The new canal was to follow the same line. There were to be two huge flights of locks, with five locks to each flight, at Bohio Soldado on the Atlantic side and between La Boca and Paraiso on the Pacific side. They would be single locks–that is, locks capable of handling ship traffic in one direction at a time–and the dimensions of each were to be 180 by 18 meters (590 by 59 feet). Passing through the full flight, a ship would be lifted to, or brought back down from, a summit level of 49 meters (roughly 161 feet), which would be well above the level of the Chagres at flood stage. So instead of a canal with a bottom 29 l A feet below the level of the sea, it was to be one 161 feet above. The total excavation required was reckoned to be only 80,000,000 cubic meters (instead of 120,000,000, as Dingler had figured), which, it was said, left only about 34,000,000 cubic meters still to go (instead of 74,000,000, using Dingler’s estimate as the base figure).
The official cost of the completed canal was also revised, making this the fourth time since the Paris congress. The estimate arrived at by the congress, it will be recalled, was 1,200,000,000 francs; at Panama in 1880 the Technical Commission had cut that to 843,000,000 francs; next, on reaching New York, de Lesseps had announced that it would be 658,600,000 francs. In July of 1885 it was back to what it had been to begin with–1,200,000,000 francs. Now, for a lock canal 161 feet above sea level, the price was declared to be 1,654,000,000 ($331,200,-000).
To build a Panama canal the French public to date had supplied something over 1,000,000,000 francs. Now de Lesseps was declaring in the same old positive, confident tones that another 600,000,000 francs were needed to open a canal of a kind he had long since educated them to regard as inferior and therefore unacceptable.
Recruiting Eiffel had involved some fast footwork on both sides and a contract that Eiffel and company officials alike thought best kept confidential. De Lesseps considered Eiffel’s name a golden touch. It was as though, or it could appear as though, that “man of genius” was making his entrance in the final thrilling act, just as he, de Lesseps, had foretold so many years before: Eiffel, the most brilliant engineer in France, suddenly famous as progenitor of the gigantic iron tower being started on the Champ de Mars. Conceived as the centerpiece for another Paris exposition scheduled for 1889, the tower was to be the tallest structure on earth. The plan had caused an uproar–many Parisians foresaw their City disfigured by an iron monstrosity–but to the vast majority of the public, the tower, like the canal at Panama, was a bold affirmation of French genius, French supremacy in the art of civilization. So for Eiffel to step forth now and join forces with Ferdinand de Lesseps seemed the perfect, brilliant stroke, and the announcement had an especially energizing effect on de Lesseps, whose response to such dramatic turns, even when self-contrived, was invariably infectious.
Eiffel’s locks, the gates and operating apparatus for which were to be manufactured in France, were in fact modified versions of the locks he had designed for his Nicaragua plan ten years earlier, prior to the Paris congress. Also, construction of the lock basins was to be delegated to another contractor, a new firm organized by Philippe Bunau-Varilla. Still, Eiffel believed in action and decisiveness. He did move quickly. By January his engineers were on the Isthmus. In another month, excavation for the lock basins was under way.
For all this, however, Panama stock kept falling.
Months slipped by as a new premier, Pierre Tirard, refused even to submit the lottery request to the Chamber of Deputies. “From all information received through other channels than the Company,” reported Economiste Français, “it is clearly shown that the situation of the undertaking is getting more and more hopeless. . . . The year 1888 will certainly see the liquidation of the Company. The lottery bonds can do nothing towards meeting such necessities.”
On March 4, 1888, several deputies introduced a bill permitting the company to go ahead with the lottery. How quickly the Chamber might act on the bill or what its chances were remained open questions. De Lesseps, however, was in the midst of offering still another issue of bonds–this made eight times in eight years that he had gone to the public for money–but with a proviso that they could be converted into lottery bonds should such a bill be passed into law. It appeared that he had been given a saving boost, and as always with every chance bit of good news, he made as much of it as possible.
Even so the sale was a fiasco. Not a third of the bonds were sold. The lottery was no longer the best hope for salvation, it was the last hope. There was no money to be had by conventional means.
The parliamentary process that followed was painfully slow. The Chamber had to vote first on whether to consider the bill, then the bill had to be appraised by a committee of eleven duly appointed deputies. Weeks passed. All signs were that the committee would defeat the bill by a vote of six to five, until one member, a hero of the Franco-Prussian War, Charles François Sans-Leroy, switched his vote at the last minute and the bill was approved by a margin of one. By now it was mid-April. The debate in the Chamber began, with loyal Panama supporters packing the public galleries. Every speaker for the bill was vigorously cheered; anyone who attacked it, or even questioned the idea, was roundly jeered or interrupted, which caused several of the bill’s more vocal opponents to grow even more impassioned and bitter. “The ruin is getting on fine!” declared one irate member from the tribune. “Scarcely more than fifty per cent remains to be lost.”
On April 28, the Chamber approved the lottery by a wide margin and instantly the company’s stock soared. In the Senate, on June 5, the bill was again approved. On June 8, three years after de Lesseps first proposed the lottery, the new law went into effect.
