When the Compagnie Universelle du Canal Interocéanique failed in December,1888, thousands of French investors lost their money. The word Panama quickly became synonymous with scandal and fraud. About $287,000,000 had been spent. 50,000,000 cubic meters of earth and rock had been moved. 11 miles of canal had been dug. 20,000 men had died. The canal remained unfinished, but the dream had not yet ended. Theodore Roosevelt would soon take up the cause.
Shortly after ascending to the presidency, Roosevelt spoke of the Panama Canal in a speech to Congress. "No single great material work which remains to be undertaken on this continent, "Roosevelt said, "is as of such consequence to the American people."
Roosevelt acted quickly. In 1902, the United States reached an agreement to buy rights to the French canal property and equipment for a sum not to exceed $40 million. The U.S. then began negotiating a Panama treaty with Colombia. The U.S Department of War would direct excavation. Many, both in the press and in the public, sensed a scandal, or, worse yet, good money thrown after bad.
In the New York Journal, William Randolph Hearst opined that "the only way we could secure a satisfactory concession from Colombia would be to go down there, take the contending statesmen by the necks, and hold a batch of them in office long enough to get a contract in mind." Hearst's statement proved prophetic.
When Colombia grew reticent in its negotiations, Roosevelt and Panamanian business interests collaborated on a revolution. The battle for Panama lasted only a few hours. Colombian soldiers in Colón were bribed $50 each to lay down their arms; the U.S.S. Nashville cruised off the Panamanian coast in a show of support. On November 3, 1903, the nation of Panama was born.
The U.S quickly assumed parental interest. Americans had written the Panamanian Constitution in advance; the wife of pro-canal lobbyist Phillipe Bunau-Varilla had sewn the country's first flag. A payment of $10,000,000 secured a canal zone and rights to build. Bunau-Varilla, installed as Panamanian minister to the U.S., signed a treaty favorable to American interests. The $40,000,000 given to J.P Morgan for distribution to French stockholders disappeared amid rumors of larcenous speculation.
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