After the 1755 earthquake, many of the main downtown buildings were torn down including churches. The King made a fellow named Pombal in charge of rebuilding and he came up with the idea of rebuilding everything based on military barracks at the time, with commercial space at the ground level. That is why there is a uniformity to the architecture in the downtown area today.
The square once was the home of the King's palace but was made into a public square after the earthquake.
The area beyond the large arch is a long pedestrian walkway with fancy shops and restaurants.
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