How Wall Street Created a Nation

How Wall Street Created a Nation:
J.P. Morgan, Teddy Roosevelt and the Panama Canal
by Ovidio Diaz Espino
Four Walls Eight Windows
New York 2001
254 pp, $27.95 in hardcover

The Panama News rarely reviews books that have been out for two years, and this reviewer rarely writes about cultural phenomena that he doesn’t like and endorse. Please allow me a one-point-something-point exception in this case. The nation is celebrating the centennial of the events which are described in Mr. Diaz Espino’s book, politicians are commenting on the work, and the issues raised therein are absolutely germane to an election campaign that’s off to an early start.

“How Wall Street Created a Nation” is most of all a story about a legendary corporate attorney’s machinations, written by another corporate attorney. To the extent that it’s a lawyer’s tale about lawyers, it’s a masterpiece of research and a valuable addition to Panamanian history. The book tells of how William Nelson Cromwell, the high-rolling Wall Street lawyer, influential Washington lobbyist and legal representative of the old Panama Railroad brokered a deal among American speculators, the principal owners of the assets left over from the failed French canal effort, the Teddy Roosevelt administration and a few Panamanian rabiblanco families, an arrangement that ultimately resulted in the Independence Day we will be celebrating in November and the Hay-Bunau-Varilla Treaty whose ultimate phase out we observed at the end of 1999.

Of course many of the descendants of the founders of the Panamanian republic dislike this book. In large part it’s about their ancestors' corruption, ineptitude and cowardice. It’s the first look in a very long time at the money trail --- which was covered, incompletely, by a 1904 Panamanian law that concealed the financial records of the republic’s first months, by stonewalling and intimidation on the part of the US government and by court decisions and document shredding in France --- behind this country’s independence. Diaz Espino makes a convincing argument that Dr. Manuel Amador Guerrero et al received substantial financial payoffs for what they did, and also a pretty good circumstantial case that the small shareholders in the French canal company were robbed by a gang of American speculators revolving around J.P. Morgan in collusion with with a few French confederates grouped around Philippe Bunau-Varilla.

The bottom line? Millions of dollars that should have gone into Panama’s roads, schools and public institutions instead lined the pockets of people with inside connections. It's a legacy that Panama has yet to overcome, and one that we must understand in order to surmount.

So this book and its author will be vilified by people whose fancy foreign educations and aristocratic airs trace in part back to the fortunes made from this peculation. Diaz Espino and his research deserve to be defended against such people.

However, outside of the book’s main line of inquiry, and to the extent that someone may take How Wall Street Created a Nation to mean that the Panamanian nation is only a product of American financial and political machinations, this work is terribly flawed.

For one glaring example, we have this paragraph on page 121:

“At that time Colón was a shantytown of wooden houses that would burn like a dry forest if set ablaze. The Americans had seen this happen in 1885, when a canal laborer, Pedro Prestan, started an uprising to protest the Compagnie Universelle’s inhuman treatment of Black West Indian workers.”

Prestán was in fact an attorney, a legislator and a leading light in Colon province’s branch of the Liberal Party. This martyred black leader’s revolt did indeed attract the support of many Afro-Antillean canal construction workers, but it is most accurately viewed in the context of the Colombian political turmoil of its time.

Similarly, Diaz Espino makes only the most glancing reference to the Thousand Day War that devastated the isthmus and no mention at all of the Liberal leader in that struggle who became Panama’s president, Belisario Porras, nor to the Liberal guerrilla leader Victoriano Lorenzo, whose execution by Conservatives earlier in 1903 disgusted most Panamanians and turned the political party of Dr. Amador Guerrero and most of his co-conspirators into a dinosaur even as it was creating a new republic. Shorn of this vital context, it would be easy to look at the facts presented by the author and erronously conclude that Panama was cut from the whole cloth by Teddy Roosevelt. And in fact this thought lives on in the email group whinings of unreconstructed Zonian colonialists, who deny Panama’s right to the former Canal Zone and even to exist, based on the premise that the country is an American creation in the first place.

Diaz Espino’s other errors run from fundamental geography (he calls the Canal Zone “an area thirty miles long and ten miles wide” on page 163), to a grossly erroneous version of the 1964 Day of the Martyrs apparently culled from the second-hand AP reports of the time that are repeated by that news agency to this day (page 198), to getting the years of Omar Torrijos’s death and Manuel Antonio Noriega’s rise to supreme power wrong (page 201). Guillermo Endara surely must not like being dismissed as “plump, comical and overwhelmingly pro-American,” and if this is the case one would wonder why he refused to negotiate a new bases treaty with the George H.W. Bush administration. The musicians who played cumbia at the canal turnover ceremonies may be puzzled by their mischaracterization as “salsa ensembles.”

So if you want to be well versed in Panamanian history, you really should read How Wall Street Created a Nation, but if you already know the subject well you will notice the book’s flaws.

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