First Presentation of All Stocks and Bonds Issued by the Compagnie Universelle du Canal Interoceanique de Panama, 1880 - 1889 and Compagnie Nouvelle du Canal de Panama, 1894

by Julius Grigore, Jr.


Privately published by W.G. Guy, 425 Harbor Drive South, Venice, Florida, 34285. Reprinted with permission.



INTRODUCTION


Scripophily is a term applied to the collection of original bonds and stock certificates of early, expired, or existing commercial or government enterprises. Some collectors include canceled checks and other negotiable papers in this category, but they are not included.

Many bond and stock certificates are designed by artists and engraved by security printers like the American Bank Note Company. Whereas a share certificate indicates part ownership in a company, a bond is a loan instrument which guarantees a fixed rate of interest to the lender or purchaser until it reaches maturity.

Often bonds are not registered by name. These are termed "bearer" bonds (in France, an "au porteur" certificate), with interest, or final settlement, being collectable on presentation of the bond by any party in possession of it. Once settled in the amount of its loan (indebtedness), or current market value, on or before it reaches maturity, the bond certificate is usually destroyed, thus the reason for their rarity. Stocks sometimes fall into the bearer category, but not often. (All French securities mentioned in this monograph are "au porteur" types.)

Clearly, when you possess a stock or bond certificate of the Compagnie Universelle Interoceanique du Canal de Panama or Compagnie Nouvelle du Canal de Panama--even though it is considered monetarily valueless on any world stock exchange--you have in your possession a magnificent item of financial memorabilia. It is associated with the priceless heritage of four great nations-Colombia, France, Panama, and the United States-and is coupled with the inspiring influence of great, imaginative men who dared, in the face of adversity, to do mighty things and to win glorious triumphs.

The fascinating scripophilatelic history about the stocks and bonds


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issued by the Compagnie Universelle Interoceanique du Canal de Panama and the Compagnie Nouvelle du Canal de Panama should have been written long ago. It is the story of the world's worst financial disaster and most complicated liquidation and transition process, but one that evolved into becoming one of the world's greatest engineering achievements-the completion of the present Panama Canal.

The delay was probably due to their rarity and the consequent difficulty in collecting them into one portfolio for analysis, as the maturity of the various bonds extended well into the 20th century, and, consequently, resulted in people continuing to hold them. Also, references to them were only found in fragments from a narrow bibliography--ofttimes over a century old--about both firms.

Another reason, closely allied with the first, is that until about 1988, only a few scripophilatelists had ever seen a complete collection of these stocks and bonds. Especially elusive was that one stock certificate issued by the Compagnie Nouvelle du Canal de Panama, of which less than ten have been reported.

For example, the author, who lived in the Canal Zone for many years and who was. an active member of coin and stamp clubs there, including the Isthmian Collector's Club, which was devoted to collecting Panama Canal memorabilia, had never heard of such certificates until the night of January 8, 1987, when Denis Beuret, Vice President of the Swiss Bank in Panama and a cofounder of the Panama Historical Society, gave a revealing talk about the stocks and bonds issued by both firms.

Even Bert E. Davis, who introduced the author to collecting Panama Canal memorabilia in 1964, and who had encouraged him to write The Coins and Currency of Panama, which was published by Krause Publications in 1972, had never known about either Compagnies' stocks


Vi

and bonds. And Bert, from Seaside, New Jersey, had been a Zonian and a serious student of Canal Zone history since 1929.

Indeed, had these documents been seen by either of us, they would have inspired reverence and stimulated intense conversation since our shipyard office bordered a portion of the Old French Canal near Mt. Hope, Canal Zone, not far from Cristobal and Colon, Panama.

Actually, as the author learned in 1992, a faded lottery bond had been hanging on the back wall of Casa de Filatelia y Cambio, City of Panama, since 1935. This favorite retreat of Canal Zone stamp collectors was operated jointly by Noah Flidman and Isaac Coriat. When queried about the bond, Coriat remarked that it had been in their shop long -before they purchased the business in 1957. He remarked also that the certificate was very rare and that he valued it highly. But Coriat wasn't aware that many lottery bonds had started to surface in the late 1980's and that they were now commonly available.

To reveal how little was known as recently as 1989 about the stocks and bonds of the Compagnie Universelle du Canal Interoceanique de Panama, Skinner in his book, France and Panama, 1894-1908-which appeared in 1989 and which authoritatively deals mainly with the operating and financial life of the Compagnie Nouvelle du Canal de Panama--referred to an illustration of the Compagnie Universelle's Seventh Bond Certificate as a lottery bond, when the two bonds are as different in design as day and night.

