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Rousseau arrived on January 30, 1886. With him, to relieve Bunau Varilla, was a new Directeur Général, thirty-five-year-old Léon Boyer, along with his own handpicked cadre of sixty engineers. Boyer was well known in France, having dabbled in politics, and also had a reputation as a brilliant civil engineer. He was a very good catch for the Company. Also on the boat was Charles de Lesseps, in theory writing a report of his own, but in reality keeping an eye on Rousseau and preparing for the arrival of his father.

Rousseau was accompanied by two other government-appointed experts. For two and a half weeks they toured the works. In the meantime, flags and bunting were dusted off, streets cleaned, speeches and pageants rehearsed, and machinery, whether operative or not, whitewashed. Le Grand Français, the “Presiding Genius of the Nineteenth Century,” was about to descend once more on Panama.

On January 31, 1886, John Bigelow learned that he had been invited, as a representative of the New York Chamber of Commerce, to accompany Ferdinand de Lesseps on his forthcoming visit to the works at Panama. Bigelow, lawyer, intellectual, former newspaper proprietor, and U.S. ambassador to France, had been at the lavish dinner for de Lesseps at Delmonico's back in March 1881. He was unsure whether or not to accept the invitation, and consulted friends and family. The first advice he heard was to have nothing to do with it, “that it was probably a scheme to use my name as an ex-Minister to France to bolster the stock of a chimerical enterprise.” But then another friend urged him to “embrace any opportunity of associating my name with such a magnificent enterprise.” Bigelow asked whether he could take his daughter Grace, for “her company and assistance.” The reply came back in the positive—and all would be at the Company's expense, including “a satisfactory remuneration” for himself. “This point, I confess, weakened my scruples about going,” he wrote in his private diary.

He accepted, but then spent a week worrying if he had made the right decision. Some big names, he learned, had said no. He was also worried about the illness on the Isthmus, and checked with a friend on the political situation to be reassured that the U.S. Navy was there in force.

On February 1 o he left with Grace on the steamer Colón, together with a journalist and other representatives from U.S. chambers of commerce. A party had already left from France. Throughout their voyage, de Lesseps kept the fifty or so businessmen, engineers, and diplomats entertained with “witty lectures” and stories of his time in Egypt. “He is indefatigable and inexhaustible!” exclaimed Gustave de Molinari, an accompanying journalist from the Paris Economiste. For the benefit of his readers in France, de Molinari spelled out the huge responsibility resting on the shoulders of Le Grand Français: “The success of the Panama business does not only interest the investors in the Company, it interests all of France. We live in a time where the power and the vitality of people is measured not only by the deployment of their military might and the success of their weapons, but also by their spirit of enterprise, the grandeur and utility of their works. If the French construction of the Panama Canal were to fail, the Americans (who are well disposed towards the idea) would take it upon themselves to buy out the project that we have given up on. As a result, with a lack of confidence in ourselves, the prestige of France would suffer for a long time in both countries. It would be like losing a battle. Let's hope that the battle is won!”

The party from France reached Colón on February 17, 1886, just as Armand Rousseau was preparing to leave, his inspection completed. As before, de Lesseps, now eighty-one, had come at the best time of year and the weather was bright and dry. But Colón was still a wreck. A few houses had been rebuilt, and there were huge improvised market stalls. But in between, writes de Molinari, were “vast open spaces left by the fire where stagnant rainwater, blackened beams, corrugated tin twisted by the heat, broken bottles and plates accumulate.” Mud and rubbish were everywhere, infested with toads, rats, and snakes, and “a myriad of mosquitoes breed in these low lying areas and spread through the mostly windowless houses and seek out their prey.”

John Bigelow's party arrived the next day, after twenty uncomfortable days at sea, and in the evening met de Lesseps for dinner on the USS Tennessee anchored in the bay. Grace Bigelow was seated on de Lesseps's left. “I was pleased to find that Grace and the old Baron got on admirably together,” wrote John Bigelow in his diary. “Went to bed about eleven but was too heated and excited by the events of the day and evening to sleep well.”

For the next three days there was an exhausting schedule of visits to the nearby works and workshops, and trips on boats along the river and the completed section of the canal. Bigelow was suffering in the heat, changing his clothes twice a day, was horrified by the price of clean water and the filthy latrines, but was impressed with much of what he saw. At one chantier, he noted how the black laborers gave de Lesseps a warm reception: “When we left they gave us repeated cheers which the old Baron returned with bows.” On board one British-built dredge, he noted approvingly its “immense power.” New, even bigger machines were just around the corner, the visitors were constantly told.

Bigelow struck up a close and lasting friendship with Bunau-Varilla and also got on well with Charles de Lesseps, whom he called a “very clear headed and capable man.” One evening, however, he was shocked to hear Charles confidentially and sadly prophesy that “two or three years hence the United States would follow the example of England in the case of the Suez Canal, purchase an interest in [the Panama Canal] and take a share in its management.” In his diary Bigelow also noted private conversations he had with fellow Americans based on the Isthmus. Several who worked for the steamship companies told him that the Company would never finish the canal. Another told him that for the past nine years the corruption on the canal and on the PRR had been “shameless and that the Americans out there on the PRR rather excelled the French on the Canal.”

