The back country is very sparsely settled, little exploited, and in some districts practically unexplored. Panama, as the world thinks of the republic, is the area close to the Panama Canal, and that is, in fact, the only portion now of significance in world affairs. In two cities of this area, Panama and Colon, live one-fourth of the inhabitants of the republic.
The strategic position of the republic, which lies on both sides of one of the world's great crossroads, gives it an importance in commercial and military affairs far out of proportion to its resources and their development. It is an area which has been coveted by the great maritime nations almost since the discovery of the New World.
Settlers early reached the west coat of Central America across the isthmus, and eastward across this neck of land, for generations, the precious metals trade passed on its way from Peru to Spain. Through the building of the Panama Canal, has the isthmian region become one through which has passed a far more valuable trade serving the world at large.
These two elements--world commerce, affecting particularly the United States, and the naval policy of the United States-give to Panama its major role in international affairs. Inevitably they exercise a far-reaching influence on the politics and prosperity of the little republic and make its relations with the United States of capital consideration. In comparison, its connections with its neighboring republics are of secondary importance and those with other foreign states of almost incidental significance.