Financing the Panama Canal

J.P. Morgan & Co. was selected by the U.S. Treasury Secretary to arrange the transfer of $40 million from the U.S. government to the Compagnie Nouvelle du Canal de Panamá (New Panama Canal Company) for its assets, including the right to build a canal.

Panama CanalJ. Pierpont Morgan, like other leaders of the early 20th century, believed that a canal bridging the Atlantic and Pacific oceans was a commercial necessity. In 1904, the U.S. government agreed to pay the Compagnie Nouvelle du Canal de Panamá (New Panama Canal Company) $40 million for the company’s assets, including the right to build a canal through the Isthmus of Panama.

J.P. Morgan & Co., which had been appointed in 1903 as fiscal agent for the newly independent Republic of Panama, was selected by the U.S. Treasury Secretary to arrange the funds’ transfer. To do so, Morgan organized an “exchange syndicate” comprised of eight banks, five in Paris and three in New York. The firm’s Paris affiliate, Morgan, Harjes & Co., managed the business in France, and J.P. Morgan & Co. headed the New York account.

 

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