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How Wall Street Created a Nation: J. P. Morgan, Teddy Roosevelt, and the Panama Canal
Growing up in Panama, Ovidio Diaz Espino had a complicated relationship with his native country. Like many of his friends and family, and neighbors, he proudly celebrated his nation's heritage and fight for independence, all the while living in the shadow and cultural influence of the American-built Panama Canal. Now, Diaz Espino - attorney and investment banker who has lived in the United States for the past 25 years - has written the true story behind the creation of the Panama Canal. How Wall-Street Created a Nation not only gives the never-before-told account of decades of financial speculation, fraud, and international conspiracy, but also holds lessons for contemporary foreign policy and casts new light on U.S. Panama relations.
254 pages, Hardcover
First published June 14, 2001
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Displaying 1 - 14 of 14 reviews
February 8, 2014
"WE STOLE IT FAIR AND SQUARE"
Ovidio Diaz Espino book on the secession of Panama from Colombia in 1903 is a fascinating look at the machinations of Wall Street and the US government aided and abetted by the insanely arrogant Phillipe Bunau-Varilla as they created the State of Panama in the interests of Wall Street, the US investors who bought the shares in the failed French attempt at digging a canal across the isthmus of Panama, the French investors who still owned shares in that effort, and the strategic interests of the United States. In short, everyone benefits except the population of Panama - with the unsurprising exception of the Panamanian elites who done quite nicely out of it.
The book could be better written, but the ins and outs of the conspiracy are sufficiently complicated so it is hardly surprising that a few passages need read over twice or thrice to work out exactly what happened. There is no excuse for the cliches which occasionally pepper the text. Otherwise it documents extensively the miserable nature of US imperialism and how a variety of interests benefited substantially in the formation of the state of Panama. The one sided Canal treaty and how it was negotiated practically beggers belief - Bunau-Varilla hoodwinks the newly born Panamanian State into making him special representative in the US on the basis that there will be no US support for their "revolution" without his influence and re-writes the Canal Treaty to make it more favourable to the US than the original treaty that the US government submitted to him to sign! All this is done in a week so that the representatives of the Panamanian State are presented with a fait-acompli when they arrive in Washington.
An interesting book, that is well worth reading.
Ovidio Diaz Espino book on the secession of Panama from Colombia in 1903 is a fascinating look at the machinations of Wall Street and the US government aided and abetted by the insanely arrogant Phillipe Bunau-Varilla as they created the State of Panama in the interests of Wall Street, the US investors who bought the shares in the failed French attempt at digging a canal across the isthmus of Panama, the French investors who still owned shares in that effort, and the strategic interests of the United States. In short, everyone benefits except the population of Panama - with the unsurprising exception of the Panamanian elites who done quite nicely out of it.
The book could be better written, but the ins and outs of the conspiracy are sufficiently complicated so it is hardly surprising that a few passages need read over twice or thrice to work out exactly what happened. There is no excuse for the cliches which occasionally pepper the text. Otherwise it documents extensively the miserable nature of US imperialism and how a variety of interests benefited substantially in the formation of the state of Panama. The one sided Canal treaty and how it was negotiated practically beggers belief - Bunau-Varilla hoodwinks the newly born Panamanian State into making him special representative in the US on the basis that there will be no US support for their "revolution" without his influence and re-writes the Canal Treaty to make it more favourable to the US than the original treaty that the US government submitted to him to sign! All this is done in a week so that the representatives of the Panamanian State are presented with a fait-acompli when they arrive in Washington.
An interesting book, that is well worth reading.
September 22, 2009
This is a very timely book in this age of cynicism and conspiracy theory, even as it describes events from more than 100 years ago. It's a welcome reminder that war for profit did not begin with Halliburton and the Bush/Cheney administration; monied interests have had a voice in foreign policy as long as there have been nations. This book manages to convey the realpolitik without excessive finger wagging.
The Panama Canal was the largest and costliest engineering project attempted by man, so it's no surprise people were lined up to get a finger in the pie. Originally Congress was set to approve the Nicaragua Canal; then a syndicate of French and American businessmen figured they could make a killing by buying up the rights to dig a Panamanian canal, and lobbying congress to build there instead. Which they did, successfully, for an obscene profit.
At this time Panama was a province of Columbia, mostly due to U.S. meddling over the previous half-century. When Columbia demanded a cut of the windfall, the syndicate calculated it would be cheaper to reverse U.S. policy and instigate a Panamanian revolution. After buying off or deceiving all the key players, the syndicate forced an extremely disadvantageous canal treaty on Panama, which grated on them through the rest of the 20th Century.
