The great canal debate


Who Stole What?

The U.S. Taxpayers Have the Only Legitimate Claim to the Canal
Don Ernsberger

The current controversy regarding the national ownership of the Panama Canal Zone provides libertarian theorists with an interesting model for applying general principles of property ownership and individual rights to a concrete current world situation. As in the case of the Palestinian dispute, libertarian analysis can peel away much of the emotion.

The government of Panama wants the Canal turned over to its control so that the sore of US imperialism in Central America is eradicated. President Carter, and perhaps Congress, appears willing to grant the Panamanian demands over a longer term. Many individuals in the United States who on principle oppose imperialism, and even the State itself, have joined the movement to have the Canal handed over.

To examine the relationship between Canal Zone ownership and individual rights, certain basic premises must first be established.

• Property ownership must always be in the hands of individuals or groups of individuals who pool individually owned resources on a voluntary basis. Areas of land cannot be owned by ethnic, religious, or cultural groups independent of individual ownership established by members of those groups.

• Government, where established by groups of people, can act as agents only on properties owned by consenting citizens. Land areas adjacent to or even surrounded by property owned by consenting citizens remains virgin land and cannot be governed, or remains under the control of the nonconsenting owners.

• Virgin land can be taken for use by individuals or groups of individuals only. When individuals from distant areas establish property ownership by transforming virgin land, they need not accept local government agents as their own.

• Properties "owned" by States are owned, in moral fact, by citizens compelled to pay for the costs of the State or by persons whose property titles were ignored in the original transfer of "ownership" to the State.

• When State property is transferred to a third party, the original owner is entitled to full ownership of what was taken. The third party is entitled to additional value given the land, and the party causing the theft (the State and its supporters) is entitled to pay the costs of damages to both parties.

Before we try to apply these principles to the Panama Canal Zone question, a brief history of the area is in order.

During the 19th century, the area known as Panama was controlled by the government of Columbia. Panamanians, with a separate culture, accepted this condition, as Columbian rule was distant and had little or no impact. During the latter half of the century, various world powers approached Columbia for permission to purchase or lease an area of the isthmus for the purpose of building a canal from the Atlantic to the Pacific.

At the turn of the century, the present area occupied by the Canal Zone was the scene of competition between a privately owned American railroad company and a private French canal-building corporation. The American company—the Panama Railroad Co.—with Columbian permission had completed a rail line from the Atlantic coast to the Pacific with loading facilities at each end the line. The French company, after spending an enormous sum to construct a canal, was on the verge of bankruptcy. Both of these companies had formal arrangements with the government of Columbia permitting use of isthmus lands, and, most important, both recognized the dismal financial future of their current endeavors. Both firms were in weak financial shape due to difficult construction problems and costs, disease, and, in the case of the railroad, innate inefficiencies in loading and unloading at each end.

Around 1900, the two companies made an agreement to seek US government purchase of their assets, and Columbia granted permits so they might each profit from allowing the US taxpayer to build the Canal. Philippe Bunau-Varilla, who represented the French firm, and William Cromwell, representing the railroad, began the traditional practices of business in seeking government aid. Bunau-Varilla visited with GOP power Mark Hanna, while Cromwell contributed $60,000 to the Republican campaign treasury. President Teddy Roosevelt announced quickly that the United States had an interest in a canal in Panama, dropping the plans for one through Nicaragua.

Meanwhile, the stock of the French Canal company had secretly been bought up by a group of US banking interests, including J.P. Morgan and Co., at two-thirds of par value. The only final obstacle was the government of Columbia. A treaty was drawn up by Roosevelt and offered to Columbia. The treaty gave $10 million to Columbia and $40 million to the stockholders of the French company in exchange for US occupation (not ownership) of the Canal Zone. Columbia rejected this treaty, thus inflaming Roosevelt.

The reader will note fundamental principles in action at this point—State ownership of land recognized by both companies in seeking permission from Columbia for their initial constructions (rather than purchase from private owners or virgin-land claim) and by the United States in seeking to buy rights to the zone for $10 million. The second principle underlying this episode in history is that of the mixed economy, wherein private entrepreneurs seek government bail-out of their unprofitable efforts by shifting their losses to taxpayers through political game playing of the sort that has become all too familiar in the 1970's. Now a new principle was to appear in the canal story—imperialism.

With the rejection by the government of Columbia, the efforts of Bunau-Varilla and Cromwell appeared to be sidetracked. Within a short time, however, Bunau-Varilla organized a revolt in the isthmus to create an independent Republic of Panama. The revolt was financed by J.P. Morgan and Co., manned by employees of the Panama Railroad Co., and led by foreign citizens living in the canal area and employed by both firms. Teddy Roosevelt quickly moved to assist the new "Republic" by sending the US cruiser Nashville to protect against a Columbian army sent to put down the revolt. The US government immediately recognized the new government, and within 10 days a treaty was signed giving the stockholders of the French company $40 million and gaining Panamanian permission for US control of the Canal Zone. Now the United States had its Canal Zone, the investors their profit (realizing 130 percent on par), with both companies transferred to the US taxpayers. Over the years there have been treaty changes in rental sums and changes in Panamanian attitudes toward continued US control. Looking at this history has led many to suggest that proper US policy should be to repudiate the principle of imperialism by returning the area to the government of Panama or even to Columbia. Others have suggested that this action would remove a socialistic operation from the US government.

