BECK index

Panama 1850-1935

by Sanderson Beck

   Panama 1850-1902
   Panama & the US Canal 1903-25
   Panama & the US Canal 1926-35

Panama 1850-1902

Panama 1817-50

      Colombia had annexed Panama in 1821, and they deployed troops there. Colombia became the Republic of New Granada in 1831 until 1858. In 1846 New Granada made the Mallarino-Bidlack Treaty with the United States which promised to protect transit over the Panama isthmus. The California gold rush greatly increased this traffic in 1849. On 19 April 1850 the United States Secretary of State John M. Clayton and the British Minister Henry Lytton Bulwer signed a treaty committing their governments to the exclusive control over any canal across Central America. They also promised that they would never fortify, occupy, colonize, or have dominion over any part of Central America related to a canal.
      In March 1850 a white American killed a black man in Panama City, and the Liberal Governor Manuel María Díaz let him go free. The angry blacks of Arrabal called “Arrabaleños” came into the conflict with elite residents of San Felipe in Panama City on May 18. The Conservative newspaper El Vijilante warned there would be a caste war, and in 1851 Conservatives rebelled with arms against the coming emancipation of the remaining 500 slaves including 50 in Panama City that went into effect on 1 January 1852. The former Texas Ranger Randolph Runnels was employed to run the Isthmus Guard for law enforcement. They sometimes used terror tactics, and in 1851 the Guard executed 37 suspects to warn against criminal behavior.
      The Liberals also ratified a radical constitution in 1853 that allowed all men to vote regardless of race or property, and in 1855 an amendment consolidated the provinces of Panama, Azuero, Chiriquí, and Veragua in the state of Panama which was part of the Republic of New Granada.
      Those crossing Panama from the Caribbean side in the 1850s had to wait for a ship on the Pacific side, and many suffered from diseases. The Barbacoas bridge over the Chagres River was completed on 26 November 1853. A locomotive was brought to Panama City in January 1854, and the railway from Colón began operating on 28 January 1855. The Panama Railroad was completed from coast to coast in 1855, and the American company charged $25 to take passengers from one port to the other in under four hours. This railroad cost over $7 million which was more than any other until then. The built 170 bridges over 80 kilometers. Within a decade annual profits increased to more than $11 million per year. From 1848 to 1869 more than 600,000 people crossed Panama. The daily Panama Star and Herald was the first newspaper in English.
      On 26 January 1854 the consuls of the United States, France, Britain, Brazil, Portugal, Denmark, Peru, and Ecuador complained that the governor of Panama was not protecting those passing across the Isthmus even though they had to pay a $2 tax. Justo Arosemena proposed a Federal State of Panama to unite the provinces on the isthmus, and he was elected its first chief executive; but he served only two months in the summer of 1855. The State of Panama was proclaimed on September 17. Conservative Francisco Fábrega became the chief executive on October 4. He tried to resolve the financial troubles by getting a loan from a bank in the United States. The Panama Railroad was completed in 1855 and from then to 1903 the United States sent troops to Panama twelve times. Railroad officials paid New Granada $250,000 a year from which that government in Bogotá sent to Panama only $25,000. The lawyer and politician Justo Arosemena criticized the United States, and in 1860 he published his essay “Moral Code Based on the Nature of Man.”
      The Liberal Pedro Goytia proclaimed himself Governor of the Azuero province, and on 14 January 1856 Fábrega learned that Goytia was leading a revolt. On 15 April 1856 a drunken sailor from the United States refused to pay for a slice of watermelon, and a fight with other drunken men broke out. A crowd gathered, and they attacked the American immigrants. All but two of the 17 killed were citizens of the United States who had arrived that day. This “incidente de la tajada de sandía” (incident of the slice of watermelon) became a significant historical event as the beginning of Panamanians’ national struggle against the imperialism of the United States. Six months later the United States sent troops to protect the railroad, and eventually Colombia was made to pay the United States $412,000 in restitution for damages to the railroad.
      In the election on 15 August 1856 the whites claimed that the conservative Bartolomé Calvo had won by 4,000 votes; but the blacks believed that Manuel María Díaz was chosen. On September 18 the legislature declared Calvo the constitutional governor for two years with Fábrega as vice governor. In 1858 José de Obaldía was popularly elected governor, and during his term whites and blacks fought twice.
      In 1858 Panama became part of the Granadine Confederation that extended federalism to all the states. In 1859 the Confederation passed laws that restricted the sovereignty of the states, and General Tomas C. de Mosquera led a revolt. In 1860 the United States landed troops at the isthmus to restore order and protect the railroad. On 1 October 1860 Santiago de la Guardia was elected over the opposition of the liberal black voters, and he moved the capital to Santiago de Veragua.
      The blacks chose Manuel Díaz provisional governor, and in a skirmish on 19 August 1862 liberals attacked towns and killed Santiago de la Guardia and two or three others. They drafted a new constitution ratified on 8 May 1863, and the Isthmus became a part of the Estados Unidos de Colombia. They banned the death penalty and cruel punishment and made ten years the maximum sentence. The constituent assembly chose Pedro Goytia to be president of the state; but he was forced to resign, and on August 13 he was replaced by General Peregrino Santacolonia. He was soon sent as a delegate to the national congress at Bogotá, and Vice President José Leonardo Calancha was chief executive; but he was unpopular and was deposed on 9 March 1865 and replaced by Gil Colunje who was president from 9 August to 30 September 1866. He managed to control the black party by using bullets. He was succeeded by Vicente Olarte Galindo who may have been elected president. He was poisoned probably by the unhappy blacks and died on 3 March 1868.
      From 1863 to 1886 the isthmus of Panama had 26 presidents. The numerous changes in government during this era under the influences of Colombia and the United States are described in detail in Hubert Howe Bancroft’s History of Central America, Volume 3, p. 532-559. He wrote,