After three days, the party headed across the Isthmus. For the arrival of de Lesseps in Panama City a huge pageant had been arranged. Everywhere de Lesseps was acclaimed on his passage round the town by “Vivas,” shouts of “Long life the Genius of the Nineteenth Century; long live the Man of Progress, the Grand old Frenchman.” Celebrations continued into the night with a torch-lit procession and, reported an exhausted de Molinari, “banquets, dancing, lights, fireworks and who knows what else …”

The party stayed for a further week, exploring the Pacific side of the works by day and dancing and banqueting by night. As before de Lesseps was “indefatigable,” restoring confidence everywhere he went. “His stay is one continued fête…” wrote the new British consul James Sadler back to London. Had it been up to the people of Panama, he said, the lottery loan would be assured. De Lesseps confidently predicted that the year ahead would see 12 million cubic meters excavated; the next, 1887, would achieve twice that; and by 1888 there would be a monthly rate that would produce 36 million cubic meters for the year. With the same rate carried into the following year, he said, the sea-level canal would be completed by July 1889.

As the visitors prepared to return home, with no illness suffered, almost everyone declared themselves highly impressed. “I am delighted to say that our expectations were exceeded,” de Molinari concluded. “Even if the piercing of the Isthmus presents enormous difficulties, the effort made to conquer them is in proportion. Never has such a colossal work been undertaken, never have capital and science so united to deploy such a powerful machine to bring to an end the resistance of nature.”

John Bigelow was also overwhelmed by the grandeur of the project's ambition and size, writing that it had “no parallel among private enterprises in all history.” He would remain a “convert” to the cause of Panama, infected with its fever, for the rest of his life. But in his widely read report he also repeated many of the criticisms of Kim-ball—that machinery was idle or discarded due to lack of leadership or system; that contractors were unreliable and corrupt; the challenges of the Chagres and the deep excavation in the Cut were not being met; that information from the company was “often conflicting and rarely more than approximative.”

The fact that it was the dry season had not prevented him from noticing the “insalubrity” of the Isthmus, particularly in the swamp area at the Atlantic end. “You have a climate,” he wrote, “where it may, without exaggeration, be said that—’Life dies and death lives.’” Although, he said, “human life is about the cheapest article to be purchased on the Isthmus,” wages had steadily risen to keep attracting workers and mechanics to Panama, to a minimum of $1.75 silver a day, rising for skilled work to five times that.

Like Kimball, Bigelow believed that the fate of the canal would be decided by its finances. But he also agreed that “too large a proportion of its cost has already been incurred to make a retreat as good polity as an advance.” In the meantime, the “people of small means” who held the Panama stock would stick by de Lesseps, Bigelow believed, because success “would rank among the half dozen largest contributions ever made to the permanent glory of France.”

Remarkably, he also anticipated what would be the American agenda in the next decade, a time that would see a radical change in the international balance of power and a transformation in U.S. foreign policy. An open waterway would, Bigelow suggested, “secure to the United States, forever, the incontestable advantage of position in the impending contest of the nations for the supremacy of the seas.” But there was a serious caveat: until the money was secured, and, crucially, the cost of the debt ascertained, it was impossible to say when and on what financial or political terms the work would be finished. “And, for aught I see, this uncertainty must last until near the completion of the work,” he concluded, “for nowhere in the world is the unexpected more certain to happen than on such a work at Panama. It is destined to be, from first to last, experimental…”

hile the Company, indeed, the whole of France, awaited the verdict of Armand Rousseau, de Lesseps tried a new tactic to raise money— selling bonds on the bourse rather than by private subscription. The experiment was not a success, with less than 40 percent of the issue sold, even at an interest rate approaching 7 percent. The decision on the lottery was now more important than ever.

Rousseau's report was submitted at the end of April 1886 to the new minister of public works, Charles Baïhaut. “I consider a cut through the isthmus … is a feasible undertaking,” Armand Rousseau wrote, “and that it has now progressed so far that its abandonment would be unthinkable,” a disaster not just for the shareholders, who were almost all French, but also “for French influence throughout America.” If the Company failed, it would, he predicted, certainly be taken up by a foreign company, wanting to exploit the enormous sacrifices and the progress so far made. “I believe that the government should … assist it,” he decreed. But before sending the lottery bill to the Chamber of Deputies, he warned, the government would have to content themselves that the Company was addressing the project's “certain grave technical defects.” “Important reductions and simplifications” were needed if the project was to be completed in anything like the time envisaged.

What he meant, though felt it was outside his remit to say, was that the sea-level plan was unworkable and had to be altered before it was too late. But, in combination with Rousseau's lofty ambiguity, others were now spelling it out. Jacquet, another government engineer who had accompanied de Lesseps to Panama, reported to the Cabinet that the sea-level plan was categorically impossible. It seemed likely that the bill would never make it to the Chamber unless this issue was resolved. On the Isthmus, too, in spite of continuing strong excavation figures for the early months of the year, Bunau-Varilla and others were exploring alternative visions to de Lesseps's “Ocean Bosporus.” Léon Boyer, the new Directeur Général, took only a month to make up his mind that a canal à niveau was simply unachievable with the money and time at his disposal. Now, he urged de Lesseps, only the rapid adoption of a lock-canal plan could save the project.

ut de Lesseps was not to be moved. He reluctantly agreed to certain time- or money-saving modifications but on the key issue—the conversion to a lock canal—he refused to comply with the wishes of the government inspectors and the urgent appeals of his own senior engineers on the spot. The promise of an open, sea-level waterway, and its superior operating profits, had been the whole reason for choosing Panama in the first place. De Lesseps had from the very start nailed his colors to the mast by so energetically selling to the French public the simplicity and beauty of the idea of a canal à niveau. It would have been an embarrassing reversal if he gave in to the pressure.

