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On the Twentieth Anniversary of the Death of Panamanian Dictator Omar Torrijos, the Man Who Negotiated the Panama Canal Treaty, “How Wall Street Created a Nation: J.P. Morgan, Teddy Rooseveltand the P

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Today is the twentieth anniversary of the death of former Panamanian dictator General Omar Torrijos, the man who negotiated the Panama Canal Treaty. Torrijos ruled Panama for 13 years after launching a military coup in October1968, until his death in a mysterious plane crash on July 31, 1981, when he was replaced by General Manuel Noriega. [includes rush transcript]

In the U.S. Torrijos is best remembered for negotiating the 1977 Panama Canal Treaty with President Jimmy Carter.The treaty returned the Panama Canal Zone to Panama in December 1999, after nearly a century of U.S. control. In1980 Ronald Reagan ran for President against Carter based on his opposition to the Panama Canal Treaty, which he saidwas a violation of U.S. sovereignty.

Unfortunately, most people in this country still have no idea how the Panama Canal was built, or how the U.S. gainedcontrol of the Canal and the land surrounding it at the turn of the century.

A new book, ??How Wall Street Created A Nation: J.P. Morgan, Teddy Roosevelt and the Panama Canal, may help toset the record straight, and return to the people of Panama a bit of their history in the process It involvespowerful Wall Street Bankers and lawyers, secretive financial dealings, and a U.S. engineered military coup that ledto Panama’s secession from Colombia. In other words, it’s a classic American story.


  • Ovidio Diaz Espino, grew up in Panama, has worked as a lawyer in several New York law firms, includingJ.P. Morgan and is and author of ??How Wall Street Created A Nation: J.P. Morgan, Teddy Roosevelt and the PanamaCanal, just published by Four Walls Eight Windows Press.

Related Story

StoryDec 04, 2018Inter-American Commission on Human Rights: U.S. Owes Reparations to Panama over Bush’s Invasion
This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: Today is the twentieth anniversary of the death of former Panamanian dictator General Omar Torrijos, the man who negotiated the Panama Canal Treaty. Torrijos ruled Panama for thirteen years, after launching a military coup in October 1968, until his death in a plane crash on July 31, 1981, when he was replaced by General Manuel Noriega.

In the US, Torrijos is best remembered for negotiating the 1977 Panama Canal Treaty with President Jimmy Carter. The treaty returned the Panama Canal Zone to Panama in December of 1999, after nearly a century of US control. In 1980, Ronald Reagan ran for president against Carter, based on his opposition to the Panama Canal Treaty, which he said was a violation of US sovereignty.

PRESIDENT RONALD REAGAN: The Panama Canal Zone is sovereign United States territory, just as much as Alaska is, as well as the states carved from the Louisiana Purchase. We bought it, we paid for it, and General Torrijo should be told we are going to keep it.

AMY GOODMAN: Unfortunately, most people in this country still have no idea how the Panama Canal was built or how the US gained control of the canal and the land surrounding it at the turn of the century.

Well, a new book, How Wall Street Created a Nation: J.P. Morgan, Teddy Roosevelt and the Panama Canal, may help to set the record straight and return to the people of Panama a bit of their history in the process. It involves powerful Wall Street bankers, lawyers, secretive financial dealings and a US-engineered military coup that led to Panama’s secession from Colombia — in other words, a classic American story.

We’re joined right now By Ovidio Diaz Espino, who grew up in Panama, has worked as a lawyer in a number of New York law firms, including J.P. Morgan, and he is author of the book, How Wall Street Created a Nation. Welcome to Democracy Now!


AMY GOODMAN: Well, you say that you stumbled on this untold story of how Wall Street created Panama. How did it happen?

OVIDIO DIAZ ESPINO: I went to a — I was working on Wall Street at that time as a regular lawyer for J.P. Morgan, and I went to a Christmas party in 1997, when a man named Webb Stone approached me and began to say, “Did you realize that the Republic of Panama was born in Room 1162 of the Waldorf Astoria? Do you know that J.P. Morgan was the treasurer of Panama during its first year of independence? Are you aware that the Republic of Panama was conceived by the attorney William Nelson Cromwell, the founder of Sullivan & Cromwell?”

As a Panamanian, I thought I knew my country’s history, and I realized how little did I know. He encouraged me to begin to search after the true story of Panama, which led to a four-year saga and which resulted in the publication of How Wall Street Created a Nation.

AMY GOODMAN: So tell us how it began. Maybe you can begin where you began in the book.

