Panama fever (34 page)

“The construction of such a maritime highway,” proclaimed McKinley at the end of 1898, “is now more than ever indispensable.” The president also instructed his secretary of state, John Hay, to restart negotiations with Britain to rid the United States of the restrictions of the Clayton-Bulwer Treaty.

Already, there was legislation for an American canal progressing through Congress. In June 1898, when it became known that the Isthmian Canal Commission under Admiral Walker intended to recommend the construction of a waterway at Nicaragua, Alabama senator John Tyler Morgan introduced a bill allowing for the building of a fortified Nicaragua canal by the U.S. government. Morgan, who chaired the Senate Committee on Interoceanic Canals, had been a colonel in the Confederate Army during the Civil War, and believed that a canal through Nicaragua would return to the South the prominence it had lost since the war and make the ports of Mobile and Galveston thriving hubs of trade. By the late 1880s the construction of a Nicaragua canal had become an obsession, and he had many times argued unsuccessfully for congressional support for the private company that actually started work on a Nicaragua canal for a short time in late 1889 before going bust. Like de Lesseps, Selfridge, Menocal, and Ammen, Morgan was gripped not only by the Great Idea of an Isthmian canal, but by a clear view of a waterway of a particular type, in this case a lock canal at Nicaragua. His obduracy would have serious consequences. Morgan's bill came up for debate in January 1899, when the ink on the Treaty of Paris with Spain was barely dry. It passed through the Senate with ease, and was presented to the House of Representatives.

Although Walker's commission had visited the French works at Panama, such as they were in early 1898, at no point had the Panama route been considered a serious option. The scandals in Paris, the well-publicized attrition from disease, and the seemingly insuperable engineering and political problems had given Panama a distinct odor of failure. There were a scattering of voices raised for Panama, including that of John Bigelow Despite his largely pessimistic report in 1886, Bigelow had become infected by the project. But supporters were few and far between and had no representation in either house in Washington. Nicaragua, on the other hand, was seen as a clean slate—free of the taint of poisonous European influence. As the
New York Herald
wrote, “The Nicaragua canal is a purely national affair, conceived by Americans, sustained by Americans, and if later on constructed, operated by Americans according to American ideas, and for American needs. In one word, it is a national enterprise.” All seemed set fair for the Nicaragua route, which would make the New Company's property worthless. It appeared it would take a mighty battle and a miracle of persuasion to change the nation's preference.

William Nelson Cromwell and Philippe Bunau-Varilla were two of the most skillful lobbyists ever to work the corridors of power in Washington. It was largely as a result of their efforts that American engineers would, in 1904, arrive to restart work on a canal not, as everyone expected, in Nicaragua, but in a newly independent and U.S.-controlled Panama. Their contribution would also see the Panama Canal at its rebirth mired, as before, in controversy, scandal, and recriminations.

Cromwell was one of history's great fixers. From a modest Brooklyn family, he was, like Bunau-Varilla, short of stature and fatherless, and he shared the Frenchman's aggression and determination. By the age of thirty-three he had risen to become the guiding light of one of Wall Street's preeminent corporate law firms. Sullivan and Cromwell, as it became known, was a new type of company, born out of the railroad boom, offering all sorts of services from finance and accounting to press relations and political lobbying. Above all, the firm was ferociously well connected. Its clients included the huge railroad companies and the nation's most trusted banks, including JP Morgan; and, starting in 1896, to represent their interests in the United States, the Compagnie Nouvelle du Canal de Panama.

It was a good choice by the directors in Paris. Cromwell knew the Isthmus, having been general counsel, a director, and a shareholder in the Panama Railroad for three years. But, above all, he was a superb operator. Affable, with disarming manners, he was known as “The Fox” because of his extraordinary cunning. “He is one of the readiest talkers in town. No life insurance agent could beat him,” wrote the
New York World
, which would lead the investigations into the “Scandal of Panama.” “[He] has an intellect that works like a flash of lightning, and … swings about with the agility of an acrobat…He talks fast, and when he wishes to, never to the point.” As well as his contacts and his lawyer's talent for obfuscation, Cromwell had the crucial ability to master such a complicated brief as that presented by the French. He did not come cheap: he would bill the New Company some $800,000 for his services. But when the fee came up for arbitration in 1907, Cromwell was able to argue with justification that his services had “involved almost every branch of professional activity—engineering, law, legislation, finance, diplomacy, administration and direction.”

