown " problem of the Hiver Chagres, and presupposing that there were only 46,000,000 cubic metres of excava- tions, would cost from i,o4o,ooo,ooof. to i,o7o,ooo,ooof., or say ^42,000,000. 2. While every serious man who had watched the pro- ceedings of the Congress was deriding them, M. de Lesseps, in less than sixty days after the Congress dis- solved, became the lawful owner of the concession. He appealed for money, but the French public did not re- spond ; the impression prevailed that the Americans were not favourable to the canal, that there had been no proper surveys, and that the Panama line was unfeasible. M. de Lesseps then went to Central America, taking with him a very respectable Dutch engineer (who at the Con- gress had warmly advocated the Panama line), a good mining engineer, and some very inferior young persons, some of whom accompanied him for the pleasure of the trip. In Panama, they were joined by two fifth-rate Colombian engineers, by Colonel Totten, who had always condemned in the press the tide-level route at Panama and a man said to be an American engineer, but utterly unknown in the United States. The " International Technical Commission " was thus organized, and its mem- bers are stated to have verified the eighteen days' surveys 236 THE PANAMA CANAL. in about six weeks. The Commission found there were 75,000,000 cubic metres of excavations instead of 46,000,000, and decided to handle the Chagres exactly as had been suggested by Commander Bonaparte Wyse by far the ablest man connected with the Panama Canal scheme. As to the estimate of expenses, as com- pared with that of the Congress, the Commission found that the canal would cost far more than the Congress thought. If every item of the estimate is taken by itself, the truth of that statement is evident ; but the Commission not only eliminated several important items, just as indispensable a.s excavation, but reduced the con- tingent expenses from 25 to 10 per cent. expenses which in the Suez Canal amounted to 128 per cent., and which the United States Committee of Revision fixed at 100 per cent. The " international " Commission placed the cost of the canal at 843,ooo,ooof., or about ^33, 720,000, against ^42,000,000 as fixed by the Con- gress, which only estimated for 46,000,000 instead of 75,000,000 cubic metres of excavation. M. de Lesseps was not satisfied even with that appa- rent reduction of ^8,280,000. On his voyage to New York, on board the steamer Colon, he cut down the estimate of his Commission still further, reducing it to 658,000,000^, or ^26,320,000 a reduction of ^15,680,000 from the estimate of his own Congress, and of ^7,400,000 from that of his own Commission, which found, we repeat, about 60 per cent, more exca- vation to be done than had been anticipated by the Congress. While in the United States M. de Lesseps visited Washington for a few days, just when President Hayes was declaring that the Union was bound to have ex- clusive control of whatever canal might be built. CONCLUSION. 237 3. On his return to France M. de Lesseps assured the public that the construction of the Panama Canal was very easy compared to that of the Suez Canal, that the Americans were now very friendly to his idea, and that MM. Hersent and Couvreux would build the canal for six or seven hundred millions of francs. He again appealed for money, this time successfully. No less than 102,230 persons applied for shares, and of that number of applicants less than twenty shares apiece were allotted to 99, 982. The company was forthwith organized. The 50 per cent, call on the shares produced ^5,900,000. Out of that sum ; 1,800,000 went at once into the pockets of the promoters and concessionaires. In March 1 88 1 the company was definitely organized. 4. In May 1885, four years later, M. de Lesseps had raised, besides the ^5,900,000 already alluded to, ^5, 000,000 in 1882, ^12,000,000 in 1883, and ;7,747>74 in 1884 altogether ,30,647,740; or, de- ducting the discounts at which the three loans were issued, 2 2, 2 7 5,000. In return, M. de Lesseps has bought the Panama Railway and a quantity of machinery, besides making an " installation," which is pronounced as very good. As to the work in the canal proper, he has found that there are 125,000,000 cubic metres to be excavated, in- stead of 46,000,000 and 75,000,000; and he is said to have taken away j 3,000,000, or about 1 1 per cent, of the total, as at present estimated. The Chagres problem is still unsolved. No complete surveys of the basin have been made; the 112,000,000 metres still to be ex- cavated will cost about 28,000,000 and the canal oflicers estimate the Chagres and harbours improvements to cost 8,000,000 a total of ^36,000,000. Adding the money for interest and amortization during the 238 THE PANAMA CANAL. period of construction, which at