By an unhappy coincidence, fever at a crucial moment robbed de Lesseps of two experts who might have changed his mind. In May, Boyer was suddenly prostrate, then dead. It was, the British consul reported, a particularly severe case of yellow fever. Bunau-Varilla, too, had “been awakened suddenly” one morning soon after the end of de Lesseps's visit, by “a violent vibration of my bed which I thought was a seismic movement.” It was “the shakes,” followed by a dose of fever, and before the end of April he had been invalided back to France. But even if the pair had been fit, it is uncertain whether de Lesseps would have listened to them. He didn't work by committee. At Suez, everyone had told him he was heading for ruin, but he had confounded his critics by never giving up. Panama, he now at last admitted, had proved many times more difficult than Suez. Yet to show weakness, he calculated, would surely be fatal to confidence.

The first reaction of the French Cabinet to the Rousseau report was to seek to delay making a decision. Then, to everyone's surprise, Minister of Works Charles Baïhaut drafted a bill in favor of the application and presented it to the Chamber. The Chamber appointed a committee, which heard from Rousseau, de Lesseps, and others. But still, as time ticked away for the effort on the Isthmus, nobody wanted to make a decision. On July 8, the committee adjourned for the summer undecided. In the meantime, they asked, could they have a look at the Company's books and contracts?

De Lesseps was incensed. He simply could not wait that long for new money, nor risk the final verdict going against him. And to open up the books would be a clear admission of guilt. It was unthinkable. The following day he withdrew the application, telling shareholders, “They are trying to shelve me—I refuse to be shelved … I work on, but not alone, assuredly, but with 350,000 Frenchmen sharing my patriotic confidence.”

The last chance to save the French canal had slipped away, through a combination of the dithering of the politicians and de Lesseps's stubborn refusal to give up the sacred sea-level plan. Meanwhile on the Isthmus, of the sixty handpicked engineers Boyer had brought with him, nearly all were sick, demoralized, or dead. Since the advent of the rainy season, more than 80 percent of the chief officials of the Company were out through sickness. Of thirty Italians who had arrived together twelve months earlier, only five now survived.

S. W. Plume was an American railway man, a veteran of South American projects. In 1886, after two years on the Isthmus, he was in charge of a gang of about a hundred workers, replacing rotten ties on the railroad. “Every month or two I would lose a man, perhaps two men,” he told a U.S. Senate committee some years later. “I will explain it to you. If a man gets wet there with the rain he is sure to be sick the next morning… I never saw such a climate in all my life, and I have worked in the rice fields of South Carolina, and gracious only knows that is bad enough.”

The streets now saw a constant stream of funeral processions, and trains ran all the time to the cemetery at Monkey Hill. “When I first went there,” said Plume, “we used to run one train—perhaps it would be a car or two boxcars—in the morning out of Colón, to Monkey Hill.” But by 1886, it was “bury, bury, bury, running two, three, and four trains a day with dead Jamaican niggers all the time. I never saw anything like it. It did not make any difference whether they were black or white. They died like animals.” In response, wrote the “occasional correspondent” of the New York Tribune, the Company's senior employees showed “insane recklessness” and took up a “habit of life …such as would result in wide-spread disease in any hot climate, even the most salubrious.” The drinking of alcohol would start at breakfast and would continue all day. In the evening, when it was too hot to read or play cards, it would be more of the same.

n spite of all this, the Company kept up a monthly excavation rate of a million cubic meters through mid-1886, according to Bunau-Varilla, who returned, after convalescence and now immune to yellow fever, late in the year. In the circumstances this was impressive, but anyone who wanted to could see that this was still not nearly enough to complete a sea-level canal within reasonable time. In the Culebra Cut, which had to be dug in places to a depth of over 300 feet, only an average of 12 feet had been removed, a paltry rate of just three feet a year. The Anglo-Dutch Company had been taken on in December 1884 and contracted to remove from Culebra 12 million cubic meters in four years, but after eighteen months had managed less than 1 million. As Bunau-Varilla wrote, they had proved to be “a dismal failure.” “During the dry season,” he explained, “the works seemed to justify the best hopes. As soon as the first rains began, the dumps began to slide, the tracks were cut, and general subsiding of the ground inside the cut paralysed any movement of trains, and often overthrew the excavating machines.”

They were dismissed and a new contract was awarded to Artigue et Sonderegger. The new contractor's guiding light was Bunau-Varilla, whose brother was also high up in the same company. The new contract was part of a wider reorganization. One outcome of de Lesseps's visit was that in mid-1886 the job of digging the canal was given to six large firms rather than the host of small contractors. This certainly helped reduce the suffocating bureaucracy of the Company and avoid the confusion and waste symptomatic of the “small contractors” period. But it was expensive. Numerous firms had to be paid off, and the new work was inevitably contracted at a higher rate. Huerne, Slaven was kept on, with an even better deal. Artigue et Sonderegger's remuneration was so lavish that it led to the resignation of the Company's secretary in Paris.

