The French Attempt to Construct a Canal at Panama

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The French Attempt to Construct a Canal at Panama
Reuben F. Hull, Jr., PE1
1Civil Design Engineering Consultants, 1162 Lowell Road, Schenectady, NY 12308; email:

Following the success of the Suez Canal, Compagnie Universelle du Canal Interoceanique incorporated under French law on March 3, 1881, for the purpose of building a canal through Panama, the first attempt at construction of a waterway to cross the Panamanian isthmus. Within eight years, on February 4, 1889, the company was declared bankrupt and dissolved. Five years later, a second French company was created, which continued nominal work, until the United States took control of the project in 1904. The French effort at Panama is regarded as a failure, often relegated to being a footnote in the history of the construction of the canal. This paper chronicles the efforts, the challenges, and the ultimate downfall of the French endeavor at the Panama Canal, calling attention to the achievements and lessons learned from the French experience, which later benefitted the American enterprise at the same location.
In 1854, Ferdinand de Lesseps, former French Consul to Cairo, was invited by Muhammad Said Pasha, Wāli of Egypt and Sudan, to initiate a plan for connecting the Mediterranean Sea and the Red Sea with a canal across Egyptian territory. The proposed canal would save 4,900 nautical miles [8,900 km] for ocean going vessels travelling between Europe to Asia. After four years of planning and engineering, the Suez Canal Company (Compagnie universelle du canal maritime de Suez) was founded on December 15, 1858, for the purpose of constructing and operating the Suez Canal. The company was formed with majority control by French investors and led by de Lesseps. Work started on the Mediterranean shore of the future Port Said on April 25, 1859. A decade later, on November 17, 1869, the Suez Canal opened to great fanfare and the event instantly made Ferdinand de Lesseps an international hero.
The elation of the Suez Canal success was short lived. European discord between factions at the time resulted in numerous wars and changes in the balance of power. In 1869, the Spanish parliament offered the throne of Spain to Prince Leopold, nephew of Prussia’s King Wilhelm I. Situated between Spain and Prussia, France feared such a powerful alliance. France challenged the candidacy and Leopold resigned. However, Prussian Chancellor Otto Von Bismarck used the opportunity to orchestrate an impression that France was the aggressor and succeeded in provoking the French, who declared war on Prussia on July 15, 1870. By September 2, 1870, Napoleon III surrendered and was taken prisoner with over 100,000 of his soldiers. It was a decisive loss for the French, as the Prussians not only captured the entire French army, but the leader of France as well.  Paris surrendered in January 1871, after being under siege for four months. The treaty of Frankfurt was signed on May 10, 1871. France's Second Empire ended and the Third Republic began, but the new French government found itself isolated on the international plane as a unified Germany established itself as the main power in continental Europe.
In the aftermath of the Franco-Prussian War, the defeated and humiliated France lost prestige in eyes of other nations. There was one certain way to restore its glory, by undertaking and completing the most challenging engineering feat in history: build a canal through Central America to link the Atlantic and Pacific Oceans. The leader of that effort would be the hero of Suez: Ferdinand de Lesseps.
Ferdinand de Lesseps was born November 19, 1805 into a family of French career-diplomats at Versailles, the city that had been the cradle of the French Revolution.  Much of his boyhood was spent in Pisa where his father was the French Consul at Lirna. He attended the Liceo Henri IV and studied at the law school. At age 19, having studied law, he was appointed assistant vice-counsel to his uncle, then the French ambassador to Lisbon. He also served in Tunis later with his father, until 1832 the year of his father’s death. 
Ferdinand de Lesseps was convinced that his life’s work lay in Africa. In 1832, de Lesseps was appointed vice-consul at Alexandria. On the voyage to Alexandria, a passenger died, it was said of cholera. When the ship docked, all the rest were immediately quarantined. While in quarantine, de Lesseps received several books, among which was Canal des Deux Mers, a memorandum of the search for the ancient Suez Canal, written by civil engineer Jacques-Marie Le Père, one of the scientific members of Napoleon Bonaparte's late-1700s French expedition. This work struck de Lesseps' imagination, and gave him the idea of the canal that he later constructed across the Egyptian isthmus.