Several moral-historical facts remain, however. The entire area presently occupied by the Canal was, at the time of construction, virgin territory, with the exception of three small villages. All present urban areas within the Canal Zone were built after and because of the Canal. In the case of the villages, two were acquired through voluntary purchases from the Indians living there and, in the other case, the facts are unclear. In any case, the village lands involved constitute a small fraction of the total land used for the Canal Zone. Perhaps 99 percent of the land was unclaimed, unowned malarial swamps, jungles, and rugged mountains. A libertarian analysis of the Canal problem would be quite easy were the Canal owned by private individuals or a corporation, since the acquisition of virgin lands by canal builders in no way violates the rights of individual Panamanians and certainly not any "rights" of the Panamanian people. Of course, the Canal would be the private property of the owner with no strings, rents, or national obligations attached. Regarding the land now occupied by the physical canal, moral ownership emerged when the Panama Railroad Company (privately owned) and the French Canal Company (privately owned) took unowned virgin lands and transformed them. Legal ownership of these areas was then transferred to the US government through purchase with coercively obtained tax funds. It is important to note that at no point did the governments of Columbia or Panama, much less the collective Panamanian people, morally own the land occupied by the present canal. To assert otherwise would assume that governments own all virgin land within their political borders, an assumption no libertarian can support.

The difficulty arises when one recognizes that the Canal was constructed, not by individual property owners, but by the US government. Who, then, are the moral owners of the Panama Canal? Certainly not the nation-state of Panama, which has no justifiable powers over owners it does not represent. Certainly not the Panamanian people, individually or collectively. They received payment for whatever labor they put into building the canal or maintaining it. Certainly not the US government, which acted as an organizing agent for the transfer of coercively obtained tax revenues to the engineering and construction firms that built the Canal.

The moral owners quite properly must be the various taxpayers of the United States who shouldered the cost of the Canal. In theory, it might be possible to pro-rate ownership to these taxpayers or their heirs. Several practical considerations need to be considered, however. While neither the US government or the government of Panama has proper moral ownership of the Canal, the interest of the true owners would best be served by control remaining in the hands of the US government, which allows free-access privileges and which runs the Canal on a self-supporting basis. There is no Panamanian statement on record that they want to take over the Canal in order to uphold the rights of the US taxpayers who financed it. The alternative of handing the Canal over to the Panamanian government switches the Canal into the hands of an unreliable, potentially erratic military dictator. Obviously, the American taxpayer will never get his just due if the Canal is abandoned to the Panamanians.

Until a moral solution can be obtained (such as the US government being persuaded to someday sell the Canal to the highest bidders and reduce the tax rate or pay off debt) defense of absolute American control over the Canal is a necessity.

The libertarian solution to the canal issue must therefore be the following:

• No surrender of control of the Canal Zone to any foreign state; rather

• Conversion of Canal Zone lands to a privately owned corporation selling stock to the highest bidders. This private corporation would be solely responsible for the operation, rate structure and defense of its Zone. Monies received by the sale would be returned to the US taxpayers.

• Under no conditions shall US taxpayers be forced to contribute monies for any costs of running or defending either American-government or privately owned American properties in foreign areas.

If the US government, itself, is to be dismantled someday, then it is best that as much "US government property" as possible be kept out of foreign hands so as to be available for distribution to those who have moral ownership over it: the US taxpayer.

To insist on assaults upon the violators of liberty is virtuous, but those with a passion for justice will demand, first, defense of individual rights under assault.

A cofounder and codirector of the Society for Individual Liberty [SIL], Donald Ernsberger currently teaches high school history while completing work toward his Ph.D. at Temple University. This article is adapted from a pamphlet entitled "The Panama Canal" obtainable from SIL, Box 1147, Warminster, PA 18974.

From Rape to Seduction

Panama and the Shifting Strategy of Empire
William Marina

Teddy Roosevelt:
"Have I defended myself?"

Secretary of War Elihu Root: "You certainly have, Mr. President. You have
shown that you were accused of seduction and you have conclusively
proved that you were guilty of rape."

—In a Cabinet meeting discussing criticisms of the President's actions in
promoting the "revolution" in Panama late in 1903.