There, the Company directors still hoped that the French government would rescue the project. After all, wasn't Charles Baïhaut, the minister for works, telling anyone who would listen that he believed in the canal, whatever the Rousseau report had said? In the meantime, the Company directors issued more bonds with some success, but at a ruinously high interest rate.

t last de Lesseps began to give way. In January 1887, he ordered his technical advisory committee in Paris to meet to consider the possibility of a lock canal. But he remained insistent on the original vision of an open waterway, demanding that all projects that construed permanent locks be excluded. Again, there was a delay. A subcommission was appointed which did not report until the autumn. The result was indecision on the Isthmus, as the latest U.S. Navy inspector, Lieutenant Charles Rogers, reported after his visit in March 1887. The progress of the previous year had, he said, been “creditable,” virtually meeting Ferdinand de Lesseps's target of 12 million cubic meters. But he was doubtful whether the rate of excavation could be doubled in 1887, as planned. Moreover, he calculated that the Company had only enough money to continue for another three and a half months.

Nonetheless, Rogers, as many before him, was overwhelmingly impressed with the ambition of the scheme and the dedication of the project's leaders on the Isthmus. “The most bitter opponents were our own countrymen and a few Englishmen or former employees of the canal who had been discharged or had some other grievance against the company,” he remarked at the end of his report. Such types “were prone to exaggerated statements … or else malice.” “The contractors are young, zealous, and energetic men,” said Rogers, “the engineers are… both clever and capable, and no one can appreciate more than these men the difficulties that lie in their path. Instead of censure and detraction, they deserve the highest praise and respect… they wish well to an enterprise fraught with so much good for the human race, and they are doing their utmost under the circumstances to promote its success.”

Not all the Frenchmen on the Isthmus, of course, were quite so high-minded. At thirty-seven, Paul Gauguin had gone from riches to rags. His job as a broker had not survived the downturn of 1882, and he had since ruined his finances and his health through his taste for absinthe. In 1886, his long-suffering Dutch wife gave birth to their fifth child, and, with the situation desperate, he called on his wealthy sister, Marie, for help. She agreed to appeal to her husband, Juan N. Uribe, a rich Peruvian businessman who had offices and outlets all over and in particular, of late, in Panama. In the country where France was digging the canal, money was being made by the fistful and Uribe's fortune, it seemed, was benefiting from the project. Gauguin learned that Uribe was setting up a brokerage office and bank and needed someone who knew finance and could be trusted to replace him when he took his holidays in Europe.

In March 1887, Gauguin resolved to try his luck on the Isthmus, writing to his wife, “I will set off for America. I cannot continue to live here swamped by debts, a stultifying and lacklustre existence.” The plan was to settle in Panama, in the benign glow of the inspiring great work, and send for his family once he was established.

He arrived at Colón at the end of April, together with his friend, fellow artist Charles Laval. They were unimpressed with the town where, it seems, new hovels had sprung up since the fire, but nothing had been cleared away. In Panama City there was further disappointment. His brother-in-law was not running a bank but a general store, and not a very grand one either. There was certainly no work to be had for Gauguin. Finding that the price of land in Panama had so risen that it was unfeasible for him to settle there, Gauguin headed for the island of Taboga, which he hoped to find “practically uninhabited, free and fertile… the fish and fruit can be had for nothing.” “I'm taking my paints and brushes,” he wrote to his wife, “and will, living like a native, immerse myself far from mankind.”

But he was in for another disappointment. Taboga had become something of a tourist trap. It was the favored location for picnickers and day-trippers, and was dominated by the large sanatorium, to which well-favored Company employees would retreat to be free, for a while, of the stultifying heat of the mainland. Well-organized guided tours crisscrossed the island. The “native villages” had long ago wised up, and were now more than a little sham.

Gauguin returned to Panama, but the hotels were expensive, and his money was now running out. His friend Laval got work painting portraits of some of the better-off Company officials. Gauguin declined to do this, instead getting himself taken on as a laborer on the canal works. There he found that rumors were rife of the impending bankruptcy of the Company, and the reality of the job was far from the noble project he had envisaged. Gauguin was set to work with a pickax, chipping out holes for the dynamiters who would follow him. “I have to dig from five-thirty in the morning to six in the evening under tropical sun and rain,” he wrote to his wife. “At night I am devoured by mosquitoes.” The death toll wasn't that bad, he added sardonically, “only 9 out of 12 of the negroes die while for the rest it is a mere half.”

Gauguin resolved to work only as long as it took to earn the fare off the Isthmus. But after a couple of weeks he fell foul of the new law-and-order regime of General Vila, who was back in Panama as Núñez's strongman, determined to stamp out dissent and resistance to firm rule from Bogotá. Gauguin was arrested for urinating in a street, which, he protested, was an open sewer anyway. He was imprisoned and then fined. Eventually back at work, he had just saved enough from his pay of 600 francs a month for the fare to Martinique, when he was laid off, along with a raft of other workers, on orders from France.

Together with Laval, Gauguin left for Martinique on June 8. On their arrival Laval came down with a fever, probably malaria. During one cycle of the disease, he became so depressed that Gauguin had to prevent him from committing suicide. Soon after, Gauguin, too, was ill. “During my stay in Colón,” he wrote to his wife, “I was poisoned by the malarious swamps of the canal and I had just enough strength to hold out on the journey, but soon as I reached Martinique I collapsed. In short, for the last month I have been with dysentery and marsh fever. At this moment my body is a skeleton and I can hardly whisper; after being so low I expected to die every night…” His stomach cramps and continued weight loss were probably due to amoebic dysentery, which had by then developed into what would today be diagnosed as hepatitis or an abscess of the liver.

The sacking of Gauguin was part of a general freezing of the Company's activities. It was more than indecision about the issue of locks. Money had pretty much run out, as Rogers had predicted back in March. Nothing more could be done until the outcome was known of de Lesseps's latest attempt to float a stock issue.

