CORNELL UNIVERSITY LIBRARY ENGINEERING Cornell University Library HD 9705.U58 Asiatic mari o u / •, ,H .3 ais « .a ■Issla 1— 1 1— I eo ^ C3 CO Meot^(D oroo'«'t^i>t^N*''*'cH ^ (I4 td ct) Ctl cii p4 H N H P^ CQ «<) ^ ^ m P! 11^^ toot- jR« CO wS?4 3< So^o^c o^ o^ d o^ o^ irsua If "I ^ bo . 5lg ^ 2 o ■Ssl ft ** o *^ a « es = _rg a S " .5-1 POSITION OF ASIA IN AMERICA'S MACHINERY TRADE. 7 AMERICAN PARTICIPATION IN MACHINERY MARKETS OF ASIA. The data given in the table on page 3 are derived from the returns of the United States customs and refer only to American machinery. By consulting the returns issued by the several Asiatic countries we can ascertain what share of their machinery imports are from the United States. In doing this it must be recognized from the start that the returns of two separate countries seldom check. The United States may report certain shipments of machinery to Ceylon, for example, and yet on examination of the returns in the Ceylon Bluebooks it is found that the.authorities there either fail to acknowl- edge receipt of any such quantity or else give values far in excess of the American claims. These discrepancies arise from a great variety of causes, such as the use of arbitrary values, differences in classifica- tion, arbitrary fiscal years, the time consumed in transit, etc. In examining these trade returns it should be remembered that from the close of the Russo-Japanese War until 1914 the machinery trade of Asia was reasonably uniform. Japan was the most" im- portant buyer (except possibly India) and startled the world with its progress, while everyone hoped that the other Eastern countries would follow the Japanese example and modernize all Asia. The machinery trade of the whole continent during the years 1905 to 1916 followed a reasonably regular and apparently satisfactory although rather deliberate course and is represented with substantial accuracy by the data for the year 1915 as published in the table on the opposite page, which shows the comparative importance of tilie markets in the principal cities and the American share in the trade of each. During these years manufacturers and exporters had a rather stable business and knew about what to expect. DEVELOPMENT OF AMERICAN MACHINERY TRADE IN ASIA. Some time between 1915 and 1919, however, new forces were re- leased, as .has been shown by the statistics of the American customs on page 3 and confirmed by the returns from the various Asiatic countries, as shown in the table opposite. During this interval ' American machinery exports increased more than a thousand per cent, and this increase has been reasonably well maintained ever since and is being augmented much faster than the corresponding trade with any other part of the world. It will also be noted that the par- ticipation of the United States in this trade has increased very rapidly. The data in this table tempt one to draw the conclusion that this tremendous increase in the Asiatic demand for machinery was caused by the war, but other circumstances suggest that such an inference is not justifiable, because the demand, has been so well sustained since the armistice and the markets of Asia are increas- ing in importance so much more rapidly than is the case elsewhere. There seems to be no relation between the market of the years since 1918 and that of the years prior to 1915. To make this perfectly 8 ASIATIC MARKETS FOR INDUSTRIAL, MACHINERY. clear the following data for exports of American industrial ma- chinery to Asia are repeated : 1910 $3, 805, 620 1913 _ 6,530,936 1915 4, 443, 287 1918 38, 676, 665 1919 73,116,419 1920 71,296,081 1921 64, 424, 150 Obviously the demand has been sustained for at least three years following the armistice, and data indicate that the trade is on a very different basis from that known previous to 1915. One would con- clude that other than war forces are at work, as is also suggested by a comparison of the values for 1913 with those of 1910. It is the writer's impression that the people of Asia, in all of the countries, appreciate the value of modern industrialism and realize that by the use of machinery they willbe able to raise their standard of living. They desire this above almost anything else. They know well the difference between conditions in their countries and those in the industrialized west, and they are very ambitious to better their own conditions. To a greater or less degree they appreciate the superiority of American engineering and American industrial ma- chinery, and whenever money is plentiful they can be relied on to buy. Each year it is becoming easier to promote new enterprises; the existing operators grow in experience and knowledge. The field is a most promising one. RELATIVE VALUE OF PRINCIPAL ASIATIC MARKETS. It is common practice to publish returns showing the values of the trade in the different countries, but to a certain extent trade ignores political boundaries. The real machinery markets of Asia are the various cities, not the countries. Hongkong and Shanghai have very little in common, although both are markets for trade in China. Eangoon has nothing in common with Bombay. The data in the table on page 6 have been prepared in an effort to show the com- parative importance of the trade in industrial machinery of 18 of the more important cities of Asia and the share of the United States in that trade in 1915 and 1918. In presenting these figures it is realized that they are subject to criticism. As has been explained, they are based on the returns of several foreign