After some years of negotiation, representatives of the governments of the United States and Panama have signed treaties concerning the Canal and the Canal Zone. In a recent plebescite the Panamanians approved the treaties by a roughly two to one vote. Despite some "clarifications" of the treaties agreed upon by President Carter and General/ President Torrijos, ratification by a two-thirds vote in that "graveyard of treaties," the Senate of the United States, remains very much in doubt. Linked to an effort to persuade the American people and a number of Senators, the President has indicated he will not submit the treaties until he feels they will be passed, sometime later in 1978. This interim gives all of us a better opportunity to examine the treaties and the circumstances surrounding the Canal issue as an example of the shifting strategy of contemporary American foreign policy.

In a "best of all possible worlds" the libertarian solution seems reasonably clear. The Canal ought to be owned and operated by a private company. Given sufficient traffic and profitable tolls, a second canal might be built to compete for some of this business utilizing, perhaps, the once-recommended route through Nicaragua, or a sea-level canal in Panama. Such an alternative, however, is not presently under discussion, and is highly unlikely to be so at any point in the near future.

In order to appreciate fully what is at issue, some historical background is essential. More important, however, is an understanding of the long-term strategic debate over the parameters of United States' foreign-military policy. The Panama problem simply cannot be understood outside of the framework of that debate. On the contrary, it is a test case for an evolving strategy.

The American Republic was born in the midst of a great western civilization-wide struggle between advocates of a mercantilist-interventionist State and those who favored a minimal to nonexistent government that would allow a maximum of liberty and freedom of action in the marketplace. Both outlooks, and several intermediate ones, were present within the American revolutionary coalition. George Washington represented the former and Thomas Paine the latter. Even in the presence of the wary French, Benjamin Franklin rarely constrained himself from talking of "this rising Empire," which would soon outshine the British. Such mercantilists did not differentiate between State interventionism in domestic, as opposed to foreign relations. It was certainly apparent to these close students of ancient history that an Empire such as many desired was impossible without an enormous increase in government and a centralized bureaucracy characteristic of Rome, China, and other empires.

Government growth more than kept pace with expansion across the continent. As W.A. Williams has pointed out, "By 1826 the government was the largest single economic entrepreneur in the country. It handled more funds, employed more people, purchased more goods, and borrowed more operating and investment capital than any other enterprise." Despite the centralizing tendencies of the Civil War, the middle part of the 19th century saw a partial retreat from this degree of government involvement and economic interventionism. The 20th century, of course, has seen a resurgence of that domestic interventionism. But it would be a mistake to imagine that this growth in domestic interventionism was unrelated to interventionism in foreign affairs. Each war, beginning with the Spanish-American War in 1898, witnessed a surging growth of the State at all levels. When the essentially libertarian critic Randolph Bourne succinctly observed that "War is the health of the State!" he was only summarizing what Bismark and other statists over at least several millennia had long recognized.

Until 1898 the debate over interventionism was far more muted in the area of foreign-defense policy. Very few Americans opposed expansionism, if by that is meant the acquisition of territory filling out the continental United States. Unlike earlier empires, under the Articles of Confederation it had early been decided that new states would enter, after a brief transition period, as territories, on an equal basis with previous ones. What occurred simultaneously under the Constitution, however, was that, while the states remained equal with each other, the national government became increasingly the locus of power.

The debates that did occur were centered around how expansion was to be achieved. One group argued for peaceful and constitutional means. Union with Canada, for example, might be voted by both nations; it ought not to be at the point of a gun as urged by some during the Revolution or the Warhawks in 1812. Such men were not on the whole opposed to acquiring the Lousiana Territory but rather to the questionable constitutional means which Jefferson had employed to do so. Abraham Lincoln criticized the aggressive means used by the Polk Administration to wrest land from Mexico. He was not opposed to Americans settling these lands and later asking to join the United States. In contrast, note the so-called anti-imperialist Karl Marx, writing for an American newspaper, urging the United States in the 1840's to take all of the territory south to the Isthmus of Panama and drag it into the 19th century!

The major, irrefutable point is that during the whole history of civilization, and certainly during the last several hundred years of Anglo-American history, the major opponents of domestic interventionism and statism have also been the major opponents of foreign interventionism and imperialism. The possible foreign/domestic policy positions can be illustrated diagrammatically as follow:

• Domestic Policy
1. interventionism—large, centralized government = C
2. anti-interventionism—small, minimal, decentralized government = D

• Foreign Policy
1. interventionism—imperialism, power, force, might makes right = I
2. anti-interventionism—rule of law between nations, anti-imperialism = A

There are four possible combinations of these positions, as follows:


Only two of the four positions are inherently "stable," as we shall see.

1) D/A—Free Market Anti-Imperialism
This is a "stable" position. That is, D and A do not contradict, but rather complement, each other. I suggest that anyone who does not adhere to this position is simply not a libertarian, either by the logic of definition or by historical example. The number of men who took this position is too long to list, let alone discuss, here. In England the leaders of the domestic anti-interventionism of the laissez-faire Manchester School of Liberalism, such as Richard Cobden and John Bright, were also the "Little Englanders" who opposed British imperialism and colonialism. Bright's comment, "What are we to say of a nation which lives under the perpetual delusion that it is about to be attacked?", is perhaps even more appropriate to America during the years of the Cold War than of 19th century England.

