Panama is a transcontinental country spanning the southern part of North America and the northern part of South America.
Independence Panama would remain as a royalist stronghold and outpost until 1821 (the year of Panama's revolution against Spain). Panama City immediately initiated plans to declare independence, but the city of Los Santos preempted the move by proclaiming freedom from Spain on November 10, 1821. This act precipitated a meeting in Panama City on November 28, which is celebrated as the official date of independence. Considerable discussion followed as to whether Panama should remain part of Colombia (then comprising both the present-day country and Venezuela) or unite with Peru. The bishop of Panama, a native Peruvian who realized the commercial ties that could be developed with his country, argued for the latter solution but was voted down. A third possible course of action, a union with Mexico proposed by emissaries of that country, was rejected.
Panama thus became part of Colombia, then governed under the 1821 Constitution of Cúcuta, and was designated a department with two provinces, Panamá and Veraguas. With the addition of Ecuador to the liberated area, the whole country became known as Gran Colombia. Panama sent a force of 700 men to join Simón Bolívar in Peru, where the Peruvian War of Independence continued.
The termination of hostilities against the royalists in 1824 failed to bring tranquillity to Gran Colombia. The constitution that Bolívar had drafted for Bolivia was put forward by him to be adopted in Gran Colombia. The country was divided principally over the proposal that a president would serve for life. The president would not be responsible to the legislature and would have power to select his vice president. Other provisions, generally centralist in their tendencies, were repugnant to some, while a few desired a monarchy. Panama escaped armed violence over the constitutional question but joined other regions in petitioning Bolívar to assume dictatorial powers until a convention could meet. Panama announced its union with Gran Colombia as a "Hanseatic State", i.e., as an autonomous area with special trading privileges until the convention was held.
In 1826 Bolívar honored Panama when he chose it as the site for a congress of the recently liberated Spanish colonies. Many leaders of the revolutions in Latin America considered the establishment of a single government for the former Spanish colonies the natural follow-up to driving out the peninsulares. Both José de San Martín and Francisco de Miranda proposed creating a single vast monarchy ruled by an emperor descended from the Incas. Bolívar, however, was the one who made the most serious attempt to unite the Spanish American republics.
Although the league or confederation envisioned by Bolívar was to foster the blessings of liberty and justice, a primary purpose was to secure the independence of the former colonies from renewed attacks by Spain and its allies. In this endeavor Bolívar sought Britain's protection. He was reluctant to invite representatives of the United States, even as observers, to the congress of plenipotentiaries lest their collaboration compromise the league's position with the British. Furthermore, Bolívar felt that the neutrality of the United States in the war between Spain and its former colonies would make its representation inappropriate. In addition, slavery in the United States would be an obstacle in discussing the abolition of the African slave trade. Bolívar nevertheless acquiesced when the governments of Colombia, Mexico, and Central America invited the United States to send observers.
Despite the sweeping implications of the Monroe Doctrine, President John Quincy Adams—in deciding to send delegates to the Panama conference—was not disposed to obligate the United States to defend its southern neighbors. Adams instructed his delegates to refrain from participating in deliberations concerning regional security and to emphasize discussions of maritime neutrality and commerce. Nevertheless, many members of the United States Congress opposed participation under any conditions. By the time participation was approved, the delegation had no time to reach the conference. The British and Dutch sent unofficial representatives.
The Congress of Panama, which convened in June and adjourned in July 1826, was attended by four American states—Mexico, Central America, Colombia, and Peru. The Treaty of Union, League, and Perpetual Confederation drawn up at that congress would have bound all parties to mutual defense and to the peaceful settlement of disputes. Furthermore, because some feared that monarchical elements sympathetic to Spain and its allies might regain control of one of the new republics, the treaty included a provision that if a member state substantially changed its form of government, it would be excluded from the confederation and could be readmitted only with the unanimous consent of all other members.
The treaty was ratified only by Colombia and never became effective. Bolívar, having made several futile attempts to establish lesser federations, declared shortly before his death in 1830 that "America is ungovernable; those who served the revolution have plowed the sea." Despite his disillusion, however, he did not see United States protection as a substitute for collective security arrangements among the Spanish-speaking states. In fact, he is credited with having said, "The United States seems destined by Providence to plague America with misery in the name of Liberty."
