Panama and the United States: The End of the Alliance

1. Independence and Early Relations

i Independence and Early Relations In April 1819 the Scottish soldier-of-fortune Gregor MacGregor and a ragged band of adventurers captured Portobelo, Panama 's northern port for trade crossing to the Pacific Ocean. Acting loosely on behalf of independence forces in the Caribbean, he also enjoyed the backing of merchants in Jamaica, who desired freer access to the markets of Panama and the Pacific ports beyond the isthmus. MacGregor and his sponsors had a secret plan to build a canal if they succeeded in wresting Panama from Spanish control. The governor of Panama soon recaptured Portobelo and imprisoned MacGregor's men, so the scheme failed utterly.1 This attack, one of three launched in the iSios against the royalist stronghold, attested to the strategic importance of Panama in the tumultuous period of Spanish-American independence. Panama's Independence and U,S* Expansionism Panama's leaders, late converts to the cause of independence, declared their separation from Spain in 1821. They annexed their land to the newly formed Confederationof Gran Colombia, a connection that would weaken as the century wore on. Prior to independence Panamanians had few dealings with citizens of the United States. Spain's loss of colonies in the hemisphere, however, brought a shift in U.S. policy, signaled by President Monroe's famous 1823 warning to the European powers not to recolonize former dependencies in the Americas. From then on U.S. leaders evinced a growing interest in an interoceanic crossing in Central America, especially at Nicaragua, Tehuantepec, or Panama. Panamanians, for their part, avidly sought 7 8 PANAMA AND THE U N I T E D STATES such a crossing in their province to restore commerce and spur economic development. By the iate-i84os these two poles of attraction— U.S. and Panamanian aspirations—formed a connection and created scheduled interoceanic traffic across the isthmus, Such was the beginning of the U.S.-Panamanian alliance, Panama had long served as a strategic locale in Spain's overseas empire, and her people had enjoyed special privileges in return, Until the eighteenth century virtually all Spain's trade with the west coast of South America had been transported across the isthmus. Her ports boasted modern fortifications, and her officials were paid well out of customshouse revenues and a generous subsidy (sitiado) from Lima, Panama was the seat of a captaincy and had a resident audienda, or high court. Panamanians thought of themselves as destined to live by commerce and sought to have Spain establish a consulada, or board of trade, in their capital. Yet, since the 17305, trade had slumped and the once-opulent fairs at Portobelo had virtually ended. The reasons were increased shipping around Cape Horn, greater commerce with non-Spanish vessels (that is, contraband), and the trade liberalization allowed after the 1770$. Spain's controlled, mercantilist system no longer benefited Panama. Due to the drop in business, Panamanians increasingly embraced the doctrine of free trade in the eighteenth and early nineteenth century . Laissez-faire would become the dogma of the independence leaders and a panacea for later generations as well. This shift drew Panamanians toward the expandingcommercialorbits ofGreat Britain and the United States. Virtually no natural affinities existed between the United States and Panama prior to the latter's independence. The scant U.S. merchandise that landed at Panama in the 17905 and iSoos was usually handled by resident British merchants. Panama herself had little to sell to the world, and most U.S. trade at the time was with Europe, the Caribbean, and Brazil.2 Panama remained loyal to Spain during the iBios. The struggles that broke out in the Spanish colonies after Napoleon's occupation of Madrid in 1808 did not cause immediate hardships in Panama nor did 9 Independence and Early Relations they provoke declarations of independence. The resident governor declared Panama's ports open to ships of friendly and neutral nations, causing a sharp increase in trade for the next several years. Many Panamanians sought to help the metropolis preserve its overseas empire . In 1810, for example, Panamanian soldiers joined military units dispatched to Quito and Bogota, where patriot forces had declared their independence. Twoyears later the viceregal government of New Granada (modern Colombia) itself was installed in Panama due to a patriot rising in Bogota.3 The viceroy remained in Panama for a year and a half. Reinforcing the Panamanians' undoubted loyalty, however , was the realization that they...