countries and are not uniform as to classification. The exchange rates employed are arbitrary arid possibly are not the best that could have been selected. In some instances these figures refer to the calendar year and in others to arbitrary fiscal years. But despite the endless series of questions that might be raised in this connection, it is believed that the impression conveyed by these figures is substantially correct and reliable. Another serious defect in these returns is the method of arriving at the American share of the business at each port. For instance, it will be noted that this percentage is assumed to be uniform for all of the cities in each country, and obviously this is not true Un- fortunately, the customs returns of the several countries show only the American participation in the trade of the country as a whole The trade of each port necessarily has been prorated on this basis POSITION OF ASIA IN AMERICA'S MACHINERY TRADE. 9 But regardless of such defects, it will be noted that the returns for 1918 check rather closely with those published by' the American authorities, and, taken as a whole, all of the returns demonstrate that the machinery trade of Asia is expanding rapidly, that the American participation in that trade is important and increasing, and that the rate of development in all countries is rapid and, everything being considered, shows gratifying progress. In this field Japan is the largest market for machinery, as well as the largest for American machinery. The cities of India rank next in total volume, but usually Manila and the ports of China take a little more American equip- ment. Up to 1918 the Philippines usually absorbed more American machinery than China, but in 1919, 1920, and 1921 this situation was reversed, as is shown by the following figures from the returns of the American customs : Years. Philippines. China. Years. Philippines. China. 1910 $532,361 1,489,836 689, 562 3,753,054 $641,732 260,431 414,046 2,744,114 1919 $10,007,110 9,861,830 5, .529, 555 $12,149,039 15,202,914 1913 1920 1 191,'i 1921 18,184,978 1918 The markets in the Dutch East Indies and British India are also very important, for while they did not absorb a great deal of American machinery before the war it was because the American participation in the trade was abnormally small. The total amount of machinery purchased is very important. In recent years Ameri- can equipment is in greater demand, and these markets deserve more careful attention, as is indicated by the following American returns, which correspond to those just given for the exports to the Philip- pines and China: Years. Dutch East Indies. British India. Years. Dutch East Indies. British India. 1910. . $84,448 424,314 212,630 2,171,062 $616,438 628,063 625, 739 3,635,335 1919 $4,546,249 3,962,705 5,061,080 $4,822,136 191.^ 1920 8,111,594 10, 772, 891 1915 1921 1918 L PRESENT SITUATION AND IMMEDIATE PROBLEMS. No further demonstration should be necessary to show that this is a time when the best results, in respect to these materials, can be secured by sustained selling effort and advertising. The significance of these figures is tremendous. This $242,000,000 worth of ma- chinery since 1918 represents a very powerful force; the trade has acquired a momentum. This machinery will not stand idle. It- will work for the American manufacturer and exporter. It estab- lishes a " good will." An era of depression has followed the fever- ish boom of the years 1918-1920, but the indications are that trade will largely readjust itself by 1924 and the volume will never fall back to the levels of pre-war days but will remain large and may be expected to expand rapidly. Before leaving Asia the writer asked several of the machinery dealers there to estimate the level 10 ASIATIC MARKETS FOB INDUSTRIAL, MACHINERY. at which it would settle down, and so far as could be learned it was felt that it would be about 60 to 70 per cent of the volume of 1920. On the whole it appears that we can expect to export to Asia during the next few years an average of about $40,000,000 or $50,000,000 worth of industrial machinery per year, and foreign sales managers would presumably be justified in developing their organizations to correspond with' this basis. It will be noted that this is about ten times the volume of the trade in 1915. Allowance and preparation should also be made for a rapidly increasing volume during the following years. The matter of foreign competition will be referred to on subse- ?uent pages, but it should be noted here that, with the exception of rreat Britain, there, is no other country that exports anything like the amount of machinery indicated by the foregoing figures. It does not seem probable that foreign competition will disturb this trade to any serious degree. The trade returns for recent years in several of these countries are not yet available but, fortunately, the following Japanese returns have been received, and these indicate the nature of the changes that are taking place as reconstruction in Europe progresses; it should be remembered that Japan is an in- dependent market where purchasers endeavor to buy on merit and political and financial affiliations do not intervene : Years. Total machinery imported to Japan. Percentage from tFnited States. Percentage from United Kingdom. 