CHAPTER I

HISTORICAL REVIEW

THE conquest of Constantinople by the Ottoman Turks in 1453 completed their capture of the trade routes between Western Europe and the East Indies. The East Indian trade had long been a source of great enrichment to European merchants. It was especially suited to the restricted carrying power of those times, the products (such as pepper) being small in bulk and high in price. The maritime nations therefore sought sea routes to the Indies in pursuit of this trade, and it was Columbus himself, in his efforts to open up a western route to the Indies and China, who discovered the Bay of Limon in 1497. He and his successors sought for a strait or channel which should open the way to the East Indies. Cortes sought for the strait in Mexico. Others sought as far north as the St. Lawrence, which was supposed to afford a route to China. No opening could, however, be found nearer to the Equator than the Straits of Magellan (1520), and the hopes of a short route westward to the Indies were disappointed. An Isthmian canal was talked of even in the days of Charles V. of Spain to open the route to the East Indies. In those days of small vessels, the river channels would have served for a great part of the traverse, so that the scheme was not so wild as it may seem.

The purpose, therefore, of the first proposal for piercing the Isthmus was for shortening the distance to the Indies and China. The discovery of the nearer riches of Peru, however, illustrated the fact that the Isthmian barrier has its uses as well as its inconveniences. Porto Bello and Panama were fortified, ships were launched from the latter port for the Peruvian traffic, the treasure was carried across the Isthmus under escort and shipped to Spain. The treasure-ships, indeed, were liable to attack on the Caribbean, but the Isthmian barrier proved an important safeguard to the Peruvian possessions of Spain.

In the next century, the seventeenth, the importance of the Isthmian land route declined, owing to the fact that Spain was no longer able to secure even moderate safety for her ships on the Caribbean. In the present days, when the importance of naval power is so well understood, it is hardly necessary to enlarge upon the significance of this fact, and its bearing upon the problems presented by the Panama route to-day. The project of an Isthmian canal for the purpose of trade between Europe and Asia continued to be agitated, but the inducements were inadequate to overcome the obstacles.

In the middle of the nineteenth century, for the second time, it was the need of improved communication between the east and west of the American Continent which provided a sufficient inducement to improve the Isthmian route.

At this time the Government of the United States were much occupied with projects of trans-Isthmian communication, particularly by canal, not with a view to Transpacific commerce, but with the object of improved communication between the east and west of their own territory.

In 1846 a treaty was made with the State of New Grenada (afterwards Colombia) with a view to providing facilities for transport in the war between the United States and Mexico. In its most important provision it is similar to the present treaty between the United States and the new Republic of Panama, viz., the United States guarantee the sovereignty of the State in question over the Isthmian territory. Hence the Isthmus was thus early constituted a Protectorate of the United States.

But at this time it was generally thought that Lake Nicaragua provided the best route for a trans-Isthmian canal.

The Pacific seaboard having recently acquired importance to the United States, the Government desired to further the canal project on that account. The only practicable Atlantic terminal of a Nicaraguan canal lay within territory over which Great Britain had long exercised control. Further, the Pacific Coast of Canada had recently acquired importance to the eastern provinces and to the home country, and access thereto was extremely difficult. The outcome of these circumstances was the conclusion in 1850 of the celebrated Clayton-Bulwer treaty between the United States and Great Britain, which was duly ratified by Congress. By this instrument it was agreed that neither Government should ever obtain or maintain for itself any exclusive control of any canal connecting the Atlantic and Pacific Oceans, nor erect fortifications commanding the same.

This treaty remained in force until 1901, and I shall have to refer to it again. Meanwhile the great rush of gold-seekers to California had supplied the needful stimulus to a scheme, already mooted, of an Isthmian railway terminating at Panama. In spite of the enormous difficulties entailed by the pestilential climate, the undertaking was completed in 1855. This achievement, originating in New York, was the work of W.H. Aspinwall, Henry Chauncey, and John L. Stephens.

It was undertaken independently of any canal scheme, but it exercised a profound effect upon the fate of subsequent schemes. The facilities which the railway afforded determined de Lesseps's choice of route, and de Lesseps ploughed so deeply that those who came after him have found themselves constrained to follow his furrow. The "New World" is in fact no longer new, and its statesmen now have to solve problems presenting historical as well as physical factors.

The American Civil War interrupted the prosecution of canal schemes, but the examination of routes was recommenced by the United States Government in 1866, a Commission finally reporting in 1876[1] in favour of the Nicaraguan route.

[1] The report, however, was not published until 1879.

In 1869 the Suez Canal was opened for traffic. Immediately, the route by Panama ceased to be the shortest from Europe to any part of the East Indies. The importance of that route to Asia was thus greatly reduced as far as Europe was concerned, but, relatively, its importance to the United States was increased, for the Suez Canal does not shorten the Asiatic voyage from New York, Boston, or New Orleans to the same extent as it does for European ports.

