276. The Biggest Corruption Scandal in French History (Part 4)

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0:28Hello and welcome to Empire with me, Anita Arnon. And me, William Durrenpool. And today we are joined once again by the brilliant Matthew Parker, author of Hell's Gorge. It is a fabulous book to discuss the building of the Panama Canal. So you might remember in the last episode, we were talking about Panama becoming part of Colombia and how the California Gold Rush of 1848 brought a huge new wave of wealth to the region. And the building of the Panama Railroad was almost necessitated by that rush. We left you with somewhat nutty de lesseps and his extravagant PR campaign to fund a French attempt to build this canal.

1:10And his daughter struck the first symbolic blow with a pickaxe, not to the damn site itself, but a champagne box filled with dirt. And carrying on with the story, Matthew, can you introduce us to the equally unusual Frenchman with an even more extraordinary moustache? Please tell us about Philippe Jean Benoit Barilla. Okay, so he's a French engineer. He's in his sort of early 20s. He went to the elite engineering school in Paris, where you wear a uniform and the motto is la patrie, la science et la gloire, the country, science and glory. Brilliant motto. Brilliant motto. So 19th century. The whole French story is so 19th century.

1:54He's very short. He's five foot four. His father died when he was young. You're right, he has a sort of red moustache with the tips sort of carefully waxed into points. I mean, you just want to put him straight on a penny farthing is where he belongs. That's where he would feel at home. That's the kind of moustache he's got, yeah. And people found him when they met him a rather sort of eccentric and slightly overwhelming figure. He was very, very intense. This is one report in America when he met him. Mr. Varia's tremendous mental capacity becomes apparent when one looks at him. His brain rises from an active rather square face, but as if to contain it, the sides of his head are much larger than his face.

2:29So he's odd looking. He's just so intense. Anyway, he'd met Ferdinand de Lesseps in 1880. I'm just looking at pictures of him. In his youth, he looks like a Prussian general. He's got the full... Well, I think everyone looked like that in the military sort of academies. Anyway, so he'd met de Lesseps and he'd clearly been subject to de Lesseps sort of hairdryer charisma. And he'd taken on this great idea of the canal. He spoke not in sentences, but in sort of proclamations. I love him more and more. I mean, so he was gripped, like all these people before, had been gripped by the great idea of the canal.

3:05He called it the greatest conception the world has ever seen of French genius. That, again, sounds like Trump, but with a French spin. Yeah. So in 1884, by this stage, Yellow Fever has struck the French project like a hammer blow. It's killing. It's a war zone out there. And some of his teachers at the academy saying to French engineers, look, don't go there. It's really far too risky. But he goes anywhere and he declares, the constant dangers of yellow fever exalted the energy of those who were filled with a sincere love for the great task undertaken. To its irradiating influence was joined the heroic joy of self-sacrifice for the greatness of France.

3:48Right. I mean, what he's talking about is people in spasms of agony dying in dysentery. I mean, but that's what he sees, which is, you know, it says a lot about him. He sees a tricolure fluttering over the whole project. This is something that really struck me when I was researching the French part of the story. It's the sort of the amazing sort of bravery and foolhardiness of these young French engineers who went out. There was another one I found called Henri Semois. And he's one of those ordinary guys. He's not one of the big bosses like the others. He says, look, we knew about the dangers, but it was like a battle.

4:22We had to brave, brave. And he says, I'm going to be hit like a cannonball by the sun. I'm going to face yellow fever nose to nose. And he says, you can imagine the sort of Gallic shrug. I mean, what was amazing? This is a point where three quarters of the French engineers who go out to Panama are dead within three months. Literally. Gosh. But they're still prepared to do it. They're prepared to die for the great idea of the canal. And one who turns up before too long, if it isn't French enough, this whole story, Georges Eiffel himself turns up. Yes, that's much later. But what happened was basically Deleuzec had to keep raising money.

5:05Like any private enterprise, it requires sort of confidence. So he kept having to spend money on the press. More hot air balloons over Paris, all that sort of thing. More money. It became known as the Panama check. And something like two and a half thousand magazines received money from the Canal Company, including things like Marriage Journal, Forrester's Echo. You know, what have they got to do? And some magazines were set up purely to get the Panama check. So if you wanted money, you set up a magazine and then you got this check. So it's becoming more and more desperate. But on the isthmus, the idea of digging a sea level canal soon becomes apparent that it's not possible.

