How America Shrank the World
On this day in economic and business history...
The Panama Canal was a dream of sailors and statesmen alike almost from the day the narrow isthmus connecting North and South America was discovered. As the shortest land-bound point between the Atlantic and Pacific, it made an ideal site for any waterway that might be constructed to link the two oceans. However, the wretched conditions of Panama's deep jungle stymied all efforts to build a canal for centuries -- including the notable disaster of a French-led construction effort that lost billions of dollars (in real terms) and cost thousands of lives in the 1880s -- before the United States finally linked the Atlantic and Pacific oceans on Oct. 10, 1913. That day, a ceremonial button-press from the White House blew apart the last earthen barrier in the middle of Panama, as recounted in The New York Times:
With an explosion which shook the surrounding hills and threw huge rocks high into the air eight tons of dynamite were set off this afternoon by President Wilson touching a button in Washington, more than 4,000 miles away. Gamboa dike, the last obstruction in the Panama Canal, was swept away, and the dream of centuries became a reality.
Following the explosion at two minutes past 2 o'clock the waters of Gatun Lake, which have been flowing slowly into Culebra Cut for the last five days through five pipes thrust through the dike, rushed into the great cut, and the Panama Canal was completed except for the finishing touches and the dredging and widening of the channel.
The path to American completion of the canal had taken a decade and a revolution, which severed Panama from Columbia in 1903. This rebellion, supported by American warships, gave the U.S. the favorable treaty conditions to make use of the unfinished French effort, which it had acquired in 1902 for the cut-rate price of $40 million, or about one-seventh of what France had spent in the 1880s.
American interests swooped into the new nation and began construction, but first chief engineer John F. Wallace made many of the same mistakes as the French, which particularly included a failure to account for the tough jungle conditions in which his men would work. More disease and death followed, and by the end of the first year of construction, the U.S. had plowed another $128 million into the canal effort but had little to show for it. John Stevens replaced Wallace and quickly realized that the work would be better served if the workers were healthy. PBS' American Experience explained:
Dr. William Gorgas, who had helped to eradicate yellow fever in Havana years before by killing the mosquitoes that carried it, directed sanitation efforts. Workers drained swamps, swept drainage ditches, paved roads and installed plumbing. They sprayed pesticides by the ton. Entire towns rose from the jungle, complete with housing, schools, churches, commissaries, and social halls. ...
With sanitation efforts complete, Stevens began work on a scale never before witnessed. Gigantic Bucyrus steam shovels scooped tons of earth. Railroad cars ran continuously on a double track, dumping the tailings to form the Charges dam.
By December 1905, yellow fever had been officially eradicated on the isthmus. In November, 1906, [President Theodore] Roosevelt himself visited the canal, posing at the controls of a Bucyrus shovel. It seemed that the project could not fail.
Despite the modernization and sanitation efforts, the Panama Canal still posed the foremost engineering challenge of the day. Nearly 6,000 workers died in the American construction efforts, which cost more money in real terms (nearly $9 billion) than was spent on the French effort and involved the removal of 4.6 billion cubic feet of earth -- the equivalent to hauling away 124 Empire State Buildings' worth of material. But when it was done, the canal shrank the world. Ships traveling from New York to Los Angeles enjoyed a route half as long as they had once taken around the tip of South America. Travel from the West Coast to Europe, or the East Coast to Asia, also experienced dramatic reductions in transit times worth thousands of nautical miles.
The Panama Canal finally opened to public traffic 10 months after its unofficial "completion," on Aug. 15, 1914, but the world was by then preoccupied with another earthshaking event: World War I. The Panama Canal's 1 millionth ship passed through its locks shortly after the 96th anniversary of its opening in 2010, and an expansion project planned for completion in 2015 will ensure that this Wonder of the Modern World can accommodate at least a million more.
UnitedHealth joined the New York Stock Exchange on Oct. 10, 1991. The fast-growing health insurer had been publicly traded for seven years, and between its IPO and its graduation to the Big Board, UnitedHealth had already rewarded shareholders with a near-1,100% return. By this point, UnitedHealth was already one of the largest American HMOs, or health management organizations, with more than 1 million members reported shortly before it moved up to the NYSE.
UnitedHealth's path to the Dow Jones Industrial Average kicked into high gear at that point. By the time it became the Dow's first and only health insurer in 2012, UnitedHealth had outperformed virtually every stock on the index from 1991 onward, including dot-com darlings, retail titans, industrial kingpins, and consumer-goods superstars. This shouldn't be surprising, considering the fact that UnitedHealth beat its future index peers by a huge margin in terms of earnings-per-share growth during this period -- from 1991 to 2012, the company's EPS grew by 7,500%. This outperformance continued during UnitedHealth's first year on the Dow, as it remained one of the index's best performers during an impressive period of bull-market growth.
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