In 1878, US claims on Panama were once again threatened when [L3 801 / Ferdinand de Lesseps], the famous Frenchman who built the Suez Canal, decided to construct a similar canal in Panama. The Americans were furious. They sent battleships to the area and protested vehemently, but little could be done to stop him. A company called the Compagnie Universelle du Canal Interoceanique (later to be called the New Panama Canal Company or NPCC) was established by de Lesseps and a number of prominent European financiers, who supported him because of his previous success with the Suez Canal. As it turned out, the project was a disaster and in time would become known as the 'Panama Scandal' (SEE TRIUMPHS AND SCANDALS).
THE NEW PANAMA CANAL COMPANY:
The New Panama Canal Company (Compagnie Nouvelle du Canal de Panama) was formed in 1894 following the collapse of its predecessor, the Compagnie Universelle du Canal Interoceanique (CUCI). The latter was created by Ferdinand de Lesseps, who had been supported by many French financiers after his success with the Suez Canal. Following de Lesseps' failure to build a canal in Panama, the CUCI went into liquidation in 1889 amid accusations of [G 14 / skulduggery] and fraud. In order to revamp the company's image and restore confidence amongst investors, it was reconstituted as the New Panama Canal Company (NPCC).
The Hay - Bunau-Varilla Treaty of 1903 between the US and Panama dashed French hopes of ever building the Panama Canal. Granting America full rights for any future canal building, the French had no choice but to reluctantly sell their holdings in the NPCC to the US in 1904. To add insult to injury, one particularly clever US diplomat called Cromwell persuaded the French to drop the price of their company down to $40 million from $109 million in 1901. It took only three years for the French to capitulate and by 1904, the NPCC had become American property.
When President Roosevelt implemented plans for the actual building of the canal, the NPCC came under a new umbrella known as the Isthmian Canal Commission, which was completely controlled and run by the US military.
