Panama Canal

Panama Canal
Panama Canal

The building of the Panama Canal linking the Atlantic to the Pacific was mired in international political and financial skulduggery. More recently, with the transfer of U.S. control of shipping facilities at the entrances to the canal at the end of 1999, many on the conspiratorial Right warned that a long-standing Communist conspiracy to dominate the strategic passage had finally come to fruition.

Early Plans to Build a Canal

The idea of building an isthmian passage linking the Pacific and the Atlantic coasts dates back to the time of the conquistadores, but the issue was slowly narrowed down to a rivalry between the United States and Great Britain. In the Clayton-Bulwer treaty of 1850, both Britain and the United States pledged to collaborate on the building of the future passage on a nonfortification and nonexclusive basis.

However, this agreement only settled the issue on the surface. In the following years, both governments contrived to obtain exclusive rights from the states of Central America, especially those which were considered the ideal location for the future canal and vital to its security.

The United States obtained a treaty with New Granada (later Colombia) in 1846 guaranteeing the “perfect neutrality” of the Isthmus of Panama. The Panama railroad was completed by the United States in 1855. Nicaragua also signed a treaty in 1867 granting privileges, but these were not exclusive.

The issue came back to the fore when it was announced that the French Panama Canal Company, under Ferdinand de Lesseps, the famous builder of the Suez Canal (1869), had undertaken to build a canal in Panama (excavations had even started in 1883 but were later abandoned).

There remained the diplomatic obstacle of the Clayton-Bulwer treaty but it was modified in the second Hay-Pauncefote treaty of 18 November 1901, which gave the United States the exclusive right to build and fortify a canal, provided its use was accorded to all nations on equal terms (the first treaty, signed on 5 February 1900, had been rejected in March 1901).

U.S. Involvement

Once this obstacle was removed, a choice had to be made between the Nicaragua route and the Isthmus of Panama (a province of Colombia) route. Meanwhile the French Panama Canal Company had ceded its assets to the New Panama Canal Company for $40 million in 1901, which lobbied actively for the Panama route.

A treaty was signed with Colombia, the Hay-Herran treaty (22 January 1903), whereby they granted the United States a ninety-nine-year lease over a 6-mile-wide zone in the province of Panama, in return for $10 million in cash and an annual rental of $250,000 beginning nine years after the ratification of the treaty. The U.S. Senate ratified the treaty, but the Colombian Senate refused for nationalistic reasons (Colombia had recently gone through a civil war) and also because they hoped to obtain better terms.

The Colombians made a series of miscalculations, by misjudging U.S. President Roosevelt and Secretary of State John Hay’s commitment to the canal, and by underestimating the New Panama Canal Company and the separatist feelings of the inhabitants of the province, who saw their hopes of economic prosperity thwarted by the central government of Bogota, against whom they had often rebelled.

These revolutionaries were manipulated by external forces—U.S. government and private interests—including Philippe Bunau-Varilla, a lobbyist for the company who assured the revolutionaries of U.S. support, understanding that Roosevelt preferred that course to open land grab.

Meanwhile, invoking an obscure treaty signed with Colombia in 1846, Bidlack’s treaty, by which the United States was supposed to help maintain “free and uninterrupted transit” across the isthmus, the United States dispatched a fleet to Central America with express orders to prevent Colombia from landing troops on the isthmus if a revolution started. However, at the time it was signed, this treaty was not meant to be used against Colombia, but rather to maintain security in the area if Colombia found itself incapable of doing so.

The chronology of the revolution clearly points to active U.S. complicity and a priori knowledge of the events to come. So the revolutionaries, who sparked off their revolt on 3 November 1903, were successful because of the presence of U.S. troops. Roosevelt’s role in this affair was extremely important, since he recognized the new republic within seventy-six minutes.

A 2001 book by Oviodio Diaz claims that a cabal of Wall Street interests led by the lawyer William Nelson Cromwell and the banker J. P Morgan worked behind the scenes, first to buy up the shares of the French Panama Canal Company (for only $3.5 million), second to persuade Congress to shift the route from Nicaragua to Panama, and then to reap the profit when the U.S. government backed the New Panama Canal Company. It is also alleged that in order to succeed in making Panama the preferred route, Cromwell helped maneuver Panama into seceding from Colombia.

What is certain, however, is that Bunau-Varilla, the newly appointed foreign minister of the independent Republic of Panama, negotiated a more favorable treaty, the Hay-Bunau-Varilla treaty, two weeks after the revolution, on 18 November 1903.

It granted to the United States in perpetuity the use of a canal zone 10 miles wide, and transferred to the United States government the properties of the New Panama Canal Company and the Panama Railroad Company.

In exchange, Panama was awarded $10 million and an annuity of $250,000 for its concessions. When the canal was completed in 1904, the canal zone had become an “unorganized possession,” with a government fixed by executive order and run by U.S. naval officers serving as appointed governors, while the rest of Panama was a de facto protectorate.

International Communist Conspiracy

With the transfer of U.S. control of the port facilities at either entrance to the canal in December 1999 to a company called Hutchison Whampoa, right-wing groups such as the John Birch Society warned that what they term the International Communist Conspiracy had finally succeeded in its mission of gaining control of such strategic routes.

The argument was that Hutchison, a Hong Kong–based company, was in fact controlled by the Communist Chinese. The John Birch Society and other groups warned that this was the latest in a long series of attempts by the Communists to gain control of the zone.

These include the long history of Communist agitation in the region, and the attempt by Alger Hiss, the former state department official who was convicted in the anticommunist trials in the late 1940s and early 1950s, to interest the United Nations in taking over the zone as a protectorate in the aftermath of World War II.