The Panama Canal: A history and description of the enterprise

by J. Saxon Mills

From these discussions emerged the celebrated "Spooner Bill," under which the Panama Canal has been constructed. It empowered the American government to secure the rights and property of the Panama Company for not more than $40,000,000; to obtain from Colombia the perpetual control of a strip of land, not less than six miles wide, in which the canal should run; and then to proceed with the work. But if it should prove impossible to come to terms with Colombia and the New Panama Company, then the Nicaraguan project was to be revived. We shall see how, in the sequel, this latter proviso came very near fulfilment. But, as a matter of fact, the Spooner Bill marks the end of the great battle of the routes which had lasted for four centuries.

The purchase price of the New Panama Company's property was happily settled, but the purchase was of course conditional on the conclusion of a satisfactory agreement between the United States and Colombia. It was no use for the United States to acquire unfinished canal-works if they were to be prevented from continuing and completing them. The situation was interesting. The Republic of Colombia was extremely "hard up." Its currency was debased, its treasury empty, its debt rapidly increasing through a large annual deficit. The government, if one may so express it, of the Colombian Republic was therefore not likely to overlook the chance of "making a bit" out of the necessities of the bigger and richer republic farther north. The United States wished to get their concession as cheaply as possible; Colombia wished to sell as dearly as possible. This is not infrequently the case with buyers and sellers; but Colombia pushed her haggling a little too far, and in the end very badly overreached herself.

The United States began by proposing terms on which they might obtain the desired strip of territory. The conditions were carefully laid down. The territory was to remain under Colombian sovereignty, but to be administered by the United States. Sanitary and police services were to be maintained by both governments jointly. Colombia was to police the zone, with the help of the United States if necessary. But the business terms were chiefly interesting to Colombia. The United States were to pay Colombia a bonus of $7,000,000 in cash, and after fourteen years an annuity of $250,000. These terms, which were not ungenerous, the Colombian minister at Washington declined to accept.

A brilliant idea had, indeed, struck the statesmen of the Colombian Republic. They had remembered that the concession to the Panama Company lapsed in October 1904, and that all its property that could not be carried away would revert to the Colombian government. Only defer any agreement with the United States till then, and the $40,000,000 to be paid to the New Panama Canal Company by the United States would drop like a golden nest-egg into the empty exchequer of the Colombian Republic. It was a brilliant idea, but the Colombian method of pursuing it was rather too crude and obvious.

In order to meet the Colombian government the United States improved their offer, considerably increasing the bonus and making other changes. An agreement, known as the Hay-Herran Treaty, was actually arranged between the United States and Colombia, the latter represented by her minister at Washington, Dr. Tomas Herran. This treaty, before it became operative, had to be ratified by the Congress of Colombia, and the president of that state took care that a congress should be elected which would do no such thing. Meantime all kinds of influences, secret and open, were at work. The German "colonial party" had become interested in the question, and had conceived the possibility of Germany, rather than the United States, succeeding to the French concession. It is quite certain that the United States would have resisted any such proceeding, if necessary by actual war. There is little doubt, also, that the party in the United States which had supported the Nicaraguan scheme were throwing every obstruction in the way of a satisfactory agreement between the big and the little republic.

The reader may guess what was the anxiety of the New Panama Canal Company during all this diplomacy and intrigue. They knew that the completion of the sale of its property to the United States depended on an agreement being concluded between that country and Colombia; and they also knew that unless they sold before October 1904, they would have practically nothing to sell, because the franchise and possessions of the company would be forfeited to the Colombian government at that date. It would be better to sell on the best terms they could obtain to Germany or anybody else before the fatal day arrived. Meantime the United States brought every force of argument and menace to bear on the Colombian government. Secretary Hay sent urgent dispatches to the American minister at Bogotá. He reminded Colombia that the decision to adopt the Panama route was not irrevocable. The Spooner law authorized the American president to await only "a reasonable time" for an agreement with Colombia. Having waited so long, he was able and indeed bound to resume the Nicaraguan project.

When the Colombian Congress duly rejected the Hay-Herran Treaty in August 1903, the New Panama Company became very seriously alarmed. Other offers of purchase were renewed, and the situation became critical for the United States. The American counsel for the company, Mr. William Nelson Cromwell, who had done his utmost to promote the agreement, had the utmost difficulty in keeping his clients to their compact with the United States. He made a hurried trip to Paris, where he said something which had the desired effect. There is no reason to believe that Mr. Cromwell took any part in the surprising events which were soon to alter the entire situation. But he had heard the proverbial "little bird," and the tidings he passed on brought the New Panama directors to the desired mood of patience and expectancy.

Colombia meanwhile kept on marking time. She suggested that a new treaty should be negotiated between the United States and Colombia, to be ratified by the Colombian Senate some time in 1904. That would have put the clock forward splendidly, but the device was duly understood at Washington. In October a committee of the Colombian Senate reported to the Senate a recommendation that no agreement should be concluded with the United States until the French concession had lapsed. This recommendation was not acted upon by the Colombian Senate, nor yet were any steps taken towards the negotiation of a new treaty. The American government gave a generous interpretation to the "reasonable time" specified in the Spooner Bill, and kept on waiting in the hope that the Colombian Congress would still change its mind and ratify the Hay-Herran Treaty, whose terms, as we have seen, were liberal to the Colombian Republic. But when the congressional session at Bogotá came to an end on October 31, 1903, without any further action over the Hay-Herran Treaty, the Americans concluded that the whole business was over so far as negotiations with Colombia on the Panama question were concerned. Obviously the only course was to turn to the Nicaraguan alternative. And the Colombian government no doubt thought it had won the day by sheer force of astute statesmanship.

Then came a coincidence more astonishing than any since the day when Mr. Weller, senior, upset the Eatanswill outvoters (purely by accident) into another canal. The Panama revolution broke out, and the United States suddenly and without further difficulty obtained all they wanted of the isthmus. And Colombia? She lost every stick and stone of the canal which was to have been hers in October 1904, never made a farthing on a Panama deal, got no thanks from Germany or anybody else, and lost a whole province into the bargain. Such were the results of very astute statesmanship at Bogotá.