Three abortive attempts to separate the isthmus from Colombia occurred between 1830 and 1840. The first was undertaken by an acting governor of Panama who opposed the policies of the president, but the Panamanian leader reincorporated the department of Panama at the urging of Bolívar, then on his deathbed. The second attempted separation was the scheme of an unpopular dictator, who was soon deposed and executed. The third secession, a response to civil war in Colombia, was declared by a popular assembly, but reintegration took place a year later. The only time that Panama gained a constitutional profile of its own, was in the context of the War of the Supremes (1839-1842), led by Tomás de Herrera in Panama, when it was part of the federalist movement and adopted the Fundamental Law and Constitution of the State of the Isthmus which, however, never gained any real validity as Panama reunited with Colombia in 1841.
The California gold rush and the railroad Even before the United States acquired California after the Mexican–American War (1846–48), many heading for California used the isthmus crossing in preference to the long and dangerous wagon route across the vast plains and rugged mountain ranges. Discovery of gold in 1848 increased traffic greatly. In 1847 a group of New York City financiers organized the Panama Railroad Company. This company secured an exclusive concession from Colombia allowing construction of a crossing, which might be by road, rail, river, or a combination. After surveys, a railroad was chosen, and a new contract so specifying was obtained in 1850. The railroad track followed generally the line of the present canal. The first through train from the Atlantic to the Pacific side ran on the completed track on January 28, 1855.
The gold rush traffic, even before the completion of the railroad, restored Panama's prosperity. Between 1848 and 1869, about 375,000 persons crossed the isthmus from the Atlantic to the Pacific, and 225,000 crossed in the opposite direction. Prices for food and services were greatly inflated, producing enormous profits from meals and lodging.
The railroad also created a new city and port at the Atlantic terminus of the line. The town that immediately sprang up to accommodate the railroad offices, warehouses, docks, and shops and to lodge both railroad workers and passengers soon became, and remains, the second largest in the country. United States citizens named it Aspinwall, after one of the founders of the Panama Railroad Company, but the Panamanians christened it Colón, in honor of Columbus. Both names were used for many years, but because the Panamanians insisted that no such place as Aspinwall existed and refused to deliver mail so addressed, the name Colón prevailed.
The gold rush and the railroad also brought the United States "Wild West" to the isthmus. The forty-niners tended to be an unruly lot, usually bored as they waited for a ship to California, frequently drunk, and often armed. Many also displayed prejudice verging on contempt for other races and cultures. The so-called Watermelon Riot of 1856, in which at least sixteen persons were killed, was the most serious clash of races and cultures of the period.
In 1869 the First transcontinental railroad was completed in the United States. This development reduced passenger and freight traffic across the isthmus and diminished the amount of gold and silver shipped east. During the height of the gold rush, however, from 1855 to 1858, only one-tenth of the ordinary commercial freight was destined for or originated in California. The balance concerned trade of the North Americans with Europe and Asia. The railroad company, because of its exceptionally high financial return, paid a total of nearly US$38 million in dividends between 1853 and 1905. Panama received US$25,000 from Colombia's annuity and benefited from transient trade and some inflow of capital.
The uncompleted French canal Throughout the nineteenth century, governments and private investors in the United States, Britain, and France intermittently displayed interest in building a canal across the Western Hemisphere. Several sites were considered, but from the start the ones in Nicaragua and Panama received the most serious attention. President Andrew Jackson sent Charles A. Biddle as his emissary in the 1830s to investigate both routes, but the project was aborted when Biddle abandoned his government mission and negotiated instead with Colombian capitalists for a private concession.
Nevertheless, Colombia continued to express interest in negotiating with the United States on building a canal. A treaty was signed in 1846 between the two countries. The treaty removed the existing restrictive tariffs and gave the United States and its citizens the right of free transit of persons and goods over any road or canal that might be constructed in the isthmus. In addition, the United States guaranteed the neutrality of the isthmus and Colombia's sovereignty over it, with a view to ensuring uninterrupted transit for the duration of the treaty, which was to be twenty years or as long thereafter as the parties gave no notice to revise it. Called the Mallarino–Bidlack Treaty of 1846, it was actually ratified and became effective in 1848.
Because the canal interests of Britain and the United States had continued to clash, particularly in Nicaragua, Britain and the United States sought to ease tensions by entering into the Clayton–Bulwer Treaty of 1850. The governments agreed specifically that neither would acquire rights to or construct a Nicaraguan canal without the participation of the other. This general principle was extended to any canal or railroad across Central America, to include the Isthmus of Tehuantepec in Mexico and Panama. In effect, since neither government was then willing or able to begin a canal, the treaty was for the time an instrument of neutrality.