1918 Yen. 58,497,998 89,221,936 110,571,375 119,882,164 80 75 66i S3 17 1919 18 1920 25.7 1921 36.7 Note. — The yen is a gold imit that does not fluctuate very much as compared with United States cur- rency and is worth a little less than 50 American cents. Even such a reduced participation in trade as is suggested by these figures is of very small significance, for it will be observed that the total value from the United States increased rapidly and continuously (1921 excepted). Also, it is felt that any slight de- crease in the American share of this trade is more than made up in gains secured in other Asiatic territories where the American par- ticipation, although smaller, has been increasing rapidly. The above figures speak for themselves and point the way to mar- kets of great present importance, with even better future prospects. But one feels that they represent a situation that is not recognized in this country. The outstanding impression left by the writer's •investigation is that many of our manufacturers need to remodel their foreign sales organizations. The business has outgrown its old bounds, and the methods that may have sufficed in 1913 are no longer suitable for the larger business and more perfectly developed markets of the present. The staff that may have met the old conditions is possibly too small or not qualified to handle the work and problems that have developed with such extreme rapidity. POSITION or ASIA IN AMERICA'S MACHINERY mADB. 11 During the months that we experienced a "sellers' market" tem- porary arrangements were acceptable, but now that foreign buyers are becoming more critical, good management requires the adoption of correct business principles. Of late a great deal of comment on export trade has appeared in the public prints and, as is well known, some of this comment is inaccurate. The present is the time for clear thinking and methodical practices, and manufactur- ers and exporters are urged to reconsider the whole problem. The first step is to decide definitely whether to cultivate foreign markets, and this is one of the most serious decisions that many executives are called upon to face, for if the trade is worth cul- tivating it is worth adequate organization, which will probably involve serious expense before adequate returns are received. No effort will be made here to demonstrate the value of foreign trade. There are important machinery manufacturers in the United States that export from 40 to 60 or more per cent of their product. The effect of this on the prosperity of- such companies, the diversity of the markets carrying the manufacturer's over periods of localized depression, the beneficial effect on factory, city, and nation of this " imported prosperity " are assumed to be fully recognized. More and more the prosperity of our people depends upon foreign trade. The fundamentals of the business of exporting machinery are practically the same as for other commodities. The decision to go in or stay out, the executive policy, the sales policy, the study of markets, the handling of agents, salesmen, advertising, and many kindred subjects are covered by a publication entitled " Selling in Foreign Markets," Miscellaneous Series No. 81, issued by the Bureau of Foreign and Domestic Commerce, and obtainable for 50 cents from any district or cooperative office of the bureau or from the Superintendent of Documents, Govermnent .Printing Office, Washington, D. C. There is no need to repeat here whattias been published previously, but an effort will be made to offer some further particulars which it is thought will make clear some of the problems involved in the exportation of machinery. ASIA AS COMPARED WITH OTHER MARKETS. For various reasons more or less sentimental or political or other- wise, many Americans make their first foreign-trade ventures in South America, and probabljr this was often good policy prior to 1915, as the markets of Latin America were comparatively well developed. Germany's experience justified this trend, as that coun- try sold more factory machinery on the South American circuit than in Africa, Asia, and Australasia put together. On the other hand, the United Kingdom, both before and since 1914, has shipped more machinery to Asia thaii to South America, Africa, and Australasia combined. The fact that the United Kingdom derived most benefit from the machinery trade of Asia at the same time that Germany profited most from its machinery sales in South America is inter- esting but not too significant. The German trade was largely in electrical machinery. The British trade was influenced by orders for textile machinery. But it is significant that Germany seemed to get a larger share of the locomotive business of South America than 12 ASIATIC MARKETS FOB INDUSTEIAL MACHINERY. did the British, while in Asia the position was reversed. This seems to call attention to the merits of the marketing organizations rather than the merits of the locomotives themselves. It also raises the question as to which would have been the better field for American efforts. The pre-war experience of the United States is interesting in this connection, as the American exports to South America and also to Australia exceeded those sent to Asia by a very heavy per- centage. But since that time this situation -has been completely changed, as has been shown on the preceding pages. Some neglected markets have been discovered. The German statistics no longer help us and the British exports are largely affected by the condi- tions of reconstruction. However, the United States may now be expected to send more machinery to Asia than to South America, Africa, and Australia combined. Those exporters who have done a certain amount of business in Asia will find that