CHAPTER III.

The geographical position of Constantinople rendered her thequeen of the ancient world. Occupying, as she does, the central point between Europe, Asia, and Africa, she could become the entrepot of the commerce of all these countries, and obtain over them immense preponderance; for in politics, as in strategy, a central position always commands the circumference. This is what the proud city of Constantine could be, but it is what she is not, because, as Montesquieu says, "God permitted that the Turks should exist on earth, as a people most fit to possess uselessly a great empire." There exists in the New World a state as admirably situated as Constantinople, and we must say, up to this time, as uselessly occupied. We allude to the State of Nicaragua. As Constantinople is the centre of the Ancient World, so is the town of Leon the centre of the New, and if the tongue of land which separates its two lakes from the Pacific Ocean were cut through, she would command by virtue of her central position the entire coast of North and South America. The State of Nicaraguacan become, better than Constantinople, the necessary route of the great commerce of the world, and is destined to attain an extraordinary degree of prosperity and grandeur. France, England, and Holland have a great commercial interest in the establishment of a communication between the two oceans, but England has more than the other Powers—a political interest in the execution of this project. England will see with pleasure Central America becoming a powerful and flourishing state, which will establish a balance of power by creating in Spanish America a new centre of active enterprise, powerful enough to give rise to a feeling of nationality, and to prevent, by backing Mexico, any further encroachments from the north.

The idea of a trans-isthmian canal seemed likely in the 'fifties of last century to prove a cause of discord, if not of war, between England and the United States. Under the rather "pushful" foreign policy of Lord Palmerston, England rapidly increased her influence and possessionsin Central America. In 1835 "British Honduras" was practically constituted a British colony, and British influence was subsequently extended into Nicaragua and Mosquitia, thus covering the favourite route for an isthmian waterway. The United States were establishing themselves on the Pacific through their encroachments on Mexico. In 1846 they acquired the states of California, Nevada, Arizona, and New Mexico, and naturally began to attach more importance to the canal project and to feel more sensitive as regards rival ambitions in Central America. Soon after they had acquired these Pacific territories, began the great rush for gold to California, and some shorter way from east to west became necessary than the sea-trail round the Horn or the weary wagon-trek over the broad North American continent. Already in 1846, before the Mexican War and the discovery of gold in California, the United States had made a treaty with New Granada, by which the former secured rights of transit over the isthmus "upon any modes of communication that now exist or may hereafter be constructed," and by which they guaranteed the sovereigntyof New Granada over all the territories at the isthmus.

It was under this treaty that the Panama Railway was constructed which brought the town of Colon (formerly Aspinwall) into existence, and was subsequently taken over by the United States government. This railroad made the isthmus for the first time a highway of world-traffic. It had a monopoly of isthmian transportation, and was able to make any charges it pleased. Steamship services to the southern and northern coasts of America from Panama were developed, and the railway succeeded so well that it paid down to 1895 an average dividend of 15 per cent. It was bought by the first French Panama Company for the outrageously high sum of £5,100,000. The existence of the railway really determined De Lesseps' choice of the Panama route, and the immense amount of excavation done by the French had a great deal to do in turn with the American choice of the same route, so that the construction of the Panama Railway was a highly important event at the isthmus. The United States took over the railroad from the French with theunfinished canal, together with a steamship service from Colon to New York, owned by the railroad.

The rivalry between England and the United States along the Nicaraguan route became so acute and dangerous that a very important treaty was concluded between the two countries in 1850, when we may say that the Panama Canal question entered the domain of modern politics. The Clayton-Bulwer Treaty, so-called from Mr. John M. Clayton, the American Secretary of State, and Sir Henry Bulwer, British Minister at Washington, who negotiated it, held the field for fifty years, and became the subject of endless discussion between England and the United States.

[2]Herodotus tells a story how the people of Knidos were forbidden by the Delphic oracle to make a canal through the isthmus, along which their Persian enemies could advance by land to attack them. The oracle said that if Zeus had wished the place to be an island he would have made it one. There is a curious resemblance between this story and that related in the text.

