Panama (an Indian word meaning abounding in fish) was founded in 1518 by Pedro Arias Davila, and is thus the oldest European city in America, the older settlement at Santa Maria el Antigua near the Atrato having been abandoned and leaving no trace. Originally it was situated six or seven miles farther north on the left side of the Rio Algarrobo; but the former city, which was the great emporium for the gold and silver from Peru, and “had eight monasteries, a cathedral, and two churches, a fine hospital,' 200 richly furnished houses, nearly 5000 houses of a humbler sort, a Genoese chamber of commerce, and 200 warehouses, was after three weeks ofrapine and murder burned, February 24, 1671, by Morgan’s buccaneers, who carried offl75 laden mules and more than 600 prisoners” (see Trawls of Pedro de Cieza de Leon, Hakluyt Soc., 1864). A new city was founded on the present site by Villacorta in 1673.

The, Isthmus and State.— By the Isthmus of Panamâ is sometimes understood the whole neck of land between the continents of North and South America; more generally the name is restricted to the narrow crossing from Panamâ to Colon, the two other narrowest crossings being distinguished as the Isthmus of San Blas (31 miles) and the Isthmus of Darien (46 miles). Nearly the whole isthmus, in the wider sense of the word, constitutes (since 1855) a state of the Confederation of Colombia, extending from the frontiers of Costa Rica to those of the state of. Cauca. Besides Panamâ the capital and Colon (Aspinwall), it contains Santiago, formerly chief town of a province and an apanage of the family of Columbus, Penonomé (about 15,000 inhabitants), Los Santos, formerly chief town of a province, Nata, and David. It is divided into six departments—Coclé, Colon, Chiriqui, Los Santos, Panamâ, Veragua. The total population in 1870 was 221,052.

Railway and Canal.— It is the Isthmus of Panamâ in the narrower sense which is crossed both by the interoceanic railway and by the line of the interoceanic ship-canal at present in course of construction. It affords a much shorter route than that of Darien, and while the central Cordillera does not sink lower than 980 feet in the Isthmus of San Blas, at the Culebra Col it is rather less than 290 feet high. As the watershed runs much nearer the south than the north side of the isthmus, the streams flowing to the Pacific are of comparatively little importance, while the Chagres on the Atlantic slope, with its tributary the Rio Obispo, forms a navigable river whose volume attains formidable dimensions at certain seasons. The railway (a single line) starting from Colon (on the swamp-island of Manzanillo on Limon Bay) reaches the valley of the Chagres at Gatun, runs along its northern flanks to Bar-bacoas, crosses the river by a large bridge, continues along the southern flank and up the tributary Obispo to the Culebra Col, from which it descends straight to Panamâ. The ship-canal is to follow very much the same route; only it will keep closer to the bed of the Chagres, which it is to cross again and again, and on the Pacific slope it will descend the valley of the Rio Grande and be continued seaward to the island of Perico. The total length is 54 miles. Throughout the whole distance the bottom is to lie 8∣ metres (nearly 28 feet) below the mean level of the oceans, and the width is to be 22 metres (72 feet) at bottom and 50 metres (160 feet) at top, except in the section through the Culebra ridge, where the depth is to be 9 metres, the bottom width 24, and the top width 28. The two great difficulties connected with the undertaking are those caused by the mountain and the river. As the idea of tunnelling the col has been abandoned, it will be necessary to cut down through the solid strata for a depth of 300 to 350 feet over a considerable distance; the rock happily is of a comparatively soft schistous character, disposed almost horizontally. The Chagres has an average discharge at Matachin of 100 cubic metres per second, which at low water may sink to 15 or 20 cubic metres, and during flood rise to 500 or 600. At Gamboa, which lies just above the influx of the Rio Obispo, it is proposed to construct an enormous reservoir by throwing a dam across the valley. From Cerro Obispo on the one side to Cerro Santa Cruz on the other this dam will be 960 metres long at the base and 1960 metres at the top, with a width at the bottom of 1000 metres and a height of 45 metres. It will thus be the largest dyke yet constructed in the world. Altogether it is calculated that the excavation of the canal involves the removal of 3531 millions of cubic feet of earth; by January 31, 1884, the actual quantity removed was 118,448,595 cubic feet, or only about one-thirtieth of the whole. All along the route, however, at Buhio Soldado, Tabernilla, San Pablo, Mamei, Ac., workshops and settlements have been formed, and by 1883 11,000 men were at work. At certain states of the tide the levels of the two oceans differ materially: while at Colon the difference between high and low water is not more than 23 inches, at Panamâ it is generally 13 feet, and at times even upwards of 19⅜ feet. The current thus produced in the canal would be sufficient to stop navigation for a number of hours at each tide; and to obviate this difficulty it will be necessary either to construct locks at the Panamâ extremity or to slope the canal from Colon to Panamâ.

A proposal to pierce the Isthmus of Darien was made as early as 1520 by Angel Saavedra; Cortez caused the Isthmus of Tehuantepec to be surveyed for the construction of a canal; and in 1550 Antonio Galväo suggested four different routes for such a scheme, one of them being across the Isthmus of Panama. In 1814 the Spanish cortes ordered the viceroy of New Spain to undertake the piercing of the Isthmus of Tehuantepec; but the War of Independence intervened, and, though a survey was made by General Obegoso in 1821, and José de Garny obtained a concession for a canal in 1842, nothing was accomplished. Bolivar, president of Colombia, caused Messrs Lloyd and Palmare to study the Isthmus of Panama. Lloyd, whose paper was published in the Philosophical Transactions, London, 1830, proposed to make only a railway from Panama or Chorrera to the Rio Trinidad (tributary of the Chagres), and to establish a port on the Bay of Limon. Μ. Napoleon Garella, sent out by the French Government in 1843, advocated the construction of a sluiced canal. An American company, stimulated by the sudden increase of traffic across the isthmus caused by the discovery of gold in California, commenced in 1849 to construct a railway, and their engineers, Totten and Trautwine, already known in connexion with the canal from Cartagena to the Magdalena, managed, in spite of the extreme difficulty of procuring labour, to complete the works in January 1855. Meanwhile the question of an interoceanic canal was not lost sight of; and in 1875 it came up for discussion in the Congrès des Sciences Géographiques at Paris. A society under General Tiirr was formed for prosecuting the necessary explorations; and Lieutenant Wyse, assisted by Celler, A. Reclus, Bixio, &c., was sent out to the isthmus in 1876. In 1878 the Colombian Government granted the society known as the Civil International Interoceanic Canal Society the exclusive privilege of constructing a canal between the two oceans through the Colombian territory; and at the same time the ports and canal were neutralized. In 1879 Μ. de Lesseps took the matter· up, and the first meeting of his company was held in 1881. The capital necessary for the “Company of the Jnteroceanic Canal of Panama,” as it is called, was stated at 600,000,000 francs,—the estimated cost of excavation being 430,000,000, that of weirs and trenches to take fresh water to the sea 46,000,000, and that of a dock and tide-gates on the Pacific side 36,000,000. The Panama canal was bought for $20,000,000. The contractors, Couvreux & Hersent, began operations in October of the same year. Meanwhile the United States Government proposed to make a treaty with Colombia by which it would be free to establish forts, arsenals, and naval stations on the Isthmus of Panama, though no forces were to be maintained during peace; but the British Government objected to any such arrangement.

Details in regard to engineering and finance will be found in the Bulletin du Canal Océanique, issued since 1879, and in Engineering, 1883 and 1884. See also Reclus’s “Explorations” in Tour du Monde, 1880, for an interesting series of views.