This time only just over half of the stocks were taken up. It was hardly enough to paper over the cracks. And again the money was ruinously expensive. By late autumn the Company's finances were once more in a perilous state, and speculators had forced the value of the original canal shares to a new low on the bourse.

But at last, in October, a full two and a half years after the Rousseau report and Léon Boyer's advice had been received, Ferdinand de Lesseps gave in to pressure to redirect the works toward the completion of a lock canal. What de Lesseps's commission recommended was based on experience on the Isthmus. Following the success of the excavation “in the wet” at Mindi, after underwater blasting, several contractors had been experimenting with creating artificial lagoons along the line of the canal, and then assembling and launching waterborne dredges. These machines filled barges, which were then towed underneath a fixed-ladder excavator. This emptied them and lifted the spoil onto waiting trains or piped it out of the way. Thus water, rather than rail—vulnerable to rain and slides—would be used to carry out most of the moving of spoil. This led on to the new scheme. If pools could be created all along the route, separated by locks, then underwater excavation could continue with the canal open to traffic. As the various levels were lowered by dredging, the locks— five on either side of the Divide—could be gradually removed until the entire canal was at sea level. In the meantime, a working, and paying, lock canal would have been created, it was estimated, by 1891, but, crucially, only as a means to the completion of what Bunau-Varilla called, “the perfect, the final, project” of a canal à niveau.

Characteristically, Bunau-Varilla claims the entire credit for this plan. In fact, he had, in early 1887, built dams at either end of the Cut and experimented with excavating “in the wet.” Whoever's idea it was, its strength did not lie in its engineering aspect alone. Indeed, the cost of the gradual transformation would still have been prohibitive. In addition, the constant supply of water to the summit level of the canal, essential to operate the locks, was dependent on vague, unsur-veyed schemes to build tunnels or viaducts from higher up the Chagres River. But the beauty of the plan was the distance it went toward reconciling the reality in the Culebra Cut with selling the change of plan to de Lesseps and his army of supporters, who had for years been persuaded of the overwhelming superiority of a sea-level trans-Isthmian route.

There was still the question of finding the new 600 million francs that this work had been estimated to cost. The following month de Lesseps reapplied to the government to run a lottery, outlining the temporary locks plan. At the same time, he announced that France's most brilliant engineer, Gustav Eiffel, had accepted the task of constructing the locks. Eiffel was newly famous as the creator of the giant iron structure just being started in Paris for the 1889 exposition. He was a good catch for the Company, although his name and expertise, it later emerged, came at an outrageous cost.

Eiffel swung into action and by January 1888 his men were on the Isthmus starting the excavation of the lock basins as the giant iron parts began to be shipped from France. In the meantime, de Lesseps set out to sell the new plan to the stockholders, reassuring them that the original vision was postponed, rather than lost, and that by 1890 the canal would be sufficiently advanced for the passage of twenty ships a day.

From the government, however, there was an ominous silence. Then, after two months of deliberation, the Cabinet announced that they would not be submitting the necessary lottery bill to the Chamber of Deputies. Once more the Company launched itself into lobbying, organizing petitions, and, it later came out, outright bribery of politicians. So, in early March, nine deputies of various political complexions introduced the bill the government had refused to back. Yet another commission was appointed to investigate.

De Lesseps could not afford to wait, and had to go with another bond issue. He promised that if the lottery was approved these new bonds could be converted to lottery bonds. But the issue in March 1888, the eighth in as many years, was the worst yet, with only a quarter being taken up. Clearly no more money was going to be forthcoming from this route. Soon after, de Lesseps was forced to borrow 30 million francs at a ruinous rate from his “friends” at the Crédit Lyonnais and Société Générale banks to keep the Company afloat. The lottery was now the only hope.

It looked at first as if the commission would reject the bill, but after the surprising last-minute change of mind of Charles François Sans-Leroy, a hero of the Franco-Prussian War, it was approved by a margin of 6 to 5. The debate in the Chamber, which was packed with canal supporters, on several occasions degenerated into a brawl. Nonetheless, the bill was approved by a wide margin on April 28, and was rubber-stamped by the Senate on June 8, though the Company was compelled to state in its loan prospectus that the granting of permission implied no government guarantee or responsibility.

Shares in the Company, which had fallen to a low of 250 francs in December, now soared. On the Isthmus, Bunau-Varilla believed that nothing could now stand in the way of the successful completion of “his” plan. In the Culebra Cut, he now only had to lower the floor to 140 feet above sea level, rather than 30 below. He was confident he could do this in three years, and now had nearly three thousand men on the site, working around the clock with the assistance of recently installed floodlights. The actual results of his company, Artigue et Sonderegger, do not back up Bunau-Varilla's boasts. In addition, in spite of the harsh regimes of Vila and his Conservative successors, tension and violence among the workers was again on the increase, made worse as the Company was forced to look farther afield for recruits, bringing new communities, such as Africans and Puerto Ri-cans, into the volatile racial mix. Yet whatever the chances of success with the lottery money secured, it was certain that should the issue fail, then all would be lost.

he lottery bill authorized the Company to borrow an additional 720 million francs, 600 million for the completion of the work and the rest for investment in French government securities to guarantee payment on the bonds and to furnish the cash prizes. Bimonthly drawings promised maximum wins of nearly 700,000 francs. Against their better judgment, the Company was persuaded by their bankers to offer the entire sale of two million bonds in one go. It would start on June 20 and run for six days.

