In late 1903, the Colombian government caught wind of trouble in Panamá and ordered troops to land at the port of Colón, cross the isthmus to Panamá City, and put down any revolt. They immediately ran into trouble. US Navy ships from the Caribbean fleet maneuvered to delay the debarkation of the troops. When they were finally ashore, the Colombians attempted to use the railroad to move their forces. However, the American government had bought the railroad from the French in 1902. Its officials used various stratagems to obstruct the efforts of the Colombian force to reach Panamá City. On November 2, 1903, a US Navy gunboat landed Marines in Panamá City to block the Colombian troops when they arrived. No less than ten US warships patrolled the coast to prevent any landing of Colombian forces from the Pacific side.
The ship, built in 2012, is 239.47 m (786 ft) long and displaces 47,266 tons.
Although a Colombian Navy ship did lob a few shells into Panamá City, killing a Chinese resident, the affair was otherwise bloodless. In fact, many of the key Colombian military officials already stationed in Panamá were part of the conspiracy. When the troops arrived from Colón, their officers were arrested and the local military officers took over. The whole operation was swiftly completed. On November 3, the day after the Marines landed, Panamanian business and political leaders declared independence from Colombia. Three days later, the US recognized the new nation. Forty-four years before the birth of the CIA, the US government was already quite adept at stage-managing coups against foreign governments to further American strategic and economic interests.
On November 18, 1903, twelve days after the declaration of independence, a canal treaty was signed by US Secretary of State John Hay and Phillipe-Jean Bunau-Varilla. The Hay-Buneau-Varilla Treaty immediately became controversial. This was due not only to its terms, but also to the fact that Bunau-Varilla was the sole negotiator and signer for Panama. He was French rather than Panamanian, and had not lived in Panamá for 17 years. After signing the document, Bunau-Varilla never returned to Panamá, probably for good reason. When he sat down with Secretary Hay, the Frenchman ignored virtually all the instructions he had received from Panamanian leaders regarding the treaty's terms. No doubt Hay was more than happy to have so pliable a bargaining partner. When the signed treaty reached Panamá, its newly installed leaders nearly rejected it. US officials told them that if they did, the US would withdraw its support. To increase the pressure. 2000 additional Marines landed in Panamá City and the implication was clear. They weren't there to fight Colombians this time. The Panamanian leaders caved in and added their signatures to the agreement.
The Hay-Buneau-Varilla Treaty remained in effect as signed in 1903 until 1936 when modest improvements were negotiated. How did it work out for the US and Panamá and why were its terms so controversial among Panamanians? The agreement included an initial payment to Panamá of $10 million in gold coins, along with an annual rent of $250,000 in gold coins. When originally offered this amount, the Colombian legislature had rejected it and demanded at least $25 million, on the basis that the US had paid the French $40 million for their failed canal company.
For the $10 million initial payment and annual rent, the treaty gave the US control of a 10-mile-wide strip of land extending across the isthmus, as well as access to any lakes and bodies of water nearby which might be used in constructing and operating the canal. US control was to extend "in perpetuity" and, in effect, the Canal Zone became a territory of the United States. The US could build whatever fortifications and use whatever military means it chose to defend the Canal. It had complete operational control over the Canal and full rights to use the ports of Colón and Panamá City. In the construction process, the US was not required to use Panamanian labor, but could import as many workers as it chose from any nation it chose. Under the terms of the treaty, no change of government or laws in Panama could effect the treaty. Panamá itself became a "protectorate" of the US, a term often used by imperial powers to describe their colonies. The "protectorate" status provided the legal framework for repeated US military interventions whenever the Panamanians became restive about their lack of sovereignty.