The same was true in America. The backbone of the anti-imperialist movement, and especially the Anti-Imperialist League, at the turn of the century were the advocates of Manchester Liberalism and laissez-faire. It is incorrect to generalize, as William Leuchtenburg did some years ago, that all progressives were imperialists. A number of reformers were opposed to imperialist interventionism. Within the reform movement differences over imperialism tended to be a reflection of views about the role of the State and, even more fundamentally, of one's basic source of values. The anti-imperialist reformers almost uniformly based their system upon natural law while the progressive imperialists turned to utilitarian, pragmatic, majoritarian, statism.

In the several 20th century cases in which the debate over foreign-military policy has erupted into a full-scale discussion, libertarians have formed the hard core of American anti-imperialism. Despite a recent emphasis on the issue, the radical left is a relative late-comer in opposing empire, and rather contradictory in its overall position. Present-day anti-imperialist libertarian spokesmen such as Murray Rothbard and Leonard Liggio are simply, and quite consistently, the latest in a long line going back at least to Moorfield Storey and Carl Schurz.

2) C/I—Neo-Mercantilist Imperialism
Like the libertarian view, this is also a stable position. A large growing domestic interventionism meshes nicely with the role of global policeman. At the turn of the century, when carrying the "white man's burden" was more in vogue, an honest advocacy of outright imperialism, or colonialism, was far more prevalent than today. Teddy Roosevelt, who seldom spoke softly even if he did carry a big stick when it came to small nations, was in his way an astonishingly candid example of this position. While in 1900 there were a few who called themselves "reluctant imperialists," these days it is more frequent to hear denials that global interventionism is really empire. And anyway, it is "necessary" because of the menace of World Communism! We thus find the anomaly that while C/I is the best description of American domestic and foreign/military policy, virtually no one wishes to acknowledge that foreign interventionism is empire, nor that empire is a good thing. To understand how C/I has come to be descriptive of American policies as they have in reality evolved, we must examine more closely the two "unstable" positions which, together, reflect the views of the majority of American political leaders today.

3) D/I—Conservative Imperialism
This position is unstable. The desire for a minimal, relatively free-market government in the domestic sphere is contradicted by the wish for a strong global presence. Even in the domestic field advocates of this position make concessions in specific areas, sometimes because of self-interest, but more often because fundamentally they take an organic rather than an individualist view of society. A beautiful analysis of the way in which the anti-market values of such conservatives leads them into a rhetoric and critique scarcely distinguishable from socialists is found in Raymond William's Culture and Society, a study of English social thought during the last several centuries.

The key to understanding the foreign interventionism of this position is its basic derivation from a kind of super-nationalism of the Stephen Decatur variety. The basic value system is organic, majoritarian statism. While often claiming values of an absolute, religious nature, these in the final analysis become subordinated to an aggressive nationalism which is majoritarian, Statistliterally populist and relativistin practice. Thus we begin to comprehend the world view of a nationalist such as Ronald Reagan, whose interventionism used to be domestic, but has now been transferred to the foreign interventionist sphere.

Such an unstable position seeks equilibrium, and finds it by transforming itself in actual practice into C/I. The demands of a global attack force"Defense"both in expenditures, and more importantly, in structure, undercut the possibility of small, domestic government. Like the Keynesian, who convinces himself that "pump priming" is a temporary expedient (rather than creating the need for more injections, thus making interventionism a permanent condition), the conservative foreign interventionist finds that the resources necessary to maintain a global presence grow ever larger. Once committed to the role of world policeman, no spot on the globe is too insignificant to be left unattended. Eventually it becomes difficult to differentiate between the bureaucracies functioning in the domestic and the foreign military spheres.

4) C/A—Centralized Anti-Imperialism
The final position is also unstable. It is probably not inaccurate to suggest that a great majority of the American people, many liberals, and most radicals, fall within its parameters. More so than in the case of the other unstable position, many accepting this outlook are receptive to a dialogue with those in the libertarian paradigm. This was revealed in the votes in the recent election, and undercuts the myth that the major source of potential libertarians is among the so-called conservative foreign-interventionists. This is understandable once we realize that the value source of such "nationalists" is a relativistic populism linking statism and force.

The 20th century liberal, on the other hand, is not always a relativist. Some stumbled into domestic interventionism from the old, if vaguely understood by them, natural law tradition. A number have become aware that centralized interventionism in the domestic sphere does not solve the problems they imagined it would, but leads to bureaucracy and a loss of control by the citizenry. Equally important, some may have begun to understand that big government cannot be contained in the domestic sphere alone, and eventually undercuts any commitment to anti-interventionism abroad.

