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THE FRENCH FIASCO
 AS early as 1581 a survey was made with a view to piercing a waterway through the Isthmus of
Panama. Between that date and 1875 several schemes for the construction of an Isthmian
Canal were discussed by Spain, Colombia, France, and the United States, and, as an outcome
of numerous surveys, various routes were suggested.
In 1875, France, encouraged by the triumphant completion of the Suez Canal under the
direction of De Lesseps, again became ambitious to pierce the Isthmus of Panama. A
Promotion Company was formed for the purpose of drawing up a Panama Canal scheme, and
obtaining from the Colombian Government the necessary grant of land, and all such
privileges as might seem necessary to a successful carrying out of the enterprise in view.
After lengthy negotiations, an agreement was concluded whereby this company received
numerous concessions, such as the grant of a zone of land and the exclusive right to
construct a canal across the Isthmus, on condition that, onwards from a given date,
Colombia should be entitled to a fixed share of the income derived from the canal, that
the general route of the canal should be determined by an international commission, and
that the canal should always be a neutral right of way so that in case of war merchant
vessels and passenger boats could pass through unmolested.
An international commission, known as the International Scientific Congress, met at Paris
on May 15, 1879, under the presidency of Count de Lesseps. As a result of discussions that
extended over a fortnight, the Conference
 came to the conclusion that a sea-level canal should be constructed from Limon Bay to the
Bay of Panama.
The Promotion Company then transferred its rights and privileges to the Panama Canal
Company, which was chartered under the laws of France. De Lesseps was given control of the
new company. One of his first acts was to purchase enough shares in the Panama Railroad
Company to give his company the controlling interest in that corporation; this was a very
shrewd move, seeing that it might be found necessary to take the Panama Canal across
territory owned by the Railroad Company, and that the Canal Company would certainly
benefit by being able to make a first claim on the services of the trains for the
transport of machinery, materials, labourers and stores.
On December 30, 1879, De Lesseps, who was then seventy-seven years old, arrived at Colon
as head of a surveying party that included the chief engineers of the Dutch canals and
waterways, and several famous mining engineers and civil engineers. Colon gave De Lesseps
and his distinguished assistants a right royal welcome. A reception committee, consisting
of delegates from the State Assembly and leading citizens, was on the quay to meet the
French steamer which brought the illustrious guests. On board, where preparations had been
made to receive the reception committee, there was much speechifying, toasting and
bandying of compliments, whilst the pick of Panamanian musicians played stirring tunes,
and the crowd on the wharf-side found a hundred and one ways of giving vent to their
enthusiasm. In the evening the town was illuminated, and a display of fireworks was given.
De Lesseps was at work early the next morning. He made an examination of the harbour, and
 information as to the direction and force of the most boisterous winds in that part of the
world; then on a carefully prepared chart he marked the location of a break-water and the
probable entrance to the great Isthmian Canal. He and his party boarded the midday
trans-Isthmian train. Panama City was in gala dress for the reception of the venerable
hero of Suez, who was officially welcomed at the station of the republican capital in the
name of the sovereign State of Panama, and escorted to the principal hotel by a military
guard of honour.
On January 1, 1880, De Lesseps made an examination of the country in which would be
situated the Pacific terminus of the canal route he had planned by the help of the records
of previous surveys which had been supplied to the Paris Congress.
Within a few days he had definitely decided on the general line of route. Meanwhile he had
won the complete confidence of the Panamanians by the force of his personality, and the
convincing manner in which he gave very simple, explanatory solutions of the supreme
difficulties which he took the greatest pains to emphasize. There were high mountains in
his way—by the sinking of wells, which could be charged with explosives that would
tear up large areas of rock at each discharge, they would be prepared for transit to the
trains that would be waiting to clear them off his track. The River Chagres was in his
way—true, it was easier to remove mountains than to alter the course of a river, but
the engineering world had long ceased to regard the construction of dams and diversion
channels as experiments in the science and art of changing Nature's designs.
