Period of Spanish rule from 1509 when the Spanish first colonized Panama, to 1819 when Panama was granted independence with the rest of the countries in what was then New Granada. This period, spanning over hundreds of years, was represented by the rule of outsiders, which resulted in a cultural, social, and even psychological transformation of inhabitants. The conquering Spanish in the colonial period were only concerned with economic gain for Spain, so mining of precious metals and export crop economies were established in the colonies (Chasteen). These intertwined the colony's economics with Spain, leading to Panama's economy being dependent on Spain. As the colony grew, it was unable to establish independent means of income, which later secured Panama's future as a country dependent on external factors.
Even before the construction of the railroad and the Panama Canal by the US, Panama’s most valuable commodity was its position as the thinnest land bridge between the Pacific and Atlantic Oceans. Panama was first discovered to be an isthmus in 1513 with Vasco Núñez de Balboa’s expedition to the Pacific and has been a site of international transport between the oceans since. Throughout its control of Panama, the Spanish Crown used the isthmus as its shipping point of precious goods from the Pacific side of South America, such as gold and silver back to Spain (US Dept. of State). From the time of Spanish occupation to today, Panama’s economic success has been highly dependent on the international importance of the isthmus, as became evident with the decline of the Spanish empire in the 1700s. Panama’s economy quickly declined with the decreased transit of goods between the oceans. It never really recovered until the mid 1800’s when US began moving gold from California across the isthmus, first by mule train and then railroad.
Port City DependencyEdit
Panamanian port towns in the 1600s were dependant on the Silver Fleet from Chile to Spain for their livelihoods. For the majority of the year when the Silver Fleet was not in port, the Panamanian towns were nearly deserted. This made them prime targets for English privateers such as Admiral Henry Morgan, evidenced by the sack of both Portobello and Panama in 1668 and 1670, respectively (Earle). The towns also depended on the Spanish fleet for news from Spain as well as supplies for defense and additional men to guard their towns (Earle). This dependency on Spain left the colonies in economic slums for the majority of the year, as well as leaving them defenseless against the privateers.