The treaty of 1850 was concerned primarily with a canal along the Nicaraguan route—that is, as the preamble expresses it, a canal "between the Atlantic and Pacific Oceans by way of the river San Juan de Nicaragua and either or both of the lakes of Nicaragua or Managua to any port or place on the Pacific Ocean." But as Article VIII. says, it established "a general principle" relating to any waterway across the isthmus between North and South America. The two contracting parties undertook in the treaty that neither should "obtain or maintain for itself any exclusive control over the said canal," or "maintain any fortifications commanding the same, or in the vicinity thereof," or "occupy, or fortify, or colonize, or assume,or exercise any dominion over Nicaragua, Costa Rica, the Mosquito Coast, or any part of Central America." This agreement, as I said, subsisted for fifty years, but it was scarcely concluded when it was found inconsistent with the growing importance and ambition of the United States, where a demand quickly arose for an American-owned canal.

Again there followed a series of schemes for canal construction at various points of the isthmus. For example, Dr. Edgar Cullen created some excitement in England in the early Victorian days by giving a very favourable account of the Caledonian route across the isthmus at Darien, in a lecture to the Royal Geographical Society. The doctor was received by the young queen and the Prince Consort, a corporation was formed, and an engineer sent out to make surveys from Caledonian Bay. A British and a French man-of-war were dispatched to the isthmus to make investigations. But the surveyor was driven from Caledonian Bay by local tribes, and so went on to Panama, giving a favourable report of that route on his return to England. But nothing came of these incidents,and the American Civil War in the early 'sixties diverted the attention of the United States from isthmian affairs. At the end of the war American interest revived, and public opinion set more and more against the idea of sharing a canal with any other Power. In 1869 President Grant gave the first public expression to the demand for an American canal under American control. "I regard it," he said, "as of vast political importance to this country that no European government should hold such a work." Later, in an article in theNorth American Review, he said, "I commend an American canal, on American soil, to the American people."

Just before the President's declaration of policy the United States had concluded an important treaty, known as the "Dickinson-Ayon Treaty," with Nicaragua, securing a right of way for a canal over the Nicaraguan route; and, just afterwards, President Grant appointed an Interoceanic Canal Commission which investigated four routes for a canal, and finally, in 1875, reported unanimously in favour of the Nicaraguan route from Grey town to the San Juan River, to Lake Nicaragua, through the Rio delMedio and Rio Grande valleys, to Brito on the Pacific coast.

In 1869 an event occurred which was to have a very decisive effect on isthmian affairs—the opening for traffic of the Suez Canal. These two isthmuses in the eastern and western hemispheres have some obvious features in common. They both link two vast continents and form a barrier between two oceans or oceanic systems. They are fairly equal in breadth—Suez, sixty miles, and Panama about fifty-four. The shortest line across each runs almost exactly north and south. And they were both until recent times uninhabited country. But there are many dissimilarities. The isthmus at Suez is a flat and sterile desert; that at Panama is hilly and covered with an almost impenetrable jungle of tropical vegetation. Again, Suez is a healthy district, whereas Panama was, until recent years, a pest-house as deadly as Sierra Leone or the Guinea coast.

Mr. Bryce in his charming book on "South America" compares these two inter-continental causeways from a more historical point of view. He writes:—

A still more remarkable contrast, between these two necks ofland, lies in the part they have respectively played in human affairs. The isthmus of Panama in far-off prehistoric days has been the highway along which those wandering tribes whose forefathers had passed in their canoes from North-eastern Asia along the Aleutian Isles into Alaska found their way, after many centuries, into the vast spaces of South America. But its place in the annals of mankind, during the four centuries that have elapsed since Balboa gazed from a mountain top rising out of the forest upon the far-off waters of the South Sea, has been small indeed compared to that which the isthmus of Suez has held from the beginning of history. It echoed to the tread of the armies of Thothmes and Rameses marching forth on their invasions of Western Asia. Along the edge of it Israel fled forth before the hosts of Pharaoh. First the Assyrian and afterwards the Persian hosts poured across it to conquer Egypt; and over its sands Bonaparte led his regiments to Palestinein that bold adventure which was stopped at St. Jean d'Acre. It has been one of the great highways for armies for forty centuries, as the canal cut through it is now one of the great highways for commerce.The turn of the isthmus of Panama is now come, and, curiously enough, it is the isthmus of Suez that brought that turn, for it was the digging of a ship canal from the Mediterranean to the Red Sea, and the vast expansion of Eastern trade which followed, that led to the revival of the old designs, mooted as far back as Philip II. of Spain, of piercing the American isthmus. Thus the comparison of the two isthmuses becomes now more interesting than ever, for our generation will watch to see whether the commerce and politics of the Western World will be affected by this new route which is now being opened, as those of the Old World have been affected by the achievement of Ferdinand de Lesseps.

