CHAPTER XVIII

CHOOSING THE PANAMA ROUTE

Proud as Americans now are of the success of their venture at Panama,

in the beginning there was by no means a general agreement that the

United States would succeed where France had failed. Indeed, the

French disaster had much influence in strengthening the position of

those who favored building the American canal through Nicaragua.

Prior to the year 1900 little thought was given by the American people

to any project for building an Isthmian Canal anywhere else than

through Nicaragua. It is true that in 1897 the New Panama Canal

Company became active in its efforts to induce the United States to

adopt the Panama route, but these activities made little impression

upon public sentiment before the outbreak of the Spanish American War.

During that war interest in the question of an Isthmian Canal waned in

America, and immediately after it the sympathy which France had given

to Spain made it advisable for the Canal Company to postpone its

propaganda.

In his annual message to Congress in December, 1898, President

McKinley recommended the building of the Nicaragua Canal. Two days

later Senator John T. Morgan, of Alabama, made a vigorous speech in

the Senate, in which he charged that the transcontinental railroads of

the United States were making efforts to defeat the canal project.

This charge was made repeatedly thereafter, and it was asserted that

the railroads espoused the cause of the Panama Canal upon the ground

of choosing the lesser of two evils, judged from their standpoint.

Prior to 1900 both Republican and Democratic parties had repeatedly

favored the construction of the Nicaragua Canal in their national

platforms, and both branches of Congress had voted for the canal at

different times.

In the early part of 1899 the Senate passed a bill authorizing the

construction of a Nicaraguan Canal. The House refused to act on the

bill, and, at the instance of Senator Morgan, the Senate attached a

rider to the rivers and harbors bill, appropriating $10,000,000 to

begin the building of the canal. This passed the Senate by a vote of

54 to 3. The amendment was defeated in the House and the matter went

to conference. If the House conferees stood pat in their opposition to

the Senate amendment, the whole rivers and harbors bill would be

defeated unless the Senate conferees yielded. The House conferees

remained unshaken in their opposition to the Nicaragua Canal

provision, and were willing to wreck the whole rivers and harbors bill

rather than to authorize the beginning of operations in the

construction of the Nicaragua Canal under the plan framed by the

Senate.

According to Philippe Bunau-Varilla, the real secret of the defeat of

the Nicaragua Canal project at this juncture lay in a dispute between

the House and Senate as to the manner of building the canal. The

Senate wanted to do it by the reorganization of the Maritime Canal

Company, with the majority of its board of directors appointed by the

President, using that corporation as the agent of the Government for

constructing and operating the canal. Representative William P.

Hepburn, of Iowa, at that time Chairman of the Committee on Interstate

and Foreign Commerce, contended that such a plan proposed that the

United States should masquerade as a corporation, instead of doing the

work in its own proper person, as it was in every sense capable of

doing. He asked for what purpose the Government should thus convert

itself into a corporation, making of itself an artificial person and

taking a position of equality with a citizen? He further pointed out

that as a corporation the Government might be sued in its own courts,

and fined for contempt by its own judicial servants.

A compromise was adopted in the form of an appropriation of $1,000,000

to defray the expenses of an investigation into all of the various

routes for an Isthmian Canal. This investigation was to have reference

particularly to the relative merits of the Nicaragua and Panama

routes, together with an estimate of the cost of constructing each.

The investigators were to ascertain what rights, privileges, and

franchises were held, and what work had been done in the construction

of the proposed canals. They were also to ascertain the cost of

acquiring the interests of any organizations holding franchises on

these routes. The President was directed to employ engineers of the

United States Army and engineers from civil life, together with such

other persons as were necessary to carry out the purposes of the

investigation. A few months later he appointed the first Isthmian

Canal Commission, consisting of Rear Admiral John G. Walker, Senator

Samuel Pasco, Alfred Noble, George S. Morison, Peter C. Hains, William

H. Burr, O. H. Ernst, Louis M. Haupt, and Emory R. Johnson.

Thus it came about that the House and Senate, divided only upon the

issue of the proper method of building the Nicaragua Canal, reopened

the whole question, and gave to the Panama Canal advocates a chance to

make a fight in favor of that route. The advocates of the Nicaragua

Canal were not satisfied, however, to await the discoveries of the

commission Congress had created. On May 2, 1900, before the commission

made its report, the House voted 234 to 36 in favor of the Nicaragua

route. The bill went to the Senate, where it was favorably reported by

the Committee on Interoceanic Canals. Senator Morgan made a formal

motion for the immediate consideration of the measure, but it was lost

by a vote of 28 to 21. He then had the 2nd day of December following

fixed as the date for again taking up the matter. His committee made a

report roundly scoring the representatives of the New Panama Canal

Company for their activities in favor of the Panama route.

