Everything about The Panama Scandal totally explained
The
Panama scandals (also known as the "Panama Canal Scandal") were a corruption affair that broke out in the
French Third Republic in 1892, linked to the building of the
Panama Canal. Close to a billion
francs were lost when the government took bribes to keep quiet about the
Panama Canal Company's financial troubles, in what is regarded as the biggest corruption scandal of the
19th century.
The bankruptcy
On 4th February 1889, the
Tribunal Civile de la Seine lawfully applied for the winding up of the Panama Canal Company in
Paris. The work on the
isthmus was stopped for 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 further and further away, because the take-over offers of the various
American 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. he same year it succeeded in agreeing on a new contract in
Bogotá, 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. One hundred and four legislators were found to have been involved in the corruption, and
Jean Jaurès 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 argued that the affair had an immense importance in the development of French
Antisemitism, due to the involvement of two
Jews of
German origin,
Jacques Reinach and
Cornelius Herz. 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 it's 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'd given the
Libre Parole a list of the suborned members of Parliament in exchange for that the paper cover up for him upon publication. The story brought
Edouard Drumont'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.
Further Information
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