Panama City — Capital of Panama

Panama City was founded by Spanish conquistador Pedro Arias Dávila in 1519 on the Pacific coast of the isthmus, making it one of the oldest continuously significant European-founded cities in the Americas and, for over a century, a critical waypoint in the Spanish Empire's transport of Peruvian and Bolivian silver overland across the isthmus to Caribbean ports for shipment to Spain — a role that made the original city an obvious target for raiders.

That original settlement, now preserved as the archaeological site Panamá Viejo, was destroyed in 1671 by the Welsh privateer Henry Morgan, operating under English backing, in one of the most notorious pirate raids of the colonial Caribbean era. The city was rebuilt a few kilometers away in 1673 on a more easily defended, fortified peninsula — the district now known as Casco Viejo (or Casco Antiguo), whose colonial-era walls, plazas, and churches survive as a UNESCO World Heritage Site distinct from the ruins of the original city.

Panama City became the capital of independent Panama immediately upon the country's 1903 secession from Colombia, a status it inherited without contest given that it had already served as the region's dominant administrative center under both Spanish and later Colombian rule; unlike many new Latin American republics, Panama never had a serious internal rivalry over where its capital should sit.

The city's modern identity is inseparable from the Panama Canal, whose Pacific entrance lies at Panama City's edge; the canal, built by the United States between 1904 and 1914 after an earlier failed French effort in the 1880s, brought substantial American investment, personnel, and military presence into the city for most of the 20th century under the terms of the Canal Zone arrangement, an influence that shaped the capital's economy and urban development long before the canal's full handover to Panama in 1999.

Panama City today is a major financial and logistics hub distinguished by a dense modern skyline of high-rise towers rising immediately adjacent to the preserved colonial streets of Casco Viejo and the ruins of Panamá Viejo — a juxtaposition of 16th-century, 17th-century, and 21st-century Panama within a few kilometers of coastline that is frequently cited as one of the more visually striking capital cityscapes in Latin America.

The city's role as a transshipment point for silver predates the canal by centuries: the Camino Real and later the Camino de Cruces, overland mule routes connecting Panama City to Caribbean ports, carried an enormous share of the silver mined at Potosí in present-day Bolivia toward Spain during the 16th and 17th centuries, making the isthmus a strategic chokepoint in global trade long before any canal was engineered — a strategic role that directly foreshadowed the canal project that would define the city centuries later.

An earlier, entirely separate French attempt to build a sea-level canal across the isthmus, led by Ferdinand de Lesseps starting in 1881, collapsed after roughly a decade amid disease outbreaks that killed thousands of workers and a financial scandal that bankrupted the project — a well-documented failure that shaped the more cautious, lock-based engineering approach the United States eventually adopted when it took over canal construction in 1904.