In December, 1900, Secretary Hay signed protocols with the ministers

of Nicaragua and Costa Rica, by which those Governments undertook to

negotiate treaties as soon as the President of the United States

should be authorized by Congress to acquire the Nicaragua route. In

the following February, Senator Morgan offered an amendment to the

sundry civil appropriation bill authorizing the President to go ahead

with the construction of the canal. When Theodore Roosevelt became

President in September, 1901, he recommended the building of the

Nicaragua Canal in his official statement of policy.

In the meantime the Isthmian Canal Commission had been repeatedly

attempting to get the New Panama Canal Company to state for what sum

it would sell its holdings to the United States. The figures finally

presented placed a value of $109,000,000 upon the property. After

this, the Isthmian Canal Commission unanimously recommended the

adoption of the Nicaragua route. Congress again took up the matter,

upon a bill introduced by Representative Hepburn, making an

appropriation of $180,000,000 for the construction of the canal. This

measure was favorably reported by the House Committee on Interstate

and Foreign Commerce, and also secured the approval of the Senate

Committee on Interoceanic Canals.

A few days later a formal convention was signed in Nicaragua by the

minister of foreign affairs and the American minister, looking to the

construction of the canal through Nicaraguan territory. A week later

the Senate ratified the Hay-Pauncefote treaty with Great Britain. On

January 7 the House of Representatives again took up the matter and,

in spite of the fact that the New Panama Canal Company had decided to

accept $40,000,000 for its property, this offer was rejected by the

House of Representatives, which passed the bill authorizing the

construction of the Nicaragua Canal by the overwhelming vote of 309 to

2.

After the rejection of the offer of the New Panama Canal Company by

the House, President Roosevelt again called the members of the

Isthmian Canal Commission together, and asked them to make a

supplementary report in view of the offer in question. On a motion of

Commissioner Morison the commission decided that, in consideration of

the change of conditions brought about by the offer of the company to

sell its property for $40,000,000, the Panama route was preferable. It

has been stated that Professor Haupt, Senator Pasco, and two other

members of the commission were reluctant to abandon the Nicaragua

project; that President Roosevelt had made it quite clear to Admiral

Walker that he expected the commission to accept the Panama Canal

Company's offer; that Commissioners Noble and Pasco had given in, but

that Professor Haupt stood out; and that he was induced to sign the

report only after Admiral Walker had called him out of the committee

room and pleaded with him to do so, stating that the President

demanded a unanimous report. Professor Haupt afterwards publicly

admitted the truth of this story in a signed article in a magazine.

About this time the Senate Committee on Interoceanic Canals appointed

a subcommittee of six members to study and report on the legal

questions involved in the transfer of the New Panama Canal Company's

title, and a majority reported that the company's title was defective

and that it had no power to transfer. It was finally decided that the

Senate Committee on Interoceanic Canals should make no report until

all of the members of the Isthmian Canal Commission had appeared

before it and testified. This delay permitted negotiations between the

United States, the New Panama Canal Company, and the Republic of

Colombia looking to a settlement of the question of title.

The New Panama Canal Company was now thoroughly in earnest in its

desire to dispose of its holdings to the United States, but the

Republic of Colombia, desiring to drive a good bargain, held aloof.

The hope of the situation as far as the Panama route was concerned,

lay in Senator Marcus A. Hanna, of Ohio, who had come to espouse the

Panama route. He declared he would not recommend the acceptance of the

proposals of the New Panama Canal Company unless a satisfactory treaty

could be obtained, and unless the shareholders of the company would

ratify the action of the board of directors in making the offer. A

meeting of the shareholders was called in February, 1902, at which the

Republic of Colombia, holding a million dollars' worth of stock in the

company, was represented by a Government delegate. He served formal

notice on the company that it was forbidden, on pain of forfeiture of

its concession, to sell its rights to the United States before that

action was approved by the Colombian Government, there being a clause

in the concession providing that in the event of such a sale to any

foreign Government all rights, titles, and property should revert to

Colombia.

When the Colombian Government took up the matter it showed a

disposition to grasp the lion's share. Its minister was instructed to

exact no less than $20,000,000 from the New Panama Canal Company for

Colombia's permission to transfer its concessions. This demand was

based on the following reasons: First, because Colombia's consent was

essential; second, because Colombia would lose its expectation of

acquiring the Panama Railroad at the expiration of its concession--a

road that was then valued at $18,000,000; third, because under the

proposed contract with the United States, Colombia was to renounce its

share in the prospective earnings of the canal, which might amount to

a million dollars a year.

Another proposition was drawn by the Colombian minister, proposing to

lease a zone across the Isthmus of the United States for a period of

200 years at an annual rental of $600,000. At another time the

Colombian minister declared that, inasmuch as the New Panama Canal

Company had taken advantage of the straitened circumstances of the

Colombian Government to obtain a six-year extension of its concession,

which was really what the canal company was about to sell for

$40,000,000, he thought Colombia ought to require the New Panama Canal

Company to pay $3,000,000 of the $40,000,000, for what the company

gained by the extension of its concession.