Almost all of this was achieved through totally legal means: "lobbying" and Wall Street business as usual. Although Teddy Roosevelt's secret support of the revolution was illegal, all the incriminating papers mysteriously vanished over time and everybody got off scott-free. As it's always good to get a second opinion on historical matters, I'm now looking for a copy of "The Path Between the Seas: The Creation of the Panama Canal, 1870-1914" by David McCullough.
The Panama Canal was the largest and costliest engineering project attempted by man, so it's no surprise people were lined up to get a finger in the pie. Originally Congress was set to approve the Nicaragua Canal; then a syndicate of French and American businessmen figured they could make a killing by buying up the rights to dig a Panamanian canal, and lobbying congress to build there instead. Which they did, successfully, for an obscene profit.
At this time Panama was a province of Columbia, mostly due to U.S. meddling over the previous half-century. When Columbia demanded a cut of the windfall, the syndicate calculated it would be cheaper to reverse U.S. policy and instigate a Panamanian revolution. After buying off or deceiving all the key players, the syndicate forced an extremely disadvantageous canal treaty on Panama, which grated on them through the rest of the 20th Century.
Almost all of this was achieved through totally legal means: "lobbying" and Wall Street business as usual. Although Teddy Roosevelt's secret support of the revolution was illegal, all the incriminating papers mysteriously vanished over time and everybody got off scott-free. As it's always good to get a second opinion on historical matters, I'm now looking for a copy of "The Path Between the Seas: The Creation of the Panama Canal, 1870-1914" by David McCullough.
December 18, 2025
Do you have opinions about the Panama canal but you know nothing about it????
WELL DO I HAVE THE BOOK FOR YOU!
TLDR (a poor summary of everything that went down in this book); French company fails at building the Panama Canal. A bunch of wall street bankers started to buy up all the shares from poor French people for dirt cheap. When they had enough to control the company- they pushed the US government to buy it for $$$$$$$$$$$ a LOT more. The US gov't was like ehhhhh we were kinda already gonna do it in Nicaragua, mate. Deals been signed. And the bankers responded by pushing more and more throwing around some more money, saying 'do Panamaaaaaa'. Columbia was like wtf, that's our property, you'd better pay US for it?? And the bankers said NO and instead they paid for the Panamanians to start a revolution under the assumption that they had the US military backing it (they did not), anyway some things happen and they succeed and no one really knows where all the money went that the US spent to 'buy' the Panama canal for 40 million. Probably in the pockets of J.P. Morgan and Cromwell and other white men (and a smaller percentage to notable Panamanian figures who are still rich to this day).
Read the whole thing though, because it's well written and engaging enough to keep you reading. The downside is all the names started to confuse me- but there's a handy dandy character sheet in the beginning of the book to keep you on track!
WELL DO I HAVE THE BOOK FOR YOU!
TLDR (a poor summary of everything that went down in this book); French company fails at building the Panama Canal. A bunch of wall street bankers started to buy up all the shares from poor French people for dirt cheap. When they had enough to control the company- they pushed the US government to buy it for $$$$$$$$$$$ a LOT more. The US gov't was like ehhhhh we were kinda already gonna do it in Nicaragua, mate. Deals been signed. And the bankers responded by pushing more and more throwing around some more money, saying 'do Panamaaaaaa'. Columbia was like wtf, that's our property, you'd better pay US for it?? And the bankers said NO and instead they paid for the Panamanians to start a revolution under the assumption that they had the US military backing it (they did not), anyway some things happen and they succeed and no one really knows where all the money went that the US spent to 'buy' the Panama canal for 40 million. Probably in the pockets of J.P. Morgan and Cromwell and other white men (and a smaller percentage to notable Panamanian figures who are still rich to this day).
Read the whole thing though, because it's well written and engaging enough to keep you reading. The downside is all the names started to confuse me- but there's a handy dandy character sheet in the beginning of the book to keep you on track!
February 24, 2025
3.5 Always love those books uncovering deep ties between gov and Wall Street like too big to fail.
May 26, 2016
Wall Street's "Inside Job" of the Early 1900s
The material is incredibly compelling but the book did not come together for me. It was really tough to get through the first third. With its short length, I had hoped it would be more of a nonfiction novel with a streamlined plot, but it read more like the summarized notes collected to write such a novel.
The author wanted to keep it brief but couldn't resist inserting excessively long, direct quotes from primary sources, such as the communication code used by American and Panamanian conspirators (One hundred = Rabbit). Chapters would just come to an end without much build or release of suspense. Despite being very brief, important characters like T.R. only received ~1 page of backstory.