It was none too soon. So desperate had the company’s situation grown that Charles de Lesseps had been forced to negotiate a hurried loan of 30,000,000 francs from Two of the largest commercial banks, the Crédit Lyonnais and the Societe Generate. As security he had been required to put up the Panama Railroad stock. Moreover, the banks had insisted that they handle the sale of a large block of the lottery bonds, in the event the bill passed, for which they were to receive extremely handsome commissions.
It is conceivable that what happened next could have been avoided. many of those involved would always think so.
By the new law the company was authorized to borrow a total of 720,000,000 francs. Six hundred million francs were to be used to finish the canal according to the lock plan, while the remainder was to go into government securities to guarantee payment on the bonds, as well as the cash prizes.
There was nothing in the law stipulating how the issue should be staged, and at the canal company and the Two banks, opinions were sharply divided. Baron Jacques de Reinach argued for scheduling the sales in successive installments, rather than going for everything in one blow. Until then, his position was, the public had supplied the canal company with some 150,000,000 francs a year on the average. If the lure of cash prizes proved strong enough even to double that, then the most that could be expected was 300,000,000 francs, or less than half the amount that was wanted. The safest plan therefore was to try for smaller parts spread out over a year or more.
The banks thought otherwise. Primarily it was Henri Germain, the august founder and chairman of the board of the Crédit Lyonnais, who thought otherwise. The strength of the whole lottery concept, he insisted, was in the size of the cash prizes. Since subdividing the issue would proportionately reduce the prizes, he was against it. “The prudence, the maturity of judgment of the man who endowed France with one of its greatest banking concerns, seemed to exclude the possibility of any error of judgment,” Bunau-Varilla would write. That Germain also had the railroad stock in hand, that he had the company By the throat, as a matter of fact, was doubtless of great importance. And it was Charles de Lesseps, not de Reinach, who had responsibility for the final decision. So the bonds were to go on sale in one gigantic issue–2,000,000 bonds redeemable in 1897 at 400 francs ($80) and priced at 360 francs ($72). The sale would start June 20, run six days, and the
re were to be lottery drawings every two months thereafter, year after year. Prizes in one year would range from as high as 500,000 francs ($100,000) down to 1,000 francs ($200).
A stupendous publicity campaign was launched at a cost of more than 7,000,000 francs, a figure, like many others, that was not to be divulged until long afterward. The intensity of feeling for and against the company was enormous. Throughout France people talked of little else.
On the morning the bonds went on sale, somebody–his identity remains a mystery–put a telegram on the wire in Paris to every major provincial city, to London and to New York, announcing the death of Ferdinand de Lesseps. There was no truth to it and the company issued an immediate denial, but the damage was done. Two days later, bear raiders dumped Panama shares on the market, driving the stock into sharp decline. Company securities could now be bought on the open market for nearly 100 francs less than the bonds being offered.
Defeat appeared inevitable and it was. of the 2,000,000 bonds offered, less than half–800,000–were sold. Receipts for the company amounted to 255,000,000 francs, or considerably less than half of what was wanted. The cost of the issue had been enormous–31,000,000 francs–and since the law required that 120,000,000 francs be set aside for interest and for the prize fund, that left the company with little more than 100,000,000 francs.
By all rights, by every established rule of the game, that should have been the end of the Compagnie Universelle. The bubble should have burst then and there and certainly it would have had de Lesseps con-ceded defeat. His faith, however, was in people. He saw the arithmetic differently. (Edouard Drumont, who was to be his most vicious critic, asserted that the whole problem all along was that de Lesseps never learned how to add and subtract.) While it was true that only 800,000 bonds had been sold, they had been subscribed for by 350,000 persons. That was 350,000 men and women who still believed, who were still behind him and the honor of France. That was also three times the number of people who had subscribed to the 1880 stock issue, which had been such an unprecedented demonstration of the “people’s capitalism.” The bond sale had shown that after eight years, after all the setbacks, the expenditures, the loss of life, his popular following was greater than ever! In the words of one contemporary English writer, “M. Lesseps soon showed he was not dead, and he was speedily laboring with great energy to repair the effects of the blow . . . .” A less admiring editor of the New York Tribune wrote of his “unscrupulous audacity.”
He would launch a campaign to sell the remainder of the lottery issue. Again he would take his case to the people of France. Striding onto the platform at a mass meeting of shareholders in August, he was cheered as never before in his career. His mere presence was a magnetic charge; he was inspiring, heartrending, commanding, all these at once; he was the voice of authority, the ageless living emblem of French verve and grandeur. The Suez Canal had brought 2,000,000,000 francs to France, he told them; the Panama Canal would bring 3,000,-000,000. “All France, it may be said, is joined in the completion of the Panama canal. Actually more than six hundred thousand 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!”