The Company threw everything it had at efforts to promote the sale, spending, it came out later, over 7 million francs on “publicity” and over 3 million francs on “patronage.” No one in France was unaware of what was at stake.

On the morning of the start of the sale, someone put a hoax notice out by wire that Ferdinand de Lesseps had died. There was an instant denial, but the damage was done. Two days later speculators dumped Panama shares on the bourse, causing a sharp fall in their value. By the end of the six days, although 350,000 people had subscribed, three times the 1880 figure, less than half of the bonds had been sold. Money, it seemed, was exhausted. Once the sum had been put aside for interest and the prize fund, the Company had gathered in only a little more than 100 million francs, a sixth of what it required.

Still, de Lesseps refused to accept defeat. On August 1, addressing the annual general meeting, he urged his troops on to one final, patriotic effort. “All France,” he announced, “is joined in the completion of the Panama Canal. Actually more than 600,000 of our compatriots are directly interested in the rapid success of the enterprise. If each of them will take two lottery bonds or get them sold, the canal is made!”

Then de Lesseps and his son Charles set off on a grueling tour of twenty-six French cities, with Charles now doing most of the speaking, while his father's presence still guaranteed huge turnouts. “Spontaneous” local committees were organized by the Company to recruit new investors.

The remaining bonds went on sale on November 29, with a final exhortation from de Lesseps: “I appeal to all Frenchmen,” he said. “I appeal to all my colleagues whose fortunes are threatened… Your fates are in your own hands. Decide!” By this time, the price had been cut to just 320 francs, with generous terms for paying in installments. It was decided that unless four hundred thousand were sold the subscription would have to be annulled.

Soon after the opening of the sale, bear raiders made another attack. By December 8, lottery bonds on the bourse were selling for 40 francs less than de Lesseps was asking. The final day of the sale had been set for December 12. The day before, the American journalist Emily Crawford visited the Company's headquarters at 46 Rue Caumartin. The hall of the building was packed with investors, “flushed and excited, but willing to stake their last penny on the hope of retrieving their fortunes … They were like desperate gamblers,” Crawford would report in the New York Tribune, “whose hopes rise highest when their losses have been greatest.” The crowd grew in number and noise, until suddenly at 4:00 p.m., it was hushed by the appearance of Ferdinand de Lesseps. The old man clambered onto a counter in the corner of the room and cried out: “My friends, the subscription is safe! Our adversaries are confounded! We have no need for the help of financiers! You have saved yourselves by your own exertion! The canal is made!” So overcome that he was weeping, de Lesseps joined the crush in the room, shaking the hands of his exultant, cheering investors.

No details were given, but soon rumors were circulating that 800,000 bonds had been sold. The next day saw the same chaotic scene in the Company headquarters, and then, late in the afternoon, Charles de Lesseps appeared. How had the subscription gone? everyone asked. “The subscriptions reached a total of 180,000 bonds,” Charles began in a low voice. “This being below the minimum fixed by M. de Lesseps, we will commence returning the deposits tomorrow. You see, I am telling you exactly how things are.”

There was a shocked, dazed silence. How had the picture changed so radically overnight? someone asked. “My father is younger in spirit than I,” Charles replied. “His remarks were made on the strength of a hopeful report… the result is bankruptcy or the winding up of the Company.”

In desperation Ferdinand de Lesseps placed before the Chamber of Deputies a bill authorizing the Compagnie Universelle to suspend payments of all debts and interest for three months, while he attempted to float a new company. On December 15, the Chamber threw out his bill by 25 6 votes to 181.

Ten minutes after the vote, a reporter called at de Lesseps's house with the news of the bill's rejection and his company's liquidation. The old man turned pale. “Cest impossible” he whispered. “Cest in-digue.”

he crash of the Compagnie Universelle was the biggest of the nineteenth century, and the greatest since the markets began. The liquidation wiped out the hard-earned savings of eight hundred thousand private investors. A staggering one billion francs ($280 million) had been expended, and the Company had liabilities of nearly three times that sum. Le Grand Franjáis made one last, fruitless effort to save his company, with a spectacularly unsuccessful bond issue in January 1889, but the next month an official receiver was appointed. De Lesseps never recovered from the blow, retiring to his country house at La Chesnaye. His great will finally broken, he quickly lost awareness of the world around him, preferring to stare out into the garden, or sit musing by the fire. By the summer of 1889, he was often confined to his bed.

When the news of the liquidation arrived in Panama, it was, according to Tracy Robinson, “like a stroke of paralysis.” Foreign consuls had been predicting fierce riots, and gunboats had arrived offshore from France, Britain, and the United States. There were disturbances, but on the whole a sense of dumb shock prevailed, as contractors and workers alike laid down their tools, the giant machines were shut down, and peace returned to the jungle for the first time in seven years.

All along the line thousands of laborers found themselves suddenly thrown out of work. Shops closed as merchants pulled down their shutters and relocated, the prostitutes and professional gamblers set off for more inviting pastures, the railway closed down stations, and the banks suddenly stopped honoring checks from the Company. Rent rates and land values collapsed just as immediately.

Within no time at all, the workforce had fallen from 14,000 to just 800 involved in basic maintenance. A large number of those laid off left the Isthmus, either for home or for other employment in the region. Many of the workers, however, found they had insufficient funds for the rail fare to Colón, let alone the steamer back to Kingston. Slowly, they made their way on foot to Colón, where they congregated in desperate groups.