On January 30, 1902, Senator John C. Spooner, of Wisconsin, introduced

a bill in the Senate, authorizing the President of the United States

to build an Isthmian Canal at Panama, if the necessary rights could be

obtained. If those rights could not be obtained the President was

required to build the canal on the Nicaraguan route. The Spooner bill

provided the machinery for the construction of the canal, created the

Isthmian Canal Commission, and authorized the expenditures necessary

for undertaking the project. Some six weeks later the Senate Committee

on Interoceanic Canals rejected the Spooner bill and presented a

favorable report on the Hepburn bill, which authorized the Nicaragua

Canal.

The final struggle in the Senate lasted from June 4 to June 19, 1902.

Senators Morgan and Harris led the fight for the Hepburn bill, while

Senators Hanna and Spooner championed the Spooner measure. The fight

resulted in the passage of the Spooner bill by a vote of 32 to 24. The

disagreeing votes of the two Houses were then sent to conference, and

the House finally receded from its position in favor of the Nicaragua

route, and the Spooner bill became a law. The situation as it now

stood was that the Panama route was chosen on the conditions that the

title of the company be proved and that a satisfactory treaty with

Colombia be negotiated; with the alternative of the adoption of the

Nicaragua route in default of one or the other of these conditions.

Whatever may have been his motives--in the light of events which have

followed it would seem unjust to question them--Senator Hanna was

undoubtedly responsible for the revolution in Congress and in public

sentiment which resulted in the selection of the Panama route. M.

Bunau-Varilla declares that he met Myron T. Herrick in Paris,

converted him, and through him met Senator Hanna, whom he also

convinced. In Crowley's "Life and Work of Marcus Alonzo Hanna," it is

declared that a series of interviews between M. Bunau-Varilla and

Senator Hanna had much to do with Mr. Hanna's decision to make a fight

in behalf of Panama. It was claimed by William Nelson Cromwell, in his

suit for fees against the New Panama Canal Company, that he was

responsible for converting Senator Hanna to the Panama project, and it

was asserted, also, that he furnished the data from which Senator

Hanna made his speech which converted the Senate, and the House, and

the country, and led to the adoption of the Panama route.

At this juncture Providence seemed to lend support to the Panama

route, for one of the many volcanoes in Nicaragua became active and

did considerable damage. Occurrences since then have borne out the

wisdom of avoiding the Nicaragua route. A few years ago the city of

Cartago, only about a hundred miles distant from the site of the works

that would have been installed to control the waters of Lake

Nicaragua, was entirely destroyed by an earthquake.

With the Spooner bill enacted into law, the next proposition which

confronted the United States Government was that of reaching an

understanding with Colombia, which would permit the building of the

canal at Panama. That country was reminded on every hand and in divers

ways that unless an acceptable treaty were forthcoming the President

of the United States would be forced to adopt the Nicaragua route.

But, notwithstanding these reminders, Colombia still moved slowly in

the matter. After being repeatedly urged to come to terms, and after

one Colombian minister to the United States had been recalled and

another resigned, the Hay-Herran treaty finally was negotiated.

Before Colombia reached the stage, however, where it would agree to

enter into negotiations with the United States, it had been reminded

by its minister in Washington that it was dangerous not to enter into

an agreement. He had declared that if Colombia should refuse to hear

the American proposal that a new treaty be entered into, the United

States would, in retaliation, denounce the treaty of 1846, and

thereafter view with complacency any events which might take place in

Panama inimical to Colombia's interests. He had reported further that

the United States would, at the first interruption of the railroad

service, occupy at once Colombia's territory on the Isthmus and

embrace whatever tendency there might be toward separation, in the

hope of bringing about the independence of Panama. This, he had

concluded, would be a catastrophe of far greater consequence to

Colombia than any damage the Republic might suffer by the ratification

of a treaty with the United States permitting the building of the

canal.

His views in the matter were strengthened by a suggestion of Senator

Shelby M. Cullom, of Illinois, that if Colombia should continue to

refuse to allow the United States to build the canal, which the United

States claimed was its right to do under the treaty of 1846, the

American Government might invoke a sort of universal right of eminent

domain, take the Isthmian territory, and pay Colombia its value in

accordance with an appraisement by experts.

About this time President Roosevelt wrote a letter to his friend, Dr.

Albert D. Shaw, of the Review of Reviews, in which he said that he had

been appealed to for aid and encouragement to a revolution at Panama,

but that as much as he would like to see such a revolution, he could

not lend any encouragement to it. The Republic of Colombia was

repeatedly reminded by Secretary Hay that if it did not act promptly

the President would take up negotiations with Nicaragua and proceed to

construct the canal there. Under these conditions Colombia finally

agreed to negotiate the Hay-Herran treaty, which was afterwards

rejected by the Colombian Congress.

It has been asserted that President Roosevelt took the view all along

that under the treaty of 1846, Colombia had no right to prevent the

United States from building the canal, and that, in spite of the

provision of the Spooner Act requiring him to proceed with the

construction of the Nicaragua Canal in the event of the failure of

negotiations at Panama, he was determined to exhaust every possible

effort before giving up the Panama route.

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