Between 1833 and 1849, de Lesseps served many diplomatic appointments in Egypt and throughout Europe. He happened to be in Egypt during the 1830s when a team of French engineers arrived to survey for a possible Suez Canal route. Egypt’s leader Mohammed Ali was not interested, but the idea later greatly attracted his son Said.
In 1849, de Lesseps’ diplomatic career culminated with his negotiation for the return of Pope Pius IX to the Vatican. A change in foreign policy led to his being recalled after which de Lesseps retired from the diplomatic service, never again occupying any public office. 
In 1854, de Lesseps was granted a concession to undertake the Suez Canal project by Muhammad Said Pasha. With Suez, de Lesseps demonstrated his gift of promotion, succeeding in rousing the patriotism of the French and obtaining subscriptions for more than half of the capital of two hundred million francs needed to form the company.  Fifteen years later, on April 18, 1869, the Red Sea joined the Mediterranean Sea. For the opening ceremony, in November 1869, thousands of distinguished guests assembled from all over Europe and the Middle East. The procession of ships through the canal was led by the French imperial yacht with Empress Eugénie on board.
Ferdinand de Lesseps, who surmounted tremendous engineering, diplomatic, and administrative difficulties, was awarded many honors, and was widely proclaimed throughout France.  He was honored around the world and celebrated as the greatest living Frenchman. More than twenty thousand people attended a reception in his honor at London’s Crystal Palace.
Ferdinand de Lesseps, Le Grand Français, had no engineering or technical skills, no financial experience, and only modest administrative ability, but his contacts in Egypt led him to dedicating fifteen years to seeing the Suez project to completion. Above all, de Lesseps was an adventurer. Also, he believed in the notion of progress that by technical and industrial achievement peace and plenty must ensue. By opening the world to the population, his canal was a means to that end, of which there was no nobler cause. Inevitably, he supported the idea of a new Suez between the Atlantic and Pacific in the Americas.
After the Franco-Prussian War ended Napoleon III’s empire, the French government reduced its role in Central America. Humbled before Germany in Europe, France lost every foothold on the American continent. A lack of understanding of the world outside of its borders was considered to be a contributing cause to the nation’s weakened position and its loss in the war. The timing of these events coincided with an increased popularity in the subject of Geography. Ferdinand de Lesseps was among those who frequented the Société de Géographie de Paris, (Geographic Society of Paris), the world’s oldest geographic society. Also among those who attended Geographic Society meetings was Jules Verne, whose 1872 publication Around the World in Eighty Days helped humanize the scale of worldly travel.
In 1872, de Lesseps began his ventures in a canal across the Central American isthmus not at Panama, but at Nicaragua, seeking to obtain a concession for a lock canal. However, the sentiment in Nicaragua favored the United States, so failing to meet his objective, de Lesseps turned his interest to a sea level canal at Panama.
In March 1875, The Geographic Society created a “Committee of Initiative” to seek international cooperation for studies to improve the geographical knowledge of the Central American area for the purpose of building an interoceanic canal.  That summer, the Geographic Society sponsored an international congress and it was at this congress that de Lesseps first made public his interest in a canal across the Central American isthmus. The congress coincided with a geographical exhibition at the Louvre, which brought public attention, and de Lesseps was the center of that attention.
Also, in 1875, Britain became the largest shareholder in the Suez Canal Company, when it bought the stock of the new Ottoman governor of Egypt. After the English took over financial control, de Lesseps' influence disappeared from the Suez Canal Company and the French enterprise in Egypt became Britain’s strength.  This was yet one more blow to the French psyche that needed to be overcome.
Ferdinand de Lesseps had no interest in participating in any commercial development that might follow from the deliberation of the international assembly of experts held under his leadership. It would be an international coup to make the grand connection between the Atlantic and Pacific in the Americas, not only as a business venture, but in terms of national prestige.
The Committee’s agent, Anthoine de Gogorza, convinced the Columbian government that he knew a practical route through Panama and in May 1876, established a contract to report on the exploration within eighteen months. When he returned to Paris with the Columbian concession, La Société Civile Internationale du Canal Interocéanique (Interoceanic Canal Company) was formed for the promotion of canal projects through Central America. The speculative venture was headed by Ferdinand de Lesseps. 
