Panama Canal
Courtez Cannady
Trident University International

In this paper we will be discussing the contract procurement of the Panama Canal and how it wound up in the hands of the United States. We will look at how much the French company The Compagnie Universelle du Canal Interoceaniqu lost in building the canal. How much did they demand when they first entered the negotiation? How much would the U.S. pay the French company? Since there is a huge difference, what are the tactics they played to justify their claims? What dramatically changed the whole situation so the U.S. won the negotiation? And finally, how did the U.S. secure its own interest? I will make any additional comments from the case as necessary. By 1889 the French company Campagnie Universalle wound up going bankrupt and lost around $289 million and an estimated 20,000 lives. When first entering the negotiation the French company demanded $109 million. The French company made this estimate based off of all of their holdings which were land, the panama railroad, 2,000 buildings and equipment. After an assessment, Rear Admiral Walker determined that the combined holdings of the French company did not exceed more than $40 million. Now we have to look at what the tactics were that the U.S. played to justify their claims. I think one of the main things the U.S. looked at was how the French companies attempt was such a catastrophe. The French were heading towards a bankruptcy at this point and had also lost the backing of the Panamanian people. The U.S. had leverage in this case. It came to the point that the Zone of Possible Agreement heavily favored the U.S., they were asking for $109 million and the U.S. was not going to budge past $40 million. This would be a $69 million difference. The next tactic the U.S. used was the media as a valuable resource of knowledge. With the president of Campagnie Nouvelles’ resignation and the loss of trust with stockholders demanding a sale, the U.S. was able to get everything they wanted for the set price of $40 million.
Now let us take a look at how the U.S secured its own interest? And any additional comments I had form the case. Part of the U.S. ability to secure its own interest was brought upon by the French company Campagnie Nouvelle. The French took an estimated 8 years to build the canal and poorly planned the execution of the contract. With the French companies failure and the knowledge that they were looking to disassociate themselves from the contract, the U.S> was in the position to aggressively approach negotiations. The next thing is the U.S. did was show how to save millions by finding the alternate route through Nicaragua instead of buying out the French. This would put Campagnie Nouevelle in a position of losing everything. Their tactic of making the U.S. feel there was a possibility of losing if Great Britain and Russian sided with them was obsolete as the U.S. had a fall back plan.

Works Cited
Negotiation.com, November 27, 2012, accessed via: Web.