This monograph is not intended to be a financial history of the Compagnie Universelle Interoceanique du Canal de Panama, Compagnie Nouvelle du Canal de Panama, or the Panama Rail Road Company, although it may closely resemble one. Rather, it was pieced together as if it were a delicate mosaic into which many historical and human-interest facts are added and arranged to enrich its content. What has resulted,


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is a compilation of fascinating revelations-beyond expectations-about international intrigue and manipulations in the highest political and financial circles.

This book could have been written without referring to the Opinion of the Attorney General Upon the Title Proposed to be Given by the New Panama Canal Company to the United States of America, 1902 or to The History of the Purchase by the United States of the Panama Canal; the Manner of Payment; and the Distribution of the Proceeds of Sale, 1909, but it is far better for having done so. Both books had only recently come to the attention of the author. Especially desirable about the former reference is that it provides an English translation of the French language text on most of the securities issued by Compagnie Universelle Interoceanique du Canal de Panama. Both references were exceedingly helpful in developing Chapter 8, "The Stock Certificate Issued by the Compagnie Nouvelle du Canal de Panama on October 20, 1894" and Chapter 10, "Possible Redemption Value of Stocks and Bonds Issued by Compagnie Universelle du Canal ~ de Panama and the Compagnie Nouvelle du Canal de Panama."

Even though the Opinion of the Attorney General about the Compagnie Universelle' 5 financial affairs, was comprehensive, his investigators overlooked its 4th bond issue of April 10, 1886. This oversight has been corrected in Chapter 3, "The Compagnie's First Seven Bond Issues."

The Attorney General's Opinion was also very informative because from it the author learned that, according to French law, a company survives the liquidation; it does not dissolve as a consequence of it. This determination contributed to the author's developing Chapter 6, "The Certificate Issued on March 11, 1889 by the Societe International d'Etudes to Determine the Assets and Value of Compagnie Universelle


viii

Interoceanique du Canal de Panama and the Methods for Its Liquidation"; Chapter 7, "The Stock Certificate Issued on May 9, 1892 by the Societe d'Etudes et Publications Pour Favoriser l'Achevement du Canal de Panama to Finance a Study to Determine if the Panama Canal Should be a Lock or Sea-level Waterway"; and Chapter 10, "Possible Redemption Value of Stocks and Bonds Issued by Compagnie Universelle du Canal Interoceanique de Panama and the Compagnie Nouvelle du Canal de Panama."

Bishop's and. Mack's. histories about the Panama Canal, The Panama Gateway and The Land Divided, also cited in the Bibliography, were useful, but not as much as Simon's, The Panama Affair, which was specifically devoted to the disastrous financial failure of the Compagnie Universelle Interoceanique du Canal de Panama and to the formation of its successor, the Compagnie Nouvelle du Canal de Panama.

Guy Cifre, a prominent scripophilatelic dealer in Paris, and a renowned author of articles and books about this intriguing subject, was -.very cooperative in assisting the author over the span of several years, in obtaining a complete set of the stocks and bonds issued by the Compagnie ~ Canal. de Panama and the Compagnie Nouvelle du Canal de Panama.

Guy, besides making available the eight volumes of the Rapports, produced by the Commission d'Etudes Instituee par le Liquidateur de la Compagnie Universelle du Canal Interoceanique de Panama, which are now part of the Panama Commission's Panama Canal Collection, also made available many duplicates of the Compagnie Universelle Interoceanique du Canal de Panama's stocks and lottery bonds for inspection of their various informational markings and cancellations for the purposes of this monograph. This, coupled with information gleaned from the Attorney General's Opinion, made it possible for the author to


ix

discover that there were two types of the Compagnie Universelle's lottery bonds, the first of which was issued on June 8, 1888, and the second of which was overprinted and issued on and after July 15, 1889.

Since the author has strong numismatic and philatelic interests, considerable mention was included about the French revenue and Compagnie Universelle's control stamps applied to the stocks and bonds. But of equal interest were the two medallions associated with the issue of the Compagnie's common stock and of its lottery-bond issues to stimulate sales. The exceedingly symbolic allegorical portrait on the medallion issued to promote sales of the Compagnie's stock certificate was given substantial mention and interpretation because of its extraordinary theme related to de Lesseps's intention to pierce the Isthmus of Panama with a canal. For this same reason, the colorful stock certificate issued by the Compagnie Nouvelle du Canal de Panama was given similar consideration.