Exploration of the isthmus was led by French Navy Lieutenant Lucien N. B. Wyse. Explorations began in December 1876, and were completed in April 1877. After the exploration of several routes in the Darien-Atrato regions, de Lesseps rejected all of these plans because they contained the construction of tunnels and locks.  On a second isthmian exploratory visit beginning December 6, 1877, two Panamanian routes were explored: the San Blas route and a route from Limon Bay to Panama City, the current Canal route.  In selecting the latter, the plan was to construct a sea level canal.  The route would closely parallel the Panama Railroad and require a 4.8 mile [7.72 km] long tunnel through the Continental Divide at Culebra.
In 1879, de Lesseps convened Congrès International d'Etudes du Canal Interocéanique (International Congress for Study of an Interoceanic Canal) in Paris to study the digging of a canal across the Central American isthmus. Fourteen proposals for sea level canals at Panama were presented before the congress, and a subcommittee reduced the choices to two, Nicaragua and Panama. The United States government refused to turn over some maps or to participate officially in the conference, but the American delegation's Nicaragua plan was introduced by Cuban-born Aniceto García Menocal, a civil engineer assigned to the Grant surveys in Nicaragua and Panama. Menocal had also evaluated the Panama route and recommended from the beginning that a lock system in Panama, rather than a one-level, sea-level canal, was the only possible way to surmount the Culebra Range.
Baron Godin de Lépinay, the chief engineer for the French Department of Bridges and Highways, was known for his intelligence, as well as his condescending attitude towards those with whom he did not agree.  He was the only one among the French delegation with construction experience in the tropics, having worked on a railroad project in South America where most of his workforce died of yellow fever. At the congress, de Lépinay supported the Panama route, but he made a forceful presentation in favor of a lock canal.
Baron de Lépinay predicted that a sea level canal would be a fiasco. The cost, in his opinion, would be exorbitantly more than the financing would be capable of supporting. Also, the mistaken belief at the time was that fevers were caused by rotting vegetation that emanated “bad air,” or in French, “mal air,” which yielded the term “malaria.” The massive excavations for a sea level canal, de Lépinay warned, would expose the bad air, devastating the workforce.
However, although estimated by the Technical Committee as being cheaper than either the Nicaragua route or the sea level Panama route, the de Lépinay design received no further attention. The delegates at the conference resolved that a canal be built in Panama and that it be modeled on the Suez Canal which had organized and opened under de Lesseps’ guidance just a decade before. The resolution read “The congress believes that the excavation of an interoceanic canal at sea-level, so desirable in the interests of commerce and navigation, is feasible; and that, in order to take advantage of the indispensable facilities for access and operation which a channel of this kind must offer above all, this canal should extend from the Gulf of Limon to the Bay of Panama."
The resolution passed 74-8.  The opposition votes included de Lépinay and Alexandre Gustave Eiffel.  The predominantly French support did not include any of the five delegates from the French Society of Engineers.  Of the seventy four voting in favor, only nineteen were engineers and of those, only one had ever been in Central America.
Ferdinand de Lesseps raised two million francs for the project by selling “founders shares” to a syndicate of 270 wealthy and influential colleagues, who would receive their shares once a company was established. Next, he negotiated the buyout of the Société Civile, including their concession and their maps and surveys, for ten million francs (approximately two million dollars), which was almost all profit.
Following the organization of the Compagnie Universelle du Canal Interocéanique de Panama (The Panama Canal Company) on August 17, 1879, de Lesseps was appointed President of the company despite the fact that he had reached the age of 74. Immediately, de Lesseps embarked on a promotional tour of France to raise the starting capital, estimated at 400 million francs, in a stock offering directly from the public.
The Suez Canal had been built with private money and existed as a publicly held corporation. Ferdinand de Lesseps saw the Central American project similarly, and felt its financing via private money was an important and “American” way to pursue the undertaking. Private financing was a strategic move. The French government repeatedly denied any official relationship with the canal enterprises, in deference to the Monroe Doctrine, which declared the Western Hemisphere as the American domain. It was also a sentimental move which de Lesseps spoke about tying the importance of private capital with the notion that it would merely facilitate him as an executor of the American idea.