The turn of the isthmus of Panama is now come, and, curiously enough, it is the isthmus of Suez that brought that turn, for it was the digging of a ship canal from the Mediterranean to the Red Sea, and the vast expansion of Eastern trade which followed, that led to the revival of the old designs, mooted as far back as Philip II. of Spain, of piercing the American isthmus. Thus the comparison of the two isthmuses becomes now more interesting than ever, for our generation will watch to see whether the commerce and politics of the Western World will be affected by this new route which is now being opened, as those of the Old World have been affected by the achievement of Ferdinand de Lesseps.

It will be seen from this quotation how the completion of the Suez Canal affected the Panamaproject. Lesseps, fresh from his success at Suez and not contented with his great achievement there, was easily attracted by the schemes which were afoot for constructing a ship canal at another land-barrier which, like the isthmus at Suez, had obstructed the quickest lines of communication between East and West. In 1876 a corporation was established, called "La Société Civile Internationale du Canal Interocéanique," for the purpose of promoting canal schemes on the lower isthmus. Its head was Lieutenant Lucien Napoleon Bonaparte Wyse, who easily obtained a canal concession at Bogotá from the Colombian government. In 1879 an International Engineering Congress was assembled at Paris by Lesseps, whose partisans compelled a decision in favour of the Panama route.

But the United States, determined by this time to construct a canal for themselves without any joint control or international guarantee of neutrality, opposed the French scheme from the outset. No amount of bluff from the French promoters affected this opposition. The American people had indeed some right to complain. The Colombian concession to the French was quiteinconsistent with the treaty of 1846 between this South American republic and the United States. This treaty Lesseps tried to induce Colombia to abrogate, and every effort, fair and foul, was employed to overcome the American objection to the scheme. In 1880 Lesseps was fêted at a public banquet at New York, but even the personal presence of the great man failed to have the desired effect. President Hayes addressed a strong message to the Senate on the subject, a few passages of which are interesting as showing the very decided views now held by the American government and people:—

An interoceanic canal across the American isthmus will essentially change the geographical relations between the Atlantic and Pacific coasts of the United States, and between the United States and the rest of the world. It will be the great ocean thoroughfare between our Atlantic and our Pacific shores, and virtually a part of the coastline of the United States. Our mere commercial interest in it is larger than that of all other countries, while its relation toour power and prosperity as a nation, to our means of defence, our unity, peace, and safety, are matters of paramount concern to the people of the United States. No other great Power would, under similar circumstances, fail to assert a rightful control over a work so closely and vitally affecting its interests and welfare.Without urging further the grounds of my opinion, I repeat, in conclusion, that it is the right and the duty of the United States to assert and maintain such supervision and authority over any interoceanic canal across the isthmus that connects North and South America as will protect our national interests. This, I am quite sure, will be found not only compatible with, but promotive of, the widest and most permanent advantage to commerce and civilization.

Without urging further the grounds of my opinion, I repeat, in conclusion, that it is the right and the duty of the United States to assert and maintain such supervision and authority over any interoceanic canal across the isthmus that connects North and South America as will protect our national interests. This, I am quite sure, will be found not only compatible with, but promotive of, the widest and most permanent advantage to commerce and civilization.

The reader will see that all this is inconsistent with the Clayton-Bulwer Treaty, under which the United States had actually undertaken to claim no such exclusive control as was now desired. Lengthy negotiations were now seton foot with England for the abrogation of a treaty which forbade the United States to build a canal of their own and prevented them from effectually opposing the French scheme. Lord Granville, however, saw no reason why England should abandon the treaty solely in the interests of the United States, and the negotiations were fruitless.

Meantime the French persisted in their undertaking. Their canal was to be tide-level, twenty-eight feet deep, costing £26,400,000. A corporation entitled the Compagnie Universelle du Canal Interocéanique de Panama was formed in 1881, and in the same year the work of construction was begun. So it looked as though the Americans were to lose all chance of constructing an isthmian canal under their own control. Events, however, were to decide otherwise.