OVIDIO DIAZ ESPINO: Sure. How Wall Street Created a Nation actually describes the journalistic saga that unmasked the true story of how the United States obtained the rights to build the Panama Canal. In 1908, Joseph Pulitzer’s newspaper, the New York World, accidentally got a tip that a secret Wall Street syndicate headed by J.P. Morgan and a foxy lawyer, William Nelson Cromwell of Sullivan & Cromwell, conspired to buy the shares of the then-defunct French Panama Canal Company and then convinced Teddy Roosevelt to buy the rights to build the Panama Canal or the concessions from the French for multiples of what they had paid. When Colombia got in the way by rejecting the Canal Treaty, this American capitalist plotted, fomented and financed a revolution in the then-province of Panama with J.P. Morgan’s money, and the help of Teddy Roosevelt’s warships, and ensured for themselves an enormous fortune.

Pulitzer published the accusations without having any evidence. The scandal almost cost the Republicans to lose Congress during the elections of that year, and Roosevelt was furious. He counterattacked with a libel suit against Pulitzer, in order to defend himself. The old, blind newspaperman, who had gone into retirement, actually fled the United States on his boat, the Liberty, and went to Lisbon in the middle of winter, causing the death of his captain. And yet, he decided to send his investigative reporters to Paris, Panama, Bogota and Washington, on a three-year campaign to discover the truth about what happened in Panama in 1903.

AMY GOODMAN: Joseph Pulitzer was afraid to come off his boat, right? He thought that if he landed in the United States that Roosevelt would have him arrested.

OVIDIO DIAZ ESPINO: Yes. He was sure that Roosevelt would walk over courts, judges, to put him in prison. In fact, he [Pulitzer] sent his reporters to find the best prisons in the United States in which to spend the rest of his life. And he nevertheless decided —

AMY GOODMAN: I hope they did an expose on prisons in the process.

OVIDIO DIAZ ESPINO: He decided to — he made a statement: “Roosevelt cannot muzzle the world.” So he was going to find the truth. And the reporters gathered an enormous amount of evidence that let to a Supreme Court case and later to congressional evidence hearings in 1913. However, the case was never conclusively proven, because first Pulitzer died in 1911, and Roosevelt was able to crush the deliberations of Congress through the help of his friend, Henry Cabot Lodge. With the advent of World War II, grass grew over this episode, except in Latin America, where the taking of Panama was the first of many motivated acts perpetrated by the United States against the sovereignty of Latin countries.

AMY GOODMAN: We’re talking with Ovidio Diaz Espino, who is the author of How All Street Created a Nation: J.P. Morgan, Teddy Roosevelt and the Panama Canal. OK, now let’s talk about the French company, the US speculators and Panama. I don’t even know if a lot of people outside of the region understand that Panama at that time was a part of Colombia, and in order to do all of this, the US had to fund a rebellion against Colombia.

OVIDIO DIAZ ESPINO: Yes. For 400 years, since the arrival of Balboa in Panama, who discovered the Pacific Ocean, cutting straight through the mountains and jungles of Panama to join the Pacific with the Atlantic coast had been the fractured dream of many European nations. As early as 1529, Roman Emperor Charles V ordered a commission to study the cutting of the canal through Panama. However, it was not until the nineteenth century, with the advent of the steam power and the electricity, that the dream could come true.

And no one represented the spirit of that nineteenth century more than the visionary French promoter and builder, Ferdinand de Lesseps. In 1881 he chartered a company called Compagnie Universelle [du] Canal Interocéanique, whose purpose was to build the Panama Canal. They raised $250 million at that time, which is an unbelievable fortune today, and mostly from small French peasants, and started the work of building the Panama Canal. The work was supposed to be finished within ten years. De Lesseps had already had success with building the Suez Canal, but by 1889 they had not even accomplished one-third of the excavation, and the company went bankrupt. This cost, the greatest bankruptcy of all time, led to the downfall of the French Republic and led to the imprisonment of people such as Gustav Eiffel, the builder of the Eiffel Tower, Ferdinand de Lesseps and others.

And the United States had become also very keenly interested in building a canal through the Straights of Panama. During the Spanish-American war, there was an incident in which most of the battleships were in the Pacific, and they had to move them to the Atlantic to fight the Spanish in Cuba, and it took three months to get them across the Cape of Horn, so the US realized that to become a world power it needed to have an access to the two oceans.

AMY GOODMAN: And the big question was whether it would go through Panama or Nicaragua.

