Immediately thereafter President William McKinley was authorized by
Congress to send a commission to Panama and Nicaragua to examine those
two routes and to receive offers from the different companies as to the
amounts the different projects could be purchased for.
The result of the investigations of the commission was that the
Panamanian Company offered their uncompleted canal, their franchises,
their plans and specifications, the Panama Railroad, which was worth
about $12,000,000, and a line of steamships from Colon to New York,
consisting of five medium-sized steel vessels of modern construction,
for the sum of $110,000,000. The Nicaraguan Company offered their
concessions from Costa Rica and Nicaragua, in addition to all their
other property, for $6,000,000. They simply desired to be reimbursed
for the amounts spent in securing their concessions and making their
preliminary surveys.
After careful consideration the commission recommended the purchase
of the Nicaraguan proposition. It was at this critical state of the
negotiations that President McKinley was removed by the bloody hand of
the assassin, and as a result Vice-President Roosevelt took his place
as the head of the American Government. President Roosevelt decided on
the Nicaraguan proposition; but before the matter was closed the French
Panama Company came fully to the realization that if the United States
purchased the concessions of the Maritime Canal Company and began the
construction of a canal through the Nicaraguan territory, without any
question that project would be completed in a reasonably short space
of time, as it would have the power of the entire American Government
behind it.
[Illustrations: BONEYARD OF THE OLD FRENCH MACHINERY.]
They also realized that if the Nicaragua Canal was constructed it would
probably make their holdings in Panama of far less value; and as they
were practically bankrupt then, they begged an opportunity to submit
a lower price for their property. This opportunity was granted, and
the result was that the French company offered their franchises and
holdings, including the railroad and the steamship line, for the sum of
$40,000,000.
This amount was so much lower than the amount originally demanded
that it caused a reconsideration by the President and Congress, which
terminated in the decision of the President and Congress to purchase
the rights and the property of the French Company.
The next step was to ascertain whether or not the French company could
convey a valid title to the United States, and Attorney-General Knox
was instructed to go to France and consult with the proper French
authorities and determine if such a legal conveyance could be made.
As a result of his investigations, General Knox on October 30, 1902,
decided that the French company could convey an absolute title to the
American Government.
A great nation such as the United States could not contemplate
becoming the tenant of any other country under the sun, much less a
feeble republic of Central America. The dignity of the United States
required absolute sovereignty over any territory through which the
American Nation might decide to construct an isthmian canal. Absolute
sovereignty over an isthmian canal, however, on the part of the United
States had been waived by the terms of the Clayton-Bulwer treaty
entered into with Great Britain a half century before. The terms of
this treaty provided that in case either nation should construct an
isthmian canal, such canal should not be fortified nor controlled by
either power; and that should any other nation construct an isthmian
canal, the United States and Great Britain should join in preserving
its neutrality.
Before the United States could exercise absolute sovereignty over
any strip of territory across the isthmus, the Clayton-Bulwer treaty
would have to be abrogated, and to accomplish this Secretary of
State Hay entered into negotiations with Great Britain. He found the
representatives of that country very willing to meet every reasonable
demand. After a short series of negotiations he succeeded in having
passed and ratified by both countries the Hay-Pauncefote treaty. Under
the terms of this treaty Great Britain waived all claims to sovereignty
and control over an Isthmian Canal, and substantially agreed to the
jurisdiction and control of the United States over any canal that might
be constructed by that country.