Even though a great number of both medallions must have been given to purchasers of the Compagnie's stock and lottery bond offerings, they are now so rare as to be almost extinct. The one medallion issued to stimulate the sale of the lottery bond is especially rare, as Cifre, who is also a prominent numismatist, had never seen or heard of it be-fore he saw it in the comprehensive Panama Canal Collection of Wren Grigore.

"First Search," which is a product of the Online Computer Library Center, Inc., Columbus, Ohio, that was available at the Reference Desk of the Venice Area Public Library, Venice, Florida, provided an instant bibliography concerning the subject of this monograph. Even though findings were minimal, it at least eliminated the necessity for pursuing fruitless search elsewhere.

First Search also facilitated ordering references, through the benefit


x

of the Inter-Library Loan System, that were of a kind rarely found collectively on public-library shelves. Both of these literary services eased and hastened the author's research efforts immensely.

The author had available three comprehensive bibliographies about the Panama Canal, which included extensive mention about the attempts of Comte Ferdinand Marie de Lesseps, "The Great builder of the Suez Canal," to build his second interoceanic canal. One bibliography was from the Library of Congress, Washington; the second, from the Panama Canal Collection of the Panama Canal Commission, Republic of Panama; and the third, from the New York Public Library.

But the contributions to this monograph by the National Archives, -Washington, cannot be understated. What was learned from that magnanimous resource was that no securities issued by either the old or new Compagnies exist in its archives. But who is to say that some are not bundled and lying in some dusty niche amongst the infinite number of records and documents held by that Federal agency? Even if discovered years later, they would not be available to collectors because they would be in the public domain.

Particularly, from the National Archives, the author was seeking information about any of the 65,000 elusive stock certificates issued by the Compagnie Nouvelle du Canal de Panama, as they mysteriously disappeared after May 4, 1904. This is when the United States of America formally obtained that Compagnie's property and rights to complete the Panama Canal diggings, but not its financial records and stock certificates.

Harding, a former Day News Editor for the New York World, in his expose', The Untold Story of Panama, which appeared in 1955, following his 51-year gentlemanly silence about the intricacies of the purchase, alluded to the Compagnie Nouvelle's colorful stock certificate,


xi

with its meaningful allegorical motif, but he was unable to explain why they vanished from scripophily.

From such vast informational resources, it was easy to clothe the securities issued by both Compagnies with deserving and rich historical background instead of merely presenting them as expended pieces of pa-per stripped of their illustrious heritage. It was also possible to derive a conclusion that they still may have redemption value. (See Chapter 10, "Possible Redemption Value of Stocks and Bonds Issued by Compagnie Universelle du Canat Interoceanique de Panama and the Compagnie Nouvelle du Canal de Panama," about this possibility.)

Some of the most beautiful, creative, meaningful, and original allegorical motifs ever designed appear on the stocks and bonds issued by the commercial world. It is undoubtedly the intent of those who are tasked with a motif's design, to deliberately include artwork, not only that required by the law of the land, such as the name of the firm, date of incorporation, serial number, etc., but symbols intended to express, sometimes subliminally, what the firm is all about: its purpose, mission, and how it otherwise expects to achieve its goals. Even today's commonly seen logos are symbolic representations of what an organization, whether private or governmental, is all about.

As explained by Cirlot, in his A Dictionary of Symbols, symbols have influenced mankind since the dawn of civilization. Some symbols are inspirational, some form the language of the unknown, and some portend good or evil Mankind reveals its mind by the symbols it adopts. For example, the symbols introduced into the motifs of the stocks and bonds of each of the two French canal companies-like the prominent presence of women-expressed their relentless determination to fulfill mankind's dream of creating a Canal that would unite the Atlantic and Pacific Oceans by a waterway across the Isthmus of Panama.


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While studying the extraordinarily meaningful symbols that appear on the motifs of the old and new Compagnies' stocks and bonds, coupled with those on the medallion issued by La Banque Parisienne to stimulate sales of the second stock offering of the Compagnie Universelle, the author was inspired to interpret each symbol that these three French firms selected to express their determination to pierce the Isthmus of Panama by a canal.

So, assisted by. Cirlot's book, the author went all out in his symbolic interpretations, by trying to imagine himself in the position of those French executives who were obsessed with an idee fixe to construct the Panama Canal. If the author exceeded himself in this regard, please forgive him.

