Panamanian rebels loyal to Pedro Prestan destroyed the city by committing arson before retreating from a battle with federal Colombian troops.

On or about March 16, the rebel leader Pedro Prestan occupied the small port of Colón on the Caribbean coast where he was waiting for a shipment of weapons by the American merchant ship Colon of the Pacific Mail Steamship Company.

On March 26, Captain John M. Dow, representing the Pacific Mail Steamship Company in Colón, received a letter from the Panamanian sub-Secretary of State informing him that the offloading of any weapons intended for rebels was strictly prohibited.

On the following day, Captain Dow received another letter from Secretary General Gomina which advised that he had assumed the position of commander-in-chief of civil and military affairs and should any of the weapons be removed from the Colon then the agent responsible for their delivery might attempt to seek asylum from the American or French naval forces present.

So on March 29, when the Colon arrived at Colón with fifty-two packages marked "M", Captain Dow assumed command and ordered that nothing be taken off the ship.

This angered Prestan when he came to pick up his delivery and Dow and three others were then taken under arrest by rebel militiamen; one of the captives was a United States Navy lieutenant named Judd.

A detachment of about 100 marines and sailors from the Galena then landed at the request of the Colombian government and 600 more men and two cannons from the USS Tennessee arrived within the next few days.