The Panama Canal - The First and Next 100 Years

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Much of my mother's family history links to Panama and Central America.  My grandfather - pictured above - worked on the building of the Panama Canal and with the money he earned - the pay was good for that era, especially given the high death rate from malaria and yellow fever - that he was able to go to Vanderbilt University where he earned his medical degree.  Graduating just in time to spend America's period of involvement in World War I as an army doctor, he returned to Panama at the war's end where he met my grandmother - they are pictured below.  My mother was born in Honduras and under the Honduran Constitution I am entitled to dual citizenship in Honduras.  All of the family saga began, however, with the building of the canal.  

The 15th of August was the centennial of its opening.   A piece in The Economist looks at the history of the Canal and its possible place in geopolitics in the coming years.  Here are article excerpts:

IN 1914, troubled by the onset of the Great War, The Economist published a 176-page special edition on what it called a great “achievement of Peace”: the opening of the Panama Canal. “It may be long before the tolls become remunerative, but its immediate effect on commerce will be stimulative,” it said. “Eventually the Isthmus is likely to become one of the busiest resorts of shipping upon the face of the globe.”

Half right. In fact, the first world war meant there was almost no commercial traffic on the canal for its first six years. But from 1921 onwards, the canal quickly started paying rich dividends—particularly to its owner, the United States.

On the eve of the anniversary of the Panama Canal’s opening on August 15th, the Egyptian government has announced a plan to upgrade the Suez Canal for the first time in its 145-year history. Nicaragua has endorsed a 278km (173-mile) route for a $40-billion canal linking the Atlantic to the Pacific, the quixotic-sounding dream of a little-known Chinese magnate and the country’s Sandinista government. Causing further intrigue, on August 8th a delegation of Chinese businessmen from the state-owned China Harbour Engineering Company visited Panama to explore the idea of building and financing a fourth set of locks—even before the third set, part of the existing expansion plan, are in place.

As 100 years ago, numerous commercial and geopolitical interests are at play.  In 1914 Panama’s beauty was its lack of competition. It was the dawn of an American century. The United States’ west coast was enjoying an oil boom and wanted a cheaper way than the steam train to move goods and fuel between the Pacific and Atlantic. The canal lopped 12,600km from the sea route between New York and San Francisco. It also had strategic value. After the Spanish-American war in 1898 gave it territories and protectorates from Cuba to the Philippines, the United States needed a naval route between Atlantic and Pacific.

The gains were swift. By 1922 real shipping rates on some routes had dropped almost one-third below their pre-war average, according to “The Big Ditch: How America Took, Built, Ran and Ultimately Gave Away the Panama Canal”, by Noel Maurer and Carlos Yu. American taxpayers quickly recouped their investment. After the second world war, however, America’s trade with Asia soared above that between its east and west coasts . . . . Competition to the canal came from America’s interstate highways and new diesel-fuelled railways. That led to the Torrijos-Carter Treaties, which handed control of the canal to Panama in 1999.

Panama has done a good job of running it. But competition is emerging on all sides. . . . Nicaragua, once deemed too earthquake-prone for a big canal, is trying to rekindle its 19th-century dream. Many doubt the commitment of Wang Jing, a 41-year-old billionaire, to build a giant waterway through Nicaragua. But the pharaonic project, and the more recent interest of Chinese businessmen in expanding the Panama Canal, reflect the fact that China may want a say in the isthmus’s future.

In a fiercely competitive shipping market, analysts say the key to Panama’s competitiveness in future may be niggling issues like the size of its tolls. But for now it is focusing on the long term. “They’re not doing this for 2017,” says Paul Bingham of CDM Smith, an infrastructure firm. “It’s the 100-year view that’s important.”

 Interestingly enough, one of my nephews just finished a stint in the Peace Corps - in Panama.  Who would have thought that 100 years later, a family member would be once again in love with Panama.

Panama Canal Expansion Could Boost Hampton Roads and Virginia Economy

Sunrise over Hampton Roads harbor - port facilities are across the harbor from our street

Despite the efforts of the Republican Party of Virginia backwards and unwelcoming to anyone who is not white, heterosexual and conservative Christian, the Hampton Roads region and to a lesser extent other parts of the state could nonetheless receive a huge economic boost next year when the expansion of the Panama Canal is completed and the superior aspects of Hampton Roads harbor could make the area the premier container ship port on the East Coast. If the projected economic boost occurs, one can only hope that it will also work to make the area more progressive - many of the European shipping lines are based in countries far more socially progressive - and boost the population and help the GOP's base in rural Virginia to be forever out voted by the urban areas of Virginia.  The Richmond Times Dispatch looks at the prospects for Hampton Roads:

The Port of Virginia — and the state’s economy — should be able to benefit from the expansion of the Panama Canal, due to go into operation at the end of 2015, Panama Canal and Virginia Port Authority officials said Friday.