With the above comments about the contours of foreign-defense policies as a matrix, we can turn to the specific issue of Panama and the recent treaties. A number of volumes have been written on how the United States acquired the Canal Zone and built the Canal so we can keep the historical narrative to a minimum, integrating what is necessary into an analysis of the problempast, present, and future.

The Panamanians voluntarily joined the Republic of Colombia in 1822. In 1830 Great Colombia was separated into Venezuela, Ecuador, and the Republic of New Granada (later called Columbia). The Panamanians planned to establish an independent nation but were induced to remain a part of New Granada (Columbia) under the constitution of 1832. The vacillation between treating Panama as a minor province and giving it the degree of autonomy always promised, coupled with continued unsettled conditions in New Granada itself, fueled a continuing separatist movement on the Isthmus.

On December 12, 1846 the United States and New Granada signed what became known as the Treaty of New Granada, Article 35 of which guaranteed the "perfect neutrality" of the isthmus and that "free transit" would not be interrupted. The United States also guaranteed the "rights of sovereignty" which New Granada held over the area. In 1850 the United States and Great Britain signed a treaty not to occupy the area, agreeing, in effect, to joint control over any future canal. That same year a very profitable railroad was opened by American entrepreneurs. Given such revenues Panama became the "milch cow" of the Columbian national government. Up until 1903 there were uprisings in the area, an average of almost one a year. American troops intervened on 13 occasions to keep open the right of passage, and thus contributed to maintaining the status quo.

A French company under Ferdinand de Lesseps, the famed builder of the Suez Canal, had begun work on a Panamanian canal in 1879, but work was suspended in 1888 for financial reasons and because of the high death rate due to disease. Its assets were held by the New Panama Canal Company which came into existence in 1894.

American interest in building a canal had been increased by its heightened sense of world power growing out of the Spanish-American War. Beyond a concern for commerce, advocates of Admiral Mahan's theories of sea power such as Theodore Roosevelt argued the need for military reasons. At the end of 1901, as a part of growing Anglo-American collaboration that would mature into alliance by 1917, the British agreed to abrogate the treaty of 1850 with the idea that the United States in building a canal would fortify it and guarantee its neutrality.

Competition now began between a route through Nicaragua as recommended by engineers and the Panama route which Roosevelt had come to favor. The New Panama Canal Company, headed by Philippe Bunau-Varilla, dropped the price for its concession making it slightly more competitive than the anticipated cost of the former. In the midst of much politicking, and rumors of bribes, Congress approved the Panama route with the $40 million payment to the French company provided an agreement could be made with Colombia. Early in 1903 the United States concluded an agreement with Tomas Herran, the Colombian charge, offering $10 million as payment and $250,000 a year rental for a 99-year lease on a 10-mile wide strip across the isthmus.

The Colombians, however, held back from ratification, while the Panamanians again talked of revolution. Funds for the revolution were put up by Bunau-Varilla, who also acquired the authority to negotiate an agreement with the Americans. American forces again intervened in the area, but this time in a different fashion. They made it impossible for the Colombian troops to put down the insurrection. On November 6, 1903, three days after the "revolution," the United States recognized the Panamanian Republic and this was made de jure a week later. A treaty was concluded with Bunau-Varilla on the 18th in which the United States guaranteed the independence of Panama and obtained "in perpetuity the use, occupation, and control" of a 10-mile strip within which to build the canal. All ratifications were completed and the treaty proclaimed on February 26, 1904.

Apart from Teddy Roosevelt himself, few have tried to make his actions appear either legal or moral. Besides the Elihu Root comment above, Attorney General Philander Knox once cut Teddy's moralizing off short by observing: "Oh, Mr. President, do not let so great an achievement suffer from any taint of legality." But semanticist Senator S.I. Hayakawa recently seems to have had the last word: "We stole it fair and square, didn't we?" But the net result was to embitter not only Colombian, and later Panamanian feelings, but also much of Latin America's as well.

The United States had constantly intervened after 1846 with the result that the status quo remained, and so did the tensions making for another revolt. To intervene in any other fashion, as in 1903, meant changing the status quo and thereby violated the guarantee of local sovereignty explicit in the 1846 Treaty. It can be laid down as a general principle that statist interventionism will always create such contradictions.

Quite apart from the bribery of soldiers and officials that occurred, Roosevelt's primary motive appears to have been his intense desire to secure the rights to a canal before the election of 1904. It is true that the Colombians wanted more money than was offered in the Hay Herran Treaty, but they also were concerned with negotiating away sovereignty, which Herran had not be empowered to do. Would it have been impossible to take a little longer to carry through a new agreement?

The agreement signed by Bunau-Varilla spoke of "control" in "perpetuity" rather than sovereignty, and this later became an issue with the Panamanians. Authorities on international law are agreed that neither control nor jurisdiction is the same as sovereignty. To say that the United States exercises "sovereign authority" while the Panamanians hold "titular sovereignty" is to play semantic games.