“There are hundreds [of destitute Jamaicans] absolutely starving,” reported the Star and Herald in early April, “who have not tasted food for days … Despair is taking possession of the people.” Many sought the help of Claude Mallet, who telegraphed the Jamaican government to send steamers to pick the men up. Receiving no reply, he was forced to feed 1,500 out of his own pocket. Eventually the government of Jamaica agreed to start bringing their thousands of destitute countrymen home. In all, 7,244 were repatriated. Some six thousand Jamaican men, women, and children were left behind when the fixed period for repatriation ended, and most took up residence in shanties along the line, growing bananas and other crops for subsistence. Many refused to believe that the project could really be abandoned.

n France, in the immediate aftermath of the great crash, when attention was diverted by the great exposition of the centennial of the French Revolution, there was a similar refusal to accept the end. Surely the French government would come to the aid of the scheme? But stern warnings from the new U.S. president Benjamin Harrison not to interfere ended what little inclination the French Cabinet might have had to do so. As this realization percolated through the country, the fever of recriminations began.

Petitions from bondholders seeking redress from the government poured into the Chamber of Deputies. At the same time, rumors of wrongdoing in the Company and in the government gathered momentum, and best-selling books were published on the “Scandal of Panama.” Le Grand Français was a fraud, a cheat, and a liar, one alleged. “What have you done with the money?” the author asked de Lesseps.

An examining magistrate was appointed, whose first step was to summon the eighty-six-year-old de Lesseps, his son Charles, and another senior Canal Company director. Ferdinand de Lesseps, against the advice of his doctor, roused himself, donned his uniform of a grand officer of the Legion of Honor, and went to meet the investigator. According to Charles, “He had apparently recovered all his strength; he remained three quarters of an hour … and when he left his face radiated charm and energy as it always did under difficulties. But the reaction soon set in; it was frightful.” Back home, the old man took to his bed and hardly spoke to anyone for three weeks, except to say to his wife, “What a terrible nightmare I have had. I had imagined I was summoned before the examining magistrate. It was atrocious.”

The magistrate's report, delivered in May 1892, accused the Company of “dissipating” funds “in a manner… more consistent with the personal views and interests of the administrators and directors… than with the true interests of the company.” Second, they were culpable of repeated “false announcements of progress,” which concealed the “true situation” and misled investors. The files were handed over to the public prosecutor, who took his time sifting through the evidence, while police raided the offices of ex-canal officials and engineers, including Gustave Eiffel.

Meanwhile, revelations came thick and fast. More than a hundred deputies, it was suggested, had taken bribes from the Canal Company. The cabinet was forced to resign, duels were fought, and a formal parliamentary investigation ordered, while criminal proceedings were brought against de Lesseps, Eiffel, and other Company officers.

Soon “the Panama Affair” had outgrown its original focus and became a general stick with which to beat one's political opponents. Out in the country, too, the word Panamiste now had a wider meaning as synonymous with corruption anywhere. On January 6 a large anti-Semitic rally was staged in the center of Paris, where the speakers proclaimed the Panama disaster the fault of the Jews, who, they said, were now laughing at France's misfortune. While most of the crowd cheered, a small number protested. A fight broke out, which degenerated into a riot. Paris was jumpy A bomb in a police station was blamed on anarchists, whose numbers were swelling as disillusion with the government grew. Then, amidst talk of a royalist coup, military units were put on the alert. Foreign consuls described France as on the brink of a revolution.

Such was the backdrop for the sensational trial of de Lesseps father and son, Eiffel, and two other Company directors, which started on January 10, 1893. Ferdinand de Lesseps was excused from attending because of his rapidly fading health. The defendants were well represented. Neither Ferdinand nor Charles de Lesseps had made any real money from the canal, their lawyer pointed out. Clearly, neither had benefited from any fraud. As for maladministration or misleading the investors, didn't every great project run vastly over budget? The Marseilles Canal was supposed to cost 13 million francs, but was not finished before an expenditure of 45 million francs; the Manchester Ship Canal, too, had massively exceeded its budget. If the de Lessepses had sinned, the defense argued, it was only through “excessive optimism.”

But the public clamor for a scapegoat had made the advocate general determined to get a conviction, describing the attempt to build the canal as “the greatest fraud of modern times.” Ferdinand de Lesseps and his son were both indicted for fraud and maladministration and given five-year prison sentences. Charles de Lesseps, his face in his hands, wept as the judgment was handed down. It was taken for granted that his father, who, reportedly, was not even aware that the trial was taking place, would not be fit to go to prison. Two other directors got two years and a fine. Eiffel, found guilty of making a 7-million-franc profit for work he had barely started, was sentenced to two years’ imprisonment and a fine of 25,000 francs.

Four months later the sentences were quashed on a technicality by the Supreme Court, but by then the situation had worsened for Charles de Lesseps. The parliamentary investigation, carried out in a febrile atmosphere of allegation and counter-allegation, had turned up one sensation after another.

The Chamber of Deputies Committee did genuinely try to answer the question posed back in 1890: what happened to the money? Much, it was immediately apparent, had gone to the large contractors taken on in late 1886. Few of them had achieved a fraction of their contracted total excavation, but some had somehow, nonetheless, cleared huge profits. The various banks and syndicates that handled and occasionally underwrote the bond issues had also made eye-wateringly huge profits from their business with the Company. Some 10 percent of the Company's total receipts, over 100 million francs, had disappeared against the cost of the flotations. Part of this cost was money paid to the press, and not all of it for advertising space. Twelve million francs had been distributed between 1880 and 1888, it emerged, with the largest “subsidy” going to Le Petit Journal, which had stayed loyal to the Canal Company right till the end. An astonishing 2,575 magazines and periodicals had received cash payments to plug the canal venture, including, bizarrely, Marriage Journal, The Poetic World, and Foresters’ Echo. Some small journals, it appeared, had been established purely to benefit from the “Panama Check.”