their impressions are inaccurate unless they have been formed very carefully and very recently. The group of mar- kets represented by the countries of Asia constitute our best oppor- tunity for the exportation of machinery, for, although the ship- ments to Europe may show a greater volume, this will probably de- crease ; there are also complications of language and foreign exchange there that interfere with business. There are also great differences in the character of the trade of those continents. The machinery shipped to Europe prior to 1919 represented to a large extent, equipment for war purposes and the making of ammunition, while that shipped to Asia was more largely equipment for the normal activities of peaceful times. ATTRACTIVE FEATURES OF ASIATIC MARKETS. USE OF ENGLISH AS LANGUAGE OF TRADE. The markets of Asia have important attractions for the American exporter of machinery. In addition to the large volume and rapid rate of development of the trade transacted there, the simplicity of the language problem is of great assistance. In Europe this problem is very serious, and many tongues are involved. In South America it involves the use of Spanish and Portuguese. In Asia the language of trade is English. One may travel from Bombay to Yokohama and English is the language used in the offices of nearly all of the firms engaged in the machinery trade. Practically every buyer in- trusted wiui authority to purchase machinery knows English well. Even the Japanese and Dutch engineering firms who operate their own business in their own language have plenty of men who are qualified engineers with a fluent knowledge of English. They do not ordinarily expect to be addressed in any other language. Cata- logues and advertising matter as used in America quite commonly meet the requirements of the. machinery trade in Asia. Similarly one seldom finds it necessary to use the metric system of weights and measurements. Difficulties of translation and correspondence will not ordinarily appear. POSITION OF ASIA IN AMERICA'S MACHINERY TRADE. 13 EXCHANGE SITUATION AND BALANCE OF TRADE. The exchange situation also makes Asia an attractive field for sales effort on behalf of American goqds. As distinguished from the position in Europe, where the exchanges are so chaotic, and that in South America, where the fluctuations are severe, the situa- tion in Asia is more nearly the 1913 level than can be found else- where. At the moment of writing the Philippine rate is on a par with the United States — a position that can not be duplicated in any other country in the world. Japanese exchange has never gone lower than about 4 per cent discount. This also can not be duplicated. The discount in Java is about 10 per cent. The other countries are largely silver countries, and the world market for this metal is reasonably close to the pre-war level. As a whole, the mar- kets for exchange in Asia are remarkably close to normal. On the other hand, American traders have a big advantage over their European competitors in this matter. The actual rate of exchange is not so important in business matters. Business can be transacted on any level so long as it is stable. It is the fluctuations that do the damage. In the markets of Asia, from Yokohama and Manila to Bombay, American exchange is far more steady than that for London, Paris, or Berlin, and Americans reap a corresponding ad- vantage. The importance of this is attested by the fact that German manufacturers frequently quote prices in terms of American money when submitting quotations in South America, Asia, and elsewhere. This matter is far more important than many people realize. In a recent statement Barclay's Bank, London, remarked of sun- dry European countries : " The capacity for these countries to ab- sorb our goods is limited by our demand for their products." This is a very concise way of stating the principle that to export we must import or else adjust the balance otherwise — a process that is not always easy. Selling American machinery in certain coun- tries may become difficult for this reason, but the foreign sales manager need not fear that his efforts in Asia will be wasted, be- cause most of these countries ship us more than we sell them. Japan and China send us sufficient silk, tea, and other commodities to more than cover purchases made here, and jute alone, regardless of other merchandise, will pay for machinery purchased for India. If we consider our imports, Americans are entitled to a much larger share of the machinery trade of Asia. FACTORS STIMULATING INDUSTRIALIZATION. The operation of steamships, telegraphs, railways, and the plants- already installed constantly encourages the establishment of new enterprises. And so, in one way or another, we have reached the point where those 700,000,000 people and the resources of a continent are being opened to industrialization. The standard of living is rising rapidly, education along occidental lines is being disseminated, and Asia demands better facilities. Efforts in such markets give promise of good rewards. Furthermore, industrialization is possible because fundamentally industry requires population. There are valuable oil nuts decaying on the "ground in South America for lack of gatherers. The p'opu- 14 ASIATIC MARKETS POE INDUSTRIAL MACHINERY. lation of Africa will be a difficult problem when the time comes to employ it in factories, and it is not a dense population. Malaysia has largely supplanted Brazil in the rubber markets of the world, because of the employment of abundant