The Panama Canal

In the Caribbean region American policy centered on building an interoceanic canal across Central America. Expanding interests in Latin America and East Asia made a canal necessary, a truth pointed up during the war with Spain by the two-month voyage of USS Oregon around South America from California waters to participate in the action against Admiral Cervera’s fleet at Santiago. The first step was to get rid of the old Clayton-Bulwer Treaty with Great Britain, which barred the United States from building a canal on its own. In 1901 Lord

An electron microscopic photo of a mosquito that carried yellow fever. Major Walter Reed of the U. S. army proved that yellow fever was not spread directly among humans, but from the bites of infected mosquitoes. The virus then multiplied in the human bloodstream. Headache, backache, fever, and vomiting ensued. Liver cells were destroyed, resulting in jaundice—thus the name "yellow fever.” American surgeon William Crawford Gorgas worked to eliminate yellow fever by destroying the breeding grounds of these mosquitoes. The last yellow fever outbreak in the United States struck New Orleans and parts of the South in 1905.

The grand opening of the huge Miraflores lock on the Panama Canal in October, 1914. The locks were big enough to allow passage of the largest American warships.

Pauncefote, the British ambassador, and Secretary of State John Hay negotiated an agreement abrogating the Clayton-Bulwer pact and giving the United States the right to build and defend a canal connecting the Pacific Ocean with the Caribbean Sea.

One possible canal route lay across the Colombian province of Panama, where the French-controlled New Panama Canal Company had taken over the franchise of the old De Lesseps company. Only fifty miles separated the oceans in Panama. The terrain, however, was rugged and unhealthy. While the French company had sunk much money into the project, it had little to show for its efforts aside from some rough excavations. A second possible route ran across Nicaragua. This route was about 200 miles long but was relatively easy since much of it traversed Lake Nicaragua and other natural waterways.

President McKinley appointed a commission to study the alternatives. It reported that the Panamanian route was technically superior, but recommended building in Nicaragua because the New Panama Canal Company was asking $109 million for its assets, which the commission valued at only $40 million. Lacking another potential purchaser, the French company lowered its price to $40 million, and after a great deal of clever propagandizing by Philippe Bunau-Varilla, a French engineer with heavy investments in the company, President Roosevelt settled on the Panamanian route.

In January 1903 Secretary of State Hay negotiated a treaty with Colombia. In return for a ninety-nine-year lease on a zone across Panama six miles wide, the United States agreed to pay Colombia $10 million and an annual rent of $250,000. The Colombian senate, however, unanimously rejected this treaty. It demanded $15 million directly from the United States, plus one-fourth of the $40 million U. S. payment to the New Panama Canal Company.

A little more patience might have produced a mutually satisfactory settlement, but Roosevelt looked on the Colombians as highwaymen who were “mad to get hold of the $40,000,000 of the Frenchmen.” (“You could no more make an agreement with the Colombian rulers,” Roosevelt later remarked, “than you could nail currant jelly to a wall.”) When Panamanians, egged on by the French company, staged a revolution against Colombia in November 1903, he ordered the cruiser Nashville to Panama. Colombian government forces found themselves looking down the barrels of the guns of the Nashville and shortly thereafter eight other American warships. The revolution succeeded.

Roosevelt instantly recognized the new Republic of Panama. Secretary Hay and the new “Panamanian” minister, Bunau-Varilla, then negotiated a treaty granting the United States a zone ten miles wide in perpetuity, on the same terms as those rejected by Colombia. Within the Canal Zone the United States could act as “the sovereign of the territory. . . to the entire exclusion of. . . the Republic of Panama.” The United States guaranteed the independence of the republic. The New Panama Canal Company then received its $40 million, including a substantial share for Bunau-Varilla.

Historians have condemned Roosevelt for his actions in this shabby affair, and with good reason. It was not that he fomented the Panamanian revolution, for he did not. Separated from the government at Bogota by an impenetrable jungle, the people of Panama province had long wanted to be free of Colombian rule. He sinned, rather, in his disregard of Latin American sensibilities. He referred to the Colombians as “dagoes” and insisted smugly that he was defending “the interests of collective civilization” when he overrode their opposition to his plans. “They cut their own throats,” he said. “They tried to hold us up; and too late they have discovered their criminal error.”

If uncharitable, Roosevelt’s analysis was not entirely inaccurate, yet it did not justify his haste in taking Panama under his wing. “Have I defended myself?” Roosevelt asked Secretary of War Root. “You certainly have, Mr. President,” Root retorted. “You were accused of seduction and you have conclusively proved that you were guilty of rape.” Throughout Latin America, especially as nationalist sentiments grew stronger, Roosevelt’s intolerance and aggressiveness in the canal incident bred resentment and fear.26

The first vessels passed through the canal in 1914—and American hegemony in the Caribbean expanded. Yet even in that strategically vital area there was more show than substance to American strength. The navy ruled Caribbean waters largely by default, for it lacked adequate bases in the region. In 1903, as authorized by the Cuban constitution, the United

The U. S. Panama Canal Following many negotiations, construction of the Panama Canal began in 1904. After many delays and hardships, it was completed in 1914.

States obtained an excellent site for a base at Guantanamo Bay, but before 1914 Congress appropriated only $89,000 to develop it.

The tendency was to try to influence outlying areas without actually controlling them. Roosevelt’s successor, William Howard Taft, called this policy dollar diplomacy, his reasoning being that economic penetration would bring stability to underdeveloped areas and power and profit to the United States without the government’s having to commit troops or spend public funds.

Under Taft the State Department won a place for American bankers in an international syndicate engaged in financing railroads in Manchuria. When Nicaragua defaulted on its foreign debt in 1911, the department arranged for American bankers to reorganize Nicaraguan finances and manage the customs service. Although the government truthfully insisted that it did not “covet an inch of territory south of the Rio Grande,” dollar diplomacy provoked further apprehension in Latin America. Efforts to establish similar arrangements in Honduras, Costa Rica, and Guatemala all failed. In Nicaragua orderly administration of the finances did not bring internal peace. In 1912, 2,500 American marines and sailors had to be landed to put down a revolution.

Economic penetration proceeded briskly. American investments in Cuba reached $500 million by 1920,

Table 22.1 Path to Empire,1885-1901

And smaller but significant investments were made in the Dominican Republic and in Haiti. In Central America the United Fruit Company accumulated large holdings in banana plantations, railroads, and other ventures. Other firms plunged heavily into Mexico’s rich mineral resources.