5:48For the French, everything that could go wrong goes wrong. There's an earthquake. There's huge floods. There's a civil war at one point on the isthmus where rival factions are actually fighting. And most of Cologne gets burned down, including a lot of equipment. The real problem is yellow fever. and there's this amazing story of a guy called Jules Danglet, basically France's most senior engineer and he's sent out on a huge salary in 83 and in order to prove that yellow fever has no fear for him, he brings out his family, his daughter, his son, his daughter's fiancé and his wife and at this point we have to understand this is before the mosquito theory of transmission has really been understood for yellow fever and for malaria.

6:36No one really knows where it comes from. Are they still thinking miasma? It's something in the air, but you know, something that we can't put our finger on. Certainly for malaria, it's about miasma, which comes, and obviously if you dig a canal, you're going to release lots of miasma. So that's obviously causing the malaria. Miasma, for those who don't know, is sort of like infected air. That's, you know, all these diseases were said to be carried in invisible clouds of death that, you know, mysteriously coming up from somewhere. Yeah. For yellow fever, it's even more mysterious because it sort of comes and goes.

7:06And obviously, yellow fever has played a large part in history if we think about America and Haiti and these sort of places. And Barbados at one point was pretty much wiped out by it. And no one knew what it was. Some people said it was a certain wind off the air. One doctor suggested it came from eating apples. But most people thought it was sort of the personal behavior, the sort of morality of the individual. Too many visits to the brothels. Exactly. Or filth. Because it was around ports, they thought it was sort of filth and dead rats and that sort of stuff. Anyway, so Danglier turns up with his entire family.

7:40He announces only the drunken and dissipated die of yellow fever. His beautiful little daughter, Louise, who's 18, she becomes the toast of Panama society. She's clearly very charismatic. and she's the pride and joy, her mother says, of their family. She gets yellow fever and dies an agonizing death. The next day, Danglet is back at his desk. Then his son dies. And then the fiancé dies. Each time, his duty takes him back to his desk and he's back at work. And then about six months later, his wife dies, at which point he breaks. And his entire family has been wiped out. But not just him. there are 22 ,000 workers who have also died at this point.

8:26Carnage. It's a mass graveyard. For all the terrible body count in this story, it is actually a good old political corruption scandal that does for the French. Can you talk us through what happens and how this dream gets dashed against the rocks? Yes. Well, as I said, de Lesseps keeps issuing bond issues to try and raise money, to try and keep the project going. He's still bribing the French press. By this stage, the Americans and the British are saying, look, this is done for. They're going to go bankrupt. And so he eventually agrees to a sort of lock canal. So they change their plan, at which point Eiffel is hired.

9:06And he's a great hire for the company, obviously. Sorry, Belisha Beacon. Boop, boop, boop. Eiffel of the Tower. Yeah, the tower is under construction. He's well famous. He's paid a lot of money. He starts building locked. And they're going to be temporary locks. We'll still get back to the important sea level canal. But then he issues a lottery bond. So this is a slightly different way to raise money. So it's like a bond issue, but you have numbers on your bonds. And every couple of months or every six months or so, a ticket is drawn and you can win a lot of money, like 250 ,000 francs or something like that.

9:38And this had saved Suez. When Suez was at a crisis point, it was saved by a lottery bond issue. That was under the emperor. And this is now the Third Republic, things slightly different. They need government approval. And this takes ages. And it takes, there's committees, there's ages. And then they all go on holiday for the whole summer, as they do. It's France. So time is running out. Time is running out. And then he tries one more bond issue and everyone, the sort of, the wool is falling from the eyes, even of the most dedicated French investors, most of whom are small investors, a lot of women have sent their children savings in.

10:13You know, the little people in France have been the backers of this, not the big investors. But they've given up and it's declared bankrupt. And then the recriminations begin and it all starts. 1892, this is. Yeah. You know, they look at the books and it all comes out about the bribery. For the lottery issue, the company gave a million francs to a minister to vote in its favour. The government falls, ministers are arrested, they resign, the cabinet goes. It's an absolute scandal. It's a terrific story, this. What a story. One of the spiciest details is that the leaders of the plan, the letters, sure, but also they name Eiffel off the tower and they're given jail sentences, which are later overturned.

