The original settlement of the city was Panama Viejo, found in what are now the suburbs of the modern day city, situated east along the coast from Casco Viejo. Panama Viejo was founded in 1519 by the conquistador Pedrarías d’Ávila, to serve (according to UNESCO research) as a “commercial and administrative centre” due to its consolidated key position on the transoceanic route between Spain and the Americas.
Upon attack by the infamous privateer Sir Henry Morgan in 1671, its population deserted the city after the decision was made by Governor Juan Perez de Guzman to burn it and flee to keep the wealth and prowess of the city from falling into his hands.
A few years later in 1673 Antonio Fernández de Córdoba initiated the building of a new settlement (Casco Viejo) on a small peninsula nearby which was superior in position and provided the necessary fortifications that its predecessor lacked (see fig.1).
Casco Viejo is considered to be the ‘cultural gem’ of Panama City. Its rich colonial history has left behind a wealth of architecture, predominantly Spanish and French colonial buildings studded with the odd examples of art deco and neoclassical styles.
Across the 18th century (1737, 1756 and 1781) the new city was severely damaged by fires. This had the unfortunate effect of stunting its urban development and expansion. The Californian ‘gold rush’ began in 1848 bringing a great number of people to Panama. It was thought preferable by many to sail from the Atlantic to Panama City and venture across the isthmus via mules and canoes, await a ship on the Pacific side to take them to San Francisco, rather than endure crossing the North American continent by railroad. In this small city men from all over the world were converging at once. The economy enjoyed a large boost in this period and by 1855 the Panama railway spanning the Isthmus of Panama was finished and the Pacific Mail Steamship Company began regular service from San Francisco to Panama. Improved infrastructure facilitated the journey of miners to California and the return of Gold bullion to the East coast thereby increasing significantly the wealth, commerce and mercantile activities of the hosting country.
In 1880 the French were the first to try and construct the Panama Canal, a waterway that would span 48 miles across the Isthmus thus saving ships an 8000-mile journey around the bottom tip of South America. The project was given the go-ahead by the Colombian Government who controlled the area at the time, financed by private investors and run by Compagnie Universelle du Canal Interocéanique. At the head of the project was the champion of Egypt’s Suez Canal Ferdinand de Lesseps. The French were unsuccessful in their pursuits due to a fundamental lack of the correct machinery and logistical knowledge to co-ordinate such a project in a unknown environment.
Not long after the Americans began to make their own plans to build the canal. However, their efforts were blocked by the Colombian government in power. The U.S. supported a revolution which led to Panamas independence in 1903. The Hay-Bunau-Varnilla Treaty was signed soon after which gave the U.S. perpetual control of the canal and 5 mile zones either side. The Canal was built between 1904 to 1914, the result of which was to create an influx of wealth into Panama which enabled the development and expansion that the city had previously lacked. To accomodate the automobile and build newer and more modern housing, the city spread into the suburbs. Its new CBD situated NE further along the coast left Casco Viejo (the old quarter) isolated on its peninsular, where it was subject to great deterioration as business moved away and the buildings emptied.
Fortunately in 1997 UNESCO declared Casco Viejo as one of the United Nations world heritage sites thus ushering in an era of revitalisation by government, entrepreneurs and international organisations. Law No 9. was partly responsible for this, offering restoration incentives to developers to attract outside investment.