So, the US used a thinly disguised imperialistic strategy to acquire the rights to the Canal Zone, then negotiated a thoroughly one-sided treaty to nail down those rights, and finally compelled the treaty's acceptance at the point of a gun. But surely Panama itself benefited from the Canal? Not remotely as much as the US benefitted, it seems. An economic analysis of the distribution of benefits does show some initial positive results in terms of Panamá's economic growth between 1915-1930. However, during the life of the US Canal Zone, the returns to Panamá were paltry. The chief beneficiaries were US corporations, whose shipping times and expenses were radically cut, especially for oil companies with operations in Southern California. The ships of other nations pass through the Canal, it is true, but the lion's share of traffic has always been American.
Panamanians were angered when some of the great economic benefits from the new Canal failed to materialize. These included the opportunity to sell goods and services to the Canal Zone, and to the transiting ships, and to work in the Canal Zone itself. As it turned out, US policy explicitly prohibited either the Canal Zone or the ships to purchase from Panamanian businesses. In addition, West Indians were given hiring preference over native Panamanians in Canal Zone employment, just as had happened during the construction phase. The best jobs were part of what was called the Gold List, while all others fell under the Silver List. In the early days, some Panamanians could access the Gold List, but after a while only white Americans could get those jobs. Canal Zone workers, whether American, Panamanian, or West Indian, used their pay in US-government owned stores to buy goods imported from America. Passing ships could only buy supplies from those same stores. Panamanians were further angered when the US refused to turn over the initial $10 million payment directly to Panamá's government. Instead, the funds were handed to the financier J.P. Morgan who was given the job of investing them "on Panama's behalf." Part of the money he used to speculate in New York real estate and the remainder he deposited in Wall Street banks. The Panamanians had intended to invest most of the $10 million in fixed income securities. Morgan's investments produced a rate of return below that which Panamá could have earned by investing on its own.
From almost before the ink was dry on the Hay-Bunau-Varilla Treaty, Panamanians resented it and the arrogant and selfish way US officials chose to operate the Canal Zone. They also objected to repeated US military interventions, not just in the Canal Zone but throughout the Republic of Panamá. US troops were used to break strikes, intervene in elections to protect favored officials, break up student demonstrations over sovereignty issues, and otherwise "put down public disturbances." Such interventions occurred in 1904, 1908, 1912, 1918, 1920, 1921, 1925. In 1936 the treaty was revised and the US agreed to increase the annual payments to Panamá and give up the right to intervene in the Republic of Panamá. Despite this, interventions occurred in 1958, 1964, and 1989. In the last case, the US sent a massive force to remove General Manuel Noriega, ostensibly because of his involvement with drug smugglers. In fact, Noriega had been a paid agent of the CIA from 1967 until 1988, just before the invasion. His real offense appears to have been his growing friendliness to Cuba and Nicaragua. The Panamanian politicians the US installed to replace Noriega were themselves heavily involved in money laundering for Colombian drug cartels, a fact well known to US officials at the time. During the invasion, as many as 1000 Panamanians, most of them civilians, were killed and an entire neighborhood was flattened.
The 1964 intervention was the result of a student demonstration. The students entered the Canal Zone and tried to raise a Panamanian flag to fly next to the US flag. The incident escalated into violence in which 19 Panamanians and 2 US military personnel were killed. Which side initiated the violence is still disputed. However, the incident convinced US President Lyndon Johnson that things would finally have to change. A series of negotiations then began. Both sides sat down with the understanding that the 1903 treaty would have to be abrogated in favor of a new treaty that would recognize Panamanian sovereignty over the Canal Zone. US control would not longer be "in perpetuity" but would have a specific ending date. The negotiations ultimately resulted in the 1977 Torrijos-Carter Treaty. In 1999, Panamá assumed full control and jurisdiction over all of its territory including the Canal Zone and all US military bases. Panamá was finally a free and independent nation and in possession of one of the most important economic waterways in the world.
This concludes Part 6 of my Panama series. I hope you have enjoyed it. If so, feel free to leave comments or questions either in the Comments section below, or by emailing me directly. If you leave a question in the Comments section PLEASE leave your email address so that I may respond.
Hasta luego, Jim