11:01The recriminations are serious and it's a national humiliation. It is a political swamp that is revealed and it hurts the French psyche for generations to come. Yes, it's a humiliation up there with the Franco-Prussian War. I think Charles Vélez actually does spend some time in prison. He's the son and he was a director of the company. The one who kept saying, don't do it, dad, you're too old. But Ferdinand himself, he sort of checks out. He sits in an armchair with a three-week-old newspaper on his lap. He doesn't really know what's going on. He's taken into the trial. He puts on his Légion d 'Honneur uniform, and he doesn't really understand what's happening.

11:47And he goes back and he says, I had this terrible dream that we were on trial somewhere. Oh, dear. And what happens? what happens just to sort of fill in the little gaps. A lot of the people like Eiffel, also like Buno Veria, they are forced. I mean, Eiffel made something like 7 million francs on doing not very much. You know, it was the whole thing was corrupt. All the contractors, they were bribing the inspectors. You know, on the isthmus itself, corruption was completely rife. They were all drinking too much. You know, they would have champagne for breakfast to stop the Les Mie Cobb. And it was really, you know, an absolute sink of corruption, as the Americans would describe it.

12:30Anyway, so some of these people who had made ridiculous profits, you know, everyone said, where's this money gone? A billion francs had been spent. And how much had been dug by this point of the bankruptcy? How many miles of canal is there? They've made a start. Not very much. A lot of champagne and not much canal. They've done a lot of dredging, sort of on the river, you know, the river bits and so on. and they've really only because the real challenge is the continental divide is the mountain range you've got to cut through and that will be there's a nine mile stretch there which was known as the Culebra cut that's the real challenge for any any canal builder in Panama.

13:06So this corruption scandal this bankruptcy in Paris it's completely tanked the building of the canal join us after the break to see what happens next in Panama.

13:21Welcome back. Before the break, we discussed how the French attempt flopped in a complete humiliation and corruption scandal. But what happened to the workers? Yes. If we go to Panama, we'll see that most of the huge workforce have sort of gone, a lot of them in extreme poverty. They have to be shipped out by the Jamaican government. Are there lots that are totally unpaid and have they been working on arrears? Yes, exactly right. So they're sort of starving, basically, and desperate. Some of the Jamaicans, because it's mainly Jamaicans who are the workforce for the French effort. Some of them go off to other parts of South America or Central America to do other jobs.

13:58I mean, they're great sort of emigrators, the West Indians, as I'm sure you know. But what happens at the trial is that the people who'd made ridiculous amounts of money from bribes and so on had been forced to invest in what was called the New Company, the New Canal Company, which was a sort of holding sort of body. And they did some sort of desultory work on the isthmus. But really, they were looking, they were still desperate. People like Bruno Veria, he still wanted the canal built. He was one of the people, they were called penalty investors. And one of the stipulations was that they should have nothing to do with the canal.

14:31Give us the money and get lost. Yeah, you're tainted. We don't want anything to do with you. So what they've got to do is they've got to basically try and sell the canal or get a new investor in the canal to keep it going. And the obvious one is to sell it to the Americans. but there's a big problem. The Americans are set on a canal at Nicaragua. Which is much longer? Yes, it's longer. It's the San Jose River, goes up to Lake Nicaragua, and then there's a sort of steep descent down the other side. The American engineers favoured this over Panama, mainly because of the problem in Panama of the river.

15:08There's this River Chagras in Panama, which is one of the most volatile in the world. And this is another one of the main problems of the French face. Panama, for some reason, is one of the wettest places on earth. You know, five inches of rain can fall in a couple of hours. So this river can rise and sweep everything away. And also the canal has to be at the lowest point of the valley. So it has to drain the area. So it has to be a sort of canal and the river, which does not work for navigation. So that was the reason why the Americans rejected Panama in favor of Nicaragua. So Buno Veria and the new company have a big challenge on their hands.

15:47They have to persuade the Americans to change their minds and to buy them out. Otherwise, the new company is worthless, and all of those lives have been for nothing. And this is when Buno Veria really flexes his brilliance, along with another man called William Cromwell, who is an American Wall Street lawyer. And he is taken on by the new company to represent their interests in New York. And the two of them get to work really on one of history's most extraordinary lobbying campaigns. And when you say, you know, one of history's most extraordinary lobbying campaigns, what does it look like? Whose doors are they knocking on?