OVIDIO DIAZ ESPINO: Correct. At that time, the favorite route, the one favored by Americans, was Nicaragua. Everybody thought that building the canal through Panama was impossible. If Ferdinand de Lesseps, the builder of the Suez Canal, could not do it, how could anybody else do it? So, therefore, Congress approved a bill to build the Nicaragua Canal using its two lakes. The construction began in Nicaragua, it went to President McKinley, who signed the bill, and it was just up for the Senate to approve it and the canal in Nicaragua would have become a reality. But at that moment Wall Street became involved.

AMY GOODMAN: And McKinley was assassinated.

OVIDIO DIAZ ESPINO: McKinley was assassinated, but right before that, right before it happened, the French realized that if the canal through Nicaragua was built, they would lose their $250 million investment. So they came to New York and searched for a man that would not only turn the public opinion towards Nicaragua towards Panama, but also defeat all of the forces of Congress, as well as the approval of McKinley. And they found that man in the Wall Street lawyer, William Nelson Cromwell, who was the lawyer of most robber barons, such as J.P. Morgan, Vanderbilt, the Harrimans, and whose specialty was bankrupt companies.

AMY GOODMAN: I wonder if the lawyers at Sullivan & Cromwell know about their history. But you’re a part of that world. You’re a lawyer on Wall Street. We’re going to continue this discussion, How Wall Street Created a Nation: J.P. Morgan, Teddy Roosevelt and the Panama Canal. Ovidio Diaz Espino is our guest. He wrote the book, and on this twentieth anniversary of the death of Torrijos, we’ll also bring it right up to, well, the last years, the years of the Panama invasion, the United States 1989, and how that fits into the picture of what Reagan called “any incursion there was a violation of US sovereignty”. You’re listening to Democracy Now! Back in a minute.


AMY GOODMAN: Right now, we are going to continue our discussion with Ovidio Diaz Espino, on his book How Wall Street Created a Nation: J.P. Morgan, Teddy Roosevelt and the Panama Canal. Ovidio, how did Wall Street conquer Congress?

OVIDIO DIAZ ESPINO: It’s a very interesting question. The first — the lawyer, Cromwell, went to Washington and started lobbying congressmen to build a Panama canal instead of Nicaragua, but he got absolutely no reception. In fact, John Tyler Morgan, who was the leader of the Southern Confederacy group in Congress, attacked him publicly in Congress. However, Cromwell did not retract it.

The Republicans at that time were in power, and Wall Street was a major donor of many Republicans, including the man who was considered the most powerful in Congress, which was Mark “Dollar” Hanna. He went to Hanna and offered him a donation of $60,000, which topped even Rockefeller’s donation of $50,000 to the Republican Party that year on behalf of his clients, a French company. I wonder whether Hanna thought it was improper to take money from a foreign company to influence his decisions.

Likewise, Cromwell went around to all of the other congressmen and reminded them that the Republicans depended very much on donations from many of his friends from Wall Street and was able to get the Republicans to block the legislation proposed by the Southern Democrats.

But there was something else going on the nobody knew, and that is that in May 1900 a group Cromwell organized, a secret syndicate, including, among others, J.P. Morgan; E.J. Simmons; Isaac Solomon; Douglas Robinson, who was Roosevelt’s brother-in-law; and H.W. Taft, who was the Secretary of War and later President of the United States Charles Taft’s brother, to also begin to lobby Congress. But more than that, they also began to speculate and purchase the shares of the defunct Panama Canal secret aim in France.

AMY GOODMAN: And so, when the US ultimately paid, how much?

OVIDIO DIAZ ESPINO: Well, what happened was that since the collapse of the De Lesseps company, everybody thought that the project was dead and that the stock was worthless. Actually, the bonds of the company were sold in France for about three cents on the dollar. Since no one would buy them, the Paris Bourse did not trade them, and they were sold by people, and there were no records of transactions. In 1900, the Cromwell and J.P. Morgan syndicate went to the France and began instructed their French counterparts, which included Credit Lyonnais, Gustav Eiffel, Ferdinand de Lesseps, to buy the bonds from the thousands of peasants who owned them. And once they had gotten enough of these bonds — they paid about $3.5 million — then they turned to the United States and then tried to convince the United States to buy the rights to build the canal, which the French company had for $40 million. Therefore, netting $36.5 million, approximately $3 billion in today’s money terms.

AMY GOODMAN: We’re talking with Ovidio Diaz Espino. He wrote, How Wall Street Created a Nation: J.P. Morgan, Teddy Roosevelt and the Panama Canal. Now, how do the Colombians fit in at this point? How did they get access to — how did the US get access to the Panama Canal to build it?

