Panama fever (32 page)

The Company threw everything it had at efforts to promote the sale, spending, it came out later, over 7 million francs on “publicity” and over 3 million francs on “patronage.” No one in France was unaware of what was at stake.

On the morning of the start of the sale, someone put a hoax notice out by wire that Ferdinand de Lesseps had died. There was an instant denial, but the damage was done. Two days later speculators dumped Panama shares on the bourse, causing a sharp fall in their value. By the end of the six days, although 350,000 people had subscribed, three times the 1880 figure, less than half of the bonds had been sold. Money, it seemed, was exhausted. Once the sum had been put aside for interest and the prize fund, the Company had gathered in only a little more than 100 million francs, a sixth of what it required.

Still, de Lesseps refused to accept defeat. On August 1, addressing the annual general meeting, he urged his troops on to one final, patriotic effort. “All France,” he announced, “is joined in the completion of the Panama Canal. Actually more than 600,000 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!”

Then de Lesseps and his son Charles set off on a grueling tour of twenty-six French cities, with Charles now doing most of the speaking, while his father's presence still guaranteed huge turnouts. “Spontaneous” local committees were organized by the Company to recruit new investors.

The remaining bonds went on sale on November 29, with a final exhortation from de Lesseps: “I appeal to all Frenchmen,” he said. “I appeal to all my colleagues whose fortunes are threatened… Your fates are in your own hands. Decide!” By this time, the price had been cut to just 320 francs, with generous terms for paying in installments. It was decided that unless four hundred thousand were sold the subscription would have to be annulled.

Soon after the opening of the sale, bear raiders made another attack. By December 8, lottery bonds on the bourse were selling for 40 francs less than de Lesseps was asking. The final day of the sale had been set for December 12. The day before, the American journalist Emily Crawford visited the Company's headquarters at 46 Rue Caumartin. The hall of the building was packed with investors, “flushed and excited, but willing to stake their last penny on the hope of retrieving their fortunes … They were like desperate gamblers,” Crawford would report in the
New York Tribune
, “whose hopes rise highest when their losses have been greatest.” The crowd grew in number and noise, until suddenly at 4:00 p.m., it was hushed by the appearance of Ferdinand de Lesseps. The old man clambered onto a counter in the corner of the room and cried out: “My friends, 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!” So overcome that he was weeping, de Lesseps joined the crush in the room, shaking the hands of his exultant, cheering investors.

No details were given, but soon rumors were circulating that 800,000 bonds had been sold. The next day saw the same chaotic scene in the Company headquarters, and then, late in the afternoon, Charles de Lesseps appeared. How had the subscription gone? everyone asked. “The subscriptions reached a total of 180,000 bonds,” Charles began in a low voice. “This being below the minimum fixed by M. de Lesseps, we will commence returning the deposits tomorrow. You see, I am telling you exactly how things are.”

There was a shocked, dazed silence. How had the picture changed so radically overnight? someone asked. “My father is younger in spirit than I,” Charles replied. “His remarks were made on the strength of a hopeful report… the result is bankruptcy or the winding up of the Company.”

In desperation Ferdinand de Lesseps placed before the Chamber of Deputies a bill authorizing the Compagnie Universelle to suspend payments of all debts and interest for three months, while he attempted to float a new company. On December 15, the Chamber threw out his bill by 25 6 votes to 181.

Ten minutes after the vote, a reporter called at de Lesseps's house with the news of the bill's rejection and his company's liquidation. The old man turned pale.
“Cest impossible”
he whispered.
“Cest in-digue.”

he crash of the Compagnie Universelle was the biggest of the nineteenth century, and the greatest since the markets began. The liquidation wiped out the hard-earned savings of eight hundred thousand private investors. A staggering one billion francs ($280 million) had been expended, and the Company had liabilities of nearly three times that sum.
Le Grand Franjáis
made one last, fruitless effort to save his company, with a spectacularly unsuccessful bond issue in January 1889, but the next month an official receiver was appointed. De Lesseps never recovered from the blow, retiring to his country house at La Chesnaye. His great will finally broken, he quickly lost awareness of the world around him, preferring to stare out into the garden, or sit musing by the fire. By the summer of 1889, he was often confined to his bed.