16:26Are they again buying up influence as they did in France with the old company? They do the obvious things. They write to all the senators. There's various sort of commissions and committees in America to do with the canal, with lots of distinguished members. So they lobby them. And Bruno Vrier, he's the master of the chance encounter. Right. So when he's in Paris, he's already befriended an American called John Bigelow, who's quite well connected. So Americans passing through Paris somehow meet him. And he gives them the sort of laser treatment on Panama. He has this spiel and he pins them down and he doesn't stop until they've changed their minds.

17:06And he's brilliant at this. And with good reason. Panama has a lot of advantages over Nicaragua. but he's this persuader extraordinaire and then he gets himself invited to a conference in Cleveland and he spends three months traveling around America lecturing he's bought a newspaper in order to promote Panama he writes a book he does everything possible and again the master of the chance encounter even though in theory he's supposed to have nothing to do with the canal company right and just to remind people I mean he's five foot four he has this enormous moustache which is wax tipped and sort of fiery red although I guess it's graying quite quickly after this experience but he's sort of charm personified just like de Lesseps was so you've got these two sort of you know very forceful figures one has fallen by the wayside and is living in a fog of dementia but Bruno Verrier I guess is really popular in America because they love a personality in America I mean how successful is he at charming people?

18:01He's yes I don't think used humor i don't think humor was one of his weapons but he's got this intensity he's got this passion for you know when americans said i love i love someone with a passion and he really it's consumed him he's absolutely this is his his whole life and he does manage to meet some meet some very influential people and there's an amazing story of him at the waldorf astoria in new york and he's according to his account he's just going for a breath of fresh air about midnight oh and in the lobby he bumps into an American friend who happens to be with a guy called Mark Hanna who is an incredibly influential Republican politician and is this has really has the ear of President McKinley who was the president at the time and he gives him the treatment the Panama treatment and he converts him so that's pretty and then he hangs around a bit longer and you can kind of imagine him with his small size sort of hiding behind a potted palm in the in the sort of atrium and then he pops out again and he meets someone who gets him an introduction to McKinley himself so he gets right to the top and he's you know with his his panama spiel um and he's starting to change minds you know meanwhile cromwell is the lawyer is being a bit more direct he goes to see mark canner and he just put sixty thousand dollars down on the table as a party donation a really brown envelope thing wow and while all this is going on mckinley is particularly interested in panama because of changes in the local politics take us through that mckinley is has a real interest a special interest in the Trans-Ithman Canal because things have changed, obviously, since the 1880s.

19:33The United States now has possessions in Hawaii, the Philippines, Puerto Rico, and effectively Cuba. This is all stuff we've done last year on the pod. And if anyone wants to hear more about how America collected those colonies, you can look at Empire Pod episodes 166 to 169 in our backlist. With fabulous Daniel Imar. This is a sort of turning point in American politics, obviously, when they're suddenly taking on colonies and so on. And there was an incident in the Spanish War, where the premium battleship, bear in mind, the United States has no real navy to speak of at this point. But the premium battleship, the Oregon is in San Francisco, and it needs to get to Cuba to fight in a decisive battle.

20:17And it has to go 8 ,000 miles, it takes 67 days to go around the Cape Fort. And all the time, the press in the US are following its progress, reporting where it is, where it is, where it is. And there cannot be a better demonstration of the military importance of a trans-Eastman Canal. And so for the Americans, this is the most important thing about breaking through that barrier. It's so that they can move warships between the two oceans. Right. And there's another thing you touched on in the last episode, which is the mindset that the French had made a big deal. This is our service to humanity.

20:51We are French. We are great. We are giving this gift to the world. The Americans have made no pretense. We're making this for ourselves because it'd be really helpful to us. Yes, there's none of that sort of, the idealism that we've seen in the story so far is, I mean, some people, you know, obviously think it would be a good thing for world trade, but it would be a particularly good thing for American trade so that, you know, the manufacturing goods of the East Coast can get to China. Obviously, the China market has been in session throughout history, and the agricultural produce of the West can get to Europe.

