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Acquiring the Panama Canal, 1903

by Donald J. Mabry

© 2002 Donald J. Mabry

United States intervention in Cuba in 1898 renewed interest in acquiring an inter-oceanic canal. In part, this was part of the same trend that produced the Cuban intervention but it was also the result, that is, that the US now had possessions in both the Atlantic and the Pacific and the fleet had to become two fleets. By being able to move ships from one ocean to the other rapidly, the US could buy more firepower with less money. The US turned attention, therefore, to the acquisition of canal building rights in Nicaragua or Panama. The acquisition of the right to finish the French canal across Panama led the US to interfere more in the Caribbean. In short, the US escalated our activities, our interference in the Circum-Caribbean region. The US had an historic interest in and a desire to interfere in this region. It is a question of timing more than a question of desire.

Interest in building an inter-oceanic canal dates back to Cortez' time. Spanish colonial administrators realized the advantages of connecting the two oceans but were unable to do anything about it because of other commitments. After 1800 and until the late nineteenth century, no American country had the capability and desire to accomplish the task.

Our concrete steps toward building the canal date from 1846 when the US signed a treaty with New Granada (Colombia) guaranteeing the neutrality of the Isthmus of Panama (part of New Granada) in exchange for transit rights. The treaty was approved by the US Senate in 1848. the US intervened in Colombia about nine times before 1903, but with Colombian permission. to protect Colombia. In 1850, the US signed the Clayton-Bulwer Treaty with Great Britain. Both agreed to cooperate in facilitating the building of an isthmian canal, both agreed never to fortify or exercise exclusive control over it. Also, both parties agreed not to occupy or colonize Central America.

January, 1900, a bill was introduced into Congress to build a Nicaraguan canal in violation of the Clayton-Bulwer Treaty. In February, 1900, Lord Pauncefote concluded a treaty with John Hay which said that the US could build a canal and occupy a canal zone but that the US could not erect fortifications in the zone. In the presidential campaign of 1900, the Democrats blasted the treaty as a base surrender to the British. More negotiations took place but American amendments in the Senate and the public debate caused its demise in March, 1901.

Britain, concerned for American friendship and in the face of a growing German threat, concluded a second Hay-Pauncefote treaty in November, 1901. This version allowed fortifications. Britain also reduced its Caribbean fleet, thus allowing the US to assume responsibility for the region.

The Walker Commission, commissioned to study the best feasible route, reported that the Nicaragua route was the best one and the cheapest one. The French-owned New Panama Canal Company, successor to the de Leseps company, had been asking $109 million for its holdings. It now dropped its price to $40 million. President Theodore Roosevelt favored Panama, but, in January, 1902, the House voted 308-2 for Nicaragua. The New Panama Canal Company used high-powered lobbyists , including big donors to the Republican Party. The key was Philippe Bunau-Varilla. Mount Pelee on Martinique blew up in May, 1902 and then a Nicaraguan volcano became active. Bunau-Varilla buys Nicaraguan stamps showing an active volcano and sent them to each Senator, clearly implying that a canal through Panama would be unsafe. The Senate voted to build the canal across Panama and, if rights could not be acquired, to build it across Nicaragua.

The Hay-Herrán Treaty of January 22, 1903 was extorted from Herrán. On the 25th, Herrán received instructions from his government in Bogotá not to sign the treaty. The Senate approved the treaty on March 17, 1903. The US offered $10 million for a six-mile wide strip across Panama and an annual payment of $250,000. On August 12, 1903, the Colombian Senate refused to ratify the treaty. It demanded another $15 million.

The concession to the New Panama Canal Company would expire in October, 1904. The Company was running the risk that it would get nothing and the government of Colombia would sell the rights for $40 million. Roosevelt was getting impatient and angry. He held the Colombians in contempt, referring to them as "monkeys." Bunau-Varilla acted.

In Room 1162 of the Waldorf Astoria Hotel in New York City, he hatched a plot for a Panamanian revolt against Colombia. Bunau-Varilla and Americans worked out the details of the revolt and decided on the necessary bribes. The US was to send the USS Nashville to Colón to prevent Colombia from landing reinforcements on Colombian soil. Panama had not been happy as part of Colombia. It was separated from the rest of Colombia by almost impenetrable mountains. It had revolted or rioted fifty-three times in fifty-seven years.

The revolt occurred on November 3, 1903. About an hour of hearing the news, Roosevelt gave de facto recognition to the hastily-created Republic of Panama and then de jure recognition on the 6th of November. On November 18, 1903, the US and Panama signed the Hay-Bunau-Varilla Pact. Bunau-Varilla, a French citizen, had managed to have himself made Panamanian ambassador to the US. Without consulting his government, he gave away a ten-mile corridor across the country and extraordinary extraterritoriality rights. The US Senate ratified it on February 23, 1904 after a debate. The new Panamanian government debated whether to sign such an unfavorable treaty and finally did because it had little choice.

On 1911, Roosevelt admitted the truth of the matter. He took the canal from Colombia. In 1914, the US Congress proposed to offer Colombia $25 million and its sincere regrets, thus implicitly, at least, admitting that it was a thief. Roosevelt would have none of it and the measure died. In 1921, after his death, Colombia was given $25 million. Oil had been discovered there and some suspect that this fact had something to do with the US gesture.