The best analysis of the arguments offered by those who supported what Roosevelt had done, and which are essentially the arguments offered today by politicians such as Ronald Reagan, is Albert K. Weinberg's Manifest Destiny: A Study of Nationalist Expansionism in American History, one of the great classics in American intellectual-diplomatic history.

The rationalization that eventually emerged was that it was the "paramount interest" of the United States to build and control any canal. But not all Americans thought in this narrow, nationalistic fashion. President Grover Cleveland, the laissez faire, Mugwumpish, anti-imperialist, suggested in the 1880's that any canal be neutralized, and in effect, internationalized. It was only in the 1890's, in a great burst of jingoistic imperialism surrounding the Spanish-American War, that the extreme nationalistic forces gained the upper hand. Some of their utterances were so extreme as almost to frighten off the British from abrogating the old treaty of 1850. The commercial argument almost became submerged in the naval "cult" which literally worshipped the sea power theories of Alfred Thayer Mahan. These "geo-politicians" simply ignored the arguments of many American leaders that, even given the commercial and strategic factors, these would also be best served by neutralization rather than exclusive protection.

Only by appreciating what Richard Hofstadter once called "the psychic crisis of the 1890's" can we understand the enormous frustration of the Jingoes in the face of the Colombian refusal to ratify the Hay-Herran Treaty which infringed upon their sovereignty. In his directly "moral" fashion, Roosevelt simply accused them of blackmail!

Among the literature protesting Roosevelt's actions, none is more succinct than that of Moorfield Storey, president of the Anti-Imperialist League during most of its existence. Storey's The Recognition of Panama amply demonstrated Roosevelt's gross violations of international law. For his part, Teddy deemed his actions "as free from scandal as the public acts of George Washington and Abraham Lincoln."

In order to even attempt to justify his policy, Roosevelt had to turn the paramount argument, as it had generally been used, completely around. Obviously, the interests of Colombia and Panama were more direct than that of the United States, but Roosevelt invoked the higher interests of "collective civilization!" Perhaps libertarians can best understand what had been done simply by citing Weinberg: "Roosevelt thus adopted the principle which has been called the right of international eminent domain." [Italics added]

As even his own cohorts admitted, the legal and moral arguments offered by Roosevelt were simply pathetic. The Congress soon decided that American coastal shipping should pay a lower Canal fee than the ships of the rest of civilization! The Wilson administration later paid what could only be regarded as compensation money to Colombia. As the historian Tyler Dennett remarked of Roosevelt's imperialism: "The saddest aspect of the episode was that it had all been so unnecessary." The rights for a canal satisfactory to all parties could have been negotiated with either Colombia or Nicaragua, thus preventing the hatred of Roosevelt's blatant imperialism which has plagued Americans ever sincebut not before the election of 1904.

Besides the bad feelings stemming from incidents over the years involving either American servicemen or Canal employees, the major cause of discontent is the perpetuity clause, which is interlocked with the whole question of sovereignty. The Panamanians had hoped to get the same terms offered Colombia. Bunau-Varilla, of course, cared little about the Panamanians and was intent on pleasing the Americans and insuring the $40 million. When the Panamanians protested, they were told to take the $10 million to start a government or go back and face a Colombian firing squad.

We are now perhaps better able to understand the role of the treaties in the ongoing debate over strategy and tactics which has occupied American policymakers for most of this century. The treaties will be ratified or defeated in Washington, not Panama. Panama is not a free society. What does it mean when two out of three Panamanians vote for the treaties? Even within Panama there are some important groups opposed to the treaties who are neither Communists nor beneficiaries of the present system. Even the dictator has been unable to silence them completely. But that is not really relevant. From a libertarian standpoint, I would suggest that our position should be determined by what a yes or no vote will accomplish in the long run with respect to the American Empire.

American power since World War Two has given a boost to the strategy of the Isolationist Imperialiststhe descendants of Teddy Rooseveltas opposed to the Collective Internationaliststhose following in Woodrow Wilson's footsteps. Both, however, as C/I types, agreed on a grand strategy of empire. Vietnam, of course, revealed the limitations of the atavistic, essentially military, Isolationist Imperialist approach. The major constraint was that in the final crunch the American people simply would not sacrifice their lives for such "globaloney."

Collective Internationalism has always been the preferred American approach, and this was reinforced by the events in Vietnam. Within the military, in some members of Congress, and in one wing of the Republican Party, Isolationist Imperialism remains a potent force in American life. This is evident from the great mass of the opposition to the treaties which comes precisely from this group.

The most important debate in the last decade was over tactics within the Collective Internationalist strategy groupthe debate between the older Kissinger group on the one hand and the Trilateral Conference on the other. Both groups appear, however, to be agreed on the question of the treaties.

As one looks at the treaties there is a strong motive to vote for them. Regardless of the motives of the Collective Internationalists (keeping the lid on radical social change), they do offer a more equitable situation to the Panamanians. Ratification may prevent further violence there and elsewhere in Latin America as well as damage to the Canal itself.

