Panamá, ISTHMUS OF, formerly called the Isthmus of Darien (q.v.), embraces the narrowest part (35 miles) of Central America, connecting Costa Rica on the W. with Colombia on the E. It now forms a department of Colombia, has an area of 31,880 sq. m., and a pop. of 285,000, with 8000 uncivilised Indians, and is traversed by a low chain of mountains, forming the barrier between the Atlantic and Pacific Oceans. Numerous streams, the largest of which is the Tuira (160 miles long, and navigable for more than 100 miles), fall into both oceans. Off the Pacific shore are numerous beautiful islands, among which Las Perlas, so called from their pearl-fisheries (now almost discontinued), Naos, and Taboga are the chief. There are no good natural harbours. The chief trading ports are Panamá (see below) and Colon (Aspinwall). The exports embrace hides, tallow, caoutchouc, indigo, vanilla, coffee, gold dust, cocoa-nuts, tortoiseshell, &c. Commerce is entirely in the hands of foreigners, and is valued at less than £1,400,000 annually. Gold, once abundant, is still worked, and copper, iron, coal, &c., exist. 'Panamá hats' are made in Ecuador and Peru.
PANAMA, the capital of the department, stands on a projecting volcanic rock on the Pacific side of the Isthmus; the massive walls the Spaniards built to protect their treasure city still stand in places. Old Panamá, founded in 1518, was captured and destroyed by the buccaneers under Morgan (1671). Modern Panamá was built two years later, 4½ miles distant from the old city. In May 1880 it had a population estimated at 15,000, the majority of Indian and negro descent, and half-breeds. During the zenith of canal work (see below) the population was estimated at 25,000 to 30,000. Fires have destroyed Panamá repeatedly, as well as its sister city Colon. The principal buildings are the cathedral (1760), a Spanish structure, built of yellow stone; the town-hall, in which the Colombians signed the declaration of their independence; and the bishop's palace (1880). Panamá is connected with Colon on the Atlantic by the Panamá Railway (48 miles long), built by Americans in 1850-55.
PANAMÁ CANAL.—The idea of connecting the Atlantic and Pacific Oceans by way of the central American isthmuses is by no means new. That for uniting them by the Isthmus of Panamá is almost coincident with Balboa's discovery of the Pacific (1513). In King's Wonders of the World we read: 'In the town library of Nuremberg is preserved a globe, made by John Schöner in 1520. It is remarkable that the passage through the Isthmus of Darien, so much sought after in later times, is on this globe carefully traced.' Gomera (1510-60), the historian, was the first to advocate a union of the oceans by means of a canal. Philip II. of Spain proved an implacable enemy to all such schemes. The Tehuantepec, Nicaragua, and Darien routes were discussed in the 16th century; and the Dutch, it is alleged, made complete plans for a canal over two centuries ago. But no steps were taken to carry out any plan until Ferdinand de Lesseps, of Suez fame, convened in Paris in May 1879 an international congress to discuss the plan of cutting through the Isthmus of Panamá. A plan previously prepared by De Lesseps was adopted, and a concession from the United States of Colombia to Lieutenant Lucien Napoleon Bonaparte Wyse of the French navy, who had made a hasty and partial survey, was sold to the prospective Panamá Canal Company. On February 28, 1881, the first detachment of canal employees arrived at Colon; surveys were at once made, and the building of camps, hospitals, &c. followed. In 1882 the Canal Company purchased the Panamá Railway. De Lesseps' Engineering Commission to Panamá in 1880 estimated that a canal could be made for 843,000,000 francs. De Lesseps reduced their figures to 600,000,000 francs, or £24,000,000, and announced that a canal à niveau, or tide-level canal, could be completed for that sum. Later he invited delegates to meet him at Panamá in 1888 for its opening. Loans followed year after year. Meantime interest charges accumulated and became burdensome, while little real progress was made. In the autumn of 1888 further borrowing became impossible. The company was forced into liquidation, January 1, 1889; its bond and share indebtedness was roughly estimated at £70,000,000, interest charges over £4,000,000, with perhaps a fifth of the real work done. There are over 800,000 holders of shares in France. Shortly after the crash, a liquidator was named by the Court of the Seine. In 1890 a commission of French and other engineers was sent to the Isthmus by him. Their report was very discouraging. Valuable plant estimated at about £6,000,000 was rusting away, much already useless. The tide-level cut at Colon was rapidly filling in, and the fine harbour shallowing, owing to the cut. In 1891 the government of Colombia granted to the Panamá Canal Company an extension of ten years from 1893. De Lesseps seems to have entered upon the plan without sufficient knowledge. Many hundreds of the workmen were swept away by tropical diseases, yellow and pernicious fevers, dysentery, &c., the climate of the isthmus being pestilential and death-dealing. Indeed the isthmus and its towns are hotbeds of malignant disease, which is distributed thence by passing merchandise to all quarters. Much money was squandered through extravagance and incapacity; and very much on bribery of public persons and journals in France, which led to the Panamá scandals of 1892-93, and the investigations, prosecutions, and imprisonments (Lesseps and his son Charles, Eiffel, &c.) which damaged the credit of many eminent men, and shook the republic to its foundations. Insurmountable obstacles to a tide-level canal are the marshes and quicksands on the Atlantic coast. The unruly Chagres periodically overflows, and fills the valley of the isthmus. Then there are serious natural obstacles in the line of the canal, as the swamps and volcanic ledges on the Panamá side. Earthquakes, too, occur; in September 1882 much damage was done to both Isthmian cities and the Panamá Railway by a severe earthquake, whilst a tidal wave swept the islands and coast of the Gulf of Darien on the Atlantic side, causing great destruction of life and property. To natural obstacles must be added the great cost of labour and living. The long wet season of nearly eight months causes delays and damages to cuttings. See Dr W. Nelson, Five Years at Panamá (New York, 1889; Lond. 1891).