The story of the building of the Panama Canal at the turn of the last century is an exposé of the operations of the capitalist system and the enormous damage that is done to workers under it.
Matthew
Parker’s recent book Panama Fever
(Hutchinson) is a piece of unvarnished
history that makes
the case
for socialism more powerfully than any political tract could do. The
construction of the canal and the ambitions, machinations and cold
calculations that lay behind it make for grim reading. There were two
elements in the building of the canal; the first, a failed French
attempt under the leadership of De Lesseps (‘builder’
of the Suez Canal) and the second successful effort of the government
of the United States. Over both construction stages, in the region of
28,000 workers lost their lives, mostly from diseases, which is a
toll on a par with many wars.
As soon as fifty years after the ‘discovery’ of the continents of North and South America, the advantage to World Trade of a man-made opening through the narrow isthmus of lower Central America was appreciated. Construction though had to wait until the appropriate technology had advanced and such a project began to appear feasible from the middle of the 19th century onwards. One of the main drivers was the rapid economic growth of the United States and its trade with the rest of the World, including both Europe and Asia. The canal which would be about 80 kilometres (50 miles) long would shorten the sea-going distance between New York and San Francisco from 22,500 km (14,000 miles) to 9,500 km (6,000 miles). In the 19th century Panama was a still a province of Columbia, ruled from Bogota. For the major powers of Britain, France, Spain (all three of which still had remnants of their colonies in the Western Hemisphere) and the United States, the future and control of the region provoked strong strategic rivalry. Panama itself had a sparse population and Columbia was weak and prone to recurring civil wars. Along with its own ambitions, each country was fearful of the significant commercial and military advantages that would accrue to the nation that would dominate the region.
While some ‘understandings’ were present between the powers, the most explicit posture was that of the United States with its self-declared Monroe doctrine of 1823. This policy began as a defensive mechanism whereby the US stated that it would not accept any future European re-colonisation of any part of the Americas; though ultimately it was used to justify exactly such activities by the United States itself. More specifically, as the idea of a canal was mooted, it became US policy that, if the canal was to be built, it would not be allowed to be under the control of any foreign power. As early as 1848, the Americans forced Columbia to grant it the right to land troops on the isthmus if free transit across it (by road, rail or future canal) was prevented. This was the only foreign treaty signed by the US in the 19th century and for almost the first time the country declared it had strategic concerns outside its continental borders. American interest was whetted by its acquisition of vast Pacific territories from Mexico after the 1848 war, which made the isthmus a key strategic artery for the country. The California gold rush accentuated this trend and an American financed railway across Panama was completed in 1855. Simultaneously, the US Navy made itself routinely present in the neighbouring seas.
Financial swindle
The European powers, while mindful and wary of the obvious growing strength of the United States, were not ready to relinquish their presence in the western hemisphere. Confident from their success in building the Suez canal, a private French company headed by De Lesseps came to an agreement with the Columbian authorities and began work on a canal in Panama (more or less along the exact path of the current canal) in 1880. There was strong American suspicion that this was another attempt by France to gain leverage in Central America after the debacle of its involvement in Mexico in the 1860s, while the US was pre-occupied by its own Civil War. The US made its displeasure known with the result that this private French effort could not be officially backed by the government in Paris. Nonetheless, there was a patriotic flavour to the French enterprise with the project being seen as a means to improve France’s standing after the defeat by Prussia in the war of 1870.
There were two main tasks for the De Lesseps organisation: the raising of capital to finance the project and the sourcing of adequate numbers of workers for the huge construction effort that would be required. To lessen the dependence on what were regarded as Jewish-dominated monetary institutions, small investors were encouraged to come forward to give the project a more ‘authentic’ Catholic French flavour. This could be regarded as an early type of ‘Peoples Capitalism’. From the outset, dubious methods were employed to raise finance and maintain investor confidence. Payments to newspaper editors and financial journalists for positive coverage, sweeteners to senior bank and stock exchange executives and payoffs to government deputies for a favourable attitude were prevalent and seen as necessary. This of course is still a practice that is widespread today by Western companies in undertakings such as the massive gas and oil pipeline projects in the former Soviet Union and in southern Asia.
The British Caribbean islands were identified as a promising source of labour, principally Jamaica owing to poor economic conditions on the island. Large numbers of workers were shipped from there to Panama. In fact initially so many Jamaicans left the island that plantation interests there lobbied to stop the outflow as it was driving up the price of labour. In Panama, the workers had to contend with extremely difficult and dangerous conditions; the diseases of malaria, yellow fever, pneumonia, dysentery, typhoid and tuberculosis were all present in addition to the hazards of physical exhaustion and frequent industrial accidents. The workers toiled outdoors in one of the wettest places on Earth with poor food and rudimentary accommodation. They were completely open to exploitation as there was no labour law in Panama except ‘the freedom to work’.
By
the late 1880s the French effort had run into serious problems. They
had grossly underestimated the scale of excavation involved and
persisted with an unrealistic sea level plan for the canal. The
project was plagued by mismanagement, extravagance and corruption
amongst the contractors and senior officials with huge profits being
taken by some engineering firms and financial middlemen. In addition,
periodic civil unrest in the province of Panama and a weak police
force hindered any meaningful advance. The high death rate amongst
the workforce (approximately 20,000 died in the eight year period)
caused demoralisation, led to a high turnover of workers and thus
pushed up the wage rates. The scale of the deaths amongst the West
Indians, combined with some high profile fatalities amongst the
senior French administrators and their families, caused doubts about
the canal’s prospects for success. Hence
raising money in Paris for the scheme became more and more expensive.
The project eventually collapsed in 1889 with most investors losing
their savings. A bitter atmosphere of recriminations developed in
France with professional anti-Semites, in the years just prior to the
Dreyfus case, using the collapse to make allegations about the role
of some Jewish financiers. The canal company was accused (and indeed
was guilty) of misleading investors by false announcements of
progress. An enquiry, driven by angry shareholders, was held to
determine whether embezzlement and corruption had occurred. The fact
that 20,000 people had lost their lives, as opposed to their savings,
was not regarded as a cause for scandal.
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