best cannot be less than nine years, and ^3,000,000 for administration in Paris and Panama, we have a total of ^77,000,000 still to be raised in cash, besides the ^30, 700,000 already raised. Excluding the discounts, the net sums to be raised are still ^58,000,000 in solid cash. This, we repeat, is without allowing for contingent expenses, and on the hypotheses (a) That the work will be done in nine years, which is not deemed possible by most authorities ; (b) that the excavations yet to be done do not exceed 112,000,000 cubic metres ; (c) that the improvements of the harbours and the Chagres are to cost only ^8,000,000, a figure that, to judge from what is known of the Chagres, might just as well be ^"80,000,000. It is evident, therefore, that too much money has been spent already, and comparatively little work has been done. It does not seem as if the several con- tractors are pushing even the easiest work at the speed agreed upon. It is also evident that the present company cannot finish the work, if it ever is to be finished. Bankruptcy is inevitable, and on the isthmus it is said that M. de Lesseps already thinks of abandoning the tide-level plan for that of locks, which is the plan that M. de Lesseps said at the Congress of 1879 he would never lend his name to. The impression on the isthmus is, that, once bankrupt, the company will appeal to the French Government to finish the work in which so many thousands have invested money. 5. M. de Lesseps has been persistently perverting estimates and facts and making promises as to the cost and conclusion of the works, which anybody who may obtain a file of his own publication, the Bulletin du Canal, can easily verify to be absurd. Thus, to give a CONCLUSION. 239 single instance of this systematic misrepresentation, in September 1883, M. de Lesseps, while applying for more money, promised that in a few months the output of excavation would increase from 210,000 metres (the total for the previous July) to 2,000,000 cubic metres a month; and yet to this day (end of May 1885) the monthly excavation has never reached even 800,000 cubic metres. 6. The French periodical press, which should be watchful of the interests of the thousands of small investors in the Panama Canal, is only careful to ignore all just criticism, and to puff the "genius" of M. de Lesseps. There has not been in France any paper with independence enough to make a thorough study of this Panama Canal business, and, among the so-called respectable dailies, the Journal des Delats has been pre- eminent in deceiving its readers. The truth can easily be found in the official publications of the canal com- pany, in spite of the fact that they are edited with extreme care in the interests of the promoters and directors of the company. All criticisms from foreign observers and students is treated as so much envy of M. de Lesseps' glory, and is answered with an appeal to the history of the opposition to the Suez Canal. These men forget that just because we are perfectly well aware that there was such opposition (principally political and rather justified), we, the independent and impartial critics of M. de Lesseps' doings in Panama, should not bring forward against him the accusations that we bring without being deeply convinced of their serious and unimpeachable character. 7. Even if the canal could be ready in nine years, and should start business with 5,000,000 tons (instead of 3,200,000 as calculated in the United States for the 2 4 o THE PANAMA CANAL. Nicaragua Canal), the outlook of the company, with a capital in shares and bonds of ^107,000,000 would be the annual deficiency of ^3,300,000. That result will be owing to the bad selection of the line and to the extravagant manner in which money has been spent. The facts, well authenticated, prove that the line was selected without any judgment whatever. 8. Supposing that the Panama Canal under French auspices should be finished, the fact of Colombia be- coming a new Egypt is most distasteful to the United States, where there is but one opinion about a European guarantee of the neutrality of the canal conjointly with the United States. The policy of that Government is a sole and exclusive guarantee of its own ; and if the Government cannot now enforce that policy without further complications, its peace and safety will compel it to have a canal constructed at Nicaragua under its own auspices. Last year the President arranged with Nica- ragua for that purpose, and the Senate set the treaty aside only for incidental causes, which can be removed without much difficulty. Such are the conclusions at which we have arrived. POSTSCRIPT. THE LATEST REPORT OF M. DE LESSEPS. SINCE the foregoing pages have heen written, the annual meeting of the Panama Canal Company was held on July 29, and M. de Lesseps has presented