the whole course of commerce will be changed there can be no two opinions, and that the Pacific seaboard of South America will benefit is also a foregone conclusion. Guayaquil, Callao, Mollendo and Arica and Valparaiso will be brought nearer to their markets by direct steamship service, and the closer intercourse will undoubtedly bring about large increases in their commerce. Ships sailing from the Eastern and Western coasts of the United States will save a distance of from seven to eight thousand miles, and European shipping to Pacific ports will reduce their voyages by about the same number. CHAPTER VII _Panama_ When the present city of Panama was founded in 1673, its architects and builders in laying out the new town fixed its location up the rocky peninsula which juts out into the sea at the foot of Ancon hill. They had a vivid recollection of the fate that had overtaken the old city, and were determined that the new one should offer a more formidable front to any invading foe, and so strongly fortified was the new city that with the exception of Cartagena it was the most impregnable fortress in the whole of South America. Shortly after the city was founded it became the capital of Terra Firma, and it was hoped by the founders that the surrounding provinces of Panama, Darien, and Veragua would contribute largely to its importance and support. But the Indians of the Darien province, regaining their independence, became uncontrollable, and the gold mines in the other provinces proved, after extended trials, to be unremunerative, so that the new city was dependent chiefly upon the pearl fisheries, which are to this day of considerable importance to it. The pearls of Panama are of fine quality and remarkable size, and although the fashions of different ages have undergone changes with regard to jewels, the fisheries have, in spite of the increasing popularity of diamonds, been able to hold their own by opening up new markets in Peru and Southern America. The real reason, however, of the importance of the new city was the unique position it occupied. It rapidly became the market for the products of the rich countries on the Pacific coast, and fleets of small sailing craft were ever arriving at the port laden with valuable merchandise. Great stores were built for the reception of the goods until the mule trains were ready to convey them across the isthmus, _en route_ for Spain. Many of the older buildings are now in ruins, but what [Illustration: OUTSIDE A CHURCH ON CHRISTMAS EVE, PANAMA.]