   After the death of President Olarte in 1868, the Isthmus
for many years did not enjoy a single day of peace.
The general wealth having declined throughout the country,
and more so in the interior, poverty prevailed.
Capital, both foreign and native,
abandoned so dangerous an abode.
The cattle ranges and estates disappeared;
likewise agriculture, except on a small scale.
   The black men of the arrabal in the city of Panama,
after they were made important factors in politics,
accustomed themselves to depend on the public funds
for a living, and the people of the interior,
who were always peaceable and industrious,
came to be virtually their tributaries.
The state became the puppet of the men at the head
of the national government, or of political clubs at Bogotá,
whose agents incited disturbances,
removing presidents indisposed to cooperate with
or to meekly submit to their dictation,
substituting others favorable to their purposes, and thus
making themselves masters of the state government,
together with the funds, and with what is of no less import,
the state’s vote in national elections.1

      The French diplomat Ferdinand de Lesseps had organized the building of the Suez Canal that was completed in November 1869. In May 1879 delegates of the Société de géographie in Paris voted to build the Panama Canal, and 74-year old Lesseps was appointed president of the Panama Canal Company. In February 1880 he began raising money in New York City. Construction of the canal began in 1882. Difficulties arose as malaria and yellow fever killed more than half the French officials. From 1883 to 1887 about 15,000 worked full-time, and more than 22,000 died mostly from diseases. That Panama Canal Company became bankrupt in December 1888 and was liquidated in February 1889. In 1892 people learned that 150 French deputies had been bribed to vote for funding the canal. A New Panama Canal Company operated from 1894 to 1899.
      Early in 1885 Colombia transferred troops from Colón in Panama to fight a rebellion in Cartagena. On March 16 the rebel Pedro Prestán began a revolt that aimed to take over Colón. He was waiting for weapons from the American merchant ship Colon. Captain John M. Dow, who worked for the Pacific Mail Steamship Company, was in Colón, and several government officials advised him not to let weapons be offloaded there. When the Colon arrived on March 29, Captain Dow took command of the ship. Pedro Prestán with militia arrested Dow, the US Navy Lt. Judd, and two others. The steamer USS Galena was also in Colón, and its Captain Theodore Kane tried to negotiate. Prestán had about 100 men, and he threatened to attack the Galena and destroy the city. A Colombian army was approaching, and rebels began burning Colón. About 100 US Marines on the Galena landed, and a few days later the USS Tennessee arrived with two cannons and 600 men. The US Admiral James Edward Jouett took command to protect American property. For several days the city burned. The US garrison departed, and US citizens and foreign nationals were evacuated. In the fighting and the fire 18 Colombians and Panamanians were killed, and many more were wounded. There were no American casualties. On April 7 the USS Shenandoah reinforced Panama City, and more American ships began arriving in Colón three days later. Prestán was caught and tried by a court martial on August 17, and the next day they hanged him in Colón.
      By 1886 Colombia became very centralized, and President Rafael Núñez led a conservative crusade called the “Regeneration” that lasted until 1895. Tax increases made life difficult, and suffrage and vagrancy laws were aimed at blacks and the poor. Panama was treated like a colony as Isthmians continued to have fewer rights than those in other states until 1894. President José M. Marroquín at his inauguration as Vice Presient on 7 August 1898 said,