OVIDIO DIAZ ESPINO: Well, things went very well in Congress, as a result of the lobbying efforts of Cromwell, a Frenchman Bunau-Varilla. Congress adopted the Panama route, despite the opposition from the press and from everybody. Roosevelt at that time became — McKinley died, and Roosevelt became a supporter of the Panama Canal. It was his first major decision in power, and he was risking control over his own presidency. No one knows why he supported Panama instead of Nicaragua, although we do know that his brother-in-law was part of the syndicate.

Now, Congress approved the bill, so everything went well in the United States, but now you needed a treaty with Colombia, because Panama at that time was a province of Colombia. It was not a separate country, but only a province of Colombia. And the Wall Street — in fact, it was not the United States who negotiated the treaty with Colombia, it was Cromwell. Secretary of State John Hay basically told Cromwell to go and negotiate a treaty. And Cromwell did end up negotiating a treaty with Colombia, in which Colombia would receive only $10 million. And the French speculators and the Americans would receive $40 million. The Colombians didn’t like that. They demanded from the French another $15 million dollars. The US was going to pay $50; they said, $25 million for you, $25 million for the Colombians, especially since the concessions were running out in only one year. So what the Colombian Congress did was reject the treaty proposed by the United States and signed by Secretary of State John Hay. And the result was the creation of a new republic.

AMY GOODMAN: When you were researching this book — I mean, you’re not a reporter, you’re a lawyer.


AMY GOODMAN: You also went home to Panama. Who were the Panamanians, the sort of nationalist heroes, that formed Panama, and how did they tie into the whole US scandal and the syndicate?

OVIDIO DIAZ ESPINO: Our Thomas Jefferson and George Washingtons of Panama are Manuel Amador Guerrero and Jose Agustin Arango. Those are our patriots. They are highly esteemed Panamanians. As it turns out, when Colombians rejected the treaty, Cromwell began to seek the support of Panamanians to liberate Panama and create an independent nation. At that time, he controlled and he was the president of the largest industry in Panama, which was the Panama Railroad Company, which was owned by American capitalists. And there was two men that were reporting to him. One was the doctor, and the other one was the lawyer of the Panama Railroad Company. They were Amador and Arango, our two patriots. In other words, our two patriots were hand-chosen by the Wall Street, because they reported to the foxy lawyer, William Nelson Cromwell.

AMY GOODMAN: So what was the response in Panama as you were writing this book of your family and others?

OVIDIO DIAZ ESPINO: The response has been extremely critical. This book has been enormously —- it’s being enormously debated. It’s even debated in Congress, because I reveal facts that they believe hurt the national pride. These are wounds that they felt had been healed with the turning back of the Panama Canal, and that they may be opened. However, the facts are the facts, and my answer to that is, it does not diminish Jefferson or Washington to know that even though they signed the Declaration of Independence they were slave owners, too. Likewise, these men -—

AMY GOODMAN: For many, it does.

OVIDIO DIAZ ESPINO: Well, for some Panamanians, certainly this is something unacceptable. But what happened in Panama was that they summoned Amador to the United States. He came to the offices of Sullivan & Cromwell. They planned the revolution. They got the support of Teddy Roosevelt, and that was very — in doing so, Roosevelt was violating a treaty that it had with Colombia, signed in 1847, in which the United States agreed to protect the sovereignty of Colombia over Panama in return for the right of passage and the right to build a railroad in Panama.

For fifty years, every time the Panamanians wanted to liberate themselves from the very repressive Colombian government, and what kept the Panamanians from liberating themselves from the Colombian government was actually invasions by the United States. And in 1902, the US invaded Panama and quashed some forces that were going to liberate Panama from Colombia. Eight months later, thanks to the influence of Wall Street, the US changed a hundred years of history and now began to support the Panamanian revolutionaries.

AMY GOODMAN: I wanted to fast forward this to 1989 and to put the Panama invasion in the context of the whole US relationship with Panama. These were President Bush’s words — don’t forget, at the time it was Cheney who was, right, Secretary of Defense; old term was Secretary of War — talking about the invasion.

PRESIDENT GEORGE H.W. BUSH: One year ago, the people of Panama lived in fear under the thumb of a dictator. Today, democracy is restored. Panama is free.

AMY GOODMAN: That was President Bush. What about the invasion and how it fits into this history of a US-created Panama?

