Panama scandals
Encyclopedia
French Third Republic
The French Third Republic was the republican government of France from 1870, when the Second French Empire collapsed due to the French defeat in the Franco-Prussian War, to 1940, when France was overrun by Nazi Germany during World War II, resulting in the German and Italian occupations of France...
in 1892, linked to the building of the Panama Canal
Panama Canal
The Panama Canal is a ship canal in Panama that joins the Atlantic Ocean and the Pacific Ocean and is a key conduit for international maritime trade. Built from 1904 to 1914, the canal has seen annual traffic rise from about 1,000 ships early on to 14,702 vessels measuring a total of 309.6...
. Close to a billion franc
Franc
The franc is the name of several currency units, most notably the Swiss franc, still a major world currency today due to the prominence of Swiss financial institutions and the former currency of France, the French franc until the Euro was adopted in 1999...
s were lost when the government took bribes to keep quiet about the Panama Canal Company's financial troubles, in what is regarded as the largest monetary corruption scandal of the 19th century.
The bankruptcy
On 4 February 1889, the Tribunal Civil de la Seine lawfully applied for the winding up of the Panama Canal Company in ParisParis
Paris is the capital and largest city in France, situated on the river Seine, in northern France, at the heart of the Île-de-France region...
. The work on the isthmus
Isthmus of Panama
The Isthmus of Panama, also historically known as the Isthmus of Darien, is the narrow strip of land that lies between the Caribbean Sea and the Pacific Ocean, linking North and South America. It contains the country of Panama and the Panama Canal...
was stopped in the meantime. The lawfully ordered liquidator tried to maintain the work carried out, the buildings, the tools and the machinery. However, within a few years, high losses were incurred due to poor means of protection in the damp, warm climate. The French government pushed the completion of the liquidation
Liquidation
In law, liquidation is the process by which a company is brought to an end, and the assets and property of the company redistributed. Liquidation is also sometimes referred to as winding-up or dissolution, although dissolution technically refers to the last stage of liquidation...
further and further away, because the take-over offers of the various American
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
companies seemed too small. An intermediate company was unable to be founded since the necessary capital failed. The liquidator appointed a commission to continue the canal project examination. The commissions report advised in 1890, the continuation of the sluice canal and the renewal of the contract with Colombia
Colombia
Colombia, officially the Republic of Colombia , is a unitary constitutional republic comprising thirty-two departments. The country is located in northwestern South America, bordered to the east by Venezuela and Brazil; to the south by Ecuador and Peru; to the north by the Caribbean Sea; to the...
. The same year it succeeded in agreeing on a new contract in Bogotá
Bogotá
Bogotá, Distrito Capital , from 1991 to 2000 called Santa Fé de Bogotá, is the capital, and largest city, of Colombia. It is also designated by the national constitution as the capital of the department of Cundinamarca, even though the city of Bogotá now comprises an independent Capital district...
, which was limited until 1904, on the same basis as the concession contract agreed on in 1878.
A concluding picture of the bankruptcy was first formed in 1892. Some 800,000 French people, including 15,000 single women, had signed for stocks, bonds and founder shares from the Panama Canal Company, to the sum of - the then considerable amount of - approximately 1.8 billion gold Francs. From the nine issues the Panama Canal Company received 1.2 billion gold Francs, 960 million gold Francs of which were invested in Panama.
The scandal
Georges Clemenceau
Georges Benjamin Clemenceau was a French statesman, physician and journalist. He served as the Prime Minister of France from 1906 to 1909, and again from 1917 to 1920. For nearly the final year of World War I he led France, and was one of the major voices behind the Treaty of Versailles at the...
) were accused by French nationalists of taking bribes from Ferdinand de Lesseps
Ferdinand de Lesseps
Ferdinand Marie, Vicomte de Lesseps, GCSI was the French developer of the Suez Canal, which joined the Mediterranean and Red Seas in 1869, and substantially reduced sailing distances and times between the West and the East.He attempted to repeat this success with an effort to build a sea-level...
in 1888, for the permit of the lottery issue, leading to a corruption process against Lesseps and his son Charles. Meanwhile, 510 members of parliament - including six ministers - were accused of receiving bribery
Bribery
Bribery, a form of corruption, is an act implying money or gift giving that alters the behavior of the recipient. Bribery constitutes a crime and is defined by Black's Law Dictionary as the offering, giving, receiving, or soliciting of any item of value to influence the actions of an official or...
from the Panama Canal Company to withhold from the public information about the company's financial status.
Lesseps, his son Charles, members of the management as well as the entrepreneur, Gustave Eiffel
Gustave Eiffel
Alexandre Gustave Eiffel was a French structural engineer from the École Centrale Paris, an architect, an entrepreneur and a specialist of metallic structures...