Despite the seeming liberalism of the treaties, however, the recent "clarifications" necessary because of the strength of Isolationist Imperialist sentiment make it evident that American power to intervene in the Canal is still a real possibility. It is not neutralization in the way in which American anti-imperialists in the late 19th century conceived of the idea, but a phony neutrality. Having nations sign a treaty of neutrality negotiated by two nations, if they wish to do so, is not the same as involvement and accountability by the major powers.

In this regard one hopes some Americans will show as much courage as have some members of the Panamanian opposition. It was the Panamanian independent lawyers who almost single-handedly shot down the draft agreements in 1967 (at the height of the inter-imperial debate in the United States) who recently spoke out against the treaties. They object to an American military presence until the year 2000, and the bilateral pact of neutrality which would permit the United States to intervene in defense of the Canal even after that date if it were attacked by a third power. The most distinguished of these is Carlos Ivan Zuniga, a legalist (and, therefore, opponent of the dictator), who has defended the rights of the people in the past. Zuniga has very perceptively pointed out that the bilateral accord with the United States guaranteeing neutrality is a return to the Treaty of 1846. The more things change the more they remain the same! If the United States honors it as it did the earlier one (see above) then God help the Panamaniansno one else will.

No! The only way to get out of the empire game is to stop. Libertarians have little choice but to oppose the treaties. They do not represent a rejection of empire but its subtle transformation through more sophisticated tactics. But in opposing the treaties, we must make it crystal clear that our reasons for doing so are precisely the opposite of the Isolationist Imperialists like Ronald Reagan and their militarist minions.

More importantly, there is another alternative, developed earlier by libertarian anti-imperialists such as Grover Cleveland and put forward for both the Philippines and Panama at the turn of the century. That this approach was ignored, by such statist interventionists as Roosevelt, led us into the whole, sordid empire syndrome. That alternative involved a true neutralization, and perhaps even internationalization, of the Canal. Bilateral neutrality is nonsense. In a real neutralization binding upon all parties it is simply unnecessary to give one of them the right to intervene. Anyone who broke that agreement would bring down upon himself the wrath and action of all the others.

These free market principles of contract should not be difficult for libertarians to grasp, or extend into the area of defense. Do we believe in a disinterested (?) entity with a right to intervene as enforcer? I should hope not! Until the rise of Isolationist Imperialism at the turn of the century (an atavistic reversion to primitive, aggressive nationalism), the international peace movement in the Anglo-American world had made great strides forward using concepts such as arbitration and neutralization. These were the same leaders who formed the core of the anti-imperialist movement. Certainly, their belief in arbitration, neutralization, and anti-imperialism was simply an extension of the logic of their laissez-faire Liberalism!

Opposing the treaties on this basis, therefore, offers us at least four opportunities:

1. It is imperative to make known, to all AmericansNorth and Souththat our opposition to the treaties is not like that of the Isolationist Imperialists such as Ronald Reagan. (To get the full flavor of Gov. Reagan one should compare his utterances with T.R.'s. Both in their way are guarding the world from Asiatic hordes of one sort or another, but the continuity is remarkable.) But larger even than Panama is destruction of the old, isolationist vs. internationalist paradigm and its replacement by a three-cornered model of (1) isolationist-imperialists, (2) collective interventionists, and (3) anti-interventionists.

2. Much of the same holds true with respect to the more refined approach to empire. The American Empire also needs to be exposed as a part of introducing a new paradigm. Here there is an opportunity to create more libertarians as our model exposes the falseness of the dualism which has helped the supporters of empire more than any other factor in their obfuscation of the issues and confusion of the American people. Whether one calls them Collective Internationalists, Neo-Mercantilist Imperialists, or Open Door Imperialists is less important than coming to understand their outlook and existence.

3. In this fashion Americans can come to understand more clearly the nature and historical continuity of the libertarian anti-interventionist paradigm. They come to see it as the only stable one consistent with the highest ideals in which the American people have traditionally believed. More than that, they will come to see that, far from being negative, libertarians historically have offered alternatives to empire.

4. Finally, in pursuing this policy toward justice, and away from power and empire, within the new paradigm, we enlarge upon our identity and reaffirm our participation in a grand tradition of libertarian principles dating back beyond Anglo-American, or even Western civilization, to the Greek Sophists and the Chinese Taoists.

William Marina is professor of business, communication and history at Florida Atlantic University. A Hispanic-American, he has written and taught on the subject of American foreign policy for the last 15 years.

The Treaty: A No-Win Proposition

Craig Roberts

I believe that the Panama Canal treaty that the administration has brought to the Senate is anti-libertarian, because (1) it is the product of an elitist foreign policy, (2) it weakens a country that is relatively free and strengthens a country that is relatively unfree, and (3) in pushing the treaty the administration shows every intention of bypassing the congressional appropriations process and violating Section 3, Article IV of the Constitution. I will comment on each of these points.