The French company began work on the isthmus in February, and such a rake's progress set in as the world has seldom seen. The name of Ferdinand de Lesseps inspired such confidence that plenty of money was forthcoming from the French people. A great deal of it was subscribed by small investors who could ill afford to lose their savings, and no fewer than 16,000 women took shares in their own names. The beginning of the excavations was celebrated with a "gala" performance in the little theatre at Panama, among the artistes being Sarah Bernhardt. Then began a drama or a melodrama of extravagance and profligacy lasting seven years. Money was poured out like the torrential flood-waters down the river Chagres. I have mentioned the exorbitant sumwhich the company paid for the Panama Railway. All the expenditure was on the same scale. Princely salaries were paid to the managers and directors, and elegant mansions erected for their accommodation. Building operations—warehouses, hospitals, hotels, etc.—were carried on "regardless." Mr. W. F. Johnson tells of a man who owned thirty acres of land useful mainly as a breeding-place for mosquitoes, but lying right across the route of the canal. It was worth perhaps 300 dollars. The man demanded just a thousand times that sum; the Colombian courts awarded it, and the French paid it. For one great mistake the French made was that they failed to secure a canal zone in which they would have exercised full powers of administration. They began to build their canal on Colombian territory, under Colombian control, and the consequence was that they were fleeced on every side. Probably this mistake was inevitable, as the United States would have vetoed any territorial concession by Colombia to France as a transgression of the Monroe doctrine.

The isthmus rapidly degenerated into a moral as well as a climatic pest-house. Froude describedthe condition of things at Panama in one terrible sentence: "In all the world there is perhaps not now concentrated in any single spot so much swindling and villainy, so much foul disease, such a hideous dung-heap of moral and physical abomination." In fairness, however, it must be said that Lesseps himself cannot be held directly responsible for this state of affairs. He lived in Paris, and had probably little notion of what was happening at Panama. He furnished an example of the proverbial effects of too much success and prosperity. He seems to have become a superstitious believer in his own star, and to have thought that nothing could fail with which he was associated. Still less can the French nation be blamed for the wild doings of their representatives at the isthmus. And there is at least one redeeming feature in the conduct of this enterprise. In the midst of the moral and physical abominations that infested the isthmus during the French occupation, the engineering work went on steadily and conscientiously. Much of the French work was available for the Americans when they took over the task, and the engineers of the UnitedStates have always testified generously to the excellence of the French excavation and construction along the Canal route.

It must be carefully noted that the French canal was to be sea-level like the Suez, Corinth, and Kiel Canals. The construction of such a waterway differed in many important ways from that of the high-level lock canal which the United States have completed. To understand this we must consider briefly the character of the country which lies between Panama and Colon. The dominant and decisive features of the isthmus at this point are the Chagres River and the Culebra Mountains. The Chagres enters the Caribbean a little west of Colon. Its valley runs right across the isthmus south-south-eastwardly towards Panama for about twenty-six miles, then, at a place called Bas Opisbo, suddenly swerves away to the north-east into the trackless and jungle-clad hill country. This valley is the only transverse trench which the isthmus affords at this stretch, and it has always fixed the attention of surveyors looking out for a canal site. If the isthmus had been a rainless desert like that of Suez, a canal could have beenconstructed by a further preparation of this river valley and some heavy excavations along the nine-mile reach from Obispo to the Pacific. The sea would then have been admitted, the ebb and flow of the Pacific (the Atlantic shore is almost tideless) being regulated by a tidal lock. But the problem is not nearly so simple. The isthmus is one of the rainiest places in the world, enjoying on the Atlantic side 140 inches of rain a year. At Panama the rate is much smaller, not more than 60 inches. In the central hills the rainfall averages 90 to 95 inches. The average number of rainy days in the year is 246 at Bohio (inland on the Atlantic side), 196 at Colon, and 141 at Panama. The reader must not imagine a perpetual downpour or drizzle. The rain comes down in thundering tropical cataracts, leaving spaces of fine weather between the storms. Still, the isthmus is undoubtedly rainy and damp, and it is this humidity which makes the climate so trying, though the variations of the thermometer are by no means extreme and the average air temperature not particularly high. For example, the average temperature at Panama rangesfrom 81.6 Fahrenheit in November to 86.1 in March—that is, during the hottest time of the day, from two to four o'clock p.m. The coolest time is from six to seven a.m., when the average temperature ranges between 74.0 in January to 76.6 in June. The yearly average daily temperature is 79.6. The thermometer seems never to have recorded 100 degrees Fahrenheit at Panama, whereas 104 has been touched even at Washington.