When the news of the liquidation arrived in Panama, it was, according to Tracy Robinson, “like a stroke of paralysis.” Foreign consuls had been predicting fierce riots, and gunboats had arrived offshore from France, Britain, and the United States. There were disturbances, but on the whole a sense of dumb shock prevailed, as contractors and workers alike laid down their tools, the giant machines were shut down, and peace returned to the jungle for the first time in seven years.

All along the line thousands of laborers found themselves suddenly thrown out of work. Shops closed as merchants pulled down their shutters and relocated, the prostitutes and professional gamblers set off for more inviting pastures, the railway closed down stations, and the banks suddenly stopped honoring checks from the Company. Rent rates and land values collapsed just as immediately.

Within no time at all, the workforce had fallen from 14,000 to just 800 involved in basic maintenance. A large number of those laid off left the Isthmus, either for home or for other employment in the region. Many of the workers, however, found they had insufficient funds for the rail fare to Colón, let alone the steamer back to Kingston. Slowly, they made their way on foot to Colón, where they congregated in desperate groups.

“There are hundreds [of destitute Jamaicans] absolutely starving,” reported the
Star and Herald
in early April, “who have not tasted food for days … Despair is taking possession of the people.” Many sought the help of Claude Mallet, who telegraphed the Jamaican government to send steamers to pick the men up. Receiving no reply, he was forced to feed 1,500 out of his own pocket. Eventually the government of Jamaica agreed to start bringing their thousands of destitute countrymen home. In all, 7,244 were repatriated. Some six thousand Jamaican men, women, and children were left behind when the fixed period for repatriation ended, and most took up residence in shanties along the line, growing bananas and other crops for subsistence. Many refused to believe that the project could really be abandoned.

n France, in the immediate aftermath of the great crash, when attention was diverted by the great exposition of the centennial of the French Revolution, there was a similar refusal to accept the end. Surely the French government would come to the aid of the scheme? But stern warnings from the new U.S. president Benjamin Harrison not to interfere ended what little inclination the French Cabinet might have had to do so. As this realization percolated through the country, the fever of recriminations began.

Petitions from bondholders seeking redress from the government poured into the Chamber of Deputies. At the same time, rumors of wrongdoing in the Company and in the government gathered momentum, and best-selling books were published on the “Scandal of Panama.”
Le Grand Français
was a fraud, a cheat, and a liar, one alleged. “What have you done with the money?” the author asked de Lesseps.

An examining magistrate was appointed, whose first step was to summon the eighty-six-year-old de Lesseps, his son Charles, and another senior Canal Company director. Ferdinand de Lesseps, against the advice of his doctor, roused himself, donned his uniform of a grand officer of the Legion of Honor, and went to meet the investigator. According to Charles, “He had apparently recovered all his strength; he remained three quarters of an hour … and when he left his face radiated charm and energy as it always did under difficulties. But the reaction soon set in; it was frightful.” Back home, the old man took to his bed and hardly spoke to anyone for three weeks, except to say to his wife, “What a terrible nightmare I have had. I had imagined I was summoned before the examining magistrate. It was atrocious.”

The magistrate's report, delivered in May 1892, accused the Company of “dissipating” funds “in a manner… more consistent with the personal views and interests of the administrators and directors… than with the true interests of the company.” Second, they were culpable of repeated “false announcements of progress,” which concealed the “true situation” and misled investors. The files were handed over to the public prosecutor, who took his time sifting through the evidence, while police raided the offices of ex-canal officials and engineers, including Gustave Eiffel.

Meanwhile, revelations came thick and fast. More than a hundred deputies, it was suggested, had taken bribes from the Canal Company. The cabinet was forced to resign, duels were fought, and a formal parliamentary investigation ordered, while criminal proceedings were brought against de Lesseps, Eiffel, and other Company officers.

Soon “the Panama Affair” had outgrown its original focus and became a general stick with which to beat one's political opponents. Out in the country, too, the word
Panamiste
now had a wider meaning as synonymous with corruption anywhere. On January 6 a large anti-Semitic rally was staged in the center of Paris, where the speakers proclaimed the Panama disaster the fault of the Jews, who, they said, were now laughing at France's misfortune. While most of the crowd cheered, a small number protested. A fight broke out, which degenerated into a riot. Paris was jumpy A bomb in a police station was blamed on anarchists, whose numbers were swelling as disillusion with the government grew. Then, amidst talk of a royalist coup, military units were put on the alert. Foreign consuls described France as on the brink of a revolution.