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History
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The first European city on the Pacific coast when it was founded by the
conquistador
Pedrarias Davila on August 15, 1519, Panama quickly flourished as the base for further conquest along the Pacific and as the point of transit for the vast booty so accrued on its way to the treasure houses of Spain. By the mid-seventeenth century it had a population of some 10,000 and boasted some of the grandest constructions in the New World. The opulence of "Panama the golden" did not escape the notice of the
pirates
then ravaging the Spanish Main. In 1671 Henry Morgan captured the fort of San Lorenzo at the mouth of the Rio Chagres, crossed the isthmus and descended on the city with a force of 1200 corsairs. After a bloody three-hour battle Morgan's desperate band defeated the much larger defending army and seized the city, already in flames after the defenders set light to its gunpowder magazines. They pillaged for three weeks before departing with 600 prisoners and a quantity of loot so vast that 175 mules were needed to carry it back across the isthmus. Known as
Panama Viejo
, the ruins of Pedrarias' city still stand amid the sprawling suburbs of the modern city.
When the scattered survivors regrouped, they opted to rebuild the city on a rocky peninsula jutting out into the bay 10km to the west, a site deemed easier to defend and more salubrious than its swamp-bound predecessor. Founded in 1673 and today known as San Felipe , the new city was heavily fortified against pirate attack, protected by defences built at such enormous expense that the King of Spain was said to scan the horizon from his Madrid palace for a glimpse of the walls of Panama, saying that given the vast quantity of gold spent in their construction they should be visible from any point on earth. Though it never matched the glory of its predecessor (and was all but destroyed by fires in 1737 and 1756), the new city slowly prospered, its fortunes rising and falling with the traffic across the isthmus. The decline brought about by the rerouting of the Spanish treasure fleet around Cape Horn in 1746 was arrested after independence , which made Panama free to trade with the world, and then reversed with the construction of the transisthmian railroad in 1855. The railroad, and subsequently the French and US canal construction efforts, brought immense prosperity and a wealth of new cultural influences that transformed the city and its population. But though the canal confirmed Panama City's importance as a global trading centre, it also restricted its development. Hemmed in to the west and northwest by the US-controlled Canal Zone, the city was only able to expand east along the coast, which it began to do very quickly from about 1920. The introduction of banking secrecy laws in the 1970s led to the rapid expansion of the financial services sector, boosted by a massive influx of narco-dollars from South America. Banking regulations were tightened enormously in the 1990s, but El Cangrejo remains a hive of intrigue and many of its luxury high-rise apartments stand empty, the astronomical rents paid by their fictitious occupants providing a useful means of laundering money.
The
1989 US invasion
devastated the poor neighbourhood of El Chorillo and was followed by widespread looting, but the city recovered quickly, free of the economic sanctions imposed by the US on the Noriega regime. With the return of the last US military bases to Panamanian control at the end of 1999, vast amounts of real estate were made available. Many wealthy Panamanians have moved into homes in the former US-dominated suburbs of Albrook and Ancon, and a major infrastructure development programme is under way in the reverted areas, counteracting to some extent the economic slowdown caused by the loss of the spending power of US servicemen and women. Other useful information
for tourists (each section contains more specific sub-sections): |
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Panama,
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