But to return to the Chagres River. The tropical rains convert this stream very quickly into a raging torrent. The Chagres is capable of rising over forty feet in twenty-four hours. If the Chagres valley was to be the site of the canal, as was obviously necessary, how did the French propose to "care for" this tremendous and capricious flow of water? Mr. Johnson remarks that "those who have seen the antics of the Chagres under the stress of a characteristic isthmian rain must be pardoned if they regard the harnessing of the Chagres to the canal as something much like the harnessing of a mad elephant to a family carriage." The only course open to the French with their sea-level projectwas to divert the Chagres with its twenty-six tributaries, chief of which are the Gatun and the Trinidad, from its old valley into another channel, along which it could rage as it pleased on its short journey to the Caribbean. This would have been a tremendous, though probably not an impossible, task. The New Panama Company, which took the French work from the Lesseps Company in 1893, dropped the tide-level in favour of a lock or high-level canal, and adopted the plan of a dam across the river valley at Bohio, creating a lake above this point and discharging the flood waters to the level below by means of a spillway in the adjacent hills. We shall see later how the Americans adopted the same principle but modified it in practice.

So much at present for the Chagres problem. The other main feature of the isthmus is met with about the point where the river suddenly changes its direction—that is at Bas Obispo, or Gamboa, about nine miles from the Pacific outlet. Here are the hills, the backbone or "continental divide," averaging over 300 feet high but rising to much higher points, which connects the Cordilleras of South with the Sierras of North America.For eight or nine miles the canal must run through this central barrier on its way to the Pacific. The earliest French notion was for a ship tunnel—a project perhaps never seriously contemplated. The only other course was to cut right down through this hilly country. That was a tremendous undertaking, which required, even for its inception, a good deal of the faith which is said to be able to "remove mountains." We shall look more closely at the famous "Culebra Cut" when we come to the American canal. Most of the work of the French companies consisted of the dredging of the sea-level channels at the Atlantic and Pacific ends. But they drove a pretty deep furrow as well through the Culebra Mountains, excavating in all about 22,600,000 cubic yards.

With their sea-level scheme the French had, of course, a bigger proposition before them at the hills than their American successors. They would have had to cut right down below sea-level, whereas the bottom of the cut in the American lock-canal is forty feet above that level. Considering the difficulty the United States engineers have had with "slides" and "breaks" along the sides of their cutting, one suspectsthat the much deeper and narrower channel of the French would have proved impracticable. The French scheme gave a width to the channel at this point of only 74 feet, while the bottom width of the American canal is 300 feet. The French work at the "Cut" was all utilizable by the Americans, who, though with different machinery, adopted the same general method of excavation.

In 1888 the French company suspended payments and went into bankruptcy. The canal was completed to the extent of about two-fifths, and had already cost nearly £80,000,000. It was said at the time that about one-third of this sum was spent on the canal, one-third wasted, and one-third stolen. The original capital with the eight subscription lists between 1882 and 1888 produced nominally £78,701,020, but actually only £40,309,348, the loss in discounts, etc., amounting to £38,391,672. The collapse of the company was followed by investigations and trials in France. Ten senators and deputies, together with the directors, were brought to trial. Ferdinand and his son Charles de Lesseps were, among others, condemned to fines andimprisonment, but the sentences upon the Lesseps were never carried out. Neither the son nor the father was probably responsible for the iniquities which had marked the history of the company. The genius who had created the Suez Canal was indeed completely broken down by the tragical conclusion of his second venture, and died in 1894 in a condition of mental and physical collapse.

But financial profligacy was not the only cause of the French failure. Disease and death fought against the enterprise from the first. Yellow fever and malaria caused as much mortality among the French employees as would suffice for a great military campaign. Sir Ronald Ross, the great expert in tropical diseases, was told in 1904, when at the isthmus, that the French attempt cost at least 50,000 lives. This may have been an over-estimate, but there is no doubt that the mortality was terrible, and would probably have brought the French operations to an end even if greater economy and honesty had prevailed in the administration. It must not be supposed that the French made no provision for the victims of these endemic diseases.Excellent hospitals were built at Ancon, near Panama, at a cost of over a million of money; while those at Colon cost more than a quarter of a million—in both cases about three times a fair and honest price. At the time of the French occupation of the isthmus nothing was known of the real nature and cause of yellow fever and malaria, of the manner in which they are transmitted, and the only effective means of prevention. All the recent and marvellous advance in scientific knowledge of these diseases was available when the Americans began their work, and was applied with the greatest efficiency and success. Medical science, quite as much as engineering skill, made a Panama canal possible, and we shall have a good deal more to say on this subject when we come to describe the American operations.

