Acquiring Panama 1901-1904

Since the 1880s, long-standing US policy had been to seek exclusive U.S. control over any canal to be built in the Central American isthmus, a goal finally realized in the 1901 Hay-Pauncefote treaty with Great Britain. The British Government was supposed to hold that the Clayton-Bulwer Treaty, although never acted on since it was concluded in 1850, was still obligatory on the United States, and entitled England to exercise jointly with ourselves a control over any interoceanic waterway, even although this should be constructed at our own expense. It had been long recognized, however, on both sides of the Atlantic that, by insisting upon the letter of the rights given to her by the Clayton-Bulwer Treaty, England would pursue a dog-in-the-manger policy, for, hampered by the provisions of that agreement, the United States would never consent to build a canal.

The Hay-Pauncefote Treaty abrogated the earlier Clayton-Bulwer Treaty and licensed the United States to build and manage its own canal, independently of the British Empire. The treaty to facilitate the construction of a ship canal was negotiated by Lord Pauncefote the British Ambassador to the US, and US Secretary of State John Milton. It was concluded on 18 November 1901; ratification was advised by the US Senate on 16 December 1901; ratified by President on 26 December 1901. Ratifications were exchanged 21 February 1902; and the Treaty was proclaimed 22 February 1902.

The November 1901 First Isthmian Canal Commission report recommended Nicaragua because it was cheaper than Panama (the New Panama Canal Company valued its assets at $100 million). The French hired Philippe Bunau-Varilla (a French engineer who had been involved in the earlier de Lesseps canal attempt) to support Cromwell's lobbying efforts in the United States. Bunau-Varilla was a French engineer who had worked for de Lesseps in Panama and was a shareholder in the New Panama Canal Company. While Bunau-Varilla talked about the advantages of Panama over Nicaragua - such as better harbors, a shorter route, and an operating railroad - he also got the New Panama Canal Company to revalue its assets at $40 million in December 1901. That made Panama cheaper than Nicaragua, and an amended ICC report on 18 January 1902 recommended the Panama route.

With that report Senator John C. Spooner successfully sponsored an amendment to turn a Nicaragua bill into a Panama bill. The Spooner Act, signed into law by President Theodore Roosevelt on 28 June 1902, authorized Map of the Panama Canal Zone purchase of the New Panama Canal Company for $40 million, purchase of a zone in Panama for construction of a canal, and set up a seven-member presidential- appointed Isthmian Canal Commission to build the canal. The Spooner Act, provided for the construction of the Panama canal, or if this should be impossible (since the French company might prove to have no title, or the Colombian government might refuse its approval) that the Nicaragua canal be built.

On 25 October 1902 the attorney-general of the United States gave his opinion that the new Panama Canal Company had title, and could legally transfer its title to the strip and to the canal as partially constructed. But negotiations with Señor Concha, the Colombian minister to the United States, were required, for the Salgar-Wyse concession of 1878 expressly forbade the concessionnaires to transfer their rights to any foreign nation or government. These negotiations were unsuccessful, and on 25 November 1902 Concha practically informed Secretary Hay that Colombia refused the offer of $10,000,000 down and $100,000 (or $125,000) a year. The Colombian opposition seemed plainly a mere matter of price, and Señor Concha was recalled by his government, which apparently took the attitude that his delay had been for his personal ends.

The Hay-Herran Treaty, signed on 22 January 1903, with Herran, the Colombian chargé d'affaires in Washington, in accordance with which the Panama concession was sold by the Colombian Republic (which owned Panama) for $10,000,000 down and $250,000 annually, was definitely rejected by the Colombian senate on 12 August 1903, and on 12 September 1903 the time for ratification expired.

At this point matters were taken out of the hands of Colombia. Fearful that the United States would return to Nicaragua, Panamanians interested in having the canal built across the isthmus approached Bunau-Varilla. Acting as their representative, Bunau-Varilla talked with officials in Washington and then promised the Panamanians US support in the event of a revolt and break with Colombia. After an almost bloodless revolt on 03 November 1903, Panama declared itself a republic on 04 November. In the early morning of 06 November 1903, Army engineer Major William M. Black, at the request of the Panamanians, raised the flag of the new republic over the city of Colon.

The United States recognised the provisional government as the de facto government and landed marines to protect the trans-isthmian commerce, thus making it impossible for the Colombian troops to strike a blow at the insurgents in Panama. Marroquin strongly protested against the action of the United States, which he interpreted as connivance in the plot against the Colombian central government and as a direct infringement of the treaty of 1846, and he urged the Latin-American republics to make common cause with him in a war on the United States of North America. In the last week of November 1903 Marroquin sent General Rafael Reyes to Washington to appeal for Colombia's ownership of Panama, or for the release of such ownership on receipt of a compensation from the United States. He was well received, but was given clearly to understand that the United States was determined to abide by what had been done; and, the independence of Panama having been recognized by the principal powers, it would be impossible to open negotiations with Colombia concerning the suppression of that republic.

The newly declared Republic of Panama immediately named Philippe Bunau-Varilla as Envoy Extraordinary and Minister Plenipotentiary. In his new role, Bunau-Varilla, as Panamanian envoy to the United States, signed the Hay-Bunau-Varilla Treaty on 18 November 1903. The United States purchased from Panama a 10-mile zone across the isthmus for $10 million and $250,000 annually, guaranteed Panama's independence from Colombia. After Panama ratified the treaty in December 1903 and the US Senate did so in February 1904, President Roosevelt - as required by the Spooner Act - named a seven-member ICC to build the canal.

In 1904 the United States purchased from the French New Panama Canal Company its rights and properties for $40 million and began construction.