The initial response for the stock offering was dismal. Engineer Gustav Eiffel and the technical committee knew that Panama’s geology was not understood. The French press and financial institutions were hostile, including banks organizing a campaign against the canal venture. Rumors persisted that Panama’s climate was a deathtrap and that the Americans would not allow construction to begin. Rumors also included personal attacks on de Lesseps’ age, abilities, and mental capacity.
In response, de Lesseps launched a public relations campaign to calm concerns about technical and practical issues of the canal. His grandiosity made him a gifted promoter. A new survey was ordered and an International Technical Commission of well-known engineers went to Panama, accompanied by de Lesseps. He reassured shareholders that progress would quickly be made, insisting that the canal would be open in 1888. It was only though the zeal, skill, experience, and confidence of de Lesseps that within a year the Company had raised enough money to launch the operation.
On New Year's Day 1880, de Lesseps visited Panama to lead a ceremony at the mouth of the Rio Grande, scheduled to become the Pacific entrance to the future canal. The steamer that was transporting the ground-breaking contingent arrived behind schedule and was prevented from landing due to the low tide. The ground-breaking ceremony was improvised ceremonial pickaxe blow in a soil-filled champagne box.
Ferdinand de Lesseps decided that another ceremony should inaugurate the section of the canal that would have the deepest excavation, the cut through the Continental Divide at Culebra.  A ceremony was arranged, and on January 10, 1880, dignitaries and guests gathered at Cerro Culebra, which included witnessing the blast from an explosive charge set to break up a basalt formation just below the summit. 
As de Lesseps was a trained diplomat and not an engineer, his son Charles took on the task of supervising the daily work.  Ferdinand de Lesseps handled the work of promoting and raising money for the project from private subscription.  Without scientific or technical understanding, de Lesseps relied upon a naive faith in the nature of emerging technology.  He worried little about the problems facing the colossal undertaking, believing that the right people with the right ideas and the right machines would appear at the right time. His boundless confidence and enthusiasm for the project and his consummate faith in technology attracted stockholders.
Meanwhile, the International Technical Commission set about the task of charting the canal route.  Survey findings were compiled into a final report by the commission headquarters in Panama City. The International Technical Commission was required to verify all previous surveys, to determine the final canal alignment leading to the preparation of design plans and specifications.  Another goal was to convince investors that de Lesseps was not just a promoter for a hastily conceived, half understood, imperfectly planned project.
The few weeks' time allowed for this survey work was too short for an investigation of such importance.  The content of the technical commission's report, submitted on February 14, 1880, was scientifically and professionally weak. In approving a sea level canal, the commission reported no significant construction difficulty in cutting the deep channel through the Continental Divide at Culebra Cut and estimated that construction would take approximately eight years. 
In February, 1880, de Lesseps arrived in New York to raise money for the project. When he stayed at the Windsor Hotel, its staff flew the French flag in his honor. He met the American Society of Civil Engineers and the Geographic Society while touring the area. 
Two years were spent conducting surveys, constructing service buildings and housing, recruiting an enormous workforce, assembling machinery, and establishing communication lines. Armand Réclus, the Agent Général (chief superintendent) Company, led the first French construction group of about 40 engineers and officials, landing at Colon on January 29, 1881.
Ferdinand, de Lesseps contracted Belgian construction firm Couvreux and Hersent, with whom he had worked at Suez.  Réclus expected to need a year for preparatory tasks, but Panama's sparse population inhibited labor recruitment, its thick jungles inhibited the ability to accomplish the work.  Gaston Blanchet, Couvreux and Hersent's director, accompanied Réclus to the Isthmus.  Ten months into the project, Blanchet, the company’s driving force died, apparently of malaria.
Work disruption began due to difficulties from New York because the Panama Railroad, which was in American possession, held the transportation monopoly for the Panama isthmus. In lengthy discussions between Paris and New York, an agreement was reached in June 1881. The Panama Canal Company was forced into taking over the railway, whose capital was now held almost solely in the hands of one speculator.  Ferdinand de Lesseps was aware that the railroad was important to the work, and control of this vital element was gained by the French in August 1881, but at an inflated cost of over one hundred million francs (twenty million dollars), two and one half times its value and about a third of the Company’s resources.  Although under the Company’s control, the railroad was never organized to serve anywhere near its full potential, especially in moving material from the site of excavation to deposit areas.
