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What had motivated the voyages that led to the discovery of the New World was exactly what the Panama Canal would eventually deliver—a through passage to the East. On his fourth voyage, in 1502, Columbus, by then embittered and sickly, sailed all along Panama's northern coast, obsessively searching every tiny cove for a “hidden strait.” At one point he anchored in Limón, or “Navy,” Bay, now the Atlantic terminus of the canal. Even after Columbus's failure to find an open passage to the East, the idea died hard. In 1507, the first map ever printed of the New World optimistically showed an open strait about where the Isthmus of Panama is located.

But Columbus did report back that the Tierra Firme he had discovered was rich in gold and pearls. West of Limón Bay he had encountered Indians wearing solid gold breastplates, which they were happy to exchange for a couple of hawk's bells. Having set out to discover a route to the wealth of the East, the Spaniards had effectively found far greater riches on the way. At the end of 1509 a settlement was established, Santa María de la Antigua del Darién, some sixty miles southeast of what would later be named Caledonia Bay. Then in 1513 the colony's leader, Vasco Núñez de Balboa, his curiosity aroused by Indian stories of a Great Ocean across the mountains, put together an expedition of 190 Spaniards, accompanied by a number of bloodhounds, which the natives found particularly terrifying. On September 6, having sailed up the coast, they set off across the mountains on a route about a hundred miles east of the modern canal, their heavy loads of supplies carried by a mixture of press-ganged local Cuna Indians and black slaves. The expedition's rate of advance through the Darién jungle was at times only a mile a day. The rivers were in spate and numerous bridges had to be improvised from tree trunks. Even in the sweltering jungle, the Spaniards wore helmets and breastplates of polished steel, thick leather breeches, woolen stockings, and thigh boots. Heatstroke, hostile Indians, and disease began to thin their numbers. On September 25, with only a third of his men left, Balboa reached a small hill. From its summit, promised the guides, you could see the Great Ocean. Balboa set off alone at midday. At the top, he turned one way and then the other; he could see both oceans quite clearly. He fell to his knees in prayer and then called up his men, “shewing them the great maine sea heretofore vn-knowne to the inhabitants of Europe, Aphrike, and Asia.”

They struggled down to the shore, on the way defeating and then befriending Indians who had barred their route to the ocean. On the afternoon of September 29 they reached the sea. That evening Balboa, in full armor, waded into the muddy water and laid claim in the name of Ferdinand of Castile to what he called the “South Sea.”

The party remained on the Pacific coast for over three months, exploring the bay and trading trinkets with the local Indians. Balboa heard stories of a rich land away to the south, but wrongly deduced that he must be close to Asia. He at last returned, heavily laden with pearls and gold, to Santa María and a hero's welcome. Along with a fifth of his treasure, Balboa sent the King of Spain a report, which included, rather as an afterthought, the musing of a Castilian engineer, Alvaro de Saavedra—a suggestion that although the search for a strait between the two oceans should continue, if it was not found, “yet it might not be impossible to make one.”

Five years after Balboa's discovery, a land route had been established linking Nombre de Dios, a port on the Caribbean, with a new Spanish settlement at Panama, a prosperous Indian village on the Pacific coast. The transit route opened up the Pacific. Although Magellan found a way around the southern tip of the continent in 1519–21, the voyage was so remote and hazardous that it did nothing to discourage the quest for a way through the Isthmus to the newly found ocean. In 1522 explorers sailing north from Panama discovered Lake Nicaragua. The following year Hernando Cortés, the conqueror of Mexico, was ordered by Charles V to continue the search for an open strait. By 1530 it was clear that no such waterway existed in the tropics, and in 1534 Charles ordered that the Chagres River be mapped and cleared as far as possible in the direction of Panama City, and that the intervening land be studied with a view to excavation. This was the first survey for a proposed ship canal through Panama, and it more or less followed the course of the current Panama Canal. At the same time, the San Juan River, which runs from Lake Nicaragua to the Caribbean coast, was also to be surveyed as part of a possible canal. The great rivalry between the two routes was thus started.

Detailed, reliable information on these very early surveys has not survived, although Charles seems to have received mixed messages. Some reported that the project was totally unfeasible; others, like the Spanish priest Francisco López de Gómara, writing to the king in 1551, thought anything was possible. In an early example of the hubris that the canal dream attracted throughout its history, the priest wrote: “If there are mountains there are also hands … To a King of Spain with the wealth of the Indies at his command, when the object to be attained is the spice trade, what is possible is easy.”