, were at first given long jail sentences, although they were later annulled.
In the bribery trial, the former city development minister, Bethaut, received five years imprisonment, three of which he had to serve. Baron Reinach
Jacques de Reinach
Baron Jacob Adolphe Reinach , known as Jacques de Reinach was a French banker of Jewish German origin, involved in many major financial affairs of the era and finally brought down by the Panama scandal...
- the financial adviser of the Canal Company and exerciser of the various bribes – committed suicide. Other defendants fled to England
England
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...
. On 7 December 1894, Lesseps died.
Politicians accused of involvement included Léon Bourgeois
Léon Bourgeois
-Biography:He was born in Paris, and was trained in law. After holding a subordinate office in the department of public works, he became successively prefect of the Tarn and the Haute-Garonne , and then returned to Paris to enter the ministry of the interior...
and Alfred Joseph Naquet
Alfred Joseph Naquet
Alfred Joseph Naquet , French chemist and politician, was born at Carpentras , on the 6th of October 1834. He became professor in the faculty of medicine in Paris in 1863, and in the same year professor of chemistry at Palermo, where he delivered his lectures in Italian.He lost his professorship in...
. One hundred and four legislators were found to have been involved in the corruption, and Jean Jaurès
Jean Jaurès
Jean Léon Jaurès was a French Socialist leader. Initially an Opportunist Republican, he evolved into one of the first social democrats, becoming the leader, in 1902, of the French Socialist Party, which opposed Jules Guesde's revolutionary Socialist Party of France. Both parties merged in 1905 in...
was commissioned by the French parliament to conduct an enquiry into the matter, completed in 1893. The investigations into the Panama affair were resumed in 1897, but the defendants were acquitted.
Aftermath
Georges Clemenceau was defeated in the 1893 election because of his association with Cornelius Herz. Although three governments collapsed, this crisis differed from the Boulanger affair in that the Republic was never really in threat of being overthrown. However, it did raise doubts in the public eye and meant that politicians were no longer trusted. To monarchists it proved that the republic was corrupt.Hannah Arendt
Hannah Arendt
Hannah Arendt was a German American political theorist. She has often been described as a philosopher, although she refused that label on the grounds that philosophy is concerned with "man in the singular." She described herself instead as a political theorist because her work centers on the fact...
argued that the affair had an immense importance in the development of French Antisemitism, due to the involvement of two Jews of German
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
origin, Jacques Reinach
Jacques de Reinach
Baron Jacob Adolphe Reinach , known as Jacques de Reinach was a French banker of Jewish German origin, involved in many major financial affairs of the era and finally brought down by the Panama scandal...
and Cornelius Herz
Cornelius Herz
Cornelius Herz was born in Besançon, France on September 3, 1845 and he died in Bournemouth, England on July 6, 1898. He was a French-American doctor, electrician, businessman and famous politician of Jewish German origin, implicated in the Panama scandals....
. Although they were not among the bribed Parliament members (or on the company's board), they were in charge of distributing the bribe money among them. Reinach was working on the right wing of the bourgeois parties while Herz was working on the radicals. Reinach was a secret financial counselor for the government and handled its relations with the company. Herz was Reinach's contact in the radical wing, and his inside information enabled him to blackmail his boss, ultimately driving him to suicide.
However, before his death he had given the Libre Parole a list of the suborned members of Parliament in exchange for the paper covering up for him upon publication. The story brought Edouard Drumont
Edouard Drumont
Édouard Adolphe Drumont was a French journalist and writer. He founded the Antisemitic League of France in 1889, and was the founder and editor of the newspaper La Libre Parole.- Early life :...
's antisemitic daily a great deal of newfound popularity. The scandal showed, in Arendt's view, that the middlemen between the business sector and the state were almost exclusively Jews, thus helping to pave the road for the Dreyfus Affair
Dreyfus Affair
The Dreyfus affair was a political scandal that divided France in the 1890s and the early 1900s. It involved the conviction for treason in November 1894 of Captain Alfred Dreyfus, a young French artillery officer of Alsatian Jewish descent...
.
See also
- French political scandalsFrench political scandals-Until 1958:*1816 - shipwreck of and search for French frigate Medusa off the west coast of Africa.*1847 - Teste-Cubières corruption scandal, revealed in May 1847...
- Eric ZenceyEric ZenceyEric Zencey is an American author of two books.Panama is an historical novel set in Paris in 1893, in which the American historian Henry Adams becomes entangled in the Panama scandals, the scandals and political crisis that befell France as a consequence of the bankruptcy of the French Panama...
author of the novel Panama dealing with the Panama scandals