After two years of surveys, work on the canal began in 1882. A banquet on January 20, 1882 in Panama City, marked the official beginning of Culebra Cut excavation.  However, little actual digging was accomplished due to a lack of field organization.  Engineers continued performing surveys and preliminary work, sending reports to Paris. When excavation began in January 1882, it proceeded rapidly, but after the removal of 40 million cubic yards [30 million cubic meters] of earth, only twenty feet of material had been removed from a ridge over two hundred feet high. Deforestation led to landslides, which in turn led to more excavation. Men were buried in landslides and railroads tracks repeatedly disappeared into the excavated trenches. Couvreux and Hersent decided to withdraw from the project and wrote to de Lesseps requesting cancellation of their contract on December 31, 1882.
Ferdinand de Lesseps decided to assume control of the operation, from Paris, working with a Director in Panama. Jules Dingler was appointed as the new Director General.  An engineer of outstanding ability, reputation, and experience, Dingler arrived in Colon on March 1, 1883, accompanied by his family, along with Charles de Lesseps. Dingler concentrated on restoring order to the work and the organization. He instituted a new system of small contracts for which the Company rented out the necessary equipment at low rates.  It was an inefficient system, requiring a tremendous paperwork and involving numerous lawsuits in Colombian courts, but work progressed, making use of the available labor force.
As the work force increased, so did illness and death.  The first yellow fever death occurred June 1881, soon after beginning of the wet season.  A young engineer died on July 25, supposedly of “brain fever."  On July 28, international finance authority Henri Bionne died.  Yellow fever appeared in epidemic form during the wet season of 1882. The Company established medical services presided over by the Sisters of St. Vincent de Paul, and established hospitals on both the Atlantic and Pacific sides of the isthmus by 1882. However, contractors often allowed workers to die on the job rather than pay for a hospital bed.
With the knowledge of mosquitoes’ role in the transmission of yellow fever and malaria not yet discovered, the hospitals unwittingly committed a number of acts that fostered the spread of the diseases.  Waterways were constructed around flower and vegetable gardens, and water pans were placed under beds to repel crawling insects.  Both insect-fighting methods provided breeding sites for the Stegomyia fasciata and Anopheles mosquitoes, carriers of yellow fever and malaria.  Many patients who came to the hospital for other reasons often fell ill after their arrival and people began to avoid the hospital whenever possible.
Excavation work was progressing in Culebra Cut and was expected to be finished by May 1885.  However, there was growing concern about bank stability and the danger of slides.  At the Atlantic and Pacific entrances, dredges worked their way inland.  Machinery arrived from France, the United States and Belgium but equipment was constantly modified and used in experimental combinations as most was too light and too small.  An amassing of discarded, inoperative equipment along the canal line testified to earlier mistakes. As late as July 1885, only about ten percent of the estimated total had been excavated.  Ultimately, the unresolved problem of the slides would doom the sea level canal plan to failure.
In January 1884, tragedy struck the Dingler family as his daughter died of yellow fever.  A month later his twenty-year-old son, Jules, died of the same disease.  Shortly after, his daughter's young fiancé, who had come with the family from France, contracted the disease and died also. In 1885, Dingler's wife died of yellow fever, just about a year after her daughter and son.  Dingler stayed on the job until June 1885, when he returned to France, never to return to the isthmus.
The project had a large turnover of labor. The laborers were mostly Jamaicans, men of the Antilles, South American Indians, and Chinese, officered by Frenchmen. At whatever level a man performed work; he was not likely to stay long unless he was well paid. With some 10,000 men employed, work was going well in September of 1883.  The maximum force employed by the French at any one time was reached in 1884, with more than 19,000.  All the while, the toll in human lives climbed, peaking in 1885.  Yellow fever was constant and malaria continued to take more lives than yellow fever.  Because the sick avoided the hospitals whenever possible because of its reputation for propagating disease, much of the death toll was never recorded. Along with yellow fever and malaria cases, there were an estimated 27,000 laborers and engineers killed between 1881 and 1889.
After the departure of Dingler, the new acting Director General was 26-year-old Philippe Bunau-Varilla, a young, capable, and energetic engineer.  Under Bunau-Varilla, worker morale improved, and excavation increased along the line.  Still, there was inadequate equipment and work organization. In a move toward greater efficiency, Bunau-Varilla reinstituted the old method of large contractors.