Public opinion polls show that a great majority of American people are opposed to giving up the Panama Canal. In deference to this overwhelming public sentiment, Robert Byrd, Majority Leader in the Senate, has delayed taking up the treaty before January. In the meantime, he suggests, the administration needs to sell its case and get "a substantial change in the polls." Obviously, a treaty that is opposed by a great majority of the people was negotiated without even the thought of their participation in mind. It is symptomatic of the elitist character of our foreign policy that its architects have no compunction about neglecting the values and participation of the American people. It is not libertarian to make decisions for people and then attempt to push them down their throats.

The cause of liberty in the world is not advanced when it is demonstrated that the representatives of liberty give in to the demands of insignificant dictators. The cause of liberty is not advanced when American diplomacy is so successful in focusing upon the United States the world's concern with imperialism. How did we get into this spotlight at a time when the second greatest imperialist power of recorded history occupies entire countries and has brought into our vocabulary new words conveying new concepts such as "Finlandization"? From the Soviet standpoint, one cannot imagine a more successful American foreign policy.

For the Soviet government, which is certainly not a libertarian one, our foreign policy is a double boon. Not only does it place us in the imperialist spotlight, it also dramatizes that it is the United States that gives in to demands. The canal treaty underlines that the Russians never give up an inch. The incentive system that American diplomacy has established for the world is clear: There is no pay-off in making demands on the Soviet Union. There is a pay-off in making demands on the United States. It is the incentive system that American diplomacy has established, rather than the form of third-world governments, that strengthens the cause of tyranny by enlarging the diplomatic line-up with the Soviet Union.

With such an incentive system, it is pointless for Senator Pat Moynihan to demand, as he did in the August 1977 issue of Commentary that

the new nations must be made to understand that our commitment to them depends on their ceasing to be agents of the totalitarian attack on democracy.

The Senator is demanding that poor nations give up material gain for the sake of principle. He is demanding that they not play by the incentive system that American diplomacy has established. As a simple matter of economics, he is wasting his time.

What kind of foreign policy "success" is it that turned an American global strategic asset into a Latin American political symbol? The way the State Department has structured the issue, the United States is in a no-win position. We either lose the canal with all that that implies for the escalation of demands world-wide against a country that is relatively free, or we become the imperialist bogeyman with no right to chastise Soviet adventures. The situation is really even more difficult, because if the State Department and its coterie of third-world partisans lose in the Senate, the very architects of our diplomacy will themselves lead the attack on the United States.

Section 3, Article IV of the Constitution provides that Congress—that is, both Houses—shall have power "to dispose of and make all needful rules and regulations respecting the territory or other property belonging to the United States." As Senator James Allen has put it: "While obviously the Executive has the power to negotiate for the acquisition of territory and property by treaty ratified by the Senate, many serious scholars of the Constitution are of the view that territory or property may be disposed of only by Congress itself and not simply by the Executive through the treaty ratification process."

Another dispute with the Congress involves the matter of monies that the treaty provides Panama. Many feel that the congressional appropriations process has been bypassed. The Administration's cavalier attitude toward the institutions of liberty is not libertarian.

I doubt that the cause of liberty is furthered by weakening the political base of the relatively free, regardless of how impure or imperfect that base may be and regardless of how magnanimously libertarian a weakening action may seem to be.

Dr. Roberts is a U.S. Senate staff member, a Fellow of the Hoover Institution at Stanford University, and Adjunct Professor at George Mason University.

A Canal Free-Zone

Hans F. Sennholz

Distinguished free-market economist Hans F. Sennholz has issued the following proposal under the auspices of the Citizens Cabinet, in which he serves as shadow Secretary of the Treasury.

It was a serious mistake for the US government to acquire title to all privately owned land and property in the Canal Zone from individual owners. I favor the immediate liquidation of this US government monopoly. All property should be owned privately regardless of the nationality or language of the owner.

The Canal itself, which the US government bought in its early construction stage from the French Canal Company for $40 million, should be returned to individual ownership regardless of the nationality and language of the stockholders. US government ownership not only breeds political conflict but also is wasteful of US taxpayers' money. From 1904 through June 30, 1971, the US government spent $5,695 billion on the canal enterprise. Private management rather than bureaucratic operation assures the most efficient use of economic facilities.

The Canal Zone should be a free zone within which goods from all countries may be landed, handled, manufactured and reshipped without the intervention of any economic authorities. It should be an American Free State that offers asylum for the refugees from political intrigue and endless turmoil that characterize that part of the world. But above all, it must be free of US labor laws and economic regulations, which would soon make it totally dependent on US doles and subsidies.

The sole function and responsibility of the US government must be the defense of the Canal state from foreign aggression. As the US is the only viable military power that is capable of defending this vital gateway of the oceans it must not shun this responsibility. The Canal must not become a pawn in power politics, not even for Panamanian dictators.