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a royal decree directed examination to be made of the land between the Atlantic town of Chagres and the Pacific with a view to the establishment of water connection. It is reported that even as early as 1520 surveys were ordered by the Emperor. The result of the royal decree was that the local governor declared the work to be impracticable and beyond the resources of any sovereign.

In the meantime a considerable commerce developed across the Isthmus. The city of Panama was founded on the Pacific side in 1517, and Nombre de Dios, founded in 1519, was the most important post on the Atlantic side. Between the two a road was built and a series of posts established. Later Porto Bello, due to a better harbor and superior location, was made the Atlantic terminus and a new road to Panama was built of such a character that portions of it may be used to this day. Subsequent to 1534 a partial water route was established for boats and light-draft vessels up the Chagres as far as Cruces by removal of obstructions from the river. This is the identical stream and valley which nearly four hundred years later is being utilized as the Atlantic end of the Isthmian Canal. The establishment of the partial water route did not lead to the discontinuance of the paved way. With the conquest of Peru by Pizarro in 1533–1535, the trans-isthmian trade grew in amount and value and the Spanish colonies continued to prosper. Panama became a great collecting and distributing center for Spanish commerce.

So lucrative and so extensive did the trade become

that under Philip II, who succeeded to the throne on the abdication of Charles V in 1555, the search for a strait was given up and all idea of a canal abandoned. With untold treasures coming to Spain by the existing means of transport, the Emperor did not desire to seek new means of intercourse which might benefit a rival nation as much as, or more than Spain, and furthermore all the energies of the people were fully occupied in developing the existing sources of treasure and none seemed available for new enterprises. The same policy continued for about two centuries.

In the meantime trade developed and the terminal towns grew. Panama in its day was the great metropolis of the New World, having pretentious stone churches, monasteries and numerous dwellings of wood. Its markets and those of Porto Bello were the meeting-places for the merchants of Peru, the Isthmus and of Spain. Great quantities of silver and gold passed eastward and supplies from Spain came in the opposite direction. The transportation across the Isthmus was by mule train. All others than Spanish were excluded from the traffic. The richness of the trade and the overbearing stand of the Spaniards encouraged piratical attacks by the seamen of the northern nations on the shipping of the Atlantic and Pacific coasts, and even on the overland mule trains. Between the years 1570 and 1596 Sir Francis Drake made numerous privateering attacks, which were very much of the nature of piracy. The Spaniards were sending their merchant ships in fleets twice a year, convoyed by six and eight armed vessels. Drake was followed in his enterprise by the buccaneers who reached the limit of their power under Henry Morgan. Morgan with great energy and daring captured Nombre de Dios and immediately after conducted operations against Porto Bello. He turned what was nearly a failure into a cruel success, and a year later, in 1671, according to his threatened promise to the governor of Panama, he returned to ransack the city of Panama. After a wretched trip across the Isthmus, almost without food, the city was attacked and fell into the hands of Morgan. As a result of his raid the city was destroyed, and to this day the ruins of old Panama, the massive stone walls, the towers of churches, monasteries and forts still remain as mute and impressive evidences of the constructive energy of the Spaniards and of the wicked, destructive energy of the English buccaneers. After a systematic plunder of all the valuables of the city, Morgan left. The town was never rebuilt on the old location.

The trade of Panama suffered a period of decline after the Indian empires had been stripped of their valuables. A royal cedula in 1593 forbade trade with China and the East Indies; the development of local industries was forbidden through rival influences at home; corrupt governors did the colonies no good, and there were various governmental restrictions on trade and growth. Even the roadway across the Isthmus entered a period of disuse, and the traffic between Spain and the western ports went via the Cape of Good Hope or Cape Horn, except a certain amount crossing at Tehuantepec.

In the latter part of the eighteenth century certain desultory efforts were made toward a canal, including an examination of the Nicaragua route from 1779 to 1781, followed by a discouraging report. Notwithstanding this, a company was formed to undertake the project and a route utilizing Lake Nicaragua was selected. By 1823, when all the continental colonies had secured their independence by revolt, all Spanish effort and influence ceased.

MODERN CANAL PROJECTS With the demise of Spanish authority on the continent there was an early active revival of canal projects. In fact, as early as 1825 the minister of the then Central American Republic to the United States addressed the Secretary of State, inviting attention to the willingness of the Republic to receive the coöperation of the United States in the building of a canal by a group of American merchants. The United States gave a favorable reply, but nothing resulted at that time. In 1826, however, the Republic of Central America actually accepted the proposals of an association for the building of the canal under liberal terms. The attempt to organize a company with a capital of $5,000,000 proved unsuccessful. In 1830 the Central American Republic negotiated with a Netherlands company, and the United States, hearing of this, informed the Republic that it would expect the same rights and privileges of passage through the canal as other nations. In 1835, at the initiative of the United States, some investigations were begun, but were dropped in 1837 upon the advice that the time was not propitious. Another project started in 1838, and a still further investigation and an estimate of $25,000,000 were made in President Van Buren's administration, but the Isthmian country was too unsettled and revolutionary for any definite progress to be made. There are records of still other efforts in 1826, 1827 and 1838. In the latter year a concession was granted to a French company to build roads or canals. As a result a canal was recommended by Napoleon Garella with a starting-point in Limon Bay, thence to a connection with the Chagres River below Gatun. The divide was to be crossed by means of a series of eighteen locks on the Atlantic side and sixteen on the Pacific side, with a summit level 158 feet above the sea, and the highest part of the divide penetrated by a tunnel over three miles long. The report of actual conditions by Garella discouraged the promoters.

During all this period the United States was peopled only on the Atlantic seaboard and was interested in commerce which started or terminated in Atlantic ports only. In the middle of the century events occurred which were destined to greatly increase the importance of the Isthmus, and to have a strong influence in pushing the canal idea to the point where its actual execution was bound to follow. It was the acquisition of California, the discovery of gold therein, the exploration and settlement of the Northwest Territory and, to a lesser extent, the purchase of Alaska, which led the United States on to its destiny as a Pacific as well as an Atlantic power and thus established the conditions that ultimately made the canal a certainty. The trans-isthmian route for freight and passengers

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