The Old World had been severed into halves by the enterprise of one man, and that man no potentate, but merely one possessing the gift of persuasion. By his achievement, which was immediately crowned by financial success, Ferdinand de Lesseps suddenly became possessed of powers such as are not always at the disposal of the Governments even of great countries. He decided himself to sever the barrier between the Atlantic and Pacific Oceans, convened a "Congress" at Paris in 1879, and inaugurated in 1881 the _Compagnie Universelle du Canal Inter-océanique de Panama_. He had decided to adopt the Panama route on account of the facilities afforded by the railway. The money was mainly subscribed in France. The American railway company was bought out at the enormous price of $25,500,000, and in the course of the next eight years a large part of the work required for a tide-level canal was well executed on sound lines by the genius of the French, who are excelled by none in the arts of the civil engineer. The exact proportion which the French work bears to that since accomplished by the American Government will be shown later. The engineers now on the Isthmus are full of praise for the work of the French engineers, and their wonder daily grows both at its quantity and its ingenuity. It is only those at a distance, or ill-informed, who have belittled these achievements. Unfortunately, the French engineers were not properly supported. De Lesseps, if he were ever a practical man, had certainly ceased to be so since his first great success. A practical man is one who counts the cost of everything he is about to do. De Lesseps no longer counted cost. He had become as one believing in his star. His actions remind us of those of some of the great conquerors whose early successes have led them to undertake impossible campaigns. The question has been discussed if any human character can stand more than a certain share of success and yet retain a sound judgment. Certainly the character of de Lesseps was not equal to the strain. The expenditure was awful--$300,000,000 in eight years, _i.e._, more than three times the sum for which the Suez Canal was constructed. The Company went into liquidation in 1889. Much had been embezzled. Much, it is said, had been spent in purchasing the silence of voices which would otherwise have been raised against a Europeanised canal.

The affairs of the Company were taken over by the New Panama Canal Company, who continued to administer the railway, and, with small means, did excellent work for the next twelve years in keeping the machinery and the works from deterioration, in excavations at the summit, and above all in extending the scientific examination of the country so as to obtain much-needed data for the construction of the high-level canal which was now proposed in place of de Lesseps's project of a tide-level waterway.

In 1869 President Grant, in a message to Congress, had recommended the construction of an Isthmian canal under the sole control of the United States, and popular opinion since that time, if not before, has always strongly held that if a canal be made it should be exclusively under that control. It was not the least of de Lesseps's imprudences that he proceeded with his project in spite of warnings on this matter. In 1898 an event occurred which made the American nation feel that an Isthmian canal was necessary, and that it must be under their exclusive control. At the outset of the war with Spain, the _Oregon_, one of the best of America's small fleet of battleships (we write of ten years since), was lying in the Pacific. She had to steam more than 13,000 miles to reach Key West, and the whole nation was in a state of nervous tension for many weeks pending her junction with the main fleet.

It seemed at the time that the Panama route could hardly be obtained for a canal under purely American control, and a further investigation of the Nicaraguan route was ordered--that route which had been preferred by the American experts before de Lesseps intervened. The New Panama Canal Company had by this time brought their labours to the point where it seemed practicable to appeal to the investing public of the world for funds to construct a high-level Panama canal. To do this in the face of a Nicaraguan canal, undertaken as a national affair by the United States, would have been hopeless: they therefore laid their detailed plans before President McKinley. A Commission was accordingly appointed by Congress to inquire into the best route for an Isthmian canal "under the control, management, and ownership of the United States."[2] The report was presented to Congress on December 4, 1901, rather more than two years later, and is a document of great historical and scientific interest. The quarto volume of 688 pages is accompanied by a portfolio of 86 maps, plans, and panoramic views. The last of these, showing the mountainous skyline of the Isthmus east of Colon, with altitudes marked, illustrates in a striking manner the conclusion of the Commission that the San Blas route, or any route east of Colon, would involve a ship tunnel. These routes are dismissed as impracticable on account of the altitude of the divide. The Nicaraguan and Panamanian are found to be the only practicable routes, and the details of both are fully discussed. The high-level canal was preferred by the Commission to the sea-level at Panama, and on the Nicaraguan route only a high-level canal is possible, so that in this respect the two routes were considered to be on a par.

[2] Act of Congress approved by President, March 3, 1899, Commission appointed June 10.

The relative advantages of the two routes are carefully set out in the report, the general tenor of which is favourable to that by Panama. Nevertheless, the Commission recommend that the Nicaraguan route be adopted, on account of the excessive valuation which, they state, was placed by the New Panama Canal Company on their works and property. The value of these, including the Panama Railway, was estimated by the Commission at $40,000,000. The New Panama Canal Company, learning that the Commission had thus reported, cabled an offer to sell at this price, and the Commission accordingly sent in a supplementary report in favour of the Panama route. By June 28, 1902, the "Spooner" Act had been passed and ratified, authorising the President to purchase the canal works at this price, and to acquire from the Republic of Colombia the necessary rights for the control of a Panama canal, then to be constructed; but in the event of his not being able to acquire such control, then to proceed with the Nicaraguan project.

