FRANCE. 



319 



Tin- Panama Scandal. The Panama ('anal 



Congress, which iwt at Paris, May 15. 1879, ap- 

 proved the project of Ferdinand de I.> >M-p> fur 

 a tide-water canal across the Isthmus of Panama 

 and the estimates of experts who reported tlint 

 it could l>e built in twelve years ut a cost of 

 I.;.'!)) 1.000,000 francs, and would yield when com- 

 pleted an annual income of 90,000,000 francs. 

 giving a dividend of 7 per cent, to ordinary 

 shareholders, as the expenses would not exceed 

 5 pt>r cent, of the receipts. M. de Lesseps. after 

 a visit to the isthmus in 1880, reduced the esti- 

 mates for cost of construction to 843,000,000 

 francs, and promised to complete it bv 1887. 

 The ."><><>- 1' rune shares of the Compagnie Univer- 

 selle du Canal Interoceanique de Panama were 

 eagerly taken by all classes of Frenchmen, espe- 

 cially by the peasants. The share capital was 

 300,000,000 francs. Couvreux and Hersent con- 

 tracted to do the work for 512,000,000 francs, it 

 was represented, though the contract was, in 

 fact, to work by the piece, and the contractors 

 soon withdrew with a large indemnity. New 

 contracts were made at a higher figure. Loans 

 were floated by the aid of bulling operations of 

 the directors. Large sums were paid out for 

 puffery or as hush money, 1.362,000 francs in 

 1882 alone to newspaper proprietors, who jeal- 

 ously chaffered about the market value of the 

 influence of their respective organs. The suc- 

 cessive loans, obtained by means of purposely 

 deceptive estimates, were loaded with more and 

 more oppressive conditions ; yet interest had to 

 be paid regularly on the nominal sums. In 1886 

 the company applied to the French Chamber for 

 permission to raise a lottery loan, representing 

 that works amounting to 471,000,000 francs had 

 l>een executed, though the true amount was 171,- 

 000,000 francs. A great number of signatures 

 hud been obtained to petitions circulated through 

 France in favor of this loan, but the committee 

 of the Chamber recommended the rejection of 

 the bill ; whereupon M. de Lesseps withdrew the 

 proposed loan, and issued instead an ordinary 

 loan for 600,000,000 francs, with which he prom- 

 ised to complete the canal. The promoters of 

 the canal, anxious to save from failure the 

 crowning achievement of Ferdinand de Lesseps, 

 the "great Frenchman," had now to treat with 

 lobbyists and legislators, as well as with the 

 newspaper organs of active politicians of all 

 parties. They still clung to the promised sea- 

 level canal, although M. Rousseau, who was sent 

 out by the Government in 1886 to examine the 

 route, and even their own engineers, pronounced 

 it financially impracticable. Charles Baihaut, 

 then Minister of Public Works, demanded 1,000,- 

 000 francs as pay for his support of the lottery 

 loan, and received a check for 375,000 francs. 

 In 1887 a fresh loan was necessary, not only to 

 carry on the work of construction and pay ex- 

 cessive interest on the loans already raised, but 

 to satisfy the exorbitant demands of those who 

 had the power to ruin the enterprise. This was 

 only half taken up. In 1888 there was a sec- 

 onii application for a lottery loan bill, which M. 

 Tirard, Minister of Finance, refused to enter- 

 tain. It was renewed, supported by popular 

 petitions with 158,000 signatures, and a plan for 

 a canal with locks was at last presented, which 

 was made alluring by the announcement of a 



contract with M. Eiffel for the employment of 

 ma. hinery of 450,000 horse power, and the loan 

 was authorized by the Chambers. To float the 

 loan Baron Ueinach was given 6,000.000 francs, 

 and circulars and prospectuses containing delib- 

 erate niisstatements, slump speeches, and glow- 

 ing articles in subsidized papers, all failed to 

 secure subscriptions enough to produce 600,000.- 

 000 francs, with which Charles ue Lesseps prom- 

 ised to complete the canal in three years, though 

 it was known that 980,000,000 francs would be 

 required. For each of these loans there were 

 enormous sums charged in the books of the com- 

 pany to syndicates and the expenses of advertis- 

 ing. Although the loan of 1886 did not suc- 

 ceed, the syndicate that undertook to place it 

 pocketed 11,000,000 francs. In 1888 the banker 

 Oberndorffer, who suggested the lottery loan, re- 

 ceived 2,000,000 francs for the idea; 2,000,000 

 francs were paid for publicity, 2,900,000 francs 

 for syndicate expenses, and 1,400,000 francs were 

 set down to warrants to bearers, which were di>- 

 tributed among journalists and politicians. 



When bankruptcy came and tne Government 

 appointed an official liquidator, M. Brunet, who 

 was succeeded on his death by M. Monchicourt. 

 it was found that 1,300,000,000 francs had been 

 spent, while only 700,000,000 francs of assets re- 

 mained. The sum expended on the works was 

 something over 500,000,000 francs. The expense 

 of loans was 160,000,000 francs, and 440,000,000 

 francs had been consumed in extravagant sala- 

 ries and profits of contractors. The official 

 accountant who examined the books in 1893 

 discovered that the disbursements were 1,434,- 

 000,000 francs, including 249,000,000 francs for 

 interest on coupons. The sum expended on the 

 works was 550,000,000 francs, of which 107,000.- 

 000 francs were paid direct to workmen and 

 443,000,000 francs to contractors. Of four of 

 the contractors the profits were 77,000,000 francs. 

 M. Eiffel's share was 33,000,000 francs, but after 

 paying bonuses and commissions to the inter- 

 mediaries who helped him to obtain the con- 

 tracts he had only 20,000,000 francs left, from 

 which he refunded 8,000,000 francs on the de- 

 mand of the liquidator. There had been war- 

 rants payable to bearer to the amount of 7,000,- 

 000 francs, the purposes and beneficiaries of 

 which were concealed from the liquidator. 



In 1887 M. Rouvier, the Prime Minister, ac- 

 cepted 50,000 francs of the Panama monev to 

 meet certain expenses incurred in fighting fiou- 

 langism, expecting to pay it back out of the 

 secret-service fund. Baron Reinach, who was 

 able not only to ruin the Panama enterprise but 

 to break down the 'Government, then engaged 

 in the struggle with Bonlangism, by disclosing 

 his bribery of Republican politicians, became 

 more extortionate in his demands. Charles de 

 Lesseps had from the first disapproved the Pan- 

 ama enterprise, and sought to dissuade his father 

 from engaging in it : but the old man considered 

 it his duty to lend the influence of his name 

 to an undertaking that would^ prove a greater 

 triumph of French engineering than the Suez 

 Canal. The underwriting syndicates that un- 

 dertook to float the Panama bonds took no risk. 

 paying only 2$ francs per bond, while they re- 

 ceived froni 5 to 20 francs as commission for 

 selling each bond. Reinach did not even ad- 



