*The Big Ditch*

by on December 13, 2010 at 7:42 am in Books, Economics, History | Permalink

The authors are Noel Maurer and Carlos Yu and the subtitle of this excellent book is How American Took, Built, Ran, and Ultimately Gave Away the Panama Canal.  In the old days they might have called this book The Panama Canal.  Excerpt:

In 1920, when the Panama Canal first opened to commercial traffic, real freight rates between Britain (Liverpool) and the West Coast of the United States (Portland, Oregon) dropped 27 percent.  In 1921, the canal's first year of operation, real shipping costs dropped another 35 percent…by 1922, shipping costs had fallen 31 percent below their prewar average.

Within a few years, oil prices in California and Texas had converged.  The authors estimate a social rate of return of nine percent for the first two decades of the canal's existence and they do include the costs of defending it.

In my view, whether as tourists, economists, or historians, people do not spend enough time thinking about the Panama Canal.  Here is the book's home page.

1 Scoop December 13, 2010 at 4:57 am

I'd argue that the Erie Canal is even more under appreciated. Its construction cut the price of transporting a ton of freight from Lake Erie to New York by more than 90 percent — $100 to $9. This made it economical for the first time in history to transport non-perishable food over huge distances. Incredibly efficient food producers from the most fertile bits of America undercut European growers so much that the price of land plummeted, which undermined the traditional power base of Europe's aristocracy. Meanwhile, the ships that took food over to Europe were mostly empty on the return routes, so they slashed the cost of shipping things east, which made it pretty cheap to immigrate to America and spurred lots of people to do so. All because of a 363 mile canal.

2 dearieme December 13, 2010 at 6:21 am

"This made it economical for the first time in history to transport non-perishable food over huge distances": apart from the big rivers? Was food never carried down the Nile, Yangtze, Indus ……?

Even in little Western Europe, if it's true, as some historians say, that the legions on the Rhine were fed with corn from Roman Britain, that's a decent distance over fresh and salt water.

3 Bernard Guerrero December 13, 2010 at 6:28 am

FYI, it's Carlos Yu. Not that he'll appreciate my making it easier for people to find him. :^)

4 Michael G Heller December 13, 2010 at 7:07 am

This must be the last-ditch effort to write definitive interpretation of Panama Canal history (*every* chapter is a ditch, except the irrelevant one). The book surely must be good. A couple of points: The US gave the Panama Canal away before expensive upgrading. I’m not saying that was the reason it gave it away, but the need for dredging and additional locks would have been predicted. For decades the width of the Culebra Cut of the Panama Canal effectively determined the global size for car carriers, and container and refrigerated ships. However, the Suez Canal is an alternative route. Climate change might open up the North-West Passage. Also container ports in Mexico and Canada could provide competitive alternative routing. Even in an expanded Panama Canal some of the biggest ships, such as the Emma Maersk which carries 11,000 twenty-foot containers (more than twice the Panama maximum) still might not scrape through. In any case, port authorities up and down the US east coast will need to spend spend spend on dredging and bigger cranes. Even if true that economic profit was the overriding or ultimate motive for imperialism and then for giving up neo-imperial ownership, remember that — irrespective of the accumulated quantity of facts, and irrespective of momentary agreement about the quality of the empirics and data — this is only ever a stylized perception on the part of historical actors and contemporary researchers, subject to testable law of unintended consequences. I hope this is not another book whose main purpose is to claim that new facts (or new stories about facts) necessarily trump time-tested logic.

5 dirk December 13, 2010 at 9:29 am

"In my view, whether as tourists, economists, or historians, people do not spend enough time thinking about the Panama Canal."

Colombians spend a lot of time thinking about the Panama Canal. Too much, I think.

6 David Zetland December 13, 2010 at 9:56 am

Give away? More like give back.

Note that the US recovered all costs (via tolls) before it gave the canal back.

7 iolanthe December 13, 2010 at 4:39 pm

I must have missed something in the comments (and book title). I had always thought that Panama is a sovereign nation so at the end of the day it gets to decide who owns assets on its territory regardless of who built them and when. I'm finding it difficult to imagine circumstances where the US would not have to cede control if that was what the Panamanians wanted (and it seems they did).

8 athEIst December 13, 2010 at 7:20 pm

This made it economical for the first time in history to transport non-perishable food over huge distances": apart from the big rivers? Was food never carried down the Nile, Yangtze, Indus ……?

The Mississippi!

9 Bartman December 13, 2010 at 8:39 pm

I had always thought that Panama is a sovereign nation

Panama is, but the Canal Zone, which consisted of the canal and five miles of land on either side, was a US territory until 1979. Had its own flag, its own government, its own police, its own courts, and so on.

As to whether we were obligated to give it back, ask yourselves if the Cubans would like Guantanamo back.

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