In 1510, the a Spanish expedition headed by Martin de Enciso, left Española to resupply the new colony of San Sebastian, on the mainland of South America (Colombia). Vasco Nuñez de Balboa, an unsuccessful farmer in Española, escaping his creditors stowed away in an empty barrel, on a ship in 1510, with his dog, Leoncico. They first landed at Cartagena, where the found some of the settlers of the abandoned San Sebastian. Enciso then went to San Sebastian, where they discovered that the settlement it had been burned to the ground by the natives and the settlers had fled. The natives were very aggressive and had poison arrows. Balboa suggested and convinced the settlers to move the settlement to the western side of the gulf, to a place he had been to on his voyage with Bastidas. He told them about how friendly the natives were, the fertile land, and good water supply in the new place. 

When they arrived there, the found that Balboa was correct in his description of the land and the natives. The natives, under chief Cemaco, although hostile, did not have poisoned arrows that did them in at San Sebastian, and were easily defeated. The found large quantities of gold, fashioned into beautiful ornaments by the natives. On 1511, Enciso founded the town of Santa Maria de la Antigua del Darien, the first European settlement in Central America on the site of the captured Indian village.

Enciso had been appointed the new Alcalde Mayor of the new settlement by Ojeda, before they left Española, started enacting new laws and regulations. The new colony flourished in this location although Enciso's enforcement of these new laws, was vigorous, and permitted no exemptions. They angered the  colonist, and they soon turned against Enciso. Balboa's knowledge of geography, came to their aid, when he informed them that Enciso had no legal powers in this new territory, because when the King divided Tierra Firme, they were now in the land assigned to Nicuesa, which was all the land on the western side of the  Gulf of Darien, while that on the east was assigned to Ojeda, and Ojeda had no authority in this land. Balboa and Martin Zamudio, were elected the new Alcalde's, and appointed Valdivia as one of the regidores, replacing Enciso. Enciso, along with some of his supporters were sent back to Española. Soon after that, Two ships arrived in Antigua, that were searching for Nicuesa, (the real governor of land) who was somewhere on the exploring the province of Castilla del Oro. The settlers in Antigua, sent an invitation to Nicuesa to visit the town of Antigua. When the supply ships found Nicuesa, he, and his men, were in Nombre de Dios, and suffering from exhaustion, disease, and the frustration of not finding a site, suitable for a permanent settlement. He became upset that there was a settlement on his land, and quickly rushed to Antigua.

When he arrived in Antigua, he tried to take over the settlement, and was arrested by Balboa. Nicuesa was set aboard an unseaworthy ship, and was never heard from again. He was lost at sea with 17 of his men, on March 1, 1511.

On July 27, 1513 a new governor was appointed by the King of Spain, to Castilla Aurifica (Golden Castle), the new name for the area from Antigua extending as far as Veraguas. Pedro Arias de Ávila (Pedrarias), was 70 years old and undertook his new assignment with the vitality of a 30 year old. He was sent to Santa Maria la Antigua de Belen,  to replace Balboa, after the King heard the story of Balboa's actions against Nicuesa and Enciso.

On June 30, 1514, Pedrarias arrived at Santa Maria la Antigua de Darien, and formally took control of the settlement. On his fleet, there were not only soldiers, but some colonist that were there to begin the settlement of Castilla Aurifica. Pretending to be a friend, he asked Balboa, to prepare a written report on all of his experiences and events that had occurred in the colony. Balboa prepared the document giving complete details of all that had transpire during his command of the region. No sooner did Balboa give the report to Pedrarias, when he turned against Balboa. Balboa was spared harsh punishment, had it not been for the bishop and the alcalde, who defended him, and he had the support of the populace. Pedrarias had to release him, or face an uprising.

Pedrarias first year at Antigua was not a pleasant one. Many of his men died, over 700 during the first four months, of disease. Famine became a problem, since most of the food brought from Spain, spoiled in the humid climate.  Over a hundred colonist, abandoned Antigua and returned to Cuba, out of fear for their life and health. King Ferdinand, ordered that settlements be established at different places in the new province of Castilla Aurifica and to explore the Mar del Sur, causing Pedrarias to release Balboa, and make use of his services. Pedrarias' forces had little luck, in establishing settlements, because of their bad  treatment the natives, and stealing their gold. The natives were always attacking their settlements. Even the caciques that Balboa had peace treaties with, were abused by the new Spanish government.

Pedrarias arranged to separate the forces loyal to Balboa, by sending them into different parts of Castilla Aurifica, attempting to form settlements. While Balboa's friends were out of the way, and the Bishop and Governor were in Spain at Balboa was arrested and charged with treason, tried and quickly executed on April 16, 1517, along with some of his lieutenants and allies.

In 1515, Captain Antonio Tello de Guzmám, under order of Pedrarias, was exploring the western coasts of the Mar del Sur (South Sea), when he came upon a native village of fishermen. The natives called themselves and their village, Panamá. Pedrarias, who had been given the orders to colonize the lands of Castilla de Oro,  ordered that a series of outpost be established in the country and one at the hamlet of Panamá to assist in the exploration of the rest of the lands west (in the direction of present day, Central America), bordering the Mar del Sur. Pedrarias wrote the Spanish Court in 1517: "Your Highnesses should know that Panama is a fishery on the coast of the South Sea and the fishermen are called Panama by the natives of the area."

In the year, 2019, the city of Panama will be celebrating her quecintentual (500) anniversary. Founded on August 15, 1519 by Pedro Arias de Ávila (Pedrarias) as Nuestra Señora de la Asunción de Panamá, she was the first city founded on the Pacific coast of America by Europeans.  Panama is one of the oldest Spanish cities in the Americas being established 46 years before San Agustin in Florida, founded in 1565, and 66 years before the English lost colony on Roanoke Island, Virginia, in 1585. Jamestown was founded in 1607, some 88 years after Panama, and the Pilgrims never arrived in America until December 1620, to settle in Plymouth, some 101 years after the establishment of the ancient city of Panama.

Panama Viejo - 1609

Morgan found very little treasures in the city, because the citizens, warned in advance of the attack, hide most of their valuables before the buccaneers arrived. The city was set ablaze by the Governor to deny the English the pleasure of destroying the city themselves. They had also removed most of the food or burned it, denying the buccaneers of food. Morgan's stayed in the city for a month, torturing the inhabitants that stayed behind, trying to find the treasures that was hidden, and searching the surrounding countryside for fleeing citizens with their treasures. On the trip back, across the Isthmus, the pirates mutinied, and Morgan, got away with most of the booty, he was able to find.

During this expedition, Morgan's chronicler wrote that there were "two-thousand houses of magnificent and prodigious building inhabited by very rich merchants and five thousand house more, occupied by persons of lesser quality and tradesmen". Historians do not believe that Panamá, at one time, had 7,000 houses. They believe that the larges population they ever had, was about 10,000 inhabitants.

Historical and Geographical Report About Panamá in 1640