It is intended that this monograph will become a repository for adding more scripophilatelic information about this enormously absorbing human-interest story. It is one that demonstrates how sometimes man-kind's greatest expectations can remain forever dormant, because they cannot be financed. It is a story we have often heard, and even experienced, countless times, but it. is one that. never seems to diminish our determination to succeed even without sufficient money.

The personnel at the Reference Desk of the Venice Area Public Library, many of which must be among the most professional in the State of Florida, are highly deserving of the author's "Outstanding Service Award." It has been well earned by Margaret Lynn Thierry, Chief, Reference Desk, and by Muriel R. McMasters, Melanie Odom, Susan Cartwright, and Lisa M. Derbyshire of Lynn's staff.

This monograph would have been most difficult to assemble had it not been for the contributions of Roberto Sarmiento, Chief of Technical Resources Center, Panama Canal Commission, Balboa Heights, Republic of


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of Panama, and his courteous and competent staff members, who administer the world-renowned Panama Canal Collection: Nan S. Chong (since retired and replaced by Rolando Cochez), Pat Booth, Irene Gonzales, Aleyda Aguilar, Elena Wong-Chung, Yolanda Hauke, and Maria del Carmen de Ameglio. Each deserves the highest commendation for a job "WELL DONE!"

All illustrations and the reproductions of the securities issued by both Compagnies were made available from the extensive Panama Canal Historical Collection of my daughter, Wren Grigore, who is also a member of the Panama Historical Society.

Extreme care was taken to assure the accuracy of the information in this monograph and maintain the chronological order. Regardless, the information and opinions presented here, including errors of fact or judgment, are those of the author. He is solely responsible for the content of this monograph. However, a qualification of this statement is necessary-as the findings and conclusions expressed here were mainly derived from the study, and piecing together, of facts from the published works cited in the Bibliography.

Now the author must depart the subject of this monograph to finish another book, The Stocks and Bonds Issued by the Panama Rail Road Company, 1850-1950. (You probably won't believe it--or perhaps you will--but the Panama Rail Road Company book has been in draft form for many years and was begun long before this one.)



Julius Grigore, Jr.

Captain, USN, Retired

Founding Member,

Panama Historical Society


XiV


PROLOGUE


In 1879, France was a rich nation. The government loan issue destined to pay the war debt of five billion francs in gold due to Germany, since Germany was victorious during the Franco-German War of 1870, was covered ten-fold. The young republic, invigorated by its trust in Progress and Science, benefited greatly from the economic prosperity under the Second Empire.

It paraded its successes, which included completion of the Suez Canal in 1869, in a series of Universal Expositions between 1878 and 1900. It celebrated the Centenary of the French Revolution by giving an enduring Statue of Liberty to the United States. It taught the world, established colonies, gazed wide-eyed at a new technological universe, and boasted of luminaries such as Victor Hugo, Comte Ferdinand Marie de Lesseps, Louis Pasteur, Alexandre Gustave Eiffel, and Sarah Bernhardt.

At the crest of France's glory, and because of its hubristic overconfidence in its national and international hero, Comte de Lesseps, "Builder of the Suez Canal," countless French citizens were influenced to invest in one of the greatest and most ambitious enterprises ever undertaken--de Lesseps's attempt to build an interoceanic canal across the Isthmus of Panama.

In attempting such a gigantic project, de Lesseps was pushing the technology of his day. This, coupled with his blind faith in France's news media and politicians, caused his dream to build his second interoceanic canal to be shattered, which resulted in the greatest engineering and financial disaster, followed by the worst political scandal, the world had ever known. It was an embarrassment to France which continues to be discussed amongst Panama Canal historians to this day.


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Chapter 1


Founder's Certificate of Shares to the Bearer

of the Compagnie Universelle du Canal

Interoceanique de Panama,

Societe Anonyme


9,000 Issued


The concession of the new Panama Canal Company was granted by the Colombian Government by law dated the 28th of May, 1878, extended by the jaw of the 26th of December, 1890, and the law of the 4th of August, 1893. The time for the completion of the Canal is thereby fixed at October, 1904; but in this present month of December, 1898, the Government of Colombia has granted an additional extension of six years to 1910, subject to the formality of ratification by Congress when it reconvenes--an assured act.

This concession grants to this Company the exclusive privilege of excavation through the Colombian territory and the opening of a maritime Canal between the Atlantic and Pacific oceans--the Canal to be constructed without restrictive conditions of any kind. The concession continues for 99 years from the time of the opening of the Canal, either wholly or in part, for public use.


