A consortium of commercial and investment banks was put together. The initial capital was set at 300,000,000 francs ($60,000,000). Clearly, this was nowhere near enough, but it was de Lesseps’ decision. And it was a bad one.
Six hundred thousand shares were offered at 500 francs ($100) each. So for the average person, the investor de Lesseps was banking on, it was very expensive stock: 500 francs was nearly a year’s wages for about half the working population of France. The terms, however, were tremendously appealing–only 25 percent down, with six years to pay off the rest. And added to this was the knowledge that Suez stock, which also had cost 500 francs a share initially, was presently listed on the Bourse at more than 2,000 francs and was paying dividends of 17 percent.
During the time of construction, shareholders were to receive 5 percent on their paid installments. Once the canal was completed, they were to get 80 percent of the net profits. The remaining 20 percent was to be divided among the “founders”–de Lesseps, Charles, those friends who had put up the initial 2,000,000 francs–and the Levy-Cremieux syndicate. Founders’ shares in the Suez company, priced the same as these originally– 5,000 francs each–were currently valued at 380,000 francs
“Subsidization” of the newspapers and magazines commenced the moment the syndicate was formed. Payments were made discreetly for the most part and the effect was pronounced. Almost without exception those papers that had so vociferously denounced the canal and its progenitor now praised it and him to the skies. Panama became “the magic word,” le synonyme de dividendes fantastiques. “Capital and science have never had such an opportunity to make a happy marriage,” said the Journal des Debuts. Le Figaro said the canal would be built in seven years and de Lesseps could then proceed with some further titanic work. La Liberte declared that the canal had no more opponents. “Oh, ye of little faith! Hear the words of M. de Lesseps, and believe!”
Émile de Girardin, proprietor of Le Petit Journal, among the most powerful of French press lords and one of those who had been particularly unpleasant in his attacks on de Lesseps the year before, was now delighted to become a member of the company’s board of administrators.
The price paid for such enthusiasm was high–1,595,573 francs, as near as could be determined by subsequent investigations–and the brokers’ commissions for the flotation were higher still, in excess of 4,000,000 francs. For the bankers it was a perfect bonanza. Their com-mission on the stock sales was 4 percent, or 20 francs a share. Still, as some of the foreign correspondents in Paris were to note, such houses as the Credit Foncier and the Rothschilds had steadfastly “refused to allow their counters to be used for such a flytrap.”
The results were far beyond anyone’s wildest hopes. Indeed, the success of the sale was such that it dramatically underscored how very much de Lesseps had misjudged the accumulative effect of all he now had working for him. He had asked for far too little money–less than half what even he was saying the canal would cost–and the irony is that he could have had all he thought he needed and more, right then at the start. Furthermore, he could have had it on relatively easy terms, and conceivably he might have succeeded without payoffs to the press. But he had failed to comprehend the difference that support from his former adversaries in the financial world could make, or, most importantly, the psychological impact of his trip to Panama.
Sale of the stock began December 7, 1880. Within three days, more than 100,000 people subscribed for 1,206,609 shares, or more than twice the number available. As a result many people had to be satisfied with considerably less than what they wanted.
As de Lesseps had forecast, it was the small investor who made the sale such a runaway success. Some eighty thousand people had bought one to five shares each. Only fourteen people owned a thousand shares or more. And about sixteen thousand of the shareholders were women.
Nothing like this had ever occurred before. The Paris-Lyon-Mediterranee railway, a huge corporation, with capital valued at 1,200,000,-000 francs, and with 800,000 shares–or 200,000 more shares than were offered by the Compagnie Universelle–had but thirty-three thousand shareholders, or less than a third the number that the Compagnie Universelle was starting with. The first stockholders’ meeting, in January 1881, had to be held in the Cirque d’Hiver, the circus building on the Boulevard des Filles-du-Calvaire, but even it held only five thousand people. All problems had been solved, de Lesseps said, all difficulties had been smoothed over.