Let us not forget, then, that despite their failure the French did a great deal of good work, which they passed on many years afterwards to their American successors. A quantity of the French machinery, tools, and hardware was also available. It is true that among this was included a large consignment of snow-shovels(for use at sea-level less than 10 degrees from the Equator!), and a quantity of petroleum torches for the festivities which were one day to celebrate the completion of the canal. But a great deal of the plant was in good condition. The extravagance and corruption which prevailed at the isthmus during the first French company were almost incredible. But it may be doubted whether any other nation could have succeeded in the 'eighties of last century where the French failed.

In 1893 a new corporation, known as the New Panama Canal Company, took over all the assets of the De Lesseps Company, including the railway, and the work of construction was continued, or at least not wholly interrupted. Meanwhile the people of the United States were not greatly displeased at the collapse of the great French enterprise. They became more and more determined to construct an American canal under American control. The Nicaraguan route was still favoured by many as compared with that at Panama. In 1887 a surveying party was sent to Nicaragua, and the next year the Maritime Canal Company was established to promote the building of a canal there. It is important to notice this particular scheme, for under it work was actually begun. Wharves, warehouses, anda breakwater were constructed at Greytown, a railway was built, and some progress made with the canal itself. Outside the Panama route this was the only actual work of canal construction performed in Isthmian and Central America. The project failed owing to the great depression of trade which occurred in 1893 and the impossibility of getting more capital. It should be noticed that these projects of constructing an American canal at Nicaragua quite independently of Great Britain were right in the teeth of the Clayton-Bulwer Treaty of 1850, which still remained in force. Most sensible persons saw that the first preliminary to an American canal was to get this treaty abrogated or modified. But this purpose and canal schemes in general were delayed by the outbreak in 1898 of the Spanish-American War.

This was a naval war, and the United States were to feel the inconvenience and danger of having no sea communication between their eastern and western coasts exceptviathe far southern extremity of the continent. United fleet action over the whole theatre of the war was rendered impossible. An event soon occurredwhich finally completed the conviction of the American people that, in the words of President Grant, "an American canal on American soil" was a national necessity. At the beginning of the war the battleshipOregon, one of the finest ships in the United States navy, lay off San Francisco. She was not wanted there, but she was very badly wanted at the West Indies, the main scene of the naval struggle. To get there theOregonhad to sail 13,400 miles round Cape Horn instead of 4,600 milesviaa Panama canal, if there had been one. Everybody in the United States knew that the precious warship was making that perilous journey exposed all the way to the attack of the enemy. If she had been lost, the course of the war might have been very different, and even the delay of this long passage was a serious consideration at so critical a time. However, the vessel arrived safely and in a record time off Florida, and the suspense and anxiety of the American people were changed into jubilation. But "never again" was the moral they drew from this painful and exciting experience.

At the end of the war a fresh canal campaign broke out in Congress, the claims of Nicaraguaand Panama being urged by their respective champions. The outcome of this rivalry was the appointment of a commission, the third of the kind, to go to the isthmus and investigate both Nicaragua and Panama. We shall have something to say about the report of this commission, which was issued in December 1900. But already, before that appeared, negotiations had been set on foot between the United States and Great Britain with regard to the Clayton-Bulwer Treaty. Allusions to the subject by Mr. M'Kinley in his second message to Congress had brought the question prominently before the people of both countries. The president had spoken thus:—

That the construction of such a maritime highway is now more than ever indispensable to that intimate and ready communication between our eastern and western seaboards demanded by the annexation of the Hawaiian Islands and the prospective expansion of our influence and commerce in the Pacific, and that our national policy now more imperatively than ever calls for its control by thisgovernment, are propositions which I doubt not the Congress will duly appreciate and wisely act upon.

It is obvious that the annexation by the United States of Hawaii and the Philippines, the beginnings of an American oversea empire, had greatly strengthened the case for a canal owned and controlled by the United States, and bringing the eastern coasts, the governmental centre of the States, into far more direct communication with these new acquisitions in the west.

