Chagres and Fort San Lorenzo Chagres , once the chief Atlantic port on the isthmus of Panama , is now an abandoned village at the historical site of Fort San Lorenzo . The fort ' s ruins and the village site are located about west of Colón , on a promontory overlooking the mouth of the Chagres River . 16th & 17th centuries : Discovery and fortification . In 1502 , during his fourth and final voyage , Christopher Columbus discovered the Chagres River . By 1534 , the Monarchy of Spain had , following its conquest of Peru , established a rainy - season gold route over the isthmus of Panama — Las Cruces Trail — most of which consisted of the Chagres River . The trail connected the Pacific port of Panama City to the mouth of the Chagres , from whence Peru ' s plunder would sail to Spain ' s storehouses in the leading Atlantic ports of the isthmus : Nombre de Dios , at first ; and , later , Portobelo . ( The dry - season , overland route — the Camino Real — connected Panama City with those ports directly . ) Attracted to the treasure , pirates began attacking Panama ' s coast around 1560 . To protect the Atlantic terminus of Las Cruces Trail , Spain built Fort San Lorenzo at the Chagres River ' s mouth . From 1587 to 1599 , the fortifications evolved into a sea - level battery . In 1670 , buccaneer Henry Morgan ordered an attack that left Fort San Lorenzo in ruins . He invaded Panama City the following year , using San Lorenzo as his base of operations . In the 1680s , the Spanish constructed a new fort above the water . Set on a cliff overlooking the entrance to the harbor , the fort was protected on the landward side by a dry moat with a drawbridge . During this time , the town of Chagres was established under the protection of the fort . 18th & 19th centuries : Decline and rebirth . In 1739 and 1740 , British Admiral Edward Vernon attacked the Spanish fortifications at Portobelo and Chagres . With the destruction of Portobelo ' s fort , Spain abandoned trade there , instead strengthening its fortifications at Chagres , and , upstream , Gatun . With the decline of Portobelo , Chagres surpassed it as the chief Atlantic port of the isthmus . By the middle of the 18th century , however , the Spanish had largely abandoned both of the old trails over the isthmus , preferring to sail around the tip of South America at Cape Horn . For over a century , Fort San Lorenzo was used as a prison . The 1848 discovery of gold in California stimulated new vitality at the mouth of the Chagres River . Westbound prospectors who preferred to avoid crossing the " Great American Desert " or rounding Cape Horn would follow the old path of the Las Cruces Trail , beginning their transcontinental journey at " Yankee Town " or " Yanqui Chagres " — the wild - west boomtown that sprang up on the bank opposite the original village and fortress . The rebirth of Chagres ' importance was short - lived . Although the advent of steamboat service on the Chagres River had , by 1853 , shortened the time required to cross the isthmus from several days to about twelve hours , the 1855 completion of the Panama Railway further reduced the transcontinental travel time to about three hours . As a result , the railway ’ s Atlantic terminus , Colón , became Panama ' s Atlantic port , and Chagres receded from importance . 20th century : Canal Zone to Protected Area . The construction of the Panama Canal , completed in 1914 , required the construction of the massive Gatun Dam , about upriver from Chagres , permanently sealing off the river from inland trade . Although Chagres fell outside the original boundary of the Panama Canal Zone , that zone expanded in 1916 to include the mouth of Chagres River . The town of Chagres — which , by then , had only 96 houses and 400 to 500 inhabitants — was then " depopulated , " and its former residents were resettled to Nuevo Chagres , located about to the southwest , along the coast . Fort San Lorenzo has been designated as government - protected since 1908 . Currently , the ruins of Fort San Lorenzo and the Chagres village site are contained within the of the San Lorenzo Protected Area , all former Canal Zone territory . In 1980 , UNESCO declared Fort San Lorenzo , together with the fortified town of Portobelo about to the northeast , to be a World Heritage Site under the name , " Fortifications on the Caribbean Side of Panama . " The organization describes the fortifications as follows : " Magnificent examples of 17th - and 18th - century military architecture , these Panamanian forts on the Caribbean coast form part of the defence system built by the Spanish Crown to protect transatlantic trade . " In fiction . Chagres features prominently in " " , a children ' s book by Richard Adams .