The official incorporation of the company took place on March 3, 1881. De Lesseps was formally designated president; Henri Bionne was to be secretary general. Charles de Lesseps was named a director.
Salaries were remarkably low, considering the scale of the enterprise. De Lesseps would receive only 75,000 francs a year ($15,000); Bionne, a mere 18,000 francs ($3,600). But by contrast, interestingly, a salary of $25,000, or more than de Lesseps’, would be paid to an American, Richard Wigginton Thompson, who had agreed to head the Comite Americain, which was to be among the most costly and fruitless of the company’s operations.
Thompson, who had been Secretary of the Navy, was actually de Lesseps’ second choice for the job. His first choice, General Grant, had been approached through Jesse Seligman, but had flatly declined the offer, a decision Grant explained in a letter to Daniel Ammen: “. . . while I would like to have my name associated with the successful completion of a ship canal between the two oceans, I was not willing to connect it with a failure and one I believe subscribers would lose all they put in.”
The committee, as de Lesseps described it, was to mount opposition to the rival Nicaragua project–through the press, by lobbying in Washington–and to impress upon the American people the surpassing virtues of a canal at sea level. It was to supervise the purchase of American-made equipment and material for Panama. But its primary mission was to induce American investors to join in the Panama venture, and in that, as in most everything else, the committee proved just about useless. Thompson was the only member to do anything to justify his pay, chiefly as a lobbyist. The New York office served little purpose. Few investors were found. About all de Lesseps got for his bargain was the use of some impressive stationery, plus the freedom to mention, when need be, the name of somebody such as Jesse Seligman as among his backers.
Yet a fee of $300,000 was paid outright to the Seligman firm, and to each of the other two firms, and all three organizations would receive another $100,000 as time went on. The total cost of the Comite Americain would be $2,400,000.
So with brokers’ commissions running to more than 4,000,000 francs, with “remuneration to banks” totaling about 1,800,000 francs, plus a commission of 11,800,000 francs for the Levy-Cremieux syndicate, plus 12,000,000 francs to the American committee, then the 1,600,000 francs for “publicity,” and another 750,000 francs for miscellaneous organization expenses, the grand sum for getting out the stock and getting the company under way came to something over 32,200,000 francs, or about $6,400,000.
Early in 1881, between his first and second stockholders’ meetings, de Lesseps also purchased for 1,000,000 francs an office building at 46 Rue Caumartin, which stood back to back with the Suez Canal office on the Rue Charras. Ten thousand shares of stock that had been withheld from sale were turned over to the Türr Syndicate as previously agreed, and de Lesseps relinquished to the new corporation, at no charge, all rights and privileges obtained earlier from the Türr Syndicate. Thus the Wyse Concession now belonged to the Compagnie Universelle. The project was under way.
II
French civil engineers of the nineteenth century were an exceptional breed and justly proud of their heritage. It was the French who pioneered in the use of pneumatic caissons for bridge foundations and who perfected the use of wrought-iron I-beams for building construction. Les Halles, the famous Paris market building, the Menier Chocolate Works, the stunning Galerie des Machines at the recent Paris exhibition, were recognized as bold and innovative structures suggesting infinite possibilities for the future
of architecture. It was in France that reinforced concrete had first been tried and French engineers remained preeminent in its use. Over all, the French were preeminent in civil engineering in general, and French technical schools, like French schools of medicine, were the finest in the world.
There were two varieties of engineers in France, other than the military engineers: the ingenieurs de Fetat, who had been trained first at the ficole Polytechnique, then at the Ecole des Ponts et Chaussees; and the ingenieurs civils, whose school was the newer Ecole Centrale des Arts et Manufactures. Of these, the graduates of the ficole Poly-technique were the cream of the crop, an elite technical class of a kind, who had vast influence in the bureaucracy, and, consequently, over the whole economic life of France.