As a “penalty” shareholder in the New Company, Philippe Banau-Varilla was barred from direct involvement with the running of the venture, but he had far from given up on his canal dream and the final accomplishment of “the Great Idea of Panama.” Apart from anything else, he had over a million francs of his own money forcibly invested in the New Company. After the collapse of the de Lesseps setup, Bunau-Varilla had unsuccessfully stood for office in France, and then with his brother taken over a newspaper,
Le Matin
, as an alternative outlet for his campaigning for the completion of the French canal. In addition, on the prompting of his friend John Bigelow in New York, in 1892 Bunau-Varilla published a book outlining his plans for finishing the canal at Panama. Bigelow saw that it was distributed widely among opinion formers in Washington.

John Bigelow also provided introductions to influential Americans living in or passing through Paris. Even if Bigelow could not provide a link, Bunau-Varilla made himself the master of “chance encounters” and thereby managed to pitch for Panama to many U.S. citizens who, once converted, would be vital to his later efforts. Frank Pavey an influential New York lawyer who would soon be working for Bunau-Varilla, described (for the benefit of a later congressional investigation into the whole “Panama Scandal”) meeting the Frenchman in Paris. Pavey's attitude prior to the encounter was typical of his countrymen—that “There was a hole in Panama into which a lot of French money had been sunk, and that no canal would ever be possible there.” But Bunau-Varilla gave him the full evangelical treatment. “He never let go of an American victim when he got one in that library until he thought he had converted him,” said Pavey, “and the first time I dined in his house I stayed until 2 o'clock the next morning, listening to his picturesque and fascinating argument in favor of Panama and against Nicaragua …[he] made a special effort to convert me to the cause of Panama, which I am frank to confess he did.”

A desire to claim credit for the great achievement of the canal was a weakness that Cromwell and Bunau-Varilla cleverly exploited among their enemies. But it also dominates their own accounts of their involvement in the events that led to the start of the American Panama Canal. In the Frenchman's published writings there is one hero of the story, namely himself, a new, hyperpatriotic
Grand Français
who steps into the breach to steer events and protagonists toward the saving of “the noble conception of French Genius through its adoption by America.” Cromwell's version emerged when his 65,000-word justification for his enormous fees at the arbitration court in 1907 was handed to the press. The leak caused a sensation, for Cromwell, naturally putting the best shine on services rendered, claimed to have decisively influenced U.S. government decisions in favor of the Panama Canal to a breathtaking extent.

But Bunau-Varilla, like de Lesseps before him, was not one to share the limelight, calling the claims of the man he disparagingly called “the lawyer Cromwell” “a tissue of erroneous and misleading assertions.” Cromwell, in turn, would play down the contribution of Bunau-Varilla and sought to discredit his motives for campaigning for a Panama Canal. Both men talked down their mutual cooperation. Each wanted to be, and subsequently saw himself as, uniquely, the hero who made the waterway a reality. They also shared an obsession with the canal. Bunau-Varilla's was well established, but for Cromwell, too, the longer he was involved, the more it became greater than just another lucrative job. As an American journalist would later write: “Once you have touched Panama, you never lose the infection. Some call it canalitis.”

But to others, one or both of the men were the villains, rather than the heroes, of the piece. To his enemies, such as the Nicaragua lobby led by Senator Morgan, and those who objected to the United States’ shady involvement in the Panama Revolution, Cromwell's undoubted influence and interest, combined with the taint of a new, runaway Wall Street, made him a perfect scapegoat. He was portrayed as a corrupter of American public life. A congressional investigation was told that Cromwell was “the revolutionist who promoted and made possible the revolution on the Isthmus of Panama.” He was, the investigation's leader suggested, one of the most dangerous men the United States had spawned for a long time. Almost worst of all, he was “one of the most accomplished lobbyists this country had ever produced.” The
New York World
concurred, writing that Cromwell's “masterful mind, whetted on the grindstone of corporation cunning, conceived and carried out the rape of the Isthmus.”