his Eeport for the year ending June 1885. It is a long document, accompanied by a memoir about the undertaking, and by the usual " In- ventaire," or financial statement, for the preceding year, which in the present case is 1883-84, M. de Lesseps discourses at length about the success of the Suez Canal, and protests against the violent opposition made to him by a few papers in Paris, which are not, he is glad to say, conducted by Frenchmen. The opposition to the Suez Canal was directed by certain foreign papers : now, he adds, though the papers are Parisian, they are edited by foreigners. He complains that papers and pam - phlets are published specially to damage the canal; but un- fortunately it is M. de Lesseps himself who, by his large subsidies to the native press, has encouraged the creation of such sheets and brochures with the main purpose of extort- ing money from him. Passing to the business of the canal, M. de Lesseps is, if anything, more unsatisfactory in his statements than he has ever been during these five years. He has suppressed one of the features of his previous reports the summing-up of the cubic metres of excavation made from the beginning. 242 THE PANAMA CANAL. He admits now that the grand total will reach 120,000,000, but he does not say how many have been removed up to date, contenting himself with showing the result for January to May, which, by the way, although in all probability grossly exaggerated, is summed up at 3,340,000, or an average of 668,000 per month a figure, indeed, very different from the 2,000,000 a month which, according to his promises in September 1883 (see page 121), was to be the output every month from and after 1884. M. de Lesseps reviews the work that is being done at the several sections and the cost of the canal line, and then gives us a sanguine account of the expected traffic. Lastly, he gives notice that he has applied to the French Govern- ment for permission to issue 6oo,ooo,ooof. in debentures with lottery prizes. That sum, he says, is all that is neces- sary, " d'ici a 1'achevement complet des travaux." His report is not a straightforward statement, not only as to work done, but also as to probable cost and the expected traffic of the canal. Not one word is said about the great difficulties presented by the River Chagres. He has a special paragraph about the cost of the canal which is grossly misleading, and inconsistent with itself. He does not say how much excavation has been done. He does not state properly how much the company is owing, for he now suppresses from his scheme the discounts at which the bonds have been issued, as well as the cost of the Panama Railway, from which company he bought not only a road which, he said, he would have to build if it did not exist, but also the right of way which had been given to it for a canal in Panama by the Colombian charter. M. de Lesseps, moreover, mixes up his figures so as to produce the impression that when he gives the mere cost of excavation, according to some contracts now in force, he really gives the cost of the canal. He continues to exclude from his already worthless calculations the outlay on the Chagres, interest during construction, administration in short, everything except excavation ; and he then parades the supposed cost of the latter for the cost of the canal. POSTSCRIPT. 243 We will give a few instances of the peculiar methods by which he manipulates his figures and information. We will take, for instance, the last named topic, the "cost of the canal," to which he devotes a special chapter. As we have shown in pages 76 et seq., M. de Lesseps, in, the autumn and winter of 1880-1, repeatedly assured the public that the cost of the canal, fully completed, would be 7oo,ooo,ooof., including ioo,ooo,ooof. for any contingency. The Economists Francais of August I, 1885 (we dare say he does not call that paper a paper edited by foreigners), reminds him that, in his Bulletin du Canal of December i, 1 880, he assured his readers that MM. Couvreux and Hersent had offered to take firm (aforfait) the contract for building the canal for 5i2,ooo,ooof., or ,20,480,000, and that adding 88,ooo,ooof., or ,3,520,000, for interest during construction, administration, &c., the total cost of the canal would be 6oo,ooo,ooof., or, anyway, yoo.ooo.ooof. equivalent to ^28,000,000. We have already remarked that MM. Couvreux and Hersent never took such a contract. But we wish to repeat that M. de Lesseps has all along, since the formation of his company, said that the canal would cost at most 7oo,ooo,ooof., including all expenses. Once more we will recapitulate the several estimates that have been made : Francs. 