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Perdido Key, Florida is a barrier island stretching 16 miles from the Perdido Pass Bridge near Orange Beach, Alabama to the Theo Baars Bridge connecting to Pensacola, Florida. The island is no more than a few hundred yards wide in most places.

From the beginning of the 17th century, Spanish and French explorers, recognizing the potential riches in the vast New World across the sea, began colonizing the northern coast of the Gulf of Mexico. The Spaniards had settled on Panzacola Bay. Some sources translate Panzacola as meaning "the village of hairy people, referring to the Spanish. The French were located above Maubila (Mobile). A natural boundary was needed for their unsettled relationship so that the groups from the two thriving seaports could live in this region in relative peace and harmony. Explorers from both countries had heard of a great mysterious body of water to the west of Pensacola, but they were unable to find the entrance.

In 1693 noted cartographer and scientist Carlos de Sigüenza y Góngora was sent by the Spanish government to locate the entrance. Even after he located the mouth of the bay, he was still unable to find a waterway deep enough to sail through. According to legend, Siquenza's ship had been blown off course as he was again searching for the pass into the deep inland waters. The ship was spotted by an Indian chief camped with his tribe at Bear Point. As the chief was walking along the water he spotted Carlos de Sigüenza y Góngora attempting to reef his sails and offered to guide Siquenza and his men to a connecting deep water channel from the Gulf of Mexico into the more tranquil bay. When the search party finally located the elusive bay, they called it "Perdido", which in Spanish means "lost" or "hidden".

Early maps indicate that, at the time, the pass was located on or very near to today's official State boundary between Alabama and Florida. Hurricanes and other forces—natural as well as man-made—have moved the pass back and forth several times to where it lies now in Orange Beach, Alabama, approximately 3 miles (4.8 km) from the Florida boundary.

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