Mr. M'Kinley's pronouncement was soon followed by conversations between Mr. John Hay, the American Secretary of State, and Lord Pauncefote, British Ambassador at Washington. The result was a treaty which was laid before the Senate in February 1900. This first attempt, however, was unsuccessful. The American people were annoyed to find that it did not abrogate the Clayton-Bulwer Treaty, but left the United States with something very short of that independent control which they desired. Amendments were introduced, and, so altered, the treaty was ratified by the Senate on December 20,1900. But in this new shape it proved unacceptable to the British government, and it was permitted to lapse; Lord Lansdowne, however, suggesting that another attempt at agreement should be made.

It may be asked why Great Britain, who had hitherto taken the view that it had nothing to gain, and perhaps much to lose, from the reconsideration of the Clayton-Bulwer Treaty, should now have been so willing to bring it under review. There was a variety of reasons. The government of the United States had protested for nearly fifty years against the agreement, and this pertinacity, together with the changed conditions since the Spanish-American War, may have weighed with the British government. Then the Alaskan boundary question was at that time still under discussion between the two countries, and a settlement was proving difficult. An obstinate resistance to the United States over the canal question might have continued that deadlock indefinitely. At this time, too, England was at the beginning of the Boer War, and finding that business a good deal more intricate than she had expected. The sentimentof Anglo-American friendship had also grown much warmer since the days when Lord Granville had repulsed the advances of Mr. Blaine.

In November 1901 a new treaty made its appearance. This was ratified by the Senate without amendment, and was ultimately concluded between the two Powers, being known as the Hay-Pauncefote Treaty.[3]

It is very important to note the provisions of this treaty, because it establishes what is known as the political "status" of the new canal. The Hay-Pauncefote expressly supersedes the Clayton-Bulwer Treaty and provides for the construction of a canal (mentioning no particular route) "under the auspices of the government of the United States," which country is "to have and enjoy all the rights incident to such construction, as well as the exclusive right of providing for the regulation and management of the canal." It adopts the principles of "neutralization" which were embodied in the Treaty of Constantinople of 1888 in connection with the Suez Canal. Both treaties provide for:—

1. Freedom of transit in time of peace or war for the vessels of all nations.

2. Freedom of the canal and its terminals from blockade.

3. A code of procedure for war-vessels entering or leaving the canal.

No special reference is made to the question of fortification, but the United States are to be at liberty to maintain such military police along the canal as may be necessary to protect it against lawlessness and disorder. A treaty, however, subsequently concluded between the United States and the Republic of Panama (known as the Hay-Bunau-Varilla Treaty) contains the following provision:—

If it should become necessary at any time to employ armed forces for the safety and protection of the canal, or of the ships that make use of the same, or the railways and auxiliary works, the United States shall have the right, at all times and in its discretion, to use its police and its land and naval forces or to establish fortifications for these purposes.

But the most important provision of all related to the question of the charges and other conditions of traffic through the canal. The meaning of the section seems plain enough, though it became a subject of rather acute controversy:—

The canal shall be free and open to the vessels of commerce and war of all nations observing these rules, on terms of entire equality; so that there shall be no discrimination against any such nation, or its citizens or subjects, in respect of the conditions and charges of traffic, or otherwise. Such conditions and charges of traffic shall be just and equitable.

This provision is reaffirmed in Article XVIII. of the Hay-Bunau-Varilla Treaty. There is no doubt that the British government regarded this promise of equal treatment as some compensation for the surrender of those rights of joint construction and control which Great Britain enjoyed under the Clayton-Bulwer Treaty. In fact, Mr. Hay, in a memorandum he sent to the Senate Committee on Foreign Relations, describedthe treaty as a sort of contract between Great Britain and the United States by which the former gave up those rights just mentioned in return for the "rules and principles" included in the new treaty, the chief among these being, of course, the provision about equality of treatment for all nations.

It was, therefore, a surprise when the United States government decided that the expression "all nations" did not include the United States themselves, and that it was quite open to them to give preferential treatment to their "coastwise" traffic. Under the term "coastwise" the United States include the sea-traffic not only between ports along a continuous coast, but between such points as San Francisco or Washington and the Philippine Islands. As a matter of fact, an amendment proposed by Mr. Burd in the Senate, reserving to the United States the right of favouring its "coastwise" traffic, had been defeated, when the new treaty was under discussion.

