Managua was, and still is, the heart of Nicaragua. In 1972 one-fifth of the nation's population, the central government, and the commercial and industrial majority was situated there. If you can imagine the importance of the US cities of Washington DC, New York, Boston, and Philadelphia all combined into one, that would be Managua to Nicaragua.
At 12:27 AM on December 23, 1972, three consecutive earthquakes struck the center of downtown Managua. The first oscillated horizontally and the other two shook vertically, leveling 5 square miles of the city and damaging the rest. Of the 400,000 people living in Managua at the time, 250,000 were rendered homeless, 20,000 were killed, and everyone in the city had to leave at least temporarily because there was no water, electricity, or gas.
With aftershocks still occurring intermittently over the next few days, the city was evacuated into the countryside by the military and police to avoid disease and looting. As it was, people would run into what was left of businesses and steal things like TVs, radios, furniture, and anything else that they could carry. The military and police were forced to burn bodies wherever they found them in the city to avoid disease and four major hospitals were destroyed so the injured had to be helped out in the open air behind the hospitals or not at all, in some cases, because there wasn't enough man power to go around.
Downtown Managua lies on the edge of Lake Managua and the epicenter of the earthquake was a few hundred meters away from the edge of the lake. The quake in itself wasn't extremely powerful (6.3 on the Richter scale), but the combination of the fact that it originated only 9 miles below the surface, that the earth under the city was compacted volcanic ash instead of rock, that many of the buildings were made out of brittle plaster and rock, that Managua lies along the circle-of-fire (a ring of volcanoes and seismic faults which circles the Pacific), and that it's on top of 5 active faults caused the catastrophic results.
For two miles from Avenida Central (the equivalent of main street) everything was destroyed or severely damaged. Banks, hotels, and government offices were all put out of commission and some are just now being rebuilt. The Gran Hotel, one of Managua's best hotels, was destroyed and you still hear people give directions by saying, "Turn where the Gran Hotel used to be." 50% of the nation's commercial services were centered in Managua and 90% of the small businesses like bakeries and auto repair shops were destroyed either by the earthquake itself or by looting. However, even though 70% of the manufacturing sector was in Managua, the industries survived mostly intact because they were built on the outskirts of the city.
See a picture of the old Managua cathedral downtown.
Many of the quarter of a million homeless people who were evacuated to the countryside had no place to stay. So, they moved into the nearby cities and slept in stadiums, parks, and schools. The population of most cities around Managua doubled in just a few days and prices on everything, especially houses, skyrocketed.
The total damage was estimated at a 1000 million dollars, not an extremely large amount by most international standards, but the entire country's production in 1972 came to just 760 million dollars and the government's budget was only 120 million. On top of that, since so much of the nation was concentrated in Managua, that government actually lost a huge percentage of its income which could have been used to repair the city.
Government's all over the world as well as international organizations and individuals rushed to help Nicaragua, both financially and physically with medical services and food packages. However, as previously noted, the city was not rebuilt and much of the money disappeared and many Nicaraguans have blamed the country's late dictator, Somoza.