However, underneath the ineffective writing is a truly fascinating story. I am now very interested in reading a better account of the same subject matter.
The material is incredibly compelling but the book did not come together for me. It was really tough to get through the first third. With its short length, I had hoped it would be more of a nonfiction novel with a streamlined plot, but it read more like the summarized notes collected to write such a novel.
The author wanted to keep it brief but couldn't resist inserting excessively long, direct quotes from primary sources, such as the communication code used by American and Panamanian conspirators (One hundred = Rabbit). Chapters would just come to an end without much build or release of suspense. Despite being very brief, important characters like T.R. only received ~1 page of backstory.
However, underneath the ineffective writing is a truly fascinating story. I am now very interested in reading a better account of the same subject matter.
April 15, 2025
Here's my quick and dirty recounting of my findings from this book.
Since it came out in 2001, the author might have been motivated to capitalize on Panama Canal interest, as the handover from the US to Panama control took place on New Year's Eve 1999. Regardless, the investigation and his methods seem robust; more than 1/3rd of the page count is notes and references. Diaz-Espino deserves credit for being brief and concise with the whole story, and it's a fascinating one. In an attempt to honour the author's brevity, here are my takeaways:
The French's failed attempt at building the canal in the late 1800s in what was then a province of Colombia, left behind a joint stock company with assets, land, and a concession along the entire route of the future canal. Because of its spectacular failure, the bearer bonds of that company were trading at less than 3% of their face value. The whole enterprise ssentially amounted to nothing more than swathes of jungle with rusting and broken down equipment, and a potential project with a feasibility that was a total wild card, if not an impossibility.
That's where a few masterminds come into the picture. A Frenchman named Philippe Bunau-Varilla sought the partnership of American Lawyer William Cromwell to come up with a scheme to take advantage of the bottom dollar valuation of the French canal company "Compagnie Nouvelle." With financial backers like JP Morgan, and some political collusion, they lobbied the right people and most importantly, got Teddy Roosevelt in on the idea of buying the shares for very little money, steering the US govt toward pursuing the project so that they can basically manufacture an enormous arbitrage moment.
At the time, the Colombian province of Panama was being loosely administered from the remote capital of the Colombian government in Bogota, with a garrison of Colombian troops stationed in Panama City that sustained salaries in arrears by a trailing six to ten months on average. It wasn't difficult for these French and American orchestrators to connect with key Panamanians who were eager to mount a separatist movement if they had the right assurances and protection from a bigger brother, i.e., Uncle Sam. The Americans were explicit about not directly fomenting a revolution, but they made it clear that if the Panamanians could pull off the opening stages of a separatist uprising, that they would be on standby to protect the Panamanians if Colombia attempted a retaking of the province. The main Panamanian actors who pulled this off are heroes to this day: Amador, Boyd, Arias, and Obarrio; their names are on countless streets, parks and government buildings. They took the leap of faith and overran the Colombian troops and awaited the appearance of American gunboats. Colombia was caught with their pants down, and shortly afterward, the people of Panama were able to gain wider support across the entire territory. Panama had its independence.
This is where the crux of the entire scheme takes place. Roosevelt was now in a position where he could advocate for the independence of Panama from the "tyranny" of the Colombian government. With plenty of PR in the form of journalistic collusion and newspaper coverage produced in advance of this narrative. At the same time, Roosevelt could claim to be the champion of commerce in his booming baritone and declare the commencement of the American Canal Project. At this point, the US government and Congress were convinced to buy the entirety of the French Compagnie Nouvelle shares at a massively overvalued price, costing far more than the Louisiana Purchase, Alaska, Philippines, and every other territorial purchase combined. The sellers and profiteers were of course our original group of conspirators (Brunau, Cromwell, JP Morgan), who also cut in people like Roosevelt himself, key senators, and congressmen, as well as the leaders of the Panamanian revolution. Not only did Roosevelt personally get his payday, but he manufactured huge political clout with his spearheading of the new project. Josef Pulitzer and his "The World" newspaper attempted in vain to publicize the whole scandal, but even he had to succumb to the hugely countervailing pressures. What was originally kept covered up eventually came out in a slow trickle, but never enough to tarnish the glory of the greater project. Evidence from both sides of the atlantic was slowly collected and pieced together, but a clear picture remained somewhat inconclusive to contemporaries, as the financiers knew exactly how to hide their tracks. Teddy Roosevelt eventually spilled the beans during his notorious attempt to get elected for a third term, where he couldn't resist proclaiming and taking credit for taking the Panama territory from Colombia and having the whole deal handed to him on a silver platter. This kicked off a new round of outrage, but ultimately it was overshadowed by the sensation of the canal itself, and the complicity of the Panamanians; combined with Colombia's inability to raise enough of a fuss to gain any traction among the international community. The US did eventually pay some reparation to the Colombian government in 1934. On the whole, it was an amazing undertaking, and the book adds to the research and wraps it up in a very tidy little package. Regardless of my spoilers, I highly recommend the book just for all of the incredible anecdotes and details of how the whole caper was pulled off.