“Virginia’s port has the draft and capacity,” María Eugenia Sánchez with the Panama Canal Authority said at the Governor’s Conference on Agricultural Trade. “They are in very good condition.”

The canal’s expansion “is going to be beneficial to us,” said Thomas D. Capozzi, the Virginia Port Authority’s chief commercial officer. “It really plays to our advantages — deep water and rail connections.”

The century-old canal’s $5.25 billion expansion now under construction is expected to create demand for ports to handle the new Panamax ships, vessels the maximum size the canal can accommodate.

Now limited to 5,000-container vessels, the Panama Canal will be able to handle ships carrying 13,000 containers when the expansion goes into service in 2015, Capozzi said.

“That will make the East Coast more competitive vis-à-vis the West Coast” for ships carrying cargo from Asia, he said.

At 50 feet, Hampton Roads has the deepest shipping channels on the East Coast, capable of accommodating vessels carrying 10,000-plus containers, the authority said.

A port like Hampton Roads, which is deep enough and well-enough equipped with commercial transportation infrastructure to handle the supersized ships, could be a big winner.

 More than 30 international steamship lines service the Hampton Roads port, and the Norfolk Southern and CSX railroads offer on-dock, double-stack intermodal service to major markets in the Midwest and the Southeast, the authority said.

The expansion project entails building two new sets of locks, one on the Pacific side and one on the Atlantic side, as well as widening and deepening the navigational channels in Gatun Lake and Culebra Cut, an artificial valley that was cut through the continental divide and that forms part of the canal.

The expansion of the Canal touches a personal note - my mother's father worked on building the original canal and received a commendation from then president Theodore Roosevelt (see image below).   It's where he first became involved in medicine and eared the funds to put himself through medical school.  After World War I - he ironically was stationed in Hampton, Virginia for the duration of the war - he returned to Central America and practiced medicine for roughly 20 years.

Roosevelt in Panama at the construction of the original canal

Expanded Panama Canal - Will Virginia Be Ready for the Opportunity

The Panama Canal has always held a mystique in my family.   Why?  Because as a young man my mothers father worked on building the original canal which opened in 1914, received a presidential medal from Teddy Roosevelt for his services, and made the money while working on the canal needed to put himself through Vanderbilt's medical school.  Later, he would return to Central America as a doctor working both in Panama and Honduras.   Investments he made during the 1920's in Central American enterprises remain in the family to this day.   

The original Panama Canal revolutionized shipping and commerce.  Now, nearly a century later, the Panama Canal is being vastly expanded and trade will again be significantly changed, with east coast ports potentially hitting a major windfall - that is, if the ports are ready to take advantage of the opportunity.  Norfolk and Hampton Roads could enjoy an economic boom.  The question is, whether the area is equipped to take advantage of the opportunity.  We have the deep water port thanks to the U.S. Navy, but much of the rest of the needed infrastructure - especially improved highways - have stagnated and/or are in poor repair thanks to the Republican Party of Virginia's refusal to increase taxes to rebuild and expand critical highway systems.   Sadly, the knuckle draggers in the Virginia GOP cannot grasp the reality that to make money, sometimes you have to spend money.  A piece in the Washington Post looks at the coming game changer the expanded Canal will be.  Here are highlights:

PANAMA CITY — This is a story about big, and how one of the biggest construction projects in the world, the remaking of the Panama Canal, will let bigger boats sail into deeper harbors, where authorities are spending billions dredging channels, blasting tunnels and buying cranes from China the size of 14-story buildings to accommodate super-sized cargo.

All this might knock a couple of dollars off the price of a smartphone shipped from Shanghai — or alleviate poverty in Panama, where the government plans to make a fortune in tolls — or create a windfall for the ports ready to receive the big ships, such as those in Baltimore and Norfolk.

[W]ith the $5.25 billion expansion of the Panama Canal now officially half complete, a scramble is on among the hemisphere’s ports to lure a new generation of elephantine cargo ships, bulk carriers and automobile haulers to their harbors, where boosters envision an economic boom.
These new “post-Panamax” ships are the length of aircraft carriers. From the waterline, they’re 190 feet tall, or nearly twice the height of the Lincoln Memorial. The ships can carry as many as 12,000 containers, or about a million flat-screen TVs.

So important is the race to be ready for the more voluminous ships that the Port Authority of New York and New Jersey is spending $1 billion to raise the Bayonne Bridge to let the taller vessels pass through.

The ships are coming at a time when many experts say U.S. infrastructure — in ports, highways, bridges, railroads and tunnels — has suffered from delayed maintenance that has undermined U.S. competitiveness.