A new Director General, Leon Boyer, arrived in January 1886.  Soon thereafter, Bunau-Varilla, himself, contracted yellow fever, and greatly weakened, he went back to France to recuperate, after which Bunau-Varilla returned his expertise to the Panama Canal and eventually played a pivotal role in the American effort at Panama.
Boyer informed his superiors his conviction that within current time and cost limits, it would not be possible to construct a sea level canal.  He recommended the design proposed by Bunau-Varilla of a temporary lake and lock canal that could later, after it was built and functioning, be gradually deepened to sea level. However, by May, he too was gone, another victim of yellow fever. 
There were six bond issues between 1882 and 1888, totaling 781 million francs, but only forty percent of this money went into the excavation. Large salaries were paid to directors. An exorbitant sum of the funds raised for the endeavor was squandered on publicity and commissions to underwriters responsible for placing stocks and bonds.  Financial journals in France received payments before each bond issue, presumably to ensure positive publicity for the project. Political leaders were receiving payment at every decision-making point. In February 1885, the eighty years old de Lesseps visited the construction site in Panama. When it was realized how little of the excavation work had been completed, investors became nervous. The Panama stocks plummeted on the Paris Stock Exchange. 
In spite of improvements in the field, the Company was in a financial crisis. A lack of progress at Culebra was beginning to concern Parisian officials.  Charles de Lesseps proposed to Bunau-Varilla to organize a company to take on the work at Culebra. Bunau-Varilla took over the field supervision of the work himself.  As American engineers would do later, he moved into quarters at the Cut so he could watch the progress of the work. About six months later, the French work at Culebra Cut had reached peak activity. 
It was becoming increasingly clear to nearly everyone except Ferdinand de Lesseps that, under the circumstances, only a high level lock canal had any chance of succeeding at this point.  In October 1887, a report was released by eminent French engineers establishing the possibility of building a high-level lock canal.  The plan would allow vessel transits while simultaneously permitting dredging of a channel to sea level sometime in the future. Ferdinand de Lesseps reluctantly relented and he drew up a contract with engineer Gustave Eiffel, for the construction of a sluice canal by 1890.
Bunau-Varilla's concept was to create a series of pools in which floating dredges could be placed; the pools would then be connected by a series of locks.  The highest level of such a canal would be 170 feet.  Work on the lock canal started on January 15, 1888.  Eiffel, builder of the Eiffel Tower in Paris, would construct the canal locks. 
Under Bunau-Varilla's company, Artigue, Sonderegger et Cie., work was progressing.  Some areas of the canal were nearly complete, the Panama Railroad was rerouted away from the Cut, the first lock was nearly ready to begin installation and preliminary work on a dam had been started. In Culebra Cut, where the average level had been lowered only 3 feet by 1886, was lowered 10 feet in 1887 and 20 feet in 1888, ultimately bringing the level to 235 feet at the time work was stopped.
In March 1888, several ministers formulated a law allowing the Panama Canal Company to carry out a lucrative lottery loan, with guaranteed funds. Three months later, the Panama Canal Company was authorized by law to set up a government supported lottery loan for 720 million francs, for the completion of the sluice canal according to Eiffel's plans.  Despite all de Lesseps' efforts, the attempt at placing these lottery bonds failed. 
The company stopped its payments and tried to receive a three-month payment moratorium. Shareholders, at their last meeting in January 1889, decided to dissolve the Company, placing it under legal receivership and Ferdinand de Lesseps resigned from the management. Some aspects of the work persisted for a few months, but by May 15, 1889, all activity on the Isthmus ceased.  Liquidation was completed in 1894.
In France, popular pressure on the government led to what was called the "Panama Affair." Three years after the collapse of the Company, the largest corruption scandal of the 19th century shook the French Republic. A large number of ministers were accused of taking bribes from de Lesseps in 1888, for the permit of the lottery issue. This resulted in a corruption process being held in 1892, against Ferdinand de Lesseps and his son Charles who were both indicted for fraud and maladministration. At the same time, 510 members of parliament, including six ministers, were accused of bribery by the Panama Canal Company, in connection with the course of events concerning the permit for the lottery issue.
