In 1879, the Compagnie Universelle du Canal Interoceanique (The Panama Canal Company) was formed by Ferdinand de Lesseps of France, the builder of the Suez Canal. His plan was to build a sea-level canal across the Isthmus of Panama and in March 1880, de Lessups visited San Francisco to help drum up American financial support, presenting his overall plan at a meeting of the City’s Board of Trade.
Work on the canal began in 1881 under de Lessup’s guidance with French contractor Couvreux and Hersent. Dredging was to begin in at the end of the year, after preliminary work to clear vegetation and build wharves, housing, and hospitals had been completed. De Lessups' hopes were high that millions of cubic feet of dirt could be moved in short periods of time. Actual progress on the canal, however, would be far slower.
According to reports, Huerne, Slaven and Co. of San Francisco were under
contract with the French company to construct 20 villages along the isthmus route using California redwood. Next, they were scheduled to begin dredging the canal in 1882. In an 1880 directory, Prosper Huerne, a personal friend of de Lesseps, was listed as an architect doing business at 126 Kearney, though elsewhere he is listed as a civil engineer. Henry B. Slaven was listed as proprietor of the pharmacy at the Baldwin Hotel at Powell at Market. However, he and his brother Moses A. Slaven at some point had dredged the Sacramento River to deepen the channel.
The lack of progress in canal work delayed the start of dredging for 14 months. By October 1883, Huerne and Slaven decided to abandon the project before work had began. During the next phase, 1883 through 1885, canal work would be performed by large number of small contractors under the direction of the Panama Canal Company itself.
Specific information about Joost’s involvement in the French phase of Panama Canal construction is sparse, at best. Some historians have referred to Joost's association with a "California Dredging Company." Irvine states,
“When the Panama canal project was first undertaken by Mr. De Lesseps Mr. Joost became one of the organizers of a company to contract for fourteen million dollars to be expended in dredging. This enterprise proved a financial success. Mr. Joost’s profits amounting to eight hundred and fifty thousand dollars in 14 months.”
That would be a cool $21 million today.
One would expect such success to be broadcast throughout local media. Yet, the San Francisco Call, Daily Alta California, San Francisco Chronicle, and New York Times essentially remain silent on the topic. In fact, after much searching, and while other dredging contractors are mentioned in historic accounts, there seems to be no specific information about a California Dredging Company or Joost’s involvement.
However, there are newspaper accounts that the Joost Brothers (Behrend and Fabian) invested in the American Dredging and Contracting Company of New York. The company was organized in 1882 under M.A. and H.B. Slaven, apparently not long after Heurne and Slaven had abandoned their earlier contract with de Lesseps. Other principle investors in the company included real estate agent Lloyd Tevis, William T. Coleman, M. Tisdale, Charles Hanson, and Joseph A. “Donohoe” (likely James Donahue of the Union Iron Works). In 1884, future mayor of San Francisco James D. Phelan was serving as the company’s vice president.
Under a $17 million contract with de Lessups, the American Dredging and Contracting Company worked on the Atlantic side of the canal at Colin. According to reports, they were earning 30 cents for every cubic yard moved 200 feet. The company was using the “Hercules Dredger,” innovated in California and with a capacity to dredge 400 cubic yards per hour. American Dredging and Contracting claimed they were able to work, on average, 12 hours daily. Assuming they worked 7 days per week, this would amount to $10,000 each week. After one year, a single dredger had the potential to generate $524,000, or $13.6 million annually today.
By 1888, American Dredging and Contracting Company still had $5 million worth of work to complete. Over the previous two years, they claimed they had declared 100% dividends. It was believed “in well-informed circles” that the Slaven Brothers had personally made about $3 million (about $78 million today) on their investment. By the time their involvement with the canal was complete, the company had dredged the opening of the canal from Colon to beyond Gatun, a distance of over eight miles.
It would be the only bright spot during the French period of construction. For many reasons, ranging from cost overruns, difficult terrain and geologic conditions that were not well understood, and exposure to deadly diseases such as malaria and yellow fever leading to thousands of deaths, the French effort to link the Atlantic and Pacific would be a dismal failure.
As valuable as shares of American Dredging and Contracting Company had become, it may be no surprise that several suits were brought against H.B. Slaven between 1888 and 1893. They all appear to have been related to alleged breaches of contract in which Slaven had made promises to sell additional shares to investors but had never followed through. Accusations were made against him in association with both Heurne and Slaven as well as the American Dredging and Contracting Company that he wanted to keep the majority of shares to himself.
In one suit, principal investor Charles Hanson claimed Slaven owed him nearly $1.3 million. In this trial, Fabian Joost,
“… was called as a witness to prove the amount of profits which the Slavens must have realized from their shares of stock in the American Contracting and Dredging Company, including the 2000 shares for which Hansen subscribed, and to which he now asserts a claim of ownership. Joost said that at the time the company was formed he and his brother, at the solicitation of the Slavens, subscribed for 500 shares of stock, for which they paid $30 a share, or in all $15,000. Subsequently they made an additional subscription of 500 shares in conjunction with the Slavens, and to secure their portion of the purchase price executed to the Slavens a promissory note for $7500. A year or so after this second subscription the Joost Brothers, at the solicitation of the Slavens, relinquished to them the 250 shares for which the note had been given in consideration that the instrument should be canceled and legal interest paid on the principal during the time it remained invested. Hardly had this transaction been completed, however, when extensive dividends were declared on the stock. On the 500 shares which they still retained, Mr. Joost testified that he and his brother between December 21, 1885, and November 22, 1888, realized dividends amounting to $167,500. On this basis, therefore, the Slavens, who held about 11,000 shares, would have realized on their investment a net profit of $3,685,000.”
Somehow, Behrend’s relationship to the Panama Canal story has become somewhat muddled with the passing of time. Did a “California Dredging Company” actually exist or was it a “California company” named the American Dredging and Contracting Company whose principle investors were from California? Was there a dredging agreement between Behrend Joost and de Lessups for $14 million, or were the Joosts and others part of a dredging subcontract for $17 million? Based on Fabian’s testimony, the Joosts appear to have been involved with Panama Canal work for about one year, not too far off from the 14 months reported elsewhere. While they walked away with at least $167,500, it’s far less than the $850,000 described in Behrend’s biographies.
Did Fabian undervalue their shares during testimony? Did they own more American Dredging and Contracting shares than revealed under oath? Had the Joosts made additional investments in Slaven's first venture, Heurne and Slaven, that in the end made up the balance of the $850,000? These and other unanswered questions require additional research for confirmation. Regardless, it is clear that the Joost Brothers, as historian Root states, “had made some easy money.” Walking away from the Panama Canal with at least $4.3 million based on today’s values, Behrend certainly had more than enough to move on to his next phase of investment: establishing San Francisco's first electric railroad, the San Mateo and San Francisco Railroad, that would bring home buyers to his new residential property in the rural Outslide Lands, the Sunnyside.