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Mar 05

In 1878 French government investors paid every French newspaper to promote construction of the Panama Canal

From the book “Famous Financial Fiascos” by John Train (1985):

The western world’s elites first began pondering the development of a canal across the Isthmas of Panama in the 1880s. It was the French government that initiated the project. (Later, the US government took the lead in the decades-long project.)

Train writes that the leading champion of the Canal idea “neglected to pay off the newspaper publishers and journalists, whose enthusiasm was linked to their subsidies.”

Thus, French (and the world’s) newspapers were less than supportive of the project. Many reported that the area was dangerous and disease-ridden. Investors were reluctant to buy into the idea.

Then, the developers traveled to Panama with their families for photo opportunities. Upon their return, they paid many thousands of francs to reporters to run favorable stories. “Faith was restored . . . helped this time by massive subsidies to the newspapers.”

But the dangers of Panama had yet to begin. “Workers and supervisors fell side by side: the death toll reached the tens of thousands (50,000 by some accounts), including two-thirds of all the Frenchmen who set foot on the Isthmas.”

The French developers paid massive bribes to French officials for their monopoly:

[A]t least 150 [French] senators and deputies, and almost every major paper in the country, had partaken of the torrent of bribes. Only a third of the money invested had gone into actual excavation; a third had gone into bribery and a third simply wasted. . . . Over a hundred parliamentarians were brought to trial, but a single poor naif who actually confessed was the only one found guilty.