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were the only three ports in Spanish America allowed by the King to trade with Spain. By 1560s, each year two fleets sailed from Spain and one to Mexico, These fleets would meet at Havana and return together to C diz, Spain. Shipments of good bullion and goods were delivered to Panama on the Pacific side for transport over the isthmus and return to Spain. When the Inca gold was exhausted, allot of silver mined in Peru replaced gold. Eventually sugar, cotton, wine, were transported.

Except for traffic in African slaves, foreign trade was forbidden unless the goods passed through Spain. Africans were brought to the colonies on contract by Portuguese, English, Dutch, and French slavers. Sometimes warfare resulted in the

Caribbean and later in the Pacific. The first serious interference with trade came from the English.

From 1572 to 1597, Francis Drake was associated with most of the assaults on Panama. Drake’s attacks showed how the area was not defended good. Despite raids on shipments and ports, precious metal transport increased between 1550

and 1600. Panama’s prosperity was at its peak during the first part of the seventeenth century. Panama City also flourished on the profits of trade. Panama City was considered, after Mexico City and Lima, the most beautiful and rich settlement in the West Indies.

A canal project was thoght about again in the seventeenth century by Philip III of Spain. The Council of the Indies argued that a canal would be attacked by other European nations and Spanish sea power would decline.

During the early seventeenth century, England, France, and the Netherlands, at war with Spain, began seizing colonies in the Caribbean. Bucaneers and pirates looted ships. The volume of precious metal arriving in Spain fell from its peak in 1600. Depletion of Peruvian mines, an increase in smuggling, and the buccaneers were

causes of the decline.

Henry Morgan, a buccaneer defeated the garrison of 2,600 and looted Panama City. The officials and citizens fled, after having loaded their ships with the most important church and government funds and treasure. Panama City was destroyed by fire, probably from blown up powder stores, although the looters were blamed. After 4 weeks, Morgan left with 175 mule loads of loot and 600 prisoners. The buccaneer scourge rapidly declined after 1688 mainly because of changing European alliances. By this time Spain was bankrupt; its population had fallen; and it suffered internal government mismanagement and corruption.

Influenced by buccaneer reports about how easy the isthmus could be crossed William Paterson, founder and ex-governor of the Bank of England, organized a Scottish company to establish a colony in the area. Paterson landed on the Caribbean coast late in 1698 with about 1,200 persons. The colonists were not prepared for life in the tropics with its heat and diseases. Their idea of trade goods which was clothing, wigs, and English Bibles was no interest to the Indians. These colonists gave up after six months, and left in April 1700, having lost many lives, mostly from malnutrition and disease.

In Spain Bourbon kings came to power in 1700.; only five fleets went to Latin America between 1715 and 1736. Panama’s temporary loss of its independent rule, from 1718 to 1722, and the country’s attachment to Peru were probably engineered by powerful Peruvian merchants. They resented Panamanian officials and their ineffectiveness in stopping the pirates. Panama’s weakness was further shown by its inability to protect itself against an invasion by the Miskito Indians of Nicaragua. Another Indian uprising in the valley caused the whites to abandon the area.

Panama’s shrinking control of the transit trade between Latin America and Spain came before the mid- eighteenth century. As a provision of the Treaty of Utrecht at the end of the War of the Spanish Succession in 1713, Britain was given the right to supply African slaves to the Spanish colonies (4,800 a year for 30 years) and also to send 1 ship a year to Panama. The slave trade provision satisfied both countries, but the trade in goods did not. Smuggling by British ships continued, and a contraband trade based in Jamaica nearly wiped out the legal trade. By 1739 the importance of the isthmus to Spain had seriously declined; Spain again took away Panama’s own rule by making the region part of the rule of New Granada.

In 1739 war broke out between Britain and Spain. Panama’s economic decline was serious. Transit trade was the reason why Panama was rich and there was no reason to find another economic base. After losing rule in 1751, Panama was hardly even self-supporting in food and producing little for export. Social class in the colony was rigid. The most prestigious and rewarding positions were reserved for the

those actually born in Spain. Those of Spanish ancestry but born in the colonies, held next positions in government and trade. Those with Spanish fathers and Indian mothers, did farming and trading. African and Indian slaves were considered underclass. The church held a special place in society. Priests were important. The relationship between church and government in the colony was closer than in Spain. Both the Catholic Church and the monks gained great wealth through titles and land.

Independence from Spain

Panama was not part of the early efforts of the Spanish colonies to separate from Spain. General Francisco Miranda of Venezuela, who,had been attracting support for revolutionary activities as early as 1797, offered a canal proposal to Britain in return for aid. Thomas Jeffersonin America also showed interest in a canal, but the policies of the new United States prevented serious

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