Ports in the Bahamas, Jamaica, Chile, Peru, Brazil, Colombia and the Dominican Republic are rushing to upgrade in hopes the ships will enter their harbors, too.

No place is the competition more fierce than in the United States. Three ports on the East Coast should be ready for the big boats: New York, Baltimore and Norfolk. Together, they hope to take a bite of the maritime trade passing through West Coast terminals, which handle the most U.S. imports from Asia.

[T]he new economies of scale and faster passage between the Americas and Asia will not only change maritime routes and cargo logistics, but also will create new markets to exploit the bigger ships and deeper ports.

We’ll see East Coast ports — and new sources in Colombia — shipping more coal to China. There will be iron ore from Brazil headed to Asia through the canal, and on and on,” Quijano said.

The United States completed the original 50 miles of Panama Canal in 1914. The expansion is being done by an international consortium of players and backers, with U.S. companies playing a secondary role.

[I]t is a very big deal, and there will be some winners and losers,” said Paul Bingham, an economist with the infrastructure consulting firm CDM Smith.  The impact of the canal may be felt far downstream. According to its June report to Congress, the Army Corps of Engineers foresees an increase in the bulk shipping of U.S. grain, fertilizer, oilseeds and petroleum, which could exploit competitive advantages provided by the improved canal, the U.S. inland waterways and post-Panamax ships.

Experts stress that the global shipping industry seeks a ruthless, penny-pinching efficiency, and routes and cargo flows will evolve.

So what is Virginia's GOP controlled government planning?  Perhaps selling the state's port facilities to private interests rather than properly fund them and sitting with their thumb up their ass rather than raise revenues to rebuild Hampton Roads' crumbling infrastructure.  As is the case in so many areas, the Virginia GOP is racing to take Virginia backward in time.  This November voters will have the opportunity to change this backward looking mindset.  They need to vote the GOP out of office in every office and district possible. 

Panama Upgrading Canal - A Past Family Connection

This post has nothing to do with gay rights or politics, but given that my mother's father worked on building the Panama Canal and made enough money to put himself through medical school and ultimately invest in Central America, I continue to follow events in Panama and Honduras. Thus, it was of interest that Panama is in the process of doing a major upgrade to the Panama Canal which when completed will double the amount of goods that will be able to transit from the Pacific Ocean to the Caribbean and Atlantic. Here are highlights from the New York Times:

About a mile long, several hundred feet wide and more than 100 feet deep, the excavation is an initial step in the building of a larger set of locks for the Panama Canal that should double the amount of goods that can pass through it each year.

The $5.25 billion project, scheduled for completion in 2014, is the first expansion in the history of the century-old shortcut between the Atlantic and Pacific. By allowing much bigger container ships and other cargo vessels to easily reach the Eastern United States, it will alter patterns of trade and put pressure on East and Gulf Coast ports like Savannah, Ga., and New Orleans to deepen harbors and expand cargo-handling facilities.

The new third set of locks will help eliminate some of those backlogs, by adding perhaps 15 passages to the daily total. More important, the locks will be able to handle “New Panamax” ships — 25 percent longer, 50 percent wider and, with a deeper draft as well, able to carry two or three times the cargo.

The expansion is being financed with loans from development banks to be repaid through tolls that currently reach several hundred thousand dollars for large ships. The project is huge by Panama’s standards; among other things, the country’s largest rock-crushing plant has sprung up, almost overnight, to turn the mountain of excavated rubble into sand and stone for the concrete.

Like the construction of the original canal, an engineering masterpiece that opened in 1914 after 10 years of work by the United States Army Corps of Engineers, the expansion project is a daunting task, but for different reasons. The corps had to tackle tropical diseases that had killed thousands of workers during an earlier failed effort by the French. It had to excavate — and, crucially, dispose of — tens of millions of cubic yards of dirt and rock. And it built locks that were then the world’s largest.

Deeper approach channels are being dredged on both coasts. And on the Pacific side, crews are excavating a long channel that will connect the new locks to the Culebra Cut. The channel through Gatún Lake is being widened so that larger ships can pass each other.

The new locks, which will account for about half the cost of the project, will work on the same principle used by the existing ones: moved solely by gravity, water is fed into or emptied from the chambers, raising or lowering the ships inside. But the new locks will use a different kind of gate at the end of each chamber, which should make maintenance easier and less disruptive. They will also have a feature found on some canals in Europe: three shallow basins next to each lock that will store water and reuse it. With the basins, the new locks will use about four million fewer gallons of water for each ship’s passage through the canal than the much smaller existing locks

The water-saving basins, with an elaborate system of culverts and valves to divert water to and from the chambers, may be the project’s most technologically challenging part. Operators will use computer controls that are a far cry from the electromechanical ones, with brass and glass indicators and chrome valve handles, that were used from 1914 until just a few years ago. Despite the system’s complexities, Mr. Quijano, the canal authority official, insisted that the authority was capable of carrying it out successfully. “We have not invented anything that has not been invented before,” he said.