OVIDIO DIAZ ESPINO: As you correctly pointed out, the Panama Canal Treaty was signed by Torrijos and Carter. One of the conditions that the United States imposed on Panama is that it had to create a powerful army that would be able to protect the Panama Canal once the United States left. So they took a very disorganized and a small police guard and turned it into a strong military force that was trained with the most sophisticated weaponry in the world. Torrijos was mysteriously killed, and this powerful force ended up in the hands of Noriega.

AMY GOODMAN: It was suggested — and we’re pulling our sound clips from the Academy Award-winning film, The Panama Deception — but that Noriega may have had involvement in that death — Noriega, who was long on the payroll of the Central Intelligence Agency.


AMY GOODMAN: When you look at how the Panama Canal was built, the concern for the many who died in the building of that canal, how many is it believed did die?

OVIDIO DIAZ ESPINO: Between the French and the Americans, well over 50,000 people died in the construction, mostly from diseases. A lot of them were mostly black Indians who were brought over to work during the construction of the Panama Canal.

AMY GOODMAN: Well, it sounds like there wasn’t much more regard for the lives of Panamanians during the Panama invasion. Again, going back to The Panama Deception, a number of reporters were interviewed, although it was very tough for reporters to cover this with the tremendous control of the military. This is from The Panama Deception, and this is WBAI reporter Robert Knight describing — he won a Polk Award for his coverage of Panama — who died in the Panama invasion.

ROBERT KNIGHT: What happened in Panama is a hidden horror. Many of the bodies were bulldozed into piles and immolated in the slums where they were collected. Other bodies were left in the garbage shoots of the poor projects in which they died from the shooting, from the artillery, from the machine guns, from the airborne attacks. Others were said to have been pushed into the ocean.

AMY GOODMAN: But that wasn’t the main concern of the US press at the time. This was NBC Nightly News at the time that I think fifteen US soldiers died.

TOM BROKAW: As we end this program, we hear from President Bush, on the high price these young men paid, and we say goodbye to them.

PRESIDENT GEORGE H.W. BUSH: Every human life is precious. And yet, I have to answer, “Yes, it has been worth it.”

AMY GOODMAN: Here comes Pentagon spokesperson, Pete Williams, who became an NBC reporter.

REPORTER: In the month’s following the invasion, Panamanians were shocked to discover the existence of mass graves, where hundreds, perhaps thousands, of bodies were hastily dumped into pits and buried by US troops.

PETE WILLIAMS: There was a report of what some were calling a mass grave, which I think is a term that is imprecise.

AMY GOODMAN: That was Pete Williams. He became an NBC reporter. This is the head of the Southern Command, Maxwell Thurman.

MAXWELL THURMAN: No, I didn’t say we had any mass burials. There was one case of some number, but I cannot quote to you that number.

AMY GOODMAN: The picture in The Panama Deception at that point is women crying over a mass grave. And in the documentary it says that it was believed that a number of these graves, perhaps up to fifteen, might have been at US bases. As we conclude this discussion, your take on why the US invaded?

OVIDIO DIAZ ESPINO: Noriega challenged the sovereignty or the influence of the United States in Panama for the first time since 1857. American troops have been present in Panama since 1857. Even the Torrijos-Carter Treaty maintains the neutrality clause, which allows the United States to enter Panamanian territory to protect the canal. And what Noriega did was to challenge that. Through the invasion of Panama, essentially what the United States did was what Teddy Roosevelt had done a hundred years later, which is to regain its powerful hand and grip over Panamanian affairs.

AMY GOODMAN: I’m going to end this segment with an excerpt from The Panama Deception of WBAI reporter Robert Knight, who — this is pretty prophetic, looking from ten years ago at what the invasion of Panama meant.

ROBERT KNIGHT: The invasion sets the stage for the wars of the 21st century in South America. The 2,000-mile invasion from Washington to Panama City took place primarily with bases from the United States. The essential value of the Southern Command is to give another 2,000 miles of intervention capability, which takes us right into the heart of the Andean coca-producing region, where the wars of the next decade are entirely likely to take place.

AMY GOODMAN: I dedicate this program to Robert Knight, who won a George Polk Award for his coverage of events leading up to the Panama invasion. His program Earth Watch — its twenty-four-year run one of the longest at WBAI — was canceled last week by the WBAI general manager. I want to thank you very much, Ovidio Diaz Espino, for joining us. How Wall Street Created a Nation: J.P. Morgan, Teddy Roosevelt, and the Panama Canal.


AMY GOODMAN: It’s published by —

OVIDIO DIAZ ESPINO: Four Walls, Eight Windows.

AMY GOODMAN: A press here in New York.

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