Meanwhile, by the Hay-Pauncefote Treaty, ratified by the Senate December 16, 1901, Great Britain had waived the right of joint control of any Isthmian canal which she had held since the ratification of the Clayton-Bulwer Treaty in 1850. It remained therefore only to negotiate a treaty with Colombia. The treaty of 1846 with New Grenada afforded a precedent as far as the question of control was concerned, and the negotiations appear to have been related mainly to the question of price. A treaty was negotiated by officials of the two Republics, by which the United States was to pay a sum of $10,000,000 to Colombia, and after nine years an annual sum of $100,000. This was confirmed by Congress but rejected by the Colombian Senate, and negotiations came to an end with the adjournment of that body, October 31, 1903.

Three days later the Province of Panama renounced its allegiance to Colombia.

Another three days, and the independence of the New Republic was recognised and guaranteed by the United States.

In less than a fortnight afterwards a treaty was signed at Washington by which the United States acquired complete ownership and control of the proposed canal for the sum of $10,000,000 and an annual payment of $250,000, to commence nine years afterwards. This treaty was ratified at Panama December 2, 1903, and by the United States Senate February 23, 1904.

One significant point must be mentioned with reference to the Panamanian revolution. The inability of Colombia to make an effective effort to assert its power on the Isthmus was due to naval weakness in the absence of communication by land. No army could march through the tropical forests which still isolate the Canal Zone from South America, and control at Colon and Panama still depends upon sea power.

Thus, at last, the United States owns and controls its Canal Zone. We will now state precisely the position in which that nation stands in reference to this matter, and then we may leave the work of the diplomats to consider the task of the engineers.

_The National Status of the Canal._

The position which will be held by the United States in relation to other Powers is foreshown in the Hay-Pauncefote treaty with Great Britain and in Article XXIII. of the treaty with Panama. The Hay-Pauncefote treaty is in supersession of the Clayton-Bulwer treaty. The latter stipulated that no fortifications should be erected controlling the Canal. In the Hay-Pauncefote treaty this clause is omitted. On the other hand, it is stated in Article III., § 2, that "the Canal shall never be blockaded, nor shall any right of war be exercised nor any act of hostility be committed within it." Hence, the reader may have remained in doubt whether the United States Government had intended to reserve to themselves the right to fortify. However, the terms of the subsequent treaty with the Republic of Panama answer this question, for after stating in Article XVIII. that the Canal shall be opened in accordance with all the stipulations of the treaty of 1901 with Great Britain, Article XXIII. states that "the United States shall have the right to establish fortifications."

As a matter of fact, such fortifications are to be constructed, and the plan of the Canal has been adjusted to the requirements of military defence.

There have been, among public men in the United States, two schools of thought on the vital question of the defence of the Canal. One school has held that the best safeguard was to be obtained by leaving the Canal unfortified (as is the case with the Suez Canal), and by the establishment of a general Convention, by which all the Powers, including the United States, should bind themselves to respect the neutrality of the Canal and leave it inviolate. Other public men preferred forts, guardships, and a garrison. The general public in the United States, on the other hand, appears to have unanimously held that an international guarantee would be ineffectual and, moreover, derogatory. As we have seen, the popular view has prevailed, but traces of the antagonistic and incompatible notion of internationalisation remain in the language of the treaties. This is not surprising when we recollect that the first draft of the Hay-Pauncefote treaty was drawn up with a view to neutralisation, according to the precedents afforded by the Suez Canal. Thus we find that Article III. commences with the words: "The United States adopts as the basis of the neutralisation of the Canal ..."; and in Article XVIII. of the treaty with Panama we find: "The Canal when constructed, and the entrances thereto, shall be neutral in perpetuity...."

What then are we to understand by the term "neutral" as applied to the Panama Canal in war time? I suppose the meaning to be that if there be a war to which the United States is not a party, the Canal will be used by belligerents in exactly the same way as was the Suez Canal, _e.g._, in the Russo-Japanese War, and that the Government of the United States has pledged itself to see that such neutrality is preserved. But if there be a war in which the United States is a party, the circumstances of fortification and operation by the United States in fact render it impossible for the other belligerent to use the Canal, and are intended[3] to have that effect. This being so, the United States is preparing to defend the Canal from attack. Thus it is important to the proper understanding of the undertaking on which the United States Government has embarked that we should clearly realise that the Canal is only neutral in a restricted sense.

The commercial status of the Canal, however, is similar to that of Suez, in that by Article III., § 1, of the Hay-Pauncefote treaty, "The Canal shall be free and open[4] to the vessels ... of all nations ... on terms of entire equality, so that there shall be no discrimination against any such nation, or its citizens or subjects, in respect of the conditions or charges of traffic, or otherwise."

[3] See Report of Canal Commission, 1897, p. 168.

[4] In Article XVIII. of the treaty with Panama this clause is cited, with the addition "and the entrances to the Canal."