Panama City History

In 1519, Panama City became the first city that the Spanish founded on the Pacific Coast of the Americas, and its Pacific orientation coupled with its location on a narrow isthmus led to a prosperous future. Only a decade earlier, Vasco Nuñez de Balboa had discovered a new ocean he'd dubbed "Pacific." Exploration of the Pacific Ocean was fairly limited, but in 1532 Francisco Pizarro sailed south to what is now Peru and conquered the Inca Empire, which had a treasure trove of gold and silver and a network of productive mines.

En route to Spain, Pizarro brought his plunder to Panama, and the former fishing village quickly gained prominence in the Spanish colonies. South American gold and silver were shipped to what is now called Panamá Viejo (Old Panama), from where it was carried across the isthmus on mule trains and river boats, and then loaded onto galleons for the trip across the Atlantic. Those same galleons carried European goods for the southern colonies, which crossed the isthmus in the other direction. Panama City grew rich, with cobblestone streets, mansions, and churches with altars covered in stolen gold, but that wealth soon attracted the attention of pirates. In 1671, the city was plundered and razed by the English pirate Henry Morgan (hence the ruins of Panamá Viejo). The survivors subsequently relocated to a small peninsula, now Casco Viejo, which was deemed easier to defend. Though it was fortified, the Spanish monarchy changed the shipping route, sending its gold around Cape Horn instead.

With the departure of the Spanish fleet, many merchants abandoned the city, which slipped into a prolonged depression. The colonies won their independence from Spain in 1821, and Panama became a province of Colombia, but nothing improved until the 1850s. In response to the California Gold Rush, an American company built a railroad across the isthmus as part of a steamship route between the eastern and western costs of the United States that was used between 1855 and 1869. The enterprise was not only a boon to Panama's economy, it also marked the first of several waves of immigration of foreign laborers, which included the city's first Chinese immigrants. The inauguration of the U.S. Transcontinental Railroad in 1869 made the Panama route obsolete, and the city again slipped into a depression, but was revived in 1880 by the French, led by Ferdinand de Lesseps, who orchestrated the first attempt to build an interoceanic canal. Though de Lesseps's efforts failed within a decade, they had a lasting effect on Casco Viejo, which the French refurbished.

Modern Panama City's development began with the arrival of the United States, which helped the country gain independence from Colombia, then demanded a 10-mile-wide slice of the isthmus. The Canal Zone was an American colony fenced off for most of the 20th century, but in accordance with the Panama Canal treaties, signed by Jimmy Carter and Omar Torrijos in 1977, it has since reverted to Panamanian control. The inauguration of the canal in 1914 led to the birth of a significant service sector in Panama City, which has only expanded since then to include major shipping and banking sectors.

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