labor on plantations instead of seeking the wild rubber. And so in numberless ways the abun- dant labor of Asia makes industrial development possible. And this applies to the immediate as well as to the remote future. India, China, and Japan all have well-established textile industries that are growing rapidly. Many of these mills have been in operation for years and have demonstrated over long periods that they earn exceedingly good profits. The demand for spindles and looms will be good for many years. Mine development in these and other countries has a similar history. Electric central stations, with both water and steam power, have like records, and Asia can now boast of plants of both kinds of several thousand horsepower each. Once progress of this kind gets started it usually quickens in its develop- ment, and when dealing with such large populations it does not re- quire imagination to see the increase in demand that results from even a slight increase in the standard of living. AMERICAN PRODUCTS WEXCOHED. The markets of Asia have the further attraction of welcoming our products. Recent years have shown diverse and important demands for our machinery, which has been purchased in places and quanti- ties previously unknown. Machine tools, steam boilers, construction equipment, road-making plant, automobiles, railway material — an almost endless variety has been purchased and found good. Ameri- can cotton mills have been established in Japan and China and the superiority of the machinery and arrangement fuUy demonstrated. In India the superiority of American equipment in steel mills, water- power plants, and numerous other lines is clearly recognized. Java has taken up American machinery for a variety of purposes, from railway equipment to vegetable-oil mills. From one end of Asia to the other American electrical machinery is admired and purchased because of its superior qualities. The markets have not been over- worked; in fact, they have not been adequately developed. Fre- quently it requires but little salesmanship to sell American equip- ment. The prospective purchasers welcome those who can offer the materials that are needed, and they offer a great opportunity to such persons as will give them proper attention. The methods to be used are discussed elsewhere. OTHER FAVORABLE CONDITIONS. In addition to what has been stated above, we should emphasize that it IS unwise to make estimates as to the positive and relative value of these Asiatic markets by means of comparisons with conditions as they existed before the war, because conditions have changed radi- cally. The Chinese revolution came in 1911. China's imports of American machinery in 1919 were four and one-half times the im- ports m 1917, which, in turn, were a record, and the 1920 business was much larger than that of 1919. In Japan the 1918 returns show an even larger increase over 1916. In the British and Dutch possessions POSITION OF ASIA IN AMERICA'S MACHINERY TRADE. 15 there is a much stronger tendency toward direct relations where f ormerlypurchases were made through London, The Hague, Amster- damj or Eotterdam. New steamship lines have been opened up con- necting these colonies directly with American ports. Banking facili- ties are being improved rapidly, and, with the decrease in the in- fluence of these European cities, our opportunities multiply — this being, after all, the normal course of development. The increase in the number of Dutch firms operating in New York testifies to the nature and extent of this change. PROSPECTS FOR DEVELOPMENT IN FAR EAST. In making a conservative estimate of the value of a prospective market, due allowance should be made for the natural growth that is to be expected. Under date of July 31, 1921, the National City Bank of New York issued a statement in which it estimated the inter- national trade of the world as follows: 1870, $10,000,000,000; 1900, $20,000,000,000; 1913, $40,000,000,000; 1918, $63,000,000,000; 1920, $100,000,000,000. The same statement adds data indicating the share of manufactured goods in American exports, as follows : 1880, 15 per cent; 1890, 21 per cent; 1900, 35 per cent; 1910, 45 per cent; 1920, 52 per cent. By 1920 the United States furnished approximately one-third of the manufactured goods entering international trade. The commercial activities of the world are expanding at a prodi- gious rate. It does not make much difference whether we examine statistics of coal production, railway traffic, cotton spun, or bank clearings, in the Orient or the Occident^ there is everywnere the same sort of chart showing a rapidly increasing rate of development. The above bank has also issued the following statement : " The inter- national commerce of the Far East doubled in value during the period 1914-1920, while its trade with the United States quintupled in the same period. It bought from the United States $125,000,000 worth of our products in the year before the war and $750,000,000 worth in the fiscal year 1920, and we bought from it, in turn, $250,000,000 worth in 1914 and $1,250,000,000 worth in 1920. Our 1920 sales in the Far East are six times as much as in 1913 and our purchases therefrom five times as much as in 1913." Unquestionably the future in these markets is most promising, and it is hoped that, in considering them, American manufacturers and exporters will exercise vision and forethought and in handling this trade will adhere very closely to good business methods. STANDING OF AMERICAN MACHINERY IN WORLD MARKETS. IMPORTANCE OF ESTABLISHING