The New Panama Canal Company,

Evening Post, New York, 1898






1

HISTORIC SETTING


On November 17, 1869, the 100-mile-long Suez Canal was officially opened during the greatest celebration of all time and with many of the world's royalty and international dignitaries present. The inspiration for, and builder of, this canal, which was the greatest engineering feat since the completion of the Panama Rail Road across the Isthmus of Panama, in 1855, was the 64-year-old Comte Ferdinand Marie de Lesseps.

When many doubted de Lesseps, and a hostile England had used many means to oppose him, the completed Suez Canal--after ten years of diplomatic and political struggle, human toil, and triumphs and disasters--formed a sea-level waterway from the Mediterranean Sea to the Red Sea.

Because of his extraordinary success, de Lesseps, "The Great Builder," became the world's most decorated and honored personage. He was compared to Columbus, for, like Columbus, de Lesseps--in creating the Suez Canal--had opened a new trade route between the East and West, making the two hemispheres of the world into one, by cutting the voyage from Europe to India by half.

While the Suez Canal was being built, the indefatigable de Lesseps was ridiculed for not being an engineer--only a former French diplomat skilled in promoting enterprises requiring publicity and money. After its completion, de Lesseps was criticized because the Suez Canal cost more than double the sum estimated, and because, during 1870, the Suez Canal Company failed to pay dividends.

On May 18, 1878, by Law 28 of 1878 of the United States of Colombia, the Lucien Napoleon Bonaparte Wyse Group (La Societe Civile International du Canal Interoceanique de Darien) obtained a 99-year

2

concession from Colombia (formerly New Granada) to construct a canal from the Atlantic to the Pacific Oceans across the Isthmus of Panama, which was one of Colombia's provinces.

Among the terms of the concession was the stipulation that the grantees were to incorporate a "universelle" compagnie within two years from the date of the concession, and that the compagnie had to complete a canal within twelve years thereafter. In addition, the grantees would be granted, as an aid to accomplishment of the work, 500,000 hectares (about 1,248,000 acres). of public lands in any locality which the compagnie selected. This acreage would be apart from a strip of land 200 meters wide on each side of a sea-level canal.

The concession specifically stated that transit of the Canal would not be closed to nations at war, and that vessels of any nation would be allowed to transit, without distinction, exclusion, or preference, upon payment of appropriate tolls. But, more precisely, Colombia had the right to pass its own vessels, troops, munitions of war, at any time, without paying tolls.

A very restrictive stipulation of Colombia's concession to the Wyse Group was that no canal could be built across the Isthmus of Panama if it competed with the railroad, which, by prior concession from Colombia, had been built and operated by the Panama Rail Road Company, unless that company granted a right-of-way to do so.

As compensation, for the privileges and rights allowed to the concessionaires to construct and operate a canal, Colombia would receive a percentage of the revenues received by the compagnie. Payments would begin with 5% for the first 25 years of canal operation, 6% during the second 25 years, 7% through the 75th year, and 8% through the 99th and last year of the concession unless it was extended.

Four-fifths of such amounts were to be paid to the Colombian Government and one-fifth to the Province of Panama. In no case would the amount received per year be less than 1,250,000 francs ($3 12,500).Lieutenant Wyse, a French Navy civil engineer--based upon a flimsy, limited survey for a canal across the Isthmus of Panama, between Colon and Panama City, closely following the line of the Railroad-estimated that only 46,000,000 cubic meters of earth and rock, had to be removed to complete the Canal, and that its cost would only be 427,000,000 francs or $85,400,000. The 18-day survey conducted by the Wyse Group was based upon a map prepared in 1857 by the Panama Rail Road Company. (The Wyse Group consisted of Wyse's brother-in-law, General Etienne Turr, a Hungarian; C. Cousin, Inspector General of the Chemin de Fer du Nord; Baron Jacques von Reinach, banker; Licaine Perdux, contractor; and Vicente Rampan, Colombian Consul to France.)

According to Rodrigues, the entire survey, from beginning to end, was suggestive of an attempt by the Wyse Group to grossly impose upon the enthusiastic and patriotic people of France, who believed in the heroic name of de Lesseps. What was sad about the affair was that de Lesseps--to whom unstinted praise was due for his glorious feat in the Isthmus of Suez-had staked his proud name, as a particularly interested partner, in a highly suspect scheme.