And when the Company became involved with the government over the lottery request, it had found a whole new raft of even greedier and more dangerous parasites. Check stubs were found that indicated that the former minister of works, Charles Baïhaut, had received 37 5,000 francs as payment for forwarding the original lottery bill to the Chamber back in 1885. Among others who had received bribes was Charles Sans-Leroy, who at the last minute had changed his deciding vote and thus ensured the success of the second lottery bill application. The evidence caused a sensation, and a new word, chéquard—check taker—entered the French language.

The corruption trial opened in March 1893, with Charles de Lesseps and the Company secretary accused of making bribes, and five deputies and one senator of receiving them. Charles de Lesseps, in prison since December, seemed a different figure from that of the first trial. His “face was drawn and his skin yellowed,” and his earlier courteous manner had been replaced by a quiet outrage. He was not guilty of bribery, he argued, but a victim of extortion. The minister for works had demanded a million francs to keep the lottery bill alive, he testified. The 375,00 francs was just the first installment. When the bill was subsequently rejected, Charles de Lesseps had refused to pay Baïhaut any more. Since the failure of the very first share issue in August 1879, Charles said, the Company had found it necessary to pay for press and political support, and for the goodwill of the bourse. “They seemed to rise up from the pavement,” Charles said of the chéquards. “We had to deal with their threats, their libels, and their broken promises.”

Charles Baïhaut tearfully confessed to having received money from Charles de Lesseps for his support of the lottery bill. But Sans-Leroy insisted that although he had suddenly paid off debts to the tune of 200,000 francs, the money had come from elsewhere. Likewise, the other politicians denied any wrongdoing. For the verdict on March 21, 1893, the aroma of whitewash was heavy in the air. All of the deputies but Baïhaut, who “had been stupid enough to confess,” were acquitted of the charge of receiving bribes. Nonetheless, Charles and an intermediary he had used were still found guilty of bribery and were sentenced to one year's imprisonment each. Baïhaut was given five years’ solitary confinement in the notorious étampes prison, a huge fine, and was ordered to repay the bribe. Should he be unable to manage this, Charles de Lesseps became liable.

A few months after his second trial, Charles de Lesseps was allowed to leave prison to visit his father on a day release. Accompanied by two policemen, Charles made the journey to La Chesnaye. His father greeted him with “Ah, there you are Charles …Has anything new happened in Paris?” The old man never asked about the ever-present policemen, and after a long walk with his father in the woods near the house, Charles was returned by his guards to his prison cell.

Soon after, Charles became ill and was in the hospital when released in September 1893. But within a couple of months he was forced to flee to London, having become liable for Charles Baïhaut's fine. By this time, Ferdinand de Lesseps's mental state was mercifully such that he knew little of what was going on, and he remained sequestered at home within the family circle. He died in December 1894, a few days after his eighty-ninth birthday. However many people had lined their pockets at the expense of the shareholders, de Lesseps had not been among them. His family were so poor that the funeral expenses had to be met by the board of directors of the Suez Canal.

he waves of scandal did nothing to help the receiver in his battle to rescue something from the mess on behalf of the investors. The option of abandoning the project altogether was seriously considered, but the impossibility of dividing up the remaining assets among the legion of creditors, of all descriptions, and the almost negligible return it would have meant, persuaded the liquidator that the best option was to keep the concern alive—either to press on and build the canal, or sell it to the highest bidder.

A new concession was negotiated with Colombia, and in October 1894 the Compagnie Nouvelle du Canal de Panama was formally incorporated, paid for by contributions extracted under threat of criminal prosecution from those who had made the most outrageous profits from the old Company. Eiffel was one such “penalty shareholder,” as was Bunau-Varilla. Only the American company, Huerne, Slaven, “one of the enterprises which made some of the most scandalously excessive profits out of Panama,” escaped, having their books in the United States, safely out of reach. In all cases, “penalty shareholders” were forbidden involvement in the running of the new company.

The whole effort of the New Company is characterized by caution and parsimony. In the absence of any firm blueprint, the desultory work undertaken was concentrated in the Culebra Cut, which would need to be lowered whatever the final scheme decided on. Efforts were made to attract investors, while keeping the canal a French project. To make it more sellable, a detailed plan—for a lock canal with a dam at Bohío—was put together by yet another international commission of experts. Bunau-Varilla, acting independently and considered something of a liability by the New Company directors, even managed to catch the interest of the tsar of Russia after a fortuitous meeting with a Russian prince on a train to Moscow. But nothing came of it. No private company had the enormous resources needed for such a project, and no foreign government would dare defy the United States by setting up in their backyard. At the end of 1898, with the original capital almost gone, the directors had only one choice. Reluctantly, clutching their latest plans, they headed to Washington where they were received by President William McKinley.

According to Bunau-Varilla, the Americans received the offer with “scepticism.” “It would never have come to anything,” he said, “had I not at that moment begun my campaign.” How the Americans came at last to take over the Panama Canal, in a U.S.-controlled zone of a newly independent country, is as controversial and murky a story as any from the de Lesseps years.

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