However, to Panamanians the “rapist” was the “traitor” Bunau-Varilla, who, as shall be seen, blackmailed the infant Republic into acceding to a deal with the United States that was patently unfair. The Frenchman, the self-anointed heir of Ferdinand de Lesseps, would stop at nothing to see the Panama Canal built.

It is Cromwell, however, who takes center stage in the early parts of the story. When he was contracted by the New Company in 1896, he told his employers that “no one in the United States doubted that the Panama Canal in itself was an impossibility … Public opinion demanded the Nicaragua Canal.” In turn, the directors in Paris for the moment kept Cromwell on a tight leash, still hoping that the last resort of selling out to the Americans might be avoided. When, by 1898, this looked impossible, they acceded to Cromwell's pleas to allow him to press energetically the case for a sale to the United States government.

Cromwell straightaway set up a special press bureau for the production and dissemination of anti-Nicaragua and pro-Panama propaganda, at the same time lobbying engineering societies, shipping interests, and influential politicians. “We must make our plans with Napoleonic strategy,” he told his French clients. For Cromwell this meant being “ubiquitous and ever present” on Capitol Hill, as one of his enemies would later complain. It was Cromwell, naturally, who set up and presided over the meeting of the New Company directors with President McKinley in early December of that year.

But the president was not impressed, in part because of the clause in the Wyse concession that forbade the sale of the canal works to a foreign government. On December 5, 1898, he sent his message to Congress supporting Morgan's Nicaragua bill.

When this measure sailed through the Senate, Cromwell had to concentrate all his resources on the House of Representatives to prevent Morgan's legislation from becoming law. If the bill passed, then all his client's assets would be worthless. The job of getting the Nicaragua bill through the House of Representatives fell to Iowa's William P. Hepburn. Both the Republican Hepburn and the Democrat Morgan considered the Nicaragua option inevitable and were maneuvering to secure the honor of the legislation for their party and themselves. Someone—what a later investigator called “mysterious influences”—played upon Hepburn's vanity by getting him to introduce a bill of his own, rather than just sponsoring Senator Morgan's in the House of Representatives. This complicated the passage of the bill, and Hepburn was persuaded to accept an amendment that called for a new study to look at all the feasible routes for a canal. Effectively, the bill was killed, and a new commission was ordered, again under the direction of Admiral Walker, to look once more at the best route for a canal “under the control, management and ownership of the United States.” To the fury of Morgan, who saw the powerful transcontinental railroad interests behind the “delaying measure,” it was the first crack in the Nicaragua edifice, and a great victory for the Panama lobby.

Characteristically, Bunau-Varilla claimed the credit, saying that the field had been reopened through the efforts of his carefully cultivated American friends. But in this instance, the “mysterious influences” were almost certainly Cromwell, who somehow got himself invited before the committee studying the bill and argued “for hours on the most profound study of the technical sides of the question.”

Cromwell did not rest on his laurels, however, immediately doing his utmost to influence the selection of the new Walker Commission. In this he was only partly successful, failing to block the appointment of several experts who had already pronounced for Nicaragua on the previous commission. But he did manage to arrange that the commission's first port of call would be Paris, where all the talk would be of Panama, rather than Nicaragua. Cromwell left ahead of the Walker party, sailing for France on August 9, 1899, “to prepare and direct the presentation of the case.”

In Paris, the nine eminent engineers and military bigwigs of the Walker Commission were subjected to a barrage of plans, maps, and figures by the New Company, but also, because of Cromwell's efforts, elaborately wined and dined. One lunch included six courses and four different wines. Bunau-Varilla popped up, too (that Cromwell did not meet and consult with him at this time if not before is impossible to believe). Supposedly thanks to another introduction from John Bigelow, now eighty years old, Bunau-Varilla had dinner with three of the Commission engineers, including the eminent George S. Morison, whom he subjected to the full Panama treatment. All were converted, or, as Bunau-Varilla puts it, “the scales had fallen from their eyes.”