Since it came out in 2001, the author might have been motivated to capitalize on Panama Canal interest, as the handover from the US to Panama control took place on New Year's Eve 1999. Regardless, the investigation and his methods seem robust; more than 1/3rd of the page count is notes and references. Diaz-Espino deserves credit for being brief and concise with the whole story, and it's a fascinating one. In an attempt to honour the author's brevity, here are my takeaways:
The French's failed attempt at building the canal in the late 1800s in what was then a province of Colombia, left behind a joint stock company with assets, land, and a concession along the entire route of the future canal. Because of its spectacular failure, the bearer bonds of that company were trading at less than 3% of their face value. The whole enterprise ssentially amounted to nothing more than swathes of jungle with rusting and broken down equipment, and a potential project with a feasibility that was a total wild card, if not an impossibility.
That's where a few masterminds come into the picture. A Frenchman named Philippe Bunau-Varilla sought the partnership of American Lawyer William Cromwell to come up with a scheme to take advantage of the bottom dollar valuation of the French canal company "Compagnie Nouvelle." With financial backers like JP Morgan, and some political collusion, they lobbied the right people and most importantly, got Teddy Roosevelt in on the idea of buying the shares for very little money, steering the US govt toward pursuing the project so that they can basically manufacture an enormous arbitrage moment.
At the time, the Colombian province of Panama was being loosely administered from the remote capital of the Colombian government in Bogota, with a garrison of Colombian troops stationed in Panama City that sustained salaries in arrears by a trailing six to ten months on average. It wasn't difficult for these French and American orchestrators to connect with key Panamanians who were eager to mount a separatist movement if they had the right assurances and protection from a bigger brother, i.e., Uncle Sam. The Americans were explicit about not directly fomenting a revolution, but they made it clear that if the Panamanians could pull off the opening stages of a separatist uprising, that they would be on standby to protect the Panamanians if Colombia attempted a retaking of the province. The main Panamanian actors who pulled this off are heroes to this day: Amador, Boyd, Arias, and Obarrio; their names are on countless streets, parks and government buildings. They took the leap of faith and overran the Colombian troops and awaited the appearance of American gunboats. Colombia was caught with their pants down, and shortly afterward, the people of Panama were able to gain wider support across the entire territory. Panama had its independence.
This is where the crux of the entire scheme takes place. Roosevelt was now in a position where he could advocate for the independence of Panama from the "tyranny" of the Colombian government. With plenty of PR in the form of journalistic collusion and newspaper coverage produced in advance of this narrative. At the same time, Roosevelt could claim to be the champion of commerce in his booming baritone and declare the commencement of the American Canal Project. At this point, the US government and Congress were convinced to buy the entirety of the French Compagnie Nouvelle shares at a massively overvalued price, costing far more than the Louisiana Purchase, Alaska, Philippines, and every other territorial purchase combined. The sellers and profiteers were of course our original group of conspirators (Brunau, Cromwell, JP Morgan), who also cut in people like Roosevelt himself, key senators, and congressmen, as well as the leaders of the Panamanian revolution. Not only did Roosevelt personally get his payday, but he manufactured huge political clout with his spearheading of the new project. Josef Pulitzer and his "The World" newspaper attempted in vain to publicize the whole scandal, but even he had to succumb to the hugely countervailing pressures. What was originally kept covered up eventually came out in a slow trickle, but never enough to tarnish the glory of the greater project. Evidence from both sides of the atlantic was slowly collected and pieced together, but a clear picture remained somewhat inconclusive to contemporaries, as the financiers knew exactly how to hide their tracks. Teddy Roosevelt eventually spilled the beans during his notorious attempt to get elected for a third term, where he couldn't resist proclaiming and taking credit for taking the Panama territory from Colombia and having the whole deal handed to him on a silver platter. This kicked off a new round of outrage, but ultimately it was overshadowed by the sensation of the canal itself, and the complicity of the Panamanians; combined with Colombia's inability to raise enough of a fuss to gain any traction among the international community. The US did eventually pay some reparation to the Colombian government in 1934. On the whole, it was an amazing undertaking, and the book adds to the research and wraps it up in a very tidy little package. Regardless of my spoilers, I highly recommend the book just for all of the incredible anecdotes and details of how the whole caper was pulled off.
