The Panama Canal

by Frederic J. Haskin

In the early part of 1899 the Senate passed a bill authorizing the construction of a Nicaraguan Canal. The House refused to act on the bill, and, at the instance of Senator Morgan, the Senate attached a rider to the rivers and harbors bill, appropriating $10,000,000 to begin the building of the canal. This passed the Senate by a vote of 54 to 3. The amendment was defeated in the House and the matter went to conference. If the House conferees stood pat in their opposition to the Senate amendment, the whole rivers and harbors bill would be defeated unless the Senate conferees yielded. The House conferees remained unshaken in their opposition to the Nicaragua Canal provision, and were willing to wreck the whole rivers and harbors bill rather than to authorize the beginning of operations in the construction of the Nicaragua Canal under the plan framed by the Senate.

According to Philippe Bunau-Varilla, the real secret of the defeat of the Nicaragua Canal project at this juncture lay in a dispute between the House and Senate as to the manner of building the canal. The Senate wanted to do it by the reorganization of the Maritime Canal Company, with the majority of its board of directors appointed by the President, using that corporation as the agent of the Government for constructing and operating the canal. Representative William P. Hepburn, of Iowa, at that time Chairman of the Committee on Interstate and Foreign Commerce, contended that such a plan proposed that the United States should masquerade as a corporation, instead of doing the work in its own proper person, as it was in every sense capable of doing. He asked for what purpose the Government should thus convert itself into a corporation, making of itself an artificial person and taking a position of equality with a citizen? He further pointed out that as a corporation the Government might be sued in its own courts, and fined for contempt by its own judicial servants.

A compromise was adopted in the form of an appropriation of $1,000,000 to defray the expenses of an investigation into all of the various routes for an Isthmian Canal. This investigation was to have reference particularly to the relative merits of the Nicaragua and Panama routes, together with an estimate of the cost of constructing each. The investigators were to ascertain what rights, privileges, and franchises were held, and what work had been done in the construction of the proposed canals. They were also to ascertain the cost of acquiring the interests of any organizations holding franchises on these routes. The President was directed to employ engineers of the United States Army and engineers from civil life, together with such other persons as were necessary to carry out the purposes of the investigation. A few months later he appointed the first Isthmian Canal Commission, consisting of Rear Admiral John G. Walker, Senator Samuel Pasco, Alfred Noble, George S. Morison, Peter C. Hains, William H. Burr, O. H. Ernst, Louis M. Haupt, and Emory R. Johnson.

Thus it came about that the House and Senate, divided only upon the issue of the proper method of building the Nicaragua Canal, reopened the whole question, and gave to the Panama Canal advocates a chance to make a fight in favor of that route. The advocates of the Nicaragua Canal were not satisfied, however, to await the discoveries of the commission Congress had created. On May 2, 1900, before the commission made its report, the House voted 234 to 36 in favor of the Nicaragua route. The bill went to the Senate, where it was favorably reported by the Committee on Interoceanic Canals. Senator Morgan made a formal motion for the immediate consideration of the measure, but it was lost by a vote of 28 to 21. He then had the 2nd day of December following fixed as the date for again taking up the matter. His committee made a report roundly scoring the representatives of the New Panama Canal Company for their activities in favor of the Panama route.

In December, 1900, Secretary Hay signed protocols with the ministers of Nicaragua and Costa Rica, by which those Governments undertook to negotiate treaties as soon as the President of the United States should be authorized by Congress to acquire the Nicaragua route. In the following February, Senator Morgan offered an amendment to the sundry civil appropriation bill authorizing the President to go ahead with the construction of the canal. When Theodore Roosevelt became President in September, 1901, he recommended the building of the Nicaragua Canal in his official statement of policy.

In the meantime the Isthmian Canal Commission had been repeatedly attempting to get the New Panama Canal Company to state for what sum it would sell its holdings to the United States. The figures finally presented placed a value of $109,000,000 upon the property. After this, the Isthmian Canal Commission unanimously recommended the adoption of the Nicaragua route. Congress again took up the matter, upon a bill introduced by Representative Hepburn, making an appropriation of $180,000,000 for the construction of the canal. This measure was favorably reported by the House Committee on Interstate and Foreign Commerce, and also secured the approval of the Senate Committee on Interoceanic Canals.

A few days later a formal convention was signed in Nicaragua by the minister of foreign affairs and the American minister, looking to the construction of the canal through Nicaraguan territory. A week later the Senate ratified the Hay-Pauncefote treaty with Great Britain. On January 7 the House of Representatives again took up the matter and, in spite of the fact that the New Panama Canal Company had decided to accept $40,000,000 for its property, this offer was rejected by the House of Representatives, which passed the bill authorizing the construction of the Nicaragua Canal by the overwhelming vote of 309 to 2.

After the rejection of the offer of the New Panama Canal Company by the House, President Roosevelt again called the members of the Isthmian Canal Commission together, and asked them to make a supplementary report in view of the offer in question. On a motion of Commissioner Morison the commission decided that, in consideration of the change of conditions brought about by the offer of the company to sell its property for $40,000,000, the Panama route was preferable. It has been stated that Professor Haupt, Senator Pasco, and two other members of the commission were reluctant to abandon the Nicaragua project; that President Roosevelt had made it quite clear to Admiral Walker that he expected the commission to accept the Panama Canal Company's offer; that Commissioners Noble and Pasco had given in, but that Professor Haupt stood out; and that he was induced to sign the report only after Admiral Walker had called him out of the committee room and pleaded with him to do so, stating that the President demanded a unanimous report. Professor Haupt afterwards publicly admitted the truth of this story in a signed article in a magazine.

About this time the Senate Committee on Interoceanic Canals appointed a subcommittee of six members to study and report on the legal questions involved in the transfer of the New Panama Canal Company's title, and a majority reported that the company's title was defective and that it had no power to transfer. It was finally decided that the Senate Committee on Interoceanic Canals should make no report until all of the members of the Isthmian Canal Commission had appeared before it and testified. This delay permitted negotiations between the United States, the New Panama Canal Company, and the Republic of Colombia looking to a settlement of the question of title.

The New Panama Canal Company was now thoroughly in earnest in its desire to dispose of its holdings to the United States, but the Republic of Colombia, desiring to drive a good bargain, held aloof. The hope of the situation as far as the Panama route was concerned, lay in Senator Marcus A. Hanna, of Ohio, who had come to espouse the Panama route. He declared he would not recommend the acceptance of the proposals of the New Panama Canal Company unless a satisfactory treaty could be obtained, and unless the shareholders of the company would ratify the action of the board of directors in making the offer. A meeting of the shareholders was called in February, 1902, at which the Republic of Colombia, holding a million dollars' worth of stock in the company, was represented by a Government delegate. He served formal notice on the company that it was forbidden, on pain of forfeiture of its concession, to sell its rights to the United States before that action was approved by the Colombian Government, there being a clause in the concession providing that in the event of such a sale to any foreign Government all rights, titles, and property should revert to Colombia.