Hatred, envy, and ambition are elements of discord;
in the political arena the battle wages fiercely,
not so much with the idea of securing
the triumph of principles as with that of humbling
or elevating persons and parties;
public tranquility, indispensable to every citizen
for the free enjoyment of what he possesses
either by luck or as the fruit of his labor,
is gradually becoming unknown;
we live in a sickly atmosphere; crisis is our normal state;
commerce and all other industries are in urgent need
of perfect calmness for their development and progress.
Poverty invades every home.2

      During Colombia’s Thousand Days’ War from 1899 to 1902 the state of Panama suffered from the conflict between Liberals and Conservatives. The conservative Manuel Antonio Sanclemente had been elected president in 1898 at the age of 84, and because of declining health he was replaced by Vice President Marroquín on 31 July 1900. That month Emiliano Herrera and Belisario Porras began a nationalist campaign to get Colombian troops out of Panama. They marched troops south from David in the north to Panama City. Then a thousand rebels began crossing the Calidonia Bridge and assaulted the capital. Better equipped Colombian troops killed or wounded over 400 insurgents while suffering only 98 casualties. After fighting two days the rebels surrendered on July 26. Porras fled to the north, and his efforts failed again in 1902 and 1903. He was a leader of the independence movement while the white Panamanian Nationalists backed the Colombian troops. They asked for help from the United States, and in November 1901 US marines landed at Colón again and fought to preserve order.
      On November 18 the United States Secretary of State John Hay and the British Ambassador Julian Paunceforte signed a treaty granting to the United States the exclusive right to build a canal in Central America. On 18 January 1902 US President Theodore Roosevelt announced that the Canal Commission had decided that Panama is the best site for a canal, and on June 29 he signed the Spooner Act that enabled the US to purchase the French canal assets in Panama for the reduced price of $40 million. On July 24 US soldiers at the isthmus revolted. American forces landed in September to protect the railway. Many Panamanian rebels surrendered in October. The USS Nashville arrived on November 2, and the next day the Colombian warship Cartegena brought 2,500 reinforcements. A peace agreement was signed on the USS Wisconsin on November 21. This accord required the insurgents to surrender their weapons. Porras, Herrera, the Guaymí Indian Victoriano Lorenzo, and others rejected that. The Colombian civil war had ended in December 1902. General Benjamín Herrera got angry at Lorenzo for inciting rebellion and ordered his arrest, and on 15 May 1903 Lorenzo was hanged.