There was no intention by the Wyse Group to build the Canal, as the Societe Civile venture was purely for speculation, even though the project had been encouraged by de Lesseps (soon to be referred to as "The Great Promoter"). De Lesseps was looking for more acclaim and for a magnificent project that could erase France's military defeat by Germany. He sincerely believed, for example, that completion of a canal across Panama would add to the grandeur of France through peaceful revenge.


4

How the conjoining of the de Lesseps and Wyse Groups led to the creation of one of the world's largest corporations and the causation of the most tragic business and human disaster of their day (one which ruined hundreds of thousands of lives--because of de Lesseps' urge to construct another trans-oceanic canal before he died) unfolds through presentation of this Part de Fondateur au Porteur certificate.


BEGINNINGS


Only de Lesseps-who was still flush from his Suez Canal triumph could give reality to the Wyse Concession through the infusion of his leadership and by the attraction of other people's money. It was his opinion that a canal across Panama would be easier to build than the Suez Canal. "Science has declared that the Panama Canal can be built, and I shall be the servant of that science."

Many doubted and plotted against him, but de Lesseps' consent and inspiration were essential before prospective founders would loan monies in anticipation of the "big bonanza" for their investment. They had no hint of how their lives would be fatally affected by de Lesseps-"The Great Persuader"-through a catastrophic reversal of fortune.

Early during 1879, the 74-year-old de Lesseps formed a syndicate of founders who would provide venture capital to purchase the Wyse Concession and to finance the incorporation of the Compagnie Universelle du Canal Interoceanique de Panama, which firm would be tasked to build the Panama Canal.


5

FINANCING


After arduous and manipulative negotiations, exercise of great intelligence and hard work, and much seductive rhetoric, de Lesseps, on March 3, 1881, formally incorporated the Compagnie Universelle du Canal Interoceanique de Panama in order to pay for the Wyse Concession and to begin construction on a sea-level canal across the Isthmus of Panama. De Lesseps, "The Great Administrator," was unanimously elected to be its President-Directeur. His son, Charles, was elected as -the Associate President-Directeur.

By the terms of the Wyse Concession, the Panama Canal had to be opened and operating within twelve years of the Compagnie Universelle's incorporation, which placed the expiration date of the Concession on March 3, 1893, unless it was mutually agreed to extend it.

No other man in the world could have commanded such confidence in what became the world's largest commercial enterprise, and which was fatally destined to become the most disastrous financial failure the world had ever seen. His proclamation, as President-Directeur, was that the Canal would be completed by 1889 for about 658,000,000 francs ($164,500,000).

At the outset, each syndicate founder obtained financial benefits that later bond and stock buyers would not enjoy and that were of a kind that insidiously contributed to forcing the Compagnie into bankruptcy on February 4, 1889--causing the world's worst political debacle up to that day.

Here is how Simon, in The Panama Affair, referred to de Lesseps's syndicate which contributed to his founding the Compagnie Universelle du Canal Interoceanique de Panama on March 3, 1879:



6

The syndicate consisted of 172 men and women who had contributed a total of 2,000,000 francs in 5,000-franc units to found the Compagnie Universelle. They were rewarded with founders' shares in the Compagnie, of which there were a total of 9,000.

The founders received 4,000 of them, one for each 5,000-franc unit they had ventured. The founders' shares did not represent any ownership in the Compagnie, but carried with them a claim in perpetuity to a large piece of the action. Article 60 of the Compagnie Universelle's by-laws reserved 15% of the Canal's net profits for the owners of the founders' shares.

The founders' shares rose quickly in price to 75,000 francs on the over-the-counter stock exchange, where they could be bought or sold in tenths of a share to facilitate trading.

The largest holder of the founders' shares was Jules Lebaudy, with 500. He was a member of a rich family of sugar refiners whose name was often identified with spectacular financial ventures. Next, with 200 shares, was Paul Dalloz, a member of a famous publishing family.

Nine hundred shares were placed at de Lesseps's disposal, 100 were given to Charles de Lesseps, and 180 to Marc Levy-Cremieux, vice president of the Societe de Franco-Egyptienne, which bank, strangely enough, opposed de Lesseps's first common stock offering. [Cremieux, soon after, became the Compagnie Universelle's financial advisor.]

Three large commercial banks-the Societe Generale, the Credit Lyonnais, and Credit --composed the underwriting group. They split 59 of the Compagnie's opulent founders' shares, one for each 10,000 shares of the Compagnie's common stock that


7

they committed themselves to underwrite. The remaining 253 founders' shares were earmarked for cooperating newspapers and bankers.


