[corp-focus] How Wall Street Created a Nation

[Robert Weissman]

How Wall Street Created a Nation 
By Russell Mokhiber and Robert Weissman
 
Oviodio Diaz Espino was working as a corporate lawyer at J.P. Morgan in
New York when he went to a Christmas Party in 1997. At the party, Diaz met
a movie producer, Webster Stone.  Stone noticed Diaz had a foreign accent
and asked him where he was from. Diaz said Panama. Stone asked Diaz who he
worked for. Diaz said J.P. Morgan.
 
Stone excitedly threw his arms in the air and said -- "Oh my God -- you
are the man I've been looking for!"
 
"Did you know that J.P. Morgan was the treasurer of Panama during its
first year of existence?."
 
"Are you aware that the Republic of Panama was created in Suite 1162 of
the Waldorf Astoria?"
 
Diaz was not, and was intrigued. Stone had been working on a script for
Robert Redford about how a group of Wall Street movers and shakers created
Panama.

Garry Trudeau was writing the script. The movie project was eventually
dropped (too many villains, no heroes), but Stone turned over his files to
an amazed Diaz, who dropped everything and began investigating.
 
Diaz spent two years with his head buried in records at the New York
Public Library, searching to confirm Stone's allegation that his country
was created by Wall Street.
 
And confirm it he did. Diaz lays out the story in a new book, How Wall
Street Created a Nation: J.P. Morgan, Teddy Roosevelt and the Panama Canal
(Four Walls Eight Windows, 2001).

Diaz's story is about a corporate hijacking of U.S. foreign policy, about
how corporate interests and government interests become so entwined that
you can't tell the difference.
 
In a nutshell, this is what Diaz found:
 
In 1900, a group of investors led by William Nelson Cromwell, the founder
of the "prestigious" New York law firm, Sullivan & Cromwell, and the
banker J.P. Morgan, created a secret syndicate of Wall Street financiers
and politicians to buy the shares of the bankrupt French Panama Canal
Company, which owned the right to build the Panama Canal, from thousands
of small shareholders throughout Europe. They invested about $3.5 million
and gained control of the company.
 
The covert investors then spent the next three years getting the United
States government to buy the holdings for $40 million, the payment of
which would flow back to them. In order to do this, they first had to
defeat an entrenched Nicaragua lobby. Nicaragua was the preferred route
for the canal because of its two big lakes, and also because the French
had already tried to build a canal in Panama but had failed miserably.
 
And the U.S. was already on its way to building the canal in Nicaragua.
The House of Representatives unanimously passed a Nicaragua canal bill, a
treaty was signed with Nicaragua, President McKinley had already signed
the bill, and the excavation had already began in Nicaragua. It was a done
deal -- until Cromwell arrived on Capitol Hill and began throwing money
around.
  
Senator Mark "Dollar" Hanna, who was at that time the chair of the
Republican Party and probably the most powerful man in America, received
$60,000, at the time the largest donation to any politician.
 
In return, Hanna began a campaign to build the canal in Panama instead.
U.S. policy was reversed, and in 1902, Congress decided that the Canal was
to go through Panama.
 
Only one problem -- Panama was at the time a province of Colombia, and the
United States needed Colombia's approval to move ahead. Teddy Roosevelt
sent Cromwell, who stood to benefit financially from the deal, to
negotiate with Colombia. Colombia balked, demanding more money. Cromwell
decided to circumvent Colombia, and to instead get Panama to secede and
create it's own country -- which it did.
 
"What is shocking about this part of the story is that Wall Street
planned, financed and executed the entire independence of Panama,"  Diaz
says. In effect, Cromwell and J.P. Morgan hired Panama's Jefferson and
Washington, a tale of intrigue that Diaz documents. Panama was declared a
nation, Cromwell negotiated a canal treaty with his cronies, and made off
with millions. (Or as Senator Samuel Hayakawa put it years later, "we
stole it, fair and square.")
 
Last week, we called up a Sullivan & Cromwell managing partner here in
Washington and asked if the law firm had any reaction to the allegations
that the firm's founding father had engaged in such skullduggery.
 
The partner says, "Well, David McCullough wrote a book about the Panama
Canal (The Path Between the Seas) -- take a look at it."
 
Diaz says, "McCullough does not dedicate one page to the question about
the secret conspiracy and speculation by the Wall Street financiers."
 
The Sullivan & Cromwell partner also asked us, "What is the relevance of
this story 100 years later?" We put the question to Diaz.
 
"I want people to know a chapter in world history that brought down a
French republic, a Colombian government, created a new republic, shook the
political foundations in Washington with corruption and gave birth to
American imperialism in Latin America," Diaz says.

"It was one of the biggest scams in history. And I believe that alone is
worth knowing about."


Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime
Reporter. Robert Weissman is editor of the Washington, D.C.-based
Multinational Monitor. They are co-authors of Corporate Predators: The
Hunt for MegaProfits and the Attack on Democracy (Monroe, Maine: Common
Courage Press, 1999; http://www.corporatepredators.org)

(c) Russell Mokhiber and Robert Weissman

This article is posted at: 
http://lists.essential.org/pipermail/corp-focus/2001/000091.html