Panama & the US Canal 1903-25

      In January 1903 United States Secretary of State John Hay and the Colombian legation led by Tomás Herrán signed a treaty leasing the isthmus of Panama to the US for 100 years. The US Senate ratified this on March 14, but the Colombian Senate rejected the treaty. President Marroquín declared Panama a nation at peace on June 1. Senator José Domingo de Obaldía became the last governor of the Panama isthmus, and he favored independence. Dr. Manuel Amador Guerrero was the medical officer for the railroad, and he and others made plans to free Panama from Colombia. In August he went to Washington and met with President Theodore Roosevelt. Philippe Bunau-Varilla had been the chief engineer for Lesseps canal, and he came to the United States and raised $100,000 for bribes and expenses of the revolution. He was put in touch with Amador who was instructed to begin the revolt on the night of November 3. On that day 500 Colombian soldiers disembarked from the Cartagena at Colón. By then the Colombian commander had gone to Panama City, and the garrison there captured him. That night the Colombian gunboat Bogotá began shelling Panama City. Nine US ships arrived at the isthmus to protect the railroad, and on November 5 the Colombians left to go to Cartagena.
      On November 6 the United States recognized the revolutionaries as the de facto government of Panama, and de jure recognition followed one week later. Panama gained independence, and only one elderly Chinese man died in the process. Thousands of US soldiers remained in Panama permanently, and finally in 1921 the United States compensated Colombia with $21 million for the loss of Panama. Bunau-Varilla became Panama’s minister in Washington, and he and Secretary of State John Hay drafted a treaty to authorize the United States constructing a canal across the isthmus that was signed on November 18. In his annual message to the United States Congress on December 3 President Roosevelt announced that the US would “maintain the independence of the Republic of Panama,” and he defined the extent of the canal and how much the US would be paying Panama which had ratified the treaty on December 2. The US would pay $10 million dollars and starting nine years after ratification would pay $250,000 per year. United States ratification was completed in February 1904.
      On 16 February 1904 the constitutional convention unanimously elected Manuel Amador Guerrero the first President of Panama. On May 19 the United States took control of the Canal Zone and issued regulations. On May 25 Panama and the United States agreed on an extradition treaty for all crimes except political ones. During the railroad strike in 1904 the two governments cooperated in keeping order. On June 24 the US Secretary of War Taft ordered and proclaimed the opening of the Canal Zone for commerce with friendly nations, and he noted that there were two customs districts. Concern was aroused when it was learned that Bunau-Varilla had changed the word “leases” in the draft to “grants” in the final treaty. On July 15 Panama City’s chamber of commerce protested to President Amador against the ports, custom-houses, and tariffs in the US Canal Zone. Businessmen complained that these would ruin the Panamanian economy. Eventually they revoked the Dingley Tariff that had been applied to the Canal Zone.
      General Huertas in October criticized the reductions in military spending, and he threatened a coup. President Amador contacted US President Roosevelt who sent Marines to squelch that idea. Amador then decided that Panama would benefit if General Huertas resigned and if the army was abolished. On November 18 he accepted the Huertas resignation. Soldiers were given severance pay, and only three men and twenty officers were retained as the legal requirements for a standing army.
      President Amador canceled the citizenship of the Liberal leader Belisario Porras in 1905. That year Almador hired the New York City police officer Samuel B. David to organize Panama’s National Police and to instruct them. In the building of the canal the United States paid American workers with gold coins and gave them benefits while the other 45,000 laborers received silver coins and no benefits. Jim Crow prejudice affected black workers. On April 27 about 200 Jamaicans refused to work because of bad food. An American foreman called in 50 armed Panamanian police who attacked defenseless Negroes. The US Minister John Barrett asked Panamanians to prevent that, and on October 1 their police and Canal Zone police cooperated in getting Martinique Negroes, who were afraid of vaccinations, to disembark from the Versailles.
      The US Army doctor William Crawford Gargas was transferred to Panama to apply the theory of the Cuban doctor Carlos Juan Finley, and his methods of killing mosquitos eradicated malaria in Panama City by the end of 1905. Pneumonia became the major killer, and during the construction the Panama Canal Commission recorded that 4,513 deaths were from disease.
      On November 5 Pablo Arosemena, Belisario Porras, Francisco Filos, Eusebio A. Morales, and General Domingo Díaz gave the United States Military Governor Charles Edward Magoon a memorial with four questions for the Secretary of War Elihu Root who on December 4 replied,

The Liberal party should be informed that
the Government of the United States, while
guaranteeing the independence of the Republic of Panama,
does not propose to interfere with that independence….
The United States will exercise its rights under the treaty
for the maintenance of order in Panama, Colon,
and upon the Canal strip, and will not permit
any interference with the peace and order
of either of those cities or of that territory
which can be prevented by the exercise of its treaty rights,
and it will not go beyond its treaty rights.3

