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Panama City (Ciudad de Panamá) Panama City (Spanish: Ciudad de Panamá) is the capital and largest city of the Republic of Panama. The city of Panama was founded on August 15, 1519, by Spanish conquistador Pedro Arias Dávila. The city was the starting point for expeditions that conquered the Inca Empire in Peru. It was a stopover point on one of the most important trade routes in the history of the American continent, leading to the fairs of Nombre de Dios and Portobelo, through which passed most of the gold and silver that Spain took from the Americas. On January 28, 1671, the original city (see Panamá Viejo) was destroyed by a fire when privateer Henry Morgan sacked and set fire to it. The city was formally reestablished two years later on January 21, 1673, in a peninsula located 8 km (5 miles) from the original settlement. The site of the previously devastated city is still in ruins and is now a popular tourist attraction known as Panama Viejo.