But, leaving these controversial questions, the most important thing for us to notice is that the Panama Canal has what is known asan "international status." It is not quite the sole and absolute property of the United States in the sense in which the Kiel Canal belongs to Germany, the Corinth Canal to Greece, and the Amsterdam or North Sea Canal to the Netherlands. Its status is governed by treaties which impose certain obligations and restrictions upon the United States and lay down certain rules of administration. It was intended at first to make the status of the Panama and the Suez Canal identical. But there are considerable differences. The "neutrality" of the Suez Canal is guaranteed by all the Powers of Europe, that of the Panama Canal by two only, England and the United States, and it is safeguarded and maintained by the United States alone. Then the Suez Canal is and must remain unfortified, while the Panama Canal will be strongly fortified by the United States.

The reader may wonder what precisely is meant by the word "neutral" as applied to the new waterway. The position will be as nearly as possible that indicated by Dr. Vaughan Cornish in the following passage:—

If there be a war in which the United States is not a party,the canal will be used by belligerents in exactly the same way as was the Suez Canal—for example, in the Russo-Japanese War—and the government of the United States has pledged itself to see that such neutrality is preserved. But if there be a war in which the United States is a party, the circumstances of fortification and operation by the United States in fact render it impossible for the other belligerent to use the canal, and are intended to have that effect. This being so, the United States is preparing to defend the canal from attack. Thus it is important to the proper understanding of the undertaking on which the United States government has embarked that we should clearly realize that the canal is only neutral in a restricted sense.[4]

As a matter of fact the status of the Panama Canal lies somewhere between neutralization and American control. The Hay-Pauncefote Treaty also lays down the rules which are to be observedby the ships of war of a belligerent using the canal and the waters adjacent to the canal—that is, within three marine miles of either end. They are similar to those in force at Suez, and need not be repeated here.

[3]Appendix i.

[4]"The Panama Canal and its Makers," pp. 42, 43.

Those citizens of the United States who thought that with the disappearance of the Clayton-Bulwer Treaty all the difficulties in the way of obtaining a canal of their own had also disappeared were doomed to a severe disappointment. They had not reckoned with a South American republic on the verge of bankruptcy and suddenly presented with a glorious opportunity to fill its empty treasury. Two preliminaries were necessary before the United States could settle down at the isthmus of Panama to the work of canal construction. They had to purchase the concession, the unfinished works and the other assets of the New Panama Company, at as reasonable a price as they could obtain; and, secondly, it was necessary to conclude a treaty with Colombia, securing to the UnitedStates on satisfactory terms the perpetual control of a strip of territory on the isthmus from sea to sea within which the canal could be constructed.

The first of these undertakings presented, as it turned out, no great difficulty. The New Panama Company had begun to despair of its own ability to get a canal finished across the isthmus, and to realize that their best course was to transfer the whole business to the United States. This disposition had been greatly strengthened by the Report of the Third Canal Commission, issued in December 1900. Probably the members of the commission were convinced of the advantages of the Panama route and the desirability of continuing the work of the French engineers. But they were shrewd people. They dwelt in their report on the improbability that the New Panama Company would sell its property to the United States, and on the difficulty of getting the Colombian concession transferred. They decided, therefore, that "the most practicable and feasible route for an isthmian canal to be under the control, management, and ownership of the United States is that known as the Nicaraguan route."

The commission probably foresaw the effect such a decision was likely to have on the directors and shareholders of the New Panama Company. If an American canal were constructed at Nicaragua, all the property and work of the company at Panama would be thrown on the scrap-heap. The company estimated the value of its property at $109,141,500, a price which the commission, representing the American government, declined to look at. The commission thought $40,000,000 quite enough for the property, and so completely were the Americans master of the situation that that price was agreed upon in January 1902. The commission thereupon issued a supplementary report, which reversed the former decision and recommended the Panama route and the purchase of the French property.

Then arose in the Congress of the United States a tremendous conflict between the Nicaraguans and the Panamanians, the champions of the two routes which had so long been in rivalry. The former party insisted that Panama was farther from the United States than Nicaragua, and therefore the journey from the eastern to thewestern seaboard of the States would be longer. They argued that Panama was unfavourable to sailing vessels on account of the prevailing calms on that coast; that it would be easier to deal with Costa Rica and Nicaragua than with Colombia; and that Nicaragua was "the traditional American route" as compared with the Frenchified Panama. The claims of the old Darien route were also advanced. This was probably done by American railway people who were against any canal, for the Darien route would have involved a rock tunnel five miles long and three hundred feet broad, the attempt to achieve which would probably have ended all canal adventures at the isthmus.

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 withColombia 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 asdearly 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 deferany 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 haveresisted 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 notirrevocable. 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 benegotiated 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 turnto 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.

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