On December 29 President Almador asked the United States Government to appoint observers for the election. Root’s dispatch and his note on 21 February 1906 were published on May 10 in Panama. Then the Liberals sent Pablo Arosemena, Porras, Morales, and General Díaz to Washington. After they returned on June 20, the Amador administration asked for 300 marines and 250 rifles with 50,000 rounds of ammunition. Fifty American police were placed in Cristóbal, and the Columbia was in the Colón Harbor for the election on June 24. On that day an angry crowd gathered in Santa Ana Plaza. When a fight started, Alcalde Ossa ordered police to clear the square. A gunshot from the home of Porras started a gunfight that killed three and wounded twelve. After negotiations the two major parties agreed to elect three members from each Panama province to the National Assembly. Many Liberals declined to vote, and the Conservatives won all but three of the 28 seats in the National Assembly.
      Also in 1906 the former New York police officer George W. Jimenez told the Panama Star and Herald that the Amador administration said,

Explicit directions have been given to the police to prevent
by every means in their power the success of the Liberals,
who, in a fair election, would overthrow
the Amador government by one hundred to one.4

      Civil servants and police officers were required to “donate” 2.5% of their incomes to the Conservative Party, and in 1924 the Porras regime would double that. Agents were allowed to keep 10% of these “party fees” for a favor or an endorsement.
      On 26 April 1906 the US Secretary of War Taft instructed Magoon that the United States would “suppress any insurrection in any part of the Republic” which “would disturb order in Panama and Colon and adjacent territory.”5
      On 15 May 1908 Panama’s Foreign Secretary Ricardo Arias asked the United States to supervise fair elections for the first time. The US appointed two commissioners for each of the seven provinces in Panama. Both sides accused each other of fraud. The Coalición Republicana included Liberals and Conservatives against the Constitutional Party and nominated and elected José Domingo de Obaldía president with support from merchants and the urban elite. Amador declined to attend his inauguration on October 1. The Obaldía administration asked the US Government to recommend a person to be the Instructor General of the National Police. The US War Department sent Major Wallis B. Clark, and he was resented so much that he soon resigned. On 5 January 1909 the National Assembly approved the beginning of railroad construction. President Obaldía died on 1 March 1910, and that made Carlos Antonio Mendoza president until October. He also resigned and was followed by Pablo Arosemena who was president for two years.
      Panama and Costa Rica had a boundary dispute, and on 17 March 1910 they signed an arbitration agreement. They exchanged ratifications on 17 May 1911 in Washington, and on July 25 the United States Chief Justice Edward D. White accepted the responsibility for deciding on the issues. On 12 September 1914 he awarded the disputed territory to Costa Rica. Panamanians became angry, and on October 5 the National Assembly rejected the decision and directed Foreign Secretary Ernesto T. Lefevre to renew negotiations with Costa Rica. On 14 January 1915 Costa Rica’s Foreign Secretary Manuel Castro Quesada warned Panama’s Minister E. J. Hale in San Jose that Costa Rica was preparing to use force. The US Secretary of State William Jennings Bryan attempted to mediate the conflict.
      In the 1912 election the Unión Patriótica party was mostly Conservatives, and the Liberal Belisario Porras was elected president. He asked the United States for tactical advice and military hardware to help improve the National Police. After a confrontation in 1913 between Panamanian police and the Canal Zone police Porras agreed to partially disarm the National Police. The Americans confiscated 941 rifles and left Panamanians with 390 to use in the rural provinces and pistols. On May 17 Panama ceded the territory of Lake Gatún and the land on its shores to the United States. The total value of land, buildings, and livestock in private hands in Panama was $33,175,501 in 1913. That year United States investments in Panama were about $5 million, and they surpassed $8 million by 1915.
      William Jennings Bryan helped facilitate the signing of arbitration treaties by many nations including Panama on 20 September 1913. Less than a year later the Great War (World War I) began. In August 1914 the Cristóbal was the first ship to pass through the Panama Canal. About 250,000 men had worked to build the canal, and the total cost was $367 million. In the first year 4.5 million tons of cargo were brought across the isthmus. On 19 November 1914 the United States forbade belligerent aircraft from approaching the Canal Zone and Panama City and Colón. In 1915 the Americans established the offices of the National Bank and Chase National in Panama City.
      Panama’s national debt was $6,755,443 in 1916. That year President Porras declined the US offer to help with the elections, and the Liberal Ramón M. Valdés was elected president. In 1917 he appointed an American police officer from Washington to be the Instructor General of the National Police, and he served for ten years. President Valdés died on 3 June 1918. That made Ciro Luis Urriola the president until October. During the election on June 28 American troops intervened, and Urriola cabled the US President Woodrow Wilson protesting the interference. On June 30 municipal elections were held without disorder. In July 1918 the US Military Governor of the Panama Canal Zone Chester Harding told Panama’s Foreign Secretary Narciso Garay that the US wanted about 3,170 acres outside the Canal Zone, and he asked Panama to abandon the land.
      In the presidential election the Americans were involved, and there were disputes. By the Armistice on November 11 the United States had 14 military bases with 7,400 soldiers in the Canal Zone. In November the National Assembly met in special session, and they validated acts of President Valdés. Then they declared Panama at war against Germany since April 7. They suspended the rights of Germans, authorized the President to cooperate on defense of the Canal, and prohibited commerce with the enemy.
      Belisario Porras had been elected again and served from 12 October 1918 until he resigned on 30 January 1920. That year Porras was elected for a third time, and he served another four-year term starting on October 1. On 17 February 1920 Chargé Lefevre protested to the US State Department against the occupation of Panamanian land without giving notice, and one week later Lefevre and the US Secretary of War Newton Baker agreed on the compensation.
      On 21 February 1921 Costa Rican troops occupied the disputed Pueblo Nuevo de Coto in the province of Chiriquí, and the police did not resist. News spread, and three days later Panamanians defaced the Costa Rican consulate in Panama City. The next day President Porras announced the use of force, and Coto was retaken on the 27th. In early March the National Assembly approved $100,000 for arms. More Costa Ricans invaded, and Porras warned them he would use force again if they did not leave. Porras in March also opposed the White decision, and on the 19th he appealed to the US President Warren Harding. He replied that the US had accepted the arbitration. In early 1921 Gov. Chester Harding summoned Canal Zone troops to help put down a massive protest. In September the government of Panama complained about the US occupying Panamanian territory, and their Secretary Narciso Garay said,