Then Spanish priorities in Panama changed. Philip II, Charles V's successor and a religious fanatic, shared little of his enthusiasm for a canal, seeing it, among other evils, as “unnatural,” as meddling with God's creation. More important, the conquest of Peru led to concerns that an Isthmian canal could be a strategic liability. As early as 1534, the governor of Panama had warned against the construction of a canal as it “would open the door to the Portuguese and even the French.” By the 1560s most believed that it was safer to have an unbroken wall of land between the gold and silver of Peru and Spain's maritime enemies in the Atlantic. Similar strategic concerns would arise three hundred years later when the United States debated building a canal.

With the conquest of the Incas, the Panama Isthmus became the overland route for the treasure pouring back to Europe, whose value dwarfed anything that could have come from the Indies. Once a year a grand fleet would arrive at the Pacific terminus of the trail and unload the bullion, which would be transferred across the Isthmus to waiting ships at Nombre de Dios. One witness recounted that he saw twelve hundred muleloads of precious metal leave Panama City in 1550. The “Royal Road” was now the most important thoroughfare in the Spanish empire, and the Isthmus the key to the Spanish commercial and defense system in the New World. Panama City quickly became one of the three richest centers in the Americas, outshone only by Lima and Mexico City. At the other end of the trail, Nombre de Dios grew into an important port, and the site of an annual trade fair of dazzling opulence, where European goods were bought for transshipment throughout Spanish America. The experience of visiting the fair was described by a traveling Englishman, Thomas Gage, as highly risky: it was “an unhealthy place … subject to breed fevers … an open grave.” But, he wrote, “I dare boldly say and avouch, that in the world there is no greater fare.”

The great wealth and strategic importance of Panama led to numerous attacks from Spain's enemies. In 1572, Francis Drake carried back to Plymouth an enormous pile of looted silver; he returned twenty years later to attempt to capture the Isthmus for England, only to die of dysentery off Nombre de Dios. The infamous buccaneer Sir Henry Morgan, under orders from the British governor of Jamaica, sacked Panama City in 1671, causing a new city to be built in a more secure location nearby. He reportedly returned to Jamaica with over £70,000 in loot.

Other arrivals came intending to stay. The famous “Darién Disaster,” the calamitous effort at the beginning of the eighteenth century to establish a Scottish colony in Panama, has many parallels with de Lesseps's French adventure nearly two hundred years later. Each was financed by a host of small investors in their own countries and motivated by idealism, patriotism, and naïveté, as well as by the chance to make a fast buck. Both had leaders with more front than particular expertise. William Paterson was born in Dumfriesshire, Scotland, in 1658, and as a young man had traveled, as part missionary, part buccaneer, to the West Indies. Returning to England, he had made his fortune in business and had become a “projector,” a promoter of speculative moneymaking schemes. But ever since his sojourn in the Caribbean, Paterson had been in the grip of a “Great Idea,” the venture to cap everything. He was not the first, nor would he be the last, to fall for the “lure of the Isthmus.” It was so obvious. If ports could be established on both coasts, cargoes could be transferred over the narrow strip of land, saving ships the long and dangerous voyage around Cape Horn. News from British coastal raiders had identified a spot where there was “no mountain range at all” and where “broad, low valleys” extended from coast to coast. It was perfect enough to envisage not just a road, but, in time, a waterway. Paterson, with more than a few ideas before his time, intended to welcome traders from all over the world to the new settlements, regardless of race or creed. It would be a truly global entrepôt, to rival any in the world, and whoever controlled it, proclaimed the Scot, would possess “the Gates to the Pacific and the keys to the Universe.” “Do but open these doors,” said Paterson, “and trade will increase trade, and money will beget money.”

The Scottish Parliament backed the scheme in spite of warnings that Paterson “talks too much and raises people's expectations,” but then money raised in England was withdrawn after pressure from vested interests such as the East India Company. However, a wave of patriotic indignation in Scotland saw money pouring in from all quarters and all levels of society. As for the French public in the 1880s, for Scottish investors the scheme was a means of reestablishing national pride. From 1,400 individuals, including craftsmen and servants, £400,000 was quickly raised, about half the country's available capital. It was a colossal risk for so much of the national silver.

