Noel Maurer and Carlos Yu have written a fascinating and engaging economic history of the Panama Canal and of the operation of US imperialism in Panama. This work makes an important contribution to understanding the financial underpinnings of the American construction and domination of the canal for nearly a century, as well as the historical antecedents that drove this process, and the current function of the waterway under Panamanian control. Central to this study is an analysis of twentieth-century imperialism, its costs, rewards, and contradictions. In the case of Panama, Washington reaped considerable profit on a number of levels, social, financial, and strategic, from its excavation and ownership of the canal in the first half-century after its 1914 completion. Earnings from the canal then began a gradual decline due to the US interstate highway system and the economic independence of the Pacific sector of the US economy from the once-dominant Eastern manufacturing base. Increasing nationalist resistance to US domination by aggrieved Panamanians and an acute loss of the Big Ditch's military necessity facilitated Washington's decision to negotiate a phased handover of its former “prize possession.” To the surprise of many skeptics, among them former US canal workers, the Zonians, Panama has done an efficient job of running the waterway since 2000, improving profitability and eliminating bottlenecks and featherbedding.
This work is primarily an economic history and therein lies its strength. The authors provide eighty statistical tables and graphs and a wealth of other demographic and fiscal data that lends considerable weight to their analysis, some of it from secondary sources, others from their own primary research. Historians of US–Panamanian relations have tended to emphasize high politics and treaties, relying on a scattershot of economic indices and inadequately analyzed assumptions, what the authors refer to as “stylized facts.” Drs. Maurer and Yu attempt to set the record straight here by “crunching hard numbers” in a variety of original ways, including counterfactuals of how Washington's economy and strategic projection might have functioned without a Panama Canal and the “social savings” and “empire effect” of the waterway for both nations. In the process, they debunk several myths about the canal, which has long held an exaggerated symbolic import for Americans. Encompassing a large economic scope, the book also shows the positive impact of the canal on Barbados, Chile, and Japan, all of which benefited financially from the Big Ditch – more so than most Latin Panamanians of earlier generations, cut off as they were from the largesse of the canal by the US commissary system that supplied the Zonians with all the goods and victuals they needed and by a racially segregated labor regime that favored Barbadian labor over native workers.
The US canal project (1904–99) was by no means the first to build and maintain a profitable transit mechanism across the isthmus. The Big Ditch expertly breaks down the successes, costs, and failures of the US canal builders' predecessors. Spanish officials built mule-train roads linked to river routes from Panama City on the Pacific to Nombre de Dios on the Caribbean as early as the mid-sixteenth century to avoid the expense, distance, and dangers of shipping silver from Andean mines to Cadiz via Cape Horn. A historical pattern soon emerged with all isthmian transit systems initially enjoying profitability which declined sharply with the advent of competitive trade routes. In the case of the mule roads, overland routes from Andean mines to the Rio de Plata and Buenos Aires proved more profitable by 1700. The next transit operation, the Panama Railroad, completed in 1855, proved immensely lucrative until the 1869 completion of the US transcontinental railroad enabled eastern US citizens to travel to California for lower rates than the isthmian railroad and its two steamship legs. De Lesseps's French Canal project (1879–89) constituted a disaster due to mismanagement, the failure to stem tropical diseases, and the decision to build a sea-level not a lock-system canal. French failure spelled opportunity for the Theodore Roosevelt administration, which moved ruthlessly to support a local secessionist revolution against Bogotá when US–Colombian bargaining over canal rights stagnated. One of the myths that the authors expose was the purported efficacy of US construction. In fact, cost overruns and labor and management problems led to the canal costing triple the time and money originally expected. Washington (with both help and interference from the Zonians) then ruled the isthmus for a century through a combination of informal colonialism, direct intervention, and exclusionary racism.
This book is an important achievement and will supply future scholars with a treasure trove of statistics, demographics, and creative ways of judging the global impact of both transport and imperial systems. Except for a couple of sections where the analysis becomes a mite confusing, the narrative admirably avoids reducing economic analysis to the “dismal science.” The book's shortcomings arise from some of its political and strategic claims and a few factual errors. Panama declared its independence on 3, not 6, November 1903 (84). The US-run Canal Zone was an enclave ten, not twenty, miles wide (84). The Kennedy administration did take action on the flag issue (238). The 1963 Kennedy-Chiari flag accord provided the basis for Panamanian retaliation in the January 1964 riots. That seminal event in US–Panamanian relations receives scant coverage; the twenty Panamanian dead, most by US gunfire, are not even mentioned. The authors also ignore a key aspect of Pentagon intransigence in relinquishing its Zone bases from the 1950s through the early 1990s: their utility for supporting US covert and counterinsurgency operations in Latin America regardless of the canal's obsolescence. Finally, in an intriguing discussion on the necessity of the canal for US victory in World War II, the authors note that a slight increase in US railroad capacity could have handled the goods and troops shipped via the canal (215). What they ignore is the flexibility that seaborne transport granted US commanders who could reroute supplies or men wherever needed in a way that transcontinental railroads could not. The authors also make the point that the total loss of the canal in the war's first year would have only led to a fourteen-day delay for the arrival of key US warships in Pacific campaigns, a correct conclusion. But at the decisive Battle of Midway where every US carrier was essential, a fourteen-day delay could have been critical. Still, Maurer and Yu are on solid ground in stating that the United States and its allies would have won the war anyway due to their overwhelming production and manpower advantages over the Axis, regardless of a functioning or sabotaged Panama Canal. In the end, the aforementioned differences are small complaints in an otherwise splendid work that will change and clarify the way scholars and ordinary readers view the Panama Canal for many years to come.