Just to be accepted at the state-run Polytechnique was a supreme honor. A rigorous entrance examination excluded all but the most brilliant applicants. And from the moment a young man walked through the gray stone portals on the Rue Descartes, he knew that nothing less than intellectual superiority and full devotion to La Patrie, les Sciences, et la Gloire were expected of him. Founded in 1794, the school was the chief scientific creation of the Revolution. Napoleon hailed it as his hen with the golden eggs, and the symbol of hen and eggs had been carved into keystones and made the centerpiece of the stained-glass skylight over the largest lecture hall, lest any student forget. It was not an engineering school, but a military school–rigid rules, tight-fitting blue uniforms, swords, the traditional bicorne for parade-ground ceremonies–and devoted to the study of pure science. The curriculum provided what was essentially a classical secondary education plus what was then the most advanced mathematical education in the world.
Upon finishing at the Polytechnique, the highest-ranking graduates generally went on to the Ponts et Chaussees–an ecole d? application–from which they emerged as engineers in the service of the state, as builders of bridges, highways, harbors, or as officials with the state-run railroads. Early in the 1860’s, after a thorough study of the system, an American authority on education, Henry Barnard, declared it gave France the best-trained corps of civil and military engineers of any nation. Lavalley, builder of the Suez dredges, Sadi Carnot, Godin de Lepinay, had come out of the Polytechnique, as had Ferdinand Foch, and as would, in another era, Valery Giscard d’Estaing.
The ingenieurs civils, the graduates of the Ecole Centrale, were the engineers of private enterprise and closer to American engineers in spirit. Gustave Eiffel was an outstanding example; another was William Le Baron Jenney, a Chicago architect and engineer, who was to build the world’s first skyscraper.
But all French engineers, and those from the Polytechnique especially, regarded themselves as men of science. Their creations were the result of abstract computation. The Americans, in the French view, were merely adroit at improvisation, which, however inspired or ingenious, was nonetheless of a lower intellectual order. The bias concerning American engineers was not wholly justified. Still the essential American spirit was improvisation. It was the attitude expressed in a remark attributed to the engineer John Fritz, who, upon building a new machine, is supposed to have said, “Now, boys, we have got her done, let’s start her up and see why she doesn’t work.”
But at Panama the French had to improvise–or rather they had to learn to improvise under pressure. And they had no past experience to go by. Virtually everything had to be learned by trial and error, and their chief difficulty as time went on was the fearful cost of their errors. The experience at Suez was little help. Probably they would have been better off in the long run had there been no Suez Canal in their past. For despite all de Lesseps told the press and his public, Panama had only one advantage over Suez: the distance to be covered. Everything else at Panama was infinitely more difficult. Panama was an immeasurably larger and more baffling task than Suez, just as Godin de Lepinay had warned.
There was, to begin with, the fundamental geology of the Isthmus, a subject that had been given scarcely a fraction of the study it deserved. At Suez the digging had been mostly through sand. The climate at Suez had been hot, but dry; the climate at Panama, eight months of the year, was not only hot, but heavy, smothering, with a humidity of about 98 percent. At Suez there had been the problem of bringing enough water to the canal site to sustain the labor force; the annual rainfall at Suez had been about nine inches. At Panama the annual rainfall could be measured in feet, not inches; ten feet or more on the Caribbean slope, five to six feet at Panama City.
Suez was as flat as a tabletop, with a maximum elevation along the canal line all of 50 feet above sea level. Panama was covered with steep little mountains, and the maximum elevation on the canal line would prove to be 330 feet. There was the Panama jungle. And there was the Chagres River, which still stood directly in the path of the canal.
Questions of housing, labor supply, and health had to be faced. John Bigelow, who would visit the Isthmus later to appraise the French effort, wrote, “There probably was never a more complicated problem–a problem embarrassed by a larger proportion of uncertain factors–presented to an engineer. . . . Every step . . . is more or less experimental.”
