History: The First Settlements

Panamá’s first city was the first European settlement on the New World’s Pacific coast, founded by Pedro Arias de Avila (Pedrarias) as Nuestra Señora de la Asuncion de Panamá on August 15, 1519. Two years later, as it became the storehouse for Panamá’s plundered gold, Spain decreed it a city and the capital of Castilla de Oro. In 1533, Francisco Pizarro murdered Inca ruler Atahualpa and seized $100 million in treasure, the first in the flood of Peru’s wealth that would pass through Panamá. Gold, silver and jewels left the isthmus for Spain and trade goods from Europe arrived for shipment on to the newly established Spanish Viceroyalty in Peru.

In 1671, notorious Henry Morgan, with a force of 2,000 privateers, landed on the Caribbean coast and captured Fort San Lorenzo at the mouth of the Chagres River. Planning to sack Panamá City, Morgan and 1,200 of the men made their way across the isthmus, a journey that took 10 days. But word of their impending arrival had reached the city and, by the time they got there, many residents had fled, taking most of the treasure with them. Within hours after Morgan and his men defeated the soldiers guarding the city, it began to burn. Panamá was completely destroyed in the conflagration, which spared only one church and the massive stone walls of the city’s most imposing structures. Morgan and his barbaric men stayed in the ruined city for almost a month, torturing the remaining residents and holding them for ransom. But he overlooked the greatest treasure of all, a magnificent tooled gold altar disguised beneath coats of whitewash and paint. In 1677, the altar was removed to the Church of San José in Nueva Panamá, now called Casco Antiguo, where it remains today.

Three years after the conflagration, Nueva Panamá (New Panamá) was founded in a more defensible position on a rocky peninsula jutting into the sea near the base of Ancón Hill. With Portobelo and the Camino Real under constant pirate attacks, the Spanish weren’t taking any chances; the city was built above a high defensive sea wall and enclosed by a massive stone wall with cannon embrasures to protect it from a land approach. New Panamá’s enormous wealth was displayed in its magnificent churches and cathedrals, monasteries, municipal palaces and homes of wealthy merchants. The city prospered for more than half a century, until English pirate Edward Vernon destroyed Portobelo in 1739. The Camino Real was abandoned soon after, when Spain began sending its trade and treasure ships around Cape Horn to the South American Viceroyalty. New Panamá began to decline and, by the end of the 18th century, it had lapsed into a forgotten backwater.

A Reawakening

Panamá City languished for almost a century until jolted awake by, of all things, the California gold rush. Between 1848 and 1869, hundreds of thousands of forty-niners sailed from the eastern United States to the Caribbean mouth of the Chagres River and crossed over the isthmus to Panamá intending to find passage on to San Francisco. But many more ships were arriving on the Caribbean side than departing from the Pacific and thousands of frustrated gold seekers found themselves stranded for days, weeks or even months. Panamá’s stagnant economy surged as local merchants prospered and new hotels and restaurants were built to accommodate the swelling population of stranded gold miners. The Panama Railroad’s construction brought more life to the city and, between 1881 and 1888, the failed French canal company endowed it with several classic French-style buildings.