Like so many of the subsequent Panama schemes, it was doomed from the start. As soon as the 1,200 Scotsmen landed in the New World, naming their anchorage Caledonia Bay, fierce protests from English merchants and the Spanish led to an embargo on the colony. For a settlement established as a trading station, it was a fatal blow.

Everything started to unravel. The death rate from fever rose steadily. It soon emerged that far too many of the settlers were “gentlemen,” with neither the inclination nor the strength for the hard labor required for starting the settlement. The “valleys” “extending coast to coast” turned out to be a fiction, and no realistic attempt was made to open up an overland route to the Pacific as planned. The only trading partners were the local Indians, who had no use for the heavy cloth and 1,500 English-language Bibles the settlers had brought with them as their start-up stock. Scarcity of food brought increasing weakness, disease, and demoralization; among the first to die was Paterson's wife. Within six months, nearly four hundred settlers had perished of fever or starvation. The onset of the rainy season in May, and the concurrent further worsening of living conditions, was the final straw.

On June 20, 1699, “Being starved and abandoned by the world,” as one contemporary letter from Panama described it, the Scots abandoned Panama and sailed for New York, en route to Europe. Only half of the weakened settlers were still alive at the end of the journey The survivors, described by an eyewitness in New York as looking “rather like Skelets than men, being starved,” barely numbered enough to fill one ship on the cross-Atlantic voyage back home. Two further expeditions, dispatched from Edinburgh before news had arrived of what had happened, met the same fate, the last being driven away by local Spanish forces.

In all, Paterson's “Great Idea” cost over two thousand lives and the precious savings of an entire nation. As de Lesseps and many others would discover, the Isthmus could be a graveyard of men, dreams, and reputations.

The “Darién Disaster” hastened the coming of the Act of Union that dissolved the Scottish Parliament. Seeing the futility of trying to compete with England, and stripped of capital from the disaster, Scotland was merged into Great Britain in 1707, an early but spectacular casualty of Panama Fever.

egardless of their abandonment of the Scots, the English Navy continued to flex its muscles in the region, and frequent plans were laid to seize the Isthmus. To take Panama, it was believed, would end Spanish rule in the Americas, and open up the Pacific to English trade. In 1739, during a period of official war with Spain, the English admiral Edward Vernon, leading six ships of the line and nearly three thousand men, took the Caribbean port of Portobelo and destroyed its defenses, although he was unable to cross the Isthmus to seize Panama City itself.

Confronted by growing threats on the Caribbean side of the Isthmus, in 1748 the bullion ships abandoned the Panama route and started sailing around Cape Horn. Thus Panama City lost her place as the treasure-house of the New World. Soon afterward, the famous fair declined and ceased. Panama was attached to the viceroyalty of New Granada based in Bogotá, beginning a century and a half of struggle on the part of the Panamanians to regain their autonomy.

During the rest of the eighteenth century Panama, tied to a fast-fading empire, shared her colonial masters’ steep decline. Weakened by incessant European warfare, falling birth rates, and intermittent bankruptcy, Spain gave way to the new aggressive mercantile and maritime powers of northern Europe. However, economic decline on the Isthmus was not matched by a falling off of geopolitical or military importance. Spain's new rivals in the Caribbean, now a key arena of international conflict, were more interested than ever in the strategic value of the Isthmus.

In 1735 the French government had sent an astronomer through Central America on a scientific expedition to investigate the possibility of a trans-Isthmian canal. He had reported back in 1740 to the French Academy of Science advocating a canal at Nicaragua, making use of the San Juan River that flowed from Lake Nicaragua to the Caribbean coast. In the same year, however, the British were establishing control over a section of the Nicaraguan coast through an alliance with the Mosquito Indians, who refused to recognize Spanish sovereignty. It was not a coincidence that this gave the British control over the mouth of the San Juan River, and therefore the Atlantic terminus of any future Nicaraguan canal. But France still made the running—over the next twenty years no fewer than four French trans-Isthmian canal proposals were made.

With the independence of Gran Colombia,* officially declared on November 28, 1821, the dead hand of Spanish rule was at last removed, and a major barrier to the construction of a canal disappeared at the same time. Furthermore, there was now a new emerging power to the north beginning to take a keen interest in Central American affairs.

*Gran Colombia consisted of modern-day Panama, Colombia, Venezuela, and Ecuador. This federation dissolved in 1830, with the latter two becoming independent and the remainder renamed the Republic of New Granada, which became Colombia in 1863.

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