COMPARATIVE MERITS. As soon as one engages in the sale of machinery abroad he is confronted with the products of other countries, and it is necessary to establish the comparative merits of each. This subject is of im- portance because of its influence on sales and business policy; it is mishandled in conversations on steamships and Pullman cars and elsewhere the world over. Many men have preconceived ideas that are at variance with the facts. The subject deserves attention. Much has been said regarding the merits of American machinery, but sometimes in such a bombastic way as to fail of conviction. At other times, especially in earlier years, similar reports have sug- gested the superiority of German equipment, particularly their electrical machinery, chemical products, gas engines, scientific in- struments, etc. Then, again, one encounters an admirer of British engineering as represented by textile machinery, marine equipment, locomotives, motor cars, and what not, with stress placed on depend- ability, strength, weight, etc. In th^ Orient one hears tales regarding the ability of the Japanese to produce cleverly and very cheaply an endless variety of equipment, copied perfectly, even such as requires the superior materials and accurate workmanship of a 12-inch gun or a 10,0^0- horsepower steam turbine. These subjects that are mentioned so glibly in such conversations are really important. It is very rarely indeed that one can get a genuine insight into the situation from these talks, because they misrepresent the facts, and yet, in a sense, they represent prevailing public opinion as to the relative excellence of American machinery, and they measure the salesman's problem. In studying these matters to establish the real engineering merit of the products from various countries, it will at once be found that there are fundamental differences in the engineering practice of the various countries. The steam boilers of the Europeans are often of a type that is rarely if ever used in America ; their steam engines are frequently vertical where ours are horizontal; their standards for electrical equipment are different. These differences raise the question as to the comparative merits of each. REASONS FOR SUPERIORITY OF AMERICAN DESIGNS. American machinery has been developed in a country where opera- tions are conducted on a larger scale than elsewhere. The amount of machinery per workman is greater than abroad. In 1907-1909 the capital invested per workman in the United States was £483 as com- pared with only £212 in the United Kingdom.^ In other words, » See ' Laljor Unrest in England," in the issue of " The Nineteenth Centui-v and \tter •• for June, 1919." o^ a u ^ner 16 STANDING or AMERICAN MACHINERY IN WORLD MARKETS. 17 when an American designer starts on a new machine, consciously or unconsciously, he plans to invest up to $2,300 per workman, whereas the British designer limits himself to about $1,000. Obviously the American designer develops the better-planned unit. Also, this does not niean that the American machine is simply equipped with some additional convenience or labor-saving attachment, but this 130 per cent increased investment is worked into every detail of the Ameri- can designs. By this we know a " modern " "from an old-style ma- chine. Europe and Asia have not yet Avorked up their designs to these high standards. The claims of long life frequently made on behalf of European designs often represent underloading. The life of a well-made marine or factory engine is in excess of 20 years at full load and speed; the life of an equally "good" automobile engine probably would not exceed 90 da,ys and that of a very good airplane engine not over 200 hours. But if the automobile is not worked it may easily " run " 10 years. This claim of long life on behalf of European equipment is probably made in connection with locomotives as often as anywhere, but, outside of the United States, where can one find locomotives handlin'g trains of over 4,000 tons net as a matter of daily routine? In an article by the Eight Hon. Sir Eric Geddes, His Majesty's Minister for Transport, as published in the London Magazine for March, 1921, is the following statement of the British position : In this country we actually get less goods traffic over each mile of running track per annum than was obtained in pre-war days in Prussia, Germany, Bel- gium, the United States, and other countries. Our average net , or paying trainload is 134 tons of freight ; in the United- States, in 1917, it was 533 tons ; and in Prussia, in pre-war days, it was 236 tons. To raise the trainload by 10 tons would mean a saving in haulage costs above £1,700,000 a year. To raise the average wagonload — which is, roughly, 5i tons in this country, 25 tons in America, and nearly 9 tons in Prussia in pre-war days— by half a ton means ^- saving of nearly £5,000,000 per annum. In the United States there are about 260,000 miles of railway, to which may be added about 145,000 miles of second, third, and other tracks, on all of which are about 2,350,000 freight cars (of much greater individual capacity than is customary abroad), 65,000 loco- motives and 55,000 cars designed for passenger-train service — a scale of operations not to be found elsewhere. The whole railway problem of England or Germany or France is probably less than that of Illinois. The basis for making this statement is shown in the table below. Unfortunately, thoroughly satisfactory statistics covering the operation of railways in the various European