Panama Scandal

(1892–1893)

   An investment scandal in which the misplaced hopes and lost fortunes of small stakeholders in the Panama Canal project of Ferdinand de Lesseps became a political earthquake in French politics. As the architect of the Suez Canal, Lesseps enjoyed a national reputation as possibly the greatest Frenchman of his time - a reputation he used to entice small investors to back the construction of a canal across Panama, partly with unrealistic initial estimates of its ultimate cost, partly through misunderstanding of its enormous engineering difficulties, and partly through concealment of colossal financial mismanagement. Financial authority over the Panama Canal Company was exercised by Baron Jacques de Reinach, a German Jew, Italian Baron, and naturalized French citizen who symbolized the new world of cosmopolitan finance in late nineteenth-century Europe.

   In the critical stage, when the canal was behind schedule and massively over budget, the government permitted the company to float a lottery-loan for 750 million francs, which, upon failure, put the company into liquidation. The resulting inquiry and trial savaged the reputation of the Radical Party in parliament, especially George Clemençeau, and contributed to a virulent wave of anti-Semitism across the country. Edouard Drumont’s 1,200 page book, La France Juive, sold tens of thousands of copies with its explanation of how France and its honest peasantry - in reality the victims of a garden variety failure in finance capitalism - had been conquered and pillaged by Jews.

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   FURTHER READING:

    Brogan, Denis. The Development of Modern France, 1870–1939. London: Hamish Hamilton, 1940.

   CARL CAVANAGH HODGE