Panama city became the center of the confederacy’s salt industry
Panama City, during the time before the civil war was only a small resort town. People came here to bathe in St. Andrews Bay and enjoy the sunshine.
It also became a center for light commerce. Sawmills where established in Panama City, this area used to be very heavily wooded. The bay supported a small fishing industry as well.
The outbreak of the Civil War, of course, brought much of this activity to a crashing halt.
At the beginning of the civil war, President Lincoln issued a blockade of all southern ports, stopping the importation of salt needed to preserve food. This forced people to make their own salt out of sea water. A long drought made St. Andrews Bay good for making salt.
As word got around, thousands came to the area to enter the salt industry. Men were even exempt form conscription into the confederate army when working in the salt industry. The Union destroyed hundreds of these salt making camps.
Federal troops established their headquarters on Hurricane island, which existed then in the old pass.
After being warned not to come ashore, a group of Yankees made the fatal mistake in trying to obtain water in a tavern at old town on March 20, 1863. Confederates killed two Yankees and mortally wounded 4 others. The Yankees retaliated on December 1863 by torching all 32 homes that existed in old town.