Panama

This Central American country was occupied by the Spanish from the 1510s and gained its independence as part of Gran Colombia in 1821, becoming an independent republic in 1903. The move to independence centered on Panama's position, which eventually led to the building of the Panama Canal.

Under the Spanish, Panama was ruled initially by a violent conquistador, Pedro Arias de Avila. Panama City was established in 1519 on the Pacific Ocean. Because all goods from Europe going to South America had to be routed through Peru, and because many traders did not want to go past Cape Horn, goods were unloaded in Panama at the port of Colon in the Caribbean and then taken by land to Panama City. Trade to Europe also went through Panama, with much gold from Peru transported in Panama. Consequently, the Welsh pirate and buccaneer Sir Henry Morgan arrived from the Caribbean, sailing up the Chagres River and then going by land to attack and sack Panama City in 1671. In 1739, in the War of Jenkins' Ear, British admiral Edward Vernon also attacked Panama. As a result of this newfound vulnerability, it was regarded as safer to send goods via Cape Horn.

In 1821 Gran Colombia, of which modern-day Panama was the northern part, became independent. The economy of the region was transformed in 1849 by the California gold rush; many people sought to go from Europe to the West Coast of America by crossing Panama. This traffic led to the building of the Trans-Panama Railway, which rapidly became, mile for mile, the most expensive railway in the world for passengers, with the overwhelming majority of passengers and goods going from the east coast to the west coast.

In 1883, following the French success with the Suez Canal, Ferdinand de Lesseps drew up plans to build [Page 1265]the Panama Canal. Despite raising large amounts of money from investors and speculators, he ran into many problems; parts of the building work were delayed, and the plan collapsed. It was left to George Washington Goethals (1858–1928) to use U.S. funds to build the canal, which finally opened in 1914. During both the French and the U.S. construction work, many migrant laborers were brought to Panama from Barbados, Trinidad, and other parts of the Caribbean. The canal became U.S. territory (and remained such until 1979), and the United States purchased the Danish West Indies from Denmark in 1917 to help control and supply the canal.

When the United States started its interest in the Panama Canal, independence movements arose, with the elite in Panama City agitating for full independence. A civil war in Colombia in 1903 provided the opportunity for a revolutionary junta to declare independence on November 3, 1903. Under the 1903 Panama Canal treaty, the United States was able to maintain its rights; initially, it had “sovereign rights in perpetuity over the Canal Zone.” But after several interventions, in 1936 the United States revoked its right to intervene militarily, and in 1955 it signed a new treaty providing a higher payment to the Panamanian government for continued use of the canal.

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