If the United States had the right to occupy the territory
of the Republic without the authorization of our Government,
the guarantee in the treaty would not be of independence
but of absolute subjection.6

      In July 1921 workers from various unions and societies organized the Federation of Panamanian Workers. They soon started working with the Pan American Federation of Labor led by Samuel Gompers. Then the Spanish anarchist José Blásquez de Pedro split off and formed The General Workers’ Union (El Sindicato General des Trabajadoresa) which in 1930 would become the Communist and Socialist parties of Panama.
      On 18 October 1923 the United States informed Panama that about 22 square miles of land by the Chagras River was being taken to use as a water reservoir. Secretary Garay and the ambassador Ricardo Alfaro protested this. Also in 1923 Alfaro asked the United States to negotiate a new treaty. On 4 January 1924 he admitted there were no practical results, and he suggested 32 issues that could be discussed. On May 18 the US President Calvin Coolidge declared that the Taft agreement of 1904 would be nullified on June 1.
      In the 1924 elections the United States declined to intervene, and the National Liberal candidate Rodolfo Chiari was able to win with help from police intimidation that persuaded indigenous people of San Blas to vote for him 594 to 17. He defeated General Manuel Quintero who commanded the Panamanian army at Coto.
      Discussions between the United States and Panama were renewed on 18 June 1925. Holdings of the United Fruit Company in Panama were worth $8,026,052 in 1925. On October 1 President Chiari increased taxes, causing a massive tenant strike against raised rents on October 10. In the next two days violence between strikers and 600 US soldiers’ bayonets left several dead and produced chaos. On the 12th Chiari appealed to the United States military to suppress the opposition to the government, and US Marines stayed in Panama until October 23.