countries are not available and certain gaps in this table can not be filled in. At first glance it will be noted that the mileage of track operated, the train-miles, and the locomotive-miles in Illinois are very low. On the other hand, the average number of net, or paying, tons of freight per trainload, as indicated above, was: United Kingdom, 134 tons; Prussia, 236 tons; United States, 533 tons. It would appear that Illinois compares with these European countries so far as ton-miles of freight carried is concerned. Although it appears that the figure for passenger-miles in Illinois is low it should be remembered that a very important number of the passengers carried in Europe travel in. a manner resembling the service rendered by the 18 ASIATIC MARKETS FOB INDUSTBIAl, MACHINERY. interurban electric railways in Illinois. Also, many passengers in Europe travel second or third class, while accommodations com- parable to those of the American Pullman car are far less common in Europe than in Illinois. Remembering also that the railway prob- lem of Illinois is complicated by an immense transcontinental traffic, that no city in Europe has a railway problem approaching that oi Chicago, and that the winters in Illinois introduce difficulties not to be measured by mere statistics, it is felt that the following table proves the statement made above: Items. Illinois, 1911. United King- dom, 1913. Germany, 1916. France, 1913. Area, square miles Population (1910) Total miles of line operated.. Freight-train miles Passenger-train miles Number of passenger-miles. . Number of freight ton-miles. Locamotive-mues Number of passengers: Steam Electric S6,66S 5,638,591 22,366 46,191,042 39,893,379 2,284,212,709 19,497,923,096 121,439 45,713,370 55,405 161,684,409 273,494,672 208,825 64,925,993 55,108 165,779,876 232,039,032 84,584,001 245,504,925 628,324,150 1,591, 146, Oqp 688,157,697 207,129 39,601,509 36,844 90,607^165 140,058,097 12,060,785,442 17,730,490,092 242,621,354 547,885,773 There is every reason why, with the much larger scale of opera- tions, American locomotive designs should be superior, and all the world concedes that we are a practical people. Whenever the re- turns are reduced to a " cost per ton-mile " basis, the advantages of American designs and j^erican railway practice are obvious. In writing the above there is no desire to claim that the British or Germans or French or others do not make good locomotives, be- cause it is well recognized that their products are good, but, on the other hand, there is no occasion to consider them superior to the American product. REASONS FOR SUPERIORITY OF AMERICAN WORKMANSHIP. The quantity production of interchangeable standardized parts is distincthr an American achievement and has had a most pro- nounced effect on a great deal of our machine design, especially of machine tools as used in the automobile, aircraft, munitions, and many other industries; and the principles involved are reflected in the interchangeability of parts of practically all types of ma- chinery. Since about 1916 there has been much talk in England of adopting the same principles, especially in connection with muni- tions and automobiles ; but when it is realized that the total British automobile production in any year never exceeded 70,000 cars (as compared with about ^,000,000 in the United States), even at times when there was a tremendous demand, it is recognized that the above production methods are scarcely understood or appreciated. Studies of the designs of the newer types of British machine tools as made by Engineering (London) are very interesting in this connec- tion, and that magazine reached the conclusion ^ " that the British manufacturer has as yet touched little more than the fringe of mass production." Other European nationalities are in no better posi- » Editorial in issue of Sept. 10, 1920. STANDING OF AMEKICAN MACHINERY IN WORLD MARKETS. 19 tion. The significance of this is really verj important, for it goes far toward silencing all the talk of superior European workman- ship that we heard in former days. The European idea that ac- curacy can only be secured by hand fitting has often been forced to yield, especially during the war, to the American idea that in- terchangeability can not be secured when hand fitting is tolerated, and, further, American shops are prepared to produce economically and by standardized methods complicated parts within the nar- rowest of tolerances. A certain American manufacturer adver- tises that, with his type of lathe, duplicate parts can be turned out within a tolerance of one-thousandth of an inch, while another pro- duces gauge blocks guaranteed to be accurate within 0.000025 inch per inch of length. The writer has seen in an American factory an automatic machine perform 22 operations on a machine part, all of which, in relation to every other, were held well within one- thousandth of an inch in repetition work. The methods involved in production along these lines are distinctly American. The fin- ishing of products Dy these methods is greatly superior to the best " workmanship " found anywhere. These production methods have had a pronounced eflPect upon the design and finish of practically all classes of American equipment, raising it to a level not known elsewhere. The particular ways in which these advantages appear differ among the different classes of equipment ; but they should be emphasized abroad with all that they imply, including precision, uniformity, interchangeability, and the facilitating of