It's an amazing project and perhaps one day I will get to visit Panama. Who knows, given the way the USA under the GOP is rushing towards backwardness and is lagging behind many Latin American nations on LGBT rights, the boyfriend and I might even retire to a country like Panama.

The Banana Chronicles - A Part of My Family Heritage

Months ago I was contacted by a journalist in Costa Rica working for an online magazine, Neotropica, that was going to do an issue on the good, the bad, and the ugly of United Fruit Company's activities in Central America during the first half of the 20th century. I was contacted because of a post I had done on this blog that referenced my family's ties to Central America - particularly Honduras where my mother (the smallest child in the photo above) was born and Panama where she later lived. The magazine issue is now up online and can be found here. The story on my grandparents (pictured below in 1922), which includes a number of family photos from the 1920's and 1930's that I furnished to the publication, begins on page 17 of the magazine. My mother still holds investment interests in both Panama and Honduras and I hope to visit both countries someday.
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United Fruit did many unfortunate things during its de facto rule of Central America. However, I remain convinced that the Medical Department of which my grandfather was a member, did much good and that the medical personnel had the best of motives. I'd be interested in hearing readers' thoughts.

My Central American Ties

Visiting my mother this past weekend gave me a chance to look at old photo albums with pictures of my mothers parents and from her childhood. My grandparents, as I have mentioned before, were quite adventurous for the times in which they were young and I wish that they had lived longer so that I could have known them better as an adult. I am trying to encourage my mother to write down her recollections from when she lived in Central America - it was an time and existence long gone and in some ways like something out of a movie. So far she has not done so, but this March 2, 2000 Virginian Pilot article gives a sense of it all:

TRANSFER OF PANAMA CANAL CONTROL HOLDS SPECIAL MEANING FOR WOMAN BAYLAKE PINES COUPLE MAINTAIN TIES TO AREA WITH INVESTMENTS

With the dawn of the new millennium, most in the United States were focused on celebrating or on the infamous Y2K bug happenings. Little fanfare was paid to an historic event that took place at noon Dec. 31. But George and Marion Hamar of Baylake Pines were watching as the United States officially transferred control of the Panama Canal to the Republic of Panama.

It was a special moment for Marion Hamar, because she spent her early childhood in Panama, where her father practiced medicine. “The land divided, the world united'' reads the backside of a medal earned by Bruce M. Phelps, Hamar's father. He earned the medal while working on the canal from 1910-13. At the time, he was 24 and one of 44,000, including 5,000 Americans, who worked on the 50-mile project.

So began a family's ties to a small tropical country. After working construction on the canal, Phelps returned to the United States in 1913 to attend medical school at Vanderbilt University. After graduating in 1917, he was drafted in the Army and was sent to Ancon Hospital in the Canal Zone, in Panama for a year-long surgical internship. Afterward, he was stationed at a military hospital in Hampton.

When Phelps left the Army, he got a job with United Fruit Company, a corporation that produced and distributed fruit. Hamar's mother, Azelie Hibben, a registered nurse and World War I veteran, did the same. The couple met in Panama. They married and had three daughters, Mary Alice, born in Panama, and Ann and Marion, both born in Honduras. The family lived in Central America, mostly Panama, until moving to New York in 1939.

``In those days the fruit companies created entire towns at the ports including schools, roads, waterworks, a golf course, swimming pools and the hospital. They also built railroads to bring the bananas from the country to the port,'' Hamar said. The fruit company owned everything, we could go anywhere, do anything. The company took care of the employees, providing them with housing and medical care,'' Hamar said. Phelps was the superintendent of the hospital, which the fruit company owned. He also served as the chief surgeon. Therefore, the Phelps family received special benefits. “My father had the only car in town, and mom had a nurse and a cook,'' Hamar said. It was a great place to live, typical plantation living. We had all sorts of fruit: tangerines, oranges, papayas, and of course bananas, even the horses ate bananas,'' Hamar said.

The Hamars decided to invest money in Central America because of the connection. “Past and current investments are part sentimental, part economics. We had an original investment from Marion's dad, held on to it, and added to it,'' George Hamar said. They're pleased Panama took control of the canal. George, a retired stock broker, and Marion, a retired cytotechnologist, have lived in Virginia Beach since 1973. They have five children and 10 grandchildren.

My mother continues to own banking stock in Panama and brewery stock in Honduras. I have never been to either Panama or Honduras, but sincerely hope to visit there some day. Panama City, Panama is pictured above.