Panama & the US Canal 1926-35

      In 1926 the Foreign Minister Horacio F. Alfaro negotiated a treaty with US Secretary of State Frank Kellogg that clarified the Taft Agreement and was signed on July 28. The United States agreed to prevent smuggling in the Canal Zone and prohibit all private business there. In 1926 the total investments by United States citizens in Panama was about $12 million, and Panama’s national debt in September was $18,686,055, most of which was owed to Americans. On 18 January 1927 the National Assembly suspended discussion on the treaty and asked President Chiari to revive negotiations. Nationalists wanted to restore their independence and autonomy, and the Assembly rejected the treaty.
      On 18 July 1927 a Canal Zone official notified Foreign Secretary Horacio F. Alfaro that land on the Taboga and Taboguila Islands was needed to defend the Canal. On December 15 Alfaro and Porras visited the US State Department and requested supervision of the 1928 elections. US Secretary of State Frank Kellogg replied that Root’s view was that Panama was responsible for its elections. President Chiari endorsed the Liberal Florencio H. Arosemena who won easily in a peaceful election on August 5. In 1928 the Republican candidate Herbert Hoover promised that the “Good Neighbor Policy” would mean that the United States would not intervene in Latin America anymore.
      Americans had invested $36,381,000 in Panama by 1929. That year the British had about $7,500,000 invested in Panama including a mining concession from 1924 that included 1,150 square miles west of the Canal Zone and 3,400 square miles from 1925 on the Colombian frontier. In 1930 the Department of Commerce reported that United States citizens had invested $28,709,000 in Panama and had bonds worth about $18 million. Panama finally ratified a claims convention on 22 December 1930. That year Panama had a population of 467,459, and the Canal Zone had 39,467 people.
      On 2 January 1931 an armed coup by the nationalist Acción Comunal led by Manuel Quintero overthrew the government of Panama. In the assault ten people were killed, and five were wounded. They made Harmodio Arias Madrid the Acting President for two weeks. On January 16 the National Assembly chose the first presidential designate 1928-30 Ricardo Alfaro to be president. On August 17 President Alfaro incorporated his own armed supporters into the National Police, and he established the Nationalist Reserve. Harmodio Arias won the 1932 elections with 39,533 votes over Francisco Arias who got 29,282 votes. Harmodio became President again on June 5, and he had 300 supporters form the Civic Guard. He had been an organizer of the working-class rent strike in 1925 and received much support from the numerous West Indians. He put his relatives and friends in top positions. The National City Bank of New York vice president Roberts noted that Panama’s presidents in the 1920s often gave family members multiple federal jobs. Harmodio had José Remón hire workers and many blacks for the National Police. President Harmodio Arias used violence to end the renters’ strike in 1932.
      The world depression was seriously affecting Panama in 1932. By the end of the year the total national debt was $19,257,968. The government had guaranteed $3,282,154 on four Banco Nacional issues, and all four were in default by 1 January 1933. Interest payments on a $12 million loan in 1928 were suspended on May 15.
      President Harmodio Arias went to Washington, and on 9 October 1933 he and US President Franklin Roosevelt issued a joint statement. Panamanians were very pleased by this, and Roosevelt was welcomed when he visited Arias in July 1934. That year Panama refused to accept the $250,000 payment because of the reduced gold in the dollar, and they continued to do so for five years. The University of Panama was founded on 7 October 1935.


1. History of Central America, Volume 3 by Hubert Howe Bancroft, p. 556.
2. The United States and the Republic of Panama by William D. McCain, p. 10-11.
3. Ibid., p. 64, 65.
4. We Answer Only to God: Politics and the Military in Panama, 1903-1947 by Thomas L. Pearcy, p. 40.
5. The United States and the Republic of Panama by William D. McCain, p. 68.
6. Ibid., p. 88.

Copyright © 2023 by Sanderson Beck

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