1. M. Bonaparte Wyse, 1879 (without contin- gencies) 427,000,000 2. Congress of Paris, 1879 (with everything except the Panama Railway and the handling of the " unknown " problem of the Chagres, and supposing the cube to be excavated to amount to only 46,000,000 metres, instead of the 120,000,000 metres as now admitted by M. de Lesseps) 1,070,000,000 3. M. de Lesseps' own " International Com- mission," February 1880 (including contingencies, but excluding administra- tion, banking, discounts, &c.) . . . 843,000,000 244 THE PANAMA CANAL. Francs. 4. M. de Lesseps himself, February 1880 (while on his voyage from Panama to New York he cuts down the estimate of his own "Commission" see Bulletin clu Canal, No. 14, page 116. This estimate excludes interest, &c. as above) . . . 658,000,000 5. "Rectified" estimate, September 1880 (two months before appealing for money. Attributed to MM. Couvreux and Tier- sent, and not including interest, bank- ing, &c.) 512,000,000 Or, "including all expenses, and these exaggerated too " 700,000,000 But after having repeated during all these years that the total cost of the canal was to be 7oo,ooo,ooof., the great Frenchman now turns around once more, and boasts in his latest edition of an estimate that the total cost is exactly that which had been foreseen by the Congress of 1879 ! Of course, we know very well, and be knows it too, that the canal will cost much more than twice as much as esti- mated by the Congress, which, after all, reckoned only on less than 40 per cent, of the excavation already admitted at present, and, besides, did not include the Panama Eailway purchase nor the " unknown " problem of the Chagres. But even here M. de Lesseps is far from frank, and resorts to his usual tactics in order to make his shareholders believe that the canal will cost no more than i,ioo,ooo,ooof., or ^44,000,000, instead of the ^28,000,000 which he has often stated to be the outside figure. He has, under the head of " Cost of the Canal," two para- graphs which are characteristic. They follow each other. The first says that the present contractors, now at work, have agreed to do excavations at the average rate per cubic metre of 3'34f. for soft soil and 8'6of. for solid rock. Instead of following up that demonstration to its legitimate conclusion, adding the sums already spent to both the cost of removing soft soil and hard rock still to be taken away, POSTSCRIPT. 245 and then adding the banking, administration, discounts, improvements in the Chagres, and other charges, M. de Lesseps docs nothing of the kind. He stops there, and then writes this extraordinary paragraph, which we will reproduce from the original : " Les contrats passes avec les deux entrepreneurs qui se sont engages a livrer le Canal completement termine jusqu'au plafond nous permettent d'etablii- la dcpense des travaux de parachevement, lesquels s'eleveront a 480 million sde francs. En ajoutant cette sornme a la somme engagce de 220 millions de francs, nous arrivons a la somme de 700 millions de francs qui sera le cout du canal maritime le jour de son inauguration." And he then adds : " II f aut necessairement ajouter a cette evaluation du cout du creusement, les charges sociales et administratives an- nuelles, les interet a servir anx actions et aux obligations, pour arriver au total general proclame par le Congres international." Our readers will perhaps be surprised to hear that there have never been " two contractors who have been engaged to deliver the canal finished to the bottom." That story matches the former one, to which the Economiste Francais referred, of MM. Couvreux and Hersent having taken, firm, the contract for building the canal for 5 1 8,ooo,ooof . Even apart from the fact that there are no such con- tractors, the story itself is not coherent and would fall to the ground. M. de Lesseps says that 480,000,000^, or .19,000,000, will finish the canal, besides the 22o,ooo,ooof., or ,8,800,000, " already engaged." Admitting those figures, what would become of those sums already spent in the canal? The memoir accompanying the report says that 2O3,66o,ooof., or .8,146,400, have already been outlaid in installation and digging. What is to become of that sum ? Is it included in the 8,800,000 " already engaged " in the contracts with the present contractors ? Moreover, he says that to the cost of the canal digging, or 7oo,ooo,ooof., there should be added the money necessary 246 THE PANAMA CANAL. for interest, administration, &c., and then we should have " arrived at the total announced by the International Con- gress." This is still another misstatement. The difference between that sum and the total announced by the Con- gress is only 4oo,ooo,ooof., or ,16,000,000, and what M. de Lesseps says is that the total cost besides canal digging will not exceed ; 1 6,000,000. Yet in the memoir accompanying his report we find that the company, while it has only spent, as aforesaid, .8,146,400 in cutting the canal, yet it has raised