21:23You know, this will be transformative for American commerce. But I think it's the military is the most important thing. And that really hits home with the public who have been following the Oregon on its epic voyage. So McKinley is keen on the Trans-Ithman Canal, not necessarily one in Panama, which is what Buno Vria wants to sell, so he gets his money back, but an Isthmian Canal of some sort. But gradually, Cromwell and Buno Vria manage to convert more and more people in the sort of high ups in Washington to Panama rather than Nicaragua. And it all comes down to a vote in the Senate. and very happily for Bruno Veria, there's quite a large volcanic explosion in Martinique which kills lots of people and it's a sort of sensation, new sensation.

22:07Just a moment, just a moment. Okay, okay, back up, back up. Go through this. Those two things aren't automatically linked. Back the heck up, mate. Yes, okay, okay, okay. We're talking 1902, right? So there's a volcanic eruption. 30 ,000 dead. How this could possibly be good news for the little man with the red mustache. Cromwell and Buno Verria exploit this tragedy. Is that better? Exploit this tragedy in order to sort of change minds about Nicaragua versus Panama. And lots of people in America were firmly, were as obsessed with Nicaragua as Buno Verria was with Panama. So it's a really hard job.

22:46But then they point out that there's volcanoes in Nicaragua. And there's a report which turns out to be entirely untrue, that one's erupted. This is sort of blown away. But at the crucial moment before the vote, Bruno Veria has this inspiration. He remembered this one St. Ivo Nicaraguan stamp, which had the majestic bulk of Mount Momotombo in the background and a wharf in the front. And the artist, in a sort of artistic flourish, had added a little bit of smoke coming out of this basically extinct volcano, which is 100 miles from the canal route anyway. But he goes, Binovier goes around all the falatelists of Washington collecting and buying as many of these can as he can.

23:24And he sends them to all the senators as evidence of them. And it swings it. It swings it. And this, we should remember, is less than 20 years after the explosion of Krakatoa, which was one of the greatest seismic event of recent centuries. Yeah, but just to stress, this volcano was absolutely no threat to the canal. But this man is a genius because if he thinks that they will see it with their own eyes on a stamp and stamps don't lie, why are you going to pour money in a place where a volcano can swallow up your investment and melt it into a lump of ashes thanks to lava? I mean, that's – and it works.

23:58You said it works. It works. And it's squeaked through for Panama. And all they had to do now was buy out the French company and do a deal with Colombia. They bought it for$40 million, which includes the concession and everything, all the sort of French plants and everything like that. A lot of money, a huge amount of money. I mean, Louisiana purchase was a lot less. But I mean, a lot of money compared to the French investment. Do they even break even with this kind of deal? I mean, you said it was what, 1 billion francs? No, that's gone. That's gone. So that's all disappeared. So this is just a recoupment.

24:32And it is, you say, substantial. More than they thought they would get? Well, they originally asked for$100 million. Okay, less than they thought they would get. And this was one of the things that was swinging at Nicaragua's way, that huge expense. So Cromwell has words with the boss of the new company in Paris and says, look, come on. And he agrees to take it down to 40, which is still, as I said, a huge amount of money. And there's all sorts of shenanigans going on. I mean, it came out later that some of Cromwell's friends had bought new company stock at a sort of bargain basement rates and then made a huge profit.

25:07So there's all sorts of shenanigans going on. Couldn't possibly happen today. Shocker. Yeah. Anyway, so in the meantime, McKinley, of course, has been assassinated. And Teddy Roosevelt, the vice president, is the unexpected new president. And he, in his first presidential address, also really stresses that he wants a canal. And this is going to be something that's going to really demonstrate to the world America's industrial might. And Teddy Roosevelt, as we know from our previous series, is a man who's very keen on pushing America's footprint all over South America and the region. He's not afraid of foreign adventures at all.

25:41And apparently on his mother's side, descended from one of the survivors of the Darien disaster. Really? Oh, we didn't know that. Scott's blood, Anita, gets everywhere, see? Yes, it does. So he's set on Panama and they buy out the French company and now they have to do a deal with Colombia. Now, one of the things that the Americans are insisting on is a canal zone and complete control over a sort of 10 mile wide strip around the proposed route of the canal to the extent where they have American sovereignty over that strip. Oh, right. OK. So I'm sure the Colombians have something to say about that, because that is a land grab by a different means.