Advanced age and ill health excused the senior de Lesseps from appearing in court, but both were found guilty and given 5-year prison sentences.  However, the penalty was never imposed, as the statute of limitations had run out. Ferdinand de Lesseps’ mental state was such that he knew little of the situation and he remained sequestered at home.  “Le Grand Français” died at age 89 on December 7, 1894, and was buried in the Le Père Lachaise cemetery in Paris. 
Charles was indicted in a second trial for corruption and found guilty of bribery.  Time he had already spent in jail during the trials was deducted from his one-year sentence.  Then, becoming seriously ill, he served the remainder of his sentence in hospital. Charles lived until 1923, long enough to see the Panama Canal completed, his father's name restored to honor and his own reputation substantially cleared.
With the original Wyse Concession to expire in 1893, Wyse negotiated a 10-year extension.  The "new" Panama Canal Company, the Compagnie Nouvelle de Canal de Panama was organized effective October 20, 1894. With insufficient working capital to proceed with significant work, the Compagnie Nouvelle hoped to attract investors who would help them to complete an isthmian canal as a French enterprise.  Initially, they had no intention of selling their rights. The new company wanted to make a success of the operation and perhaps repay the losses of the original shareholders.
Sailing from France on December 9, 1894, the first group arrived in Panama to again resume excavation in Culebra Cut.  Work on the canal was taken up again and at the beginning of 1895, 500 workers were in employment on the canal. In 1898, the canal employed 3400 workers. Between 1895 and 1898, 3.8 million cubic yards [2.9 million cubic meters] of earth were excavated.
The Comité Technique was formed by the Compagnie Nouvelle to review the studies and finished and ongoing work and devise the best plan for completing the canal.  The committee arrived on the Isthmus in February 1896 and presented their plan on November 16, 1898. Many aspects of the plan were similar to the canal that was finally built by the Americans in 1914.  It was a lock canal with two high level lakes to lift ships up and over the Continental Divide.  Artificial lakes would be formed by damming the Chagres River providing both flood control and electric power.
The directors of the Compagnie Nouvelle soon faced with the reality of their situation following the scandal of the old company. The public had lost faith in the project. There would be no funds forthcoming from a bond issue, and the French government did not provide any support for the project. With half its original capital gone by 1898, the company had few choices, abandon it or sell it.
It was no secret that the United States was interested in an isthmian canal.  With the technical commission report and a tentative rights transfer proposal in hand, company officials headed for the United States, where they were received by President William McKinley on December 2, 1899.  A deal was five years in the making, but was eventually signed. In 1904, the United States bought the French equipment and excavations, including the Panama Railroad, for 40 million dollars, of which 30 million related to excavations completed, primarily in the Culebra Cut.
Many reasons can be cited for the failure of the French to complete the Panama Canal, The principal reason was Ferdinand de Lesseps’ stubbornness in insisting on the sea level plan.  He had neither a technical education nor financial experience. At Panama, de Lesseps was a victim of his own success at Suez. His own charisma and confidence turned out to be his enemy as people believed in him beyond reason. He preferred to rely on his judgment, which was proven by the success of the construction of the Suez Canal.
A large part of the eventual success on the part of the United States in building a canal at Panama came from avoiding the mistakes of the French.  A lack of knowledge of sanitation and tropical diseases contributed greatly to the demise of the French endeavor. The American success at Panama benefitted from twenty years of advances in health, medicine, hygiene, and sanitary engineering as well as advances in engineering and construction.
The American effort also benefitted from the project left behind by the French. Beginning in 1888, the sea level project was finally abandoned for a lock canal with the idea that, after the lock canal was functional, the channel could be deepened gradually to make a sea level canal.  When the Americans did take over the canal construction, in 1903, a third of the work had been completed and the materials, buildings, and work the French left behind was of highest quality.
The French experience was without question a financial failure, but in retrospect, the failure did not lie with French engineering. Ferdinand de Lesseps was not an engineer and he did not follow the advice of the specialists. The de Lépinay design in 1879, contained the basic elements ultimately designed into the American design.  The French company would use these concepts as a basis for a lock canal that they eventually adopted in 1887, following the disappointment of their sea level attempt.  Had his plan been originally approved, France may have prevailed in their canal construction effort and had it been adopted at the beginning, the Panama Canal may have been completed by the French instead of by the United States. 

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