To emphasize the potential worth of the founders' shares, particularly for what follows in Chapter 10, "Possible Redemption Value of Stocks and Bonds Issued by Compagnie Universelle du Canal Interoceanique de Panama and the Compagnie Nouvelle du Canal de Panama," the author also cites from Mack's The Land Divided:


To enable the founders to anticipate their remuneration without waiting for the Canal to open, the Compagnie created 900 founders' shares, the owners of which were to divide among themselves 15% of the potential net profits from the Canal. Each founder's share thus represented 1/60th of 1% of the total earnings of the Canal.

A similar system had been used to reward the promoters of the Suez Canal, whose original contributions had been repaid many times over: a Suez founder's share quoted at 5,000 francs when issued on November 5, 1858, had a market value on the Paris Bourse during November 1880 of 380,000 francs.

Since the Panama Canal was never completed by the Compagnie Universelle, founders' shares [allegedly] became worthless, but at one period when the Compagnie's prospects of success seemed bright they sold for 75,000 francs each.


Mack further remarked that 210 founders' shares were found in the -Compagnie Universelle's office following announcement of its financial failure on December 14, 1888, and that in 1893, a Chambre des


8

Deputes (Chamber of Deputies) investigating team reported that 320 founders' shares were never accounted for.

The first, and continuous, drain upon the financial resources of the Compagnie was profits and pay-outs for each of the 9,000 founders' shares. Aside from the 5,000,000 francs ($1,250,000) paid in cash for the Wyse Concession on July 5, 1879, which netted insiders within that Group a 3,000% profit:


The Wyse Group received 10,000 tax-free stock from the

Compagnie Universelle for which the Compagnie paid a tax of

40,000 francs. (See a very rare "Entierement Liberee" stock

certificate that follows in Chapter 2, "The Compagnie

Universelle's Common Stock Certificate and Its Related

Medallion, 1881.")


{Special Char 183 in Font "Symbol"}

$6,920,000 expense was disbursed for incorporation of the

Compagnie.


{Special Char 183 in Font "Symbol"}

$2,360,000 profit was immediately paid to the founders from

revenues received by the Compagnie from its second offering of common shares to the public.


{Special Char 183 in Font "Symbol"}

De Lesseps, as President-Directeur of the Compagnie, was given 1000 paid-up common shares.


{Special Char 183 in Font "Symbol"}

In 1883, $1,000,000 was paid to the founders from a "profits

account," even though none was realized by the Compagnie.


{Special Char 183 in Font "Symbol"}

The Government of Colombia was paid 750,000 francs in accordance with the terms of the Wyse Concession.



9

According to Fobres-Lindsay, in Panama and the Canal Today, most of the founders' return on investment was taken out of the first $20,000,000 received from the public subscription of common shares.

In addition to their immediate cash benefits of 2,000,000 francs, the founders were to receive 15% of the net profits of the Compagnie based upon the anticipated 90,000,000 franc annual revenue the Panama Canal was expected to earn when completed. On the Paris Bourse, one Part -de Fondateur share sold for as high as 360,000 francs because speculators envisioned vast profits once the Panama Canal was completed.

By 1883, the founders of the Compagnie Universelle each netted $716,000 and the directors, $186,000 out of the profits (which later was increased by 3% for the directors).

Also, 12,000,000 francs was paid to the American Committee (Comite Americain) that was formed in New York City on July 7, 1880. This Committee, according to Johnson, in Four Centuries of the Panama Canal, consisted of men prominent in financial and political circles whose purpose was to bribe or influence legislators and the media into molding American acceptance of a French firm building a canal across Panama in flagrant defiance of the Monroe Doctrine.

The Committee also employed a legion of lobbyists to defeat any Congressional legislation to construct a canal under American control across Nicaragua, and to insidiously attempt to have the Treaty of New Granada, between the United States of America and the Republic of New Granada (later the United States of Colombia) abrogated.

(See the epigraph at the beginning of Chapter 3, "The Compagnie's First Seven Bond Issues, 1882-1888", which explicitly refers to this treaty, to Chapter 10, "Possible Redemption Value of Stocks and Bonds Issued by Compagnie Universelle du Canal Interoceanique de Panama and the Compagnie Nouvelle du Canal de Panama". These


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discuss the significance of this treaty relative to the possible redemption value of the stocks and bonds issued by the Compagnie Universelle and Compagnie Nouvelle, and to the Panama Rail Road Company assets on the Isthmus of Panama, allegedly still in its name, and which allegedly were never transferred to the United States Government on May 4, 1904.)