His call was for one all-out, climactic assault. The proposition was like that of a chain letter: a bonanza only if everyone participates, only so long as no one breaks the spell. To line up new investors, security holders throughout France were organized into hundreds of committees, these supposedly an expression of a huge ground swell of popular support. He and Charles set off on a grueling cross-country tour to Lyon, Nimes, Marseilles, Bordeaux, to Nantes (where the Eiffel locks were being built), to Lorient, to twenty-six cities in October and November, spending long nights on trains, listening to advice, shaking hands, sitting for photographers, answering questions, exhorting local committee heads, enduring endless formal banquets. It was billed as a lecture tour, but de Lesseps, who turned eighty-three on November 19, was unable any longer to sustain the old exuberance. It was Charles who gave most of the speeches this time, while his father sat on the stage like some national monument. On cue he would rise and add a few words.
The price of the unsold bonds was cut once, twice, three times, to a bargain price of 320 francs. A buyer need only put down 90 francs ($18) and could pay the balance in eight monthly installments.
Only once does the strain of the ordeal seem to have affected the old hero. He and Charles had taken their campaign across to England, for an appearance before the British Association at Bath. Afterward came reports of personal bitterness, reports ignored by the French press but picked up in Panama by the Star & Herald. In London he implied that there had been more to his labors than met the eye. He threatened “to publish an account of every step he had been forced to take in the Panama Crusade” steps that had involved certain high-placed figures in the French government.
If it was an attempt to frighten the government at home into saving the company at the last minute, it did not work.
The remaining lottery bonds went on sale November 29. The closing of the issue was set for December 12. The condition of the sale was that unless 400,000 of the bonds were taken, the subscription would be annulled. “I appeal to all Frenchmen,” wrote de Lesseps in a final stirring call. “I appeal to all my colleagues whose fortunes are threatened. . . . Your fates are in your own hands. Decide!”
The offices on the Rue Caumartin became the focus of a tremendous emotional tension that reached to every part of France. For hundreds of thousands of people the fate of the company meant the difference between a chance of real security for once in their lives and absolute financial disaster. If the company were to fail, it would indeed be, as Paul Leroy-Beaulieu had said, the largest, most terrible financial collapse on record, a stupendous event historically; but for the vast majority of those who had stood behind Ferdinand de Lesseps all these years, investing their life’s savings, often borrowing heavily, mortgaging land, selling off family treasures–jewelry, pictures–to invest more, it would very simply mean a personal disaster of almost unimaginable proportions.
Again bear raiders made an all-out attack and Panama stock plum-meted more than 100 points in less than two weeks, from 270 francs to 165 francs. By December 8, lottery bonds on the Bourse were selling for 260 francs, 40 francs less than what de Lesseps was asking.
December 11, the next to the last day of the sale, the large public hall on the ground floor of the company’s offices was filled with investors, “flushed and excited,” as Emily Crawford wrote, “but willing to stake their last penny on the hope of retrieving their fortunes.” They were, she said, like desperate gamblers, their hopes highest at the point when their losses had become greatest. “Strangers met and mutually strengthened their faith with words of comfort. A man who ventured to express doubts as to the possibility of the canal found the place too hot for him.” That same day Panama shares on the Bourse closed at 145, down another 115 points in three days.
The next day, the final day of the sale, the scene at the canal offices was even more frenzied, as a still larger, more excited crowd packed into the public hall. At about four in the afternoon, de Lesseps appeared, causing a sensation. A way was cleared and he climbed onto a table at one end of the room. He motioned for silence.
“My friends,” he cried out, “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!”
Tears were streaming down his face. Then he was being helped from the table and the crowd seemed delirious. People were crying, cheering, embracing one another. He began reaching out for hands. Several women tried to kiss his clothing.
No details were available on the success of the sale. But by nightfall reports swept through the City that more than the required 400,000 bonds had been sold in Paris alone, that Marseilles had taken another 86,000.
The throngs that pressed into the Rue Ca
umartin the next morning, December 13, had come for a victory celebration. Orders were still pouring in, it was announced when the company opened its doors. The subscription had reached an astounding 800,000. There were repeated shouts for de Lesseps to appear; everyone was pressing toward the table where he had stood the day before. Perhaps an hour went by. Then the figure that entered, moved through the crowd, and climbed onto the table was seen to be Charles de Lesseps.
“Do you wish to see Monsieur de Lesseps?” he called, and there was a roar of approval. (“Yes! We want to see that good Monsieur de Lesseps,” said an elderly woman standing beside Mrs. Crawford. )
“My father will always be happy to see you, but I suppose you all wish for some information.”
He waited for the cheering to stop.
“We are sitting at an important meeting of directors which I have left for a moment to come here. I do not know what decision may be taken by this meeting, but I am willing to tell you whatever I know. “
The crowd was suddenly still. He had barely to raise his voice to be heard.
“I will be perfectly open with you, only do not hold me responsible if you learn anything else tomorrow. If you would like to wait for another hour, I will let you know the full result of our deliberations, but would you rather know at once what I can tell you? “
According to Mrs. Crawford, whose account of the scene is the most vivid available, everybody assented to this. He asked what sort of information they wanted, she wrote, “and being told in reply that they wished to know the result of the subscription, he went on in a deliberate tone.”
The subscription, he said, had thus far reached a total of 180,000 bonds. “This being below the minimum fixed by Monsieur de Lesseps, we will commence returning the deposits tomorrow. You see, I am telling you exactly how things are.”
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