July 27, 2019
An interesting look at one of the parts of American history we studiously avoid. I remember the huge arguments that happened when we renegotiated the Panama Canal treaty in the late '70s. It was one of the issues that cost President Carter a second term. The truth is that the original treaty was a travesty. Orchestrated by stock speculators angling to turn a failed French company's stocks into a windfall, negotiated by a Frenchman looking to restore the glory of his home country, and aided by American desires for empire, everyone got exactly what they wanted. Except for the people of Panama. A ten-mile wide swath of their country was taken in perpetuity, without a single Panamanian involved in the negotiation.
Ovidio Diaz Espino does a careful job of walking through the sometimes comic opera plots that led to the creation of a new nation, and how that nation was taken advantage of in its literal first days. He is a Panamanian himself, and his national outrage seeps through only occasionally. Otherwise, the story is told in a very detailed, lawyerly format that remains an interesting read.
I see the book billed as an "untold story", which the book itself disproves. The ridiculously one-sided nature of the original treaty was recognized at the time of its signing. There were repeated Congressional investigations of it, newspaper coverage was widespread, and it was a huge issue in Latin America for decades. Rather, the book reveals details that had been carefully hidden for all that time and draws together a rare comprehensive look at one of the lesser moments in our national history.
There are times when the author's background in finance and the law results in some dry reading, but overall it held my interest.
Ovidio Diaz Espino does a careful job of walking through the sometimes comic opera plots that led to the creation of a new nation, and how that nation was taken advantage of in its literal first days. He is a Panamanian himself, and his national outrage seeps through only occasionally. Otherwise, the story is told in a very detailed, lawyerly format that remains an interesting read.
I see the book billed as an "untold story", which the book itself disproves. The ridiculously one-sided nature of the original treaty was recognized at the time of its signing. There were repeated Congressional investigations of it, newspaper coverage was widespread, and it was a huge issue in Latin America for decades. Rather, the book reveals details that had been carefully hidden for all that time and draws together a rare comprehensive look at one of the lesser moments in our national history.
There are times when the author's background in finance and the law results in some dry reading, but overall it held my interest.
April 22, 2020
This is a concise but thorough and detailed accounting of one of the 20th century's most influential and controversial events - the creation of both Panama the nation and Panama the Canal. It was also arguably Theodore Roosevelt's most important contribution to American history as President. The title, while technically accurate, is a bit of a misnomer, however. While Roosevelt and Morgan were the political and financial forces, respectively, behind the events as they occurred, the book is a more detailed account of the players more intimately involved. Having just completed one of the most well-known biographies of Roosevelt, I became disappointed in that work's lack of attention given to this episode in Roosevelt's political career. On every level, it's hard to deny the creation of Panama and the Canal, along with tens of millions of "missing" dollars all happened due to dubious motives that received Roosevelt's initial and ongoing approval.
June 23, 2022
How Wall Street Crated a Nation by Ovidio Diaz Espino is a backstabbing, real life, story of utter greed from all types of angles. Colombian government screwing their military, US high powered officials wanting to leave a mark in history, bankers wanting to make a profit out of the US Government, “revolutionaries” making profits from independence, a country screwed over from the beginning with a perpetual clause of “neutrality”.
In the end, a nice book to read if you want to learn a bit more of the back-end story of the Panama Canal and it´s accomplice´s, but the book to read for this is The Path Between the Seas by David McCullough.
In the end, a nice book to read if you want to learn a bit more of the back-end story of the Panama Canal and it´s accomplice´s, but the book to read for this is The Path Between the Seas by David McCullough.
September 16, 2019
A little slow at times, but a facinating look at what actually was going on in building the canal.
June 28, 2023
This was very well done. I appreciated all of the perspective on what is now a much-told story, beginning with the note by the author at the beginning.
November 16, 2010
A basic overview of the political and financial machinations behind the building of the Panama Canal. Not a groundbreaking study or a definitive account, but rather a general survey intended as a starting point. It's not a very clear or memorable one, though, for all its conciseness; characterization is nonexistent and the human element is studiously omitted. Of limited usefulness; boring and unclear.
December 8, 2016
The book is an incredible work of historical research on the creation of my country (Panama) and the forces behind our independence movement. This should a be requiere reading for all students in Panama as well as for those who are interested in Panamanian history.
February 25, 2010
An interesting account of how those with money gain influence and set the course of American military and political policy in foreign countries...
Displaying 1 - 14 of 14 reviews