THE FOUNDER'S CERTIFICATE


The Part de Fondateur au Porteur certificate was associated with the profound diplomatic, financial, political, and sociological history of La Belle France between 1879-1914; with great achievers of the 19th century; with the greatest scandal of the day; and with the 50-mile-long Panama Canal, which, when finally inaugurated by Americans in August 15, 1914, was recognized as the supreme engineering feat of the ages and the greatest manmade waterway in the world. (The distance saved by the Panama Canal between New York and San Francisco is 7,853 nautical miles.)

The Founder's Certificate of Shares to the Bearer (Part de Fondateur au Porteur), as follows, reveals that the Compagnie Universelle du Canal Interoceanique de Panama, which was incorporated on March 3, 1879, was capitalized in the amount of 300,000,000 francs, with 600,000 shares (parts) offered at 500 francs per share.

English language translation of the founder's certificate is provided in the Opinion of the Attorney General Upon the Title proposed to be Given by the New Panama Canal Company to the United States of America, 1902.




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DESIGN OF THE FOUNDER'S CERTIFICATE


The light yellow certificate, 270mm x 327mm from border to border, has four intricate border designs around its perimeter which parallel each other. Each certificate, in addition to its obvious title, has an imprint reading: "COMPAGNIE UNIVERSELLE DU CANAL INTEROCEANIQUE DE PANAMA" in black block letters.

In the center reads, "PART DE FONDEUR AU PORTEUR," in black block letters which are 10mm high

At the bottom is a 56mm x 263mm block in which appears the Extraits des Status (By-laws) of the Compagnie.

The certificates were designed and printed by the Societe Anonyme de Publications et Periodiques--P. Mouillot, 13 Quai Voltaire, Paris, under Order No. 1970.


SlGNATURES, VALlDATIONS,

WATERMARKS, AND CANCELLATIONS

ON THE FOUNDER'S CERTIFICATE


In the exact center of the certificate there is a 6mm x 40mm shaded block for a printed serial number, which appear in black.

Each certificate, when issued, was embossed with a 39mm-diameter stamp in which appears inside its perimeter: "COMPAGNIE UNIVERSELLE DU CANAL INTEROCEANIQUE DE PANAMA" and "P de F' inside of two small decorative ovals.

A watermark reading: "COMPAGNIE UNIVERSELLE DU CANAL INTEROCEANIQUE DE PANAMA" appears in various heights.

Each certificate was validated by the signature of two Compagnie administrators. Many also have been noted with the ink signature of


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Charles A. de Lesseps, who was Ferdinand's eldest son and Associate President-Directeur of the Compagnie. Occasionally, an ink signature of Comte de Lesseps appears on founder's certificates.

Upon its execution, each certificate was rubber stamped with a 28mm-diameter French Government revenue marking to indicate that a five- centimes-value tax was collected for every 100 francs of face value "ACTION ABONENT" (share subscription).

After the Compagnie's liquidation in 1889, another validation was affixed to available Part de Fondateur au Porteur certificates. It is mentioned in Chapter 5, "How Overprinted Lottery Bonds were Used During the Liquidation of the Compagnie Universelle."


CONDITION AND SCARCITY OF THE

FOUNDER'S CERTIFICATES


The Part de Fondateur au Porteur certificate issued by the Compagnie Universelle du Canal Interoceanique de Panama appears not to have been of the best quality paper, as many copies observed have shown considerable damage and wear.

However, since less than 75 of these particular fiscal papers are estimated to exist, most serious students of Panama Canal memorabilia would accept them in any collectible condition.

Compagnie Universelle du Canal Interoceanique de Panama Part de Fondateur au Porteur certificates are therefore extremely rare. Only 9,000 were issued. As an "au Porteur" (bearer) share, each one was supposed to have been destroyed upon redemption, but, as mentioned, a few canceled and uncancelled issues have survived.

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POSTSCRIPT


According to an October 16, 1986 letter from the National Archives, Washington, there are no bonds or stocks within its repository that were issued by the Compagnie Universelle du Canal Interoceanique de Panama (1879-1889) or by the Compagnie Nouvelle du Canal de Panama (1893-1904). Only a few of the most common of the Compagnie Universelle common stock and a few of its bonds exist in museums throughout France or Europe, and none of the Compagnie Nouvelle.

The balance of the certificates are the in portfolios of scripophilatelists or are held by collectors of Panama Canal memorabilia.

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