Ferdinand de Lesseps would never see it that way, however. “It is,” he informed his stockholders, “an operation the exact mathematics of which is perfectly well known. . . .” Couvreux, Hersent had built Suez; Couvreux, Hersent and exact mathematics would build Panama. He could never quite put Suez out of his mind and his engineers in the field had had no experience in the tropics and had not been trained to improvise. So they not only had to learn as they went along, which would have been difficult enough, but they had to learn to learn as they went along and to unlearn nearly everything that had been supposedly “taught” at Suez.
The first group arrived at Colón on the faithful Lafayette at the end of January 1881. There were some forty engineers, headed by Gaston Blanchet and by Armand Réclus, who was the new general agent of the canal company, and his assistant, Louis Verbrugghe, the lawyer who had gone to Bogotá with Lieutenant Wyse. Several of the engineers had brought their wives with them and there were various festivities at Panama City to honor the occasion. There is, however, nothing to the story that Sarah Bernhardt had also come out on the Lafayette or that she “presented a drama in the wretched little box of a play-house that was then the only theater in the city.” Bernhardt’s one and only visit to the Isthmus came later, in 1886.
On February 1, Réclus sent a two-word telegram to Ferdinand de Lesseps that was to thrill newspaper readers all over France: “Travail commence”–“Work begun.”
Réclus had overall control, as things were organized, but Blanchet, as the ranking official for Couvreux, Hersent, was the one in charge of the actual work. De Lesseps’ contract with the construction firm was for two years and the work was to be done on a cost-plus basis; that is, any costs above the estimates were to be met by the canal company.
As someone to set things in motion, Blanchet was a good choice. He was decisive and forceful and his marriage had smoothed the way in Panama society. His strategy was to spend a year preparing to dig. He wanted to cut a path four hundred feet wide the whole way across the Isthmus, nearly fifty miles, to provide enough open space for the most accurate siting of the canal line as possible. But right away the idea was rejected by the Paris office. He had to content himself with clearing a strip of only fifty feet, which proved too narrow to do what he wanted, so, eventually, the entire line would have to be redone as he had intended in the first place.
With a force of black and Indian laborers hired locally, he proceeded to chop his way from Colón to Panama City on a line that crossed the looping brown Chagres no less than fourteen times. This in itself was an enormously difficult and dangerous task. Immense trees and all their tangled undergrowth had to be taken down by hand.
Except for the path of the railroad, the jungle was no different than it had been when the railroad was begun, or, for that matter, than in the time of the earliest Spanish explorers. Th
e men worked in constant fear of poisonous snakes (coral, bushmaster, fer-de-lance, all three among the world’s most deadly reptiles) and of the big cats (puma and jaguar). Days and nights were made a living hell by bichos, the local designation for ticks, chiggers, spiders, ants, mosquitoes, flies, or any other crawling, buzzing, stinging form of insect life for which no one had a name. The only tools were machete and ax, and the jungle, as one engineer wrote, was “so thickly matted that one could only see a few yards in any direction. . . .” Beyond Gatun the line cut through seven miles of marshy flats and swamp.
And before the job was finished, the rains had begun.
There were, as all newcomers learned, but two seasons in Panama: the season Ferdinand de Lesseps had seen and the wet season. The dry season, with its clear skies and trade winds, began normally about mid-December and lasted four months, during which, in Panama City, water carts had to be used to keep the dust down. Then, abruptly, about the first of May, the rains returned. It did not rain all the time in the wet season, as many supposed. In a country where an inch of rain can fall in an hour, 120 or 130 inches in a year may not mean a great many more than 120 or 130 hours of rain all told. Some of the most torrential downpours lasted only a few minutes. But it did rain nearly every day and it never just rained. At Colón six inches in twenty-four hours or less was not uncommon. In the single month of November, when the heaviest storms struck, rainfall along the Chagres basin–on the Atlantic slope, that is–could range from two to three feet.
But no statistic conveyed a true picture of Panama rain. It had to be seen, to be felt, smelled; it had to be heard to be appreciated. The effect was much as though the heavens had opened and the air had turned instantly liquid.
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