the net sum of ,23,226,960 (or .600,000 more than in our statement on page 166, as we did not take into account the counter-interest earned by the dormant capital, the data of which is now for the first time published). It follows therefore that, deducting the above ,8,146,400 and the ,4,121,560 in cash on hand in July last a total of ,12,268,000 the rest of the net sums raised has gone for those expenses, which M. de Lesseps savs will not exceed 16,000.000. In other words, while on July 1885 he says that he has had the net sum (exclusive of dis- counts) of ,23,226,960, and has spent in other purposes than canal-cutting the sum of ,10,959,000 (which is the round difference between ,23,226,960 and ,12,268,000), he now says that these expenses will amount to no more at the date of the inauguration of the canal than ,16,000,000, or only ,5,000,000 beyond the sum already spent! And as if that were not distorting the facts enough, the President of the Panama Company takes only into con- sideration the net sum that he receives, caring nothing at all for the heavy discounts at which his obligations are issued, as if they were of no account whatever, or were not liabilities of the company. He forgets that the interest and amortization on the capital already raised requires about ,1.400,000 per annum, and that if the canal is to be ready, as he is still promising, in July 1889, he needs ,5,600,000 for that service alone, which is already more than the margin that he has, in his own theory, for such expenses, and so that they may come within the so-called calculations of the Paris Congress. He also forgets that in this report of his own he announces that he must issue ,24,000,000 more, and that POSTSCRIPT. 247 interest must be paid on that sum for the time being. He also forgets that, besides the interest, he has to provide for the discounts or lottery prizes, as the case may be. Finally, he forgets that the Paris Congress also reckoned something for other works than canal-digging. In short, not only is M. de Lesseps' theory a fatuous pre- sumption of mere imagination, but even admitting it for the sake of argument, it is impossible to make it consistent with its own premises. We will give just one instance more of the way in which. M. de Lesseps makes his statements. In his canal there is a section that of Culebra which is one of the hardest, because it is the highest ; but it is only two kilometres in extent, and there is not so much solid rock in it as in the Emperador section. In his report M. de Lesseps takes great pride in saying that certain contractors are about to under- take to cut the two kilometres down to the bottom of the proposed canal. According to the projet de contrat (which, contract M. de Lesseps, with characteristic zeal, calls at once unfait) the average price of that excavation will be 8 francs on a quantity of metres that he admits to be 20,000,000. We call attention to the fact that not only the contract had not been signed, but also that, according to the profile accompanying the report, the Culebra, is not so difficult a section as that of Emperador, which measures close on five kilometres, and has the greater quantity of hard rock to be taken away. To that section the report only devotes seven short and meaningless printed lines. And as M. de Lesseps is now admitting that there are 20,000,000 cubic metres in the two kilometres of the Culebra, we may as well recall here that his " Commission Inter- nationale " found that the whole forty-seven kilometres of the canal comprised no more than 28,500,000 cubic metres of both semi-hard and hard rock ! It will be remarked also that when, in our estimate of cost of finishing the canal, we took (page 168) five shillings as the average price per metre, we really favoured M. de Lesseps, who is now delighted to announce that the semi-hard section of the Culebra will be done at 8f., or 6s. $\d. (That the section is only of semi- 248 THE PANAMA CANAL. hard rock we learn now from the profile accompanying the report.) But we must conclude our remarks, and in doing so we are glad to hear that the Economiste Francais promises now to make an etude d'ensemble on the Panama Canal. We feel sure that any impartial critic, who should study the history of this company without fear of the talisman that seems to be hidden behind the name of M. de Lesseps, will arrive at the same conclusions that we were led to. Our data are derived from official sources which are accessible to everybody at very little expense. Our deductions from them may be wrong, but, if so, the fact ought to be shown to us by the ordinary process, and not by an appeal to the Suez Canal. This book is about the Panama Canal. THE END. PRINTED BY BALLANTYNE, HANSON AND CO. LONDON AND EDINBURGH "V - SOUTHERN 305 De RN LIBRARY FACILITY JAN 1 2 2004 HOf H