On January 10, 1880, De Lesseps took a large party to the neighbourhood of Culebra, to
witness a momentous
 event. A mine had been laid in the mountain side. The seven-year-old daughter of De
Lesseps performed the ceremony of applying the electric spark whereby a mighty blast tore
a huge mass of solid rock from its foundation, and heralded the beginning of the great
work of making the Panama Canal.
De Lesseps toured the United States and Europe for the purpose of inducing people to
invest in the Panama Canal Company. Owing to the attractive way in which he introduced the
Franco-Panama scheme to the public, large numbers of people clamoured for shares, and
France would have had no difficulty at that stage of the proceedings in obtaining twice as
much money as she felt she needed to get from outside contributors.
The route of the Franco-Panama Canal began at Folks River, Cristobal-Colon, followed the
valley of the Chagres to Bas Obispo, passed through the Culebra mountains, followed the
valley of the Rio Grande to its mouth, and went two miles out to sea in Panama Bay.
By the end of three years, De Lesseps and his staff had collected a good deal of machinery
and a three-thousand strong labour force on the scene of operations; also, the work of
excavating had been begun. But by this time the labourers had considerably raised the
original scale of wages and were demanding still better pay, and other unforeseen
difficulties had cropped up to hamper the organizers.
By 1885 it was an open secret that the Company could not complete the Canal in the
stipulated time or at the estimated cost, the newspapers were crying out against the
reckless extravagance which was going on in the Canal Zone, and the public who had
invested in the enterprise were getting nervous. So,
 when, in that year, De Lesseps applied for permission to raise more funds by means of a
lottery, the French Government sent another eminent engineer to the Isthmus to report on
the situation. This expert emphatically announced that the amount of excavation which had
yet to be done to complete the proposed sea-level canal would, under the best of
economical management, cost a great deal more money over and above the original estimate
than the public, in their present attitude to the enterprise, would be likely to
subscribe; he recommended that new plans should be got out for a canal with locks, which
would not require any alteration in route.
De Lesseps very reluctantly consented to the change. But there was only a poor response to
the appeal for further funds which the French Government made, although very attractive
terms were offered to investors. By the end of 1888 the Company was obliged to go into
liquidation, and early in 1889 the work on the Canal was suspended. An official
investigation of accounts showed that nearly $235,000,000 ($1=4s. 2d.) had been expended.
De Lesseps had estimated that the Canal could be completed for a little over half that
In 1894 the "New Panama Canal Company" was formed in France, and Colombia extended the
date limit by which the waterway must be finished. In 1901 this Company hinted at its
willingness to transfer its assets to the United States, who had been making various
inquiries with a view to obtaining sole control of any practicable route for the
construction of a canal between the Atlantic and Pacific Oceans. A deal was carried
through between the New Panama Canal Company and the United States in 1904, with the
consent of Panama, which had now
 become a separate republic. The United States paid the French company the "bargain" price
of $40,000,000 for about 65 5,000 acres of Isthmian land, all the excavating work that had
been done, machinery, boats, buildings, maps, records, and the Panama railroad. A treaty
was entered into between the United States and the Republic of Panama, whereby the former
were granted, together with numerous other rights and privileges, the use, occupation and
control in perpetuity of a ten-miles wide zone of territory, beginning three miles away
from shore in the Caribbean Sea and extending across the Isthmus to a boundary three miles
out in the Pacific, excluding the cities of Colon and Panama; in return, the United States
guaranteed to maintain the independence of the Republic of Panama, paid over a lump sum of
$10,000,000, and undertook to make an annual payment of $250,000 onwards from 1913.
From an international standpoint, the most important clause in the agreement between the
United States and the Republic of Panama is one stipulating that the Canal shall be
neutral in perpetuity. In the Hay-Pauncefote Treaty between the United States and Great
Britain (1901), the neutrality condition, under which the objection by Great Britain to a
canal constructed by the United States was withdrawn, runs as follows:
"The Canal shall be free and open to the vessels of commerce and of war of all nations on
terms of entire equality, so that there shall be no discrimination against any such