Due to its unique geographical position as a land and ocean crossroads, Panama has a rich historical heritage. Near present day Panama City, the Spanish conquistador Vasco Nuñez de Balboa became the first European to view the Pacific Ocean. Columbus dropped anchor repeatedly on Panama's Caribbean Coast, taking advantage of the protected waters of Bocas del Toro and attempting to establish a colony there. President Theodore Roosevelt came to Panama to inspect progress on the construction of the Panama Canal, which he regarded as the greatest achievement of his presidency.
Spanish Colonial Times
From very early on Panama has served as an important hub in the region. Panama was it the first place that Christopher Colombus explored in the Americas and also the place where Europeans first discovered the Pacific Ocean. When Pizarro and his army managed to sack the Incan Empire all the gold and silver was shipped to Panama, stored in Panama City, taken by donkey across the isthmus on the "Camino de las Cruces" and deposited in the treasure house on the Caribbean bayside town of Portobelo where it awaited transport to the Old World. So much treasure passed through Panama that it is said that the price of gold in Europe dropped for 50 years.
Panama City continued to prosper as an important colonial port until it became the favorite target for pirates intent on looting Spanish wealth. In 1668 the English Privateer, Sir Henry Morgan, sacked the fort of Portobelo and held it for a ransom of 100,000 gold coins, only to later siege and conquer the original Panama City (Panama Viejo), burning it to the ground and leaving the ruins seen today. Continuous successful pirate attacks on Portobelo's treasure house ended the hey-day of that seaside town, but life continued elsewhere in the isthmus as a New Panama City was founded not far from the original. As one of the provinces of Colombia, Panama became independent from Spain in 1821.
Panama's Transcontinental Railway
During the California Gold Rush, Thousands of "49er's (men seeking to strike it rich and tired of fighting the Indians on the Great Plains) sought a safer and shorter route to the west coast of the U.S.. This demand resulted in the building of the Panama Transcontinental Railway by the Kansas City Railway Company. Inaugurated in 1855, the 50-mile coast-to-coast route was the world's first transcontinental railroad.
The "49ers" would take steamships from the east coast of the U.S. to the port city of Colon on the Atlantic side of Panama's and then travel by train to Panama City on the Pacific side where ships bound for California departed regularly. In 2001 the Transcontinental Panama Canal Railway was reopened with special observation cars for tourists to enjoy canal and rainforest views as the cross the isthmus.
Panama's Birth as a Nation and the Panama Canal
From the time of the Spanish conquerors, men had dreamed of creating a Canal across the slender Isthmus of Panama. In the early 1900's Panama became the center of the world's attention when the French architect of the Suez Canal, Ferdinand de Lesseps, announced his plans to build a similar sea level canal in Panama. His catastrophic failure cost France a fortune and resulted in nearly 20,000 deaths, mainly due to malaria and yellow fever. The U.S. however was determined to create a trans-oceanic canal in Central America and began plans to buy the rights from Lesseps to build the canal in Panama. The French were happy to abandon the scandalous project, however the Colombian government conspired to strike a much more generous deal with the U.S. than they had gotten from the French.
After growing weary of Colombia's hard bargaining the U.S. discovered an alternate strategy. Over the course of the 19th century Panama's leaders had many to achieve independence from Colombia many times but were always rebuffed by Colombia. Now the U.S. plotted to ensure Panama's independence in exchange for a generous bargain for the right to build the canal in Panama. On November 3rd 1903, with the help of the U.S. navy Panama gained its independence, and in 1904 a treaty was signed granting the U.S. the rights to build the canal.
Learning from the mistakes of the French, the Americans succeeded due to brilliant engineering feats, superb administration and the concurrent discovery of the mosquito as the main cause of the spread of malaria and yellow fever. In 1914, after nine years in construction the Canal was finally finished.