The schemes were ultimately reduced to two—those for the Nicaragua and Panama routes. The position of the great lake caused the former to be thoroughly discussed; but there were several almost insurmountable difficulties in the way of its adoption. To clear the San Juan river, and make it into a great canal, would entail great labour and expense, and then seven or eight locks would be required. On the Pacific side locks would also be required for the Rivas, while the harbours of Greytown on the Gulf side, and Brito on the Pacific, were quite unsuited as termini for a canal. The total length would be 182½ miles, and the time occupied in the passage four and a half days. There was also another great draw-back: Nicaragua was and is subject to earthquakes, which would be likely at times to interfere greatly with such heavy works as were required. It followed, therefore, that notwithstanding the powerful support of the Americans, this line was abandoned in favour of that from Port Simon to Panama, not far from the railway.
Two French officers, MM. Wyse and Reclus, had explored the country, and proposed to carry the canal through the Chagres river, and thence, by means of a great tunnel, into the valley of the Rio Grande; but, on consideration, the tunnel was abandoned in favour of a deep cutting, which would not exceed 290 feet. The great objection to this was the floods of the Chagres river, which sometimes rose twenty-five feet in a single night; but this was got over by arranging for a separate bed for the canal. There were a few other difficulties, but propositions were made to obviate them; and at last the sub-commission reported that "the Panama Canal on the level technically presents itself under the most satisfactory conditions, and ensures every facility, as it gives every security, for the transit of vessels from one sea to another."
Now came the question of cost. The Nicaragua Canal was estimated at £32,000,000, and that at Panama £40,000,000. (The reader will compare these with former estimates, especially that of Nicaragua as stated by the Times.) The former was rejected absolutely, on account of the necessity for locks, and all further discussion was concerned with the latter. It was then calculated that, with transit dues of fifteen francs per ton, the net annual profit would be £1,680,000.
M. de Lesseps was elected to the Academy in 1885, when M. Renan said he had been born to pierce isthmuses, and that antiquity would have made him a god. Carried away by enthusiasm, the great projector saw no difficulties; he had already completed a work which had been declared almost impossible, now he would carry out a project similar to that proposed by William Paterson. However, Panama was not Suez, a rainless desert, but a place where floods, marshes, and quagmires took the place of almost level sands.
M. Wyse had vainly tried to start a Company; but when Lesseps, with all the prestige of his Suez Canal, joined him, there was comparatively little difficulty. Personally, Lesseps seems to have known little of Panama—all his knowledge was gained at second hand. The first public subscription was invited in July, 1879, the capital being 400,000,000 francs (£16,000,000), in 800,000 shares at 500 francs each. This large sum, however, was not obtained at once, only £3,200,000 being applied for. However, Lesseps was not discouraged, but determined to go on with the work, trusting that money would flow in as it was wanted, which ultimately proved to be the case, until the project appeared hopeless. He visited the isthmus, and made a triumphal progress over the line; he even witnessed one of the great floods of the Chagres river, which rose forty feet and covered the railway. Undaunted by this, he went over to Panama, and on the 5th of January, 1880, inaugurated the great canal with a ceremony and fête. He then stated that success was assured, and declared, upon his word of honour, that the work would be much easier on the isthmus than in the desert of Suez.
In March following he visited New York, where he was but coldly received, on account of American jealousy of European influence. The President said that the capital invested in such an enterprise by corporations or citizens of other countries must be protected by one or more of the great Powers, but no European Power could intervene for such protection without adopting means which the United States would deem inadmissible. This did not damp his enthusiasm; if other countries would not assist, all the credit would go to France. The Company had a concession from the Columbian Republic for twelve years, and the United States would not be likely to interfere.
It will be interesting here to compare the estimates for the canal by different persons and at different times within two years:—
| M. Wyse, 1879 | £17,080,000 |
| The Paris Congress, 1879 | 41,760,000 |
| The Lesseps Commission, February, 1880 | 33,720,000 |
| M. de Lesseps himself, " " | 26,320,000 |
| Rectified estimate, September, 1880 | 21,200,000 |
Lesseps said he had an offer from a contractor to complete the work for twenty millions. Backed by the press and the deputies, the Company's shares sold freely, and on the 3rd of March, 1881, it was fully established. It was promised that in the course of that year the line of the canal should be cleared, and dredging commenced. Lesseps expected to finish in 1887, but in 1884 and the two following years he was obliged to advance the time to 1890. The canal was to be 47 miles long, 70 feet wide at the bottom, and 29 feet deep.
Little was done in 1881, but the work was divided into five sections, and in the following year dredging and excavating were commenced. But, even thus early, it was found to be more difficult than had been expected. Up to March, 1883, only 659,703 metres had been excavated, which was reckoned to be about 1/130th of the whole. This would not do, as it meant that over a century would pass before its completion. About seven thousand labourers, mostly Jamaica negroes, were employed at that time, and this number was increased until, in 1888, there were 11,500. In 1884 the average amount excavated was 600,000 metres per month, against Lesseps' estimate of two millions. Yet, with all that, it was calculated that in this year only 1/180th of the material had been taken out.