repairs. DEPENDABILITY OF AMERICAN MACHINERY. Practically all machinery that is exported from America i^ of a design that has been thoroughly standardized to meet the require- ments of the domestic market. These requirements are very severe, for in America the maximum is demanded. All machinery is re- quired to show the utmost capacity, the utmost efficiency, and the utmost dependability — all to a degree not laiown abroad. In devel- oping a standardized design to meet such conditions, sample ma- chines are subjected to careful test both in laboratory and in service before approval. Frequently these tests cover not only working con- ditions but abnormal conditions, such as overload tests, endurance tests, and tests to destruction. From the circumstances of the case equal care can not be given to the nonstandardized equipment that .is so often supplied from Europe, and as a consequence in the actual markets abroad one finds a thoroughness in the design of American equipment that is not equaled in machines from other countries. Naturally, in the absence of full data, nonstandardized designs are made heavy, but in foreign markets Americans will do well to dis- cover when the "factor of safety " in competing equipment is really the " factor of ignorance." Factory arrangement is also handled differently in America than elsewhere, and has been carried to a high degree of perfection. In cases where complete plants are sold this is a very important matter, for, under the American designs, plants are so arranged that the raw material passes into finished product with an absolute minimum of handling; fuel is economized by superior furnace and boiler design, and by reducing to the utmost piping and radiating 20 ASIATIC MARKETS FOE INDUSTRIAL MACHINERY. surfaces ; superior illumination is obtained by eliminating belts and perfecting window and electrical arrangements. Foreign designs do not ordinarily show that these subjects have received the same thoughtful care — and they are all subjects that will bear much em- phasis in sales work abroad. Where American experts have been employed abroad they enjoy an excellent reputation. Frequently they have made successes where those from other countries have failed. In many of the Com- munities of Asia they have established industries and are admired for the masterly way in which they have developed and continue to operate them. Although it is not practical here to attempt to show the superiority of each particular design, it is safe to say in connection with all of them that in the individual machines, in plant assembly, in the pioneering of experts, and in their general activities American engi- neering and American engineers are equal or superior to the best. In his design the American displays a superior thoroughness and in his work a superior energy. These remarks are not offerfed for mere bombast. It should be emphasized in foreign sales work that Americans sell not only individual machines but also American engineering methods — the best that exist. And as they are little understood or appreciated abroad, they need to be advertised and explained correspondingly. Also, American products must usually be sold on a quality rather than a price basis, and such a sales organization must be developed as may be necessary to do this. Previous to the war European machinery was offered on a price basis. There is some probability that a similar policy will be fol- lowed in the future. Sometimes electrical specifications were much less liberal than with us. Factors of safety in both strength and capacity were reduced, not as eliminating the " factor of ignorance," but as deliberate pinching and skimping even to approaching the unethical. On the other hand, European engineers can turn out good equipment when they desire to do so. The buyer's problem is to be sure that they do so desire. The American exporter should educate his customers in such a way that they will understand these matters clearly. PROBLEMS CONFRONTING FOREIGN MANUFACTURERS OF MACHINERY. . It should also be remembered that a great many European shops are operating at a great disadvantage because the relative value of their labor and raw material has been most seriously changed since 1913. In the old days their designs and shop practices were based upon expensive materials and cheap labor. They were, and possibly still are, " tooled up " on this basis, but as a result of the experience of recent years all this has been changed. Their labor is no longer cheaj), and this implies that their designs, their shop equipment, and, in fact, their whole organization are out of line with the timesi It will be obvious to any production man that such a situation dis- organizes the entire industry, making it necessary to revise designs, to " tool up " on the new basis, to increase the plant investment, and revise selling costs. The Japanese and Chinese are also making efforts to supply ma- chinery, but as yet their efforts are rather modest. The Chinese STANDING OF AMBBIOAN MACHINERY IN WOULD MARKETS. 21 produce machine tools, gasoline engines, semi-Diesel engines, and a few other similar products. The Japanese produce the above and also certain electrical equipment, such as wire, fixtures, fans, motors, transformers, generators, turbine sets and the like, textile machinery,' grain-milling equipment, agricultural equipment, and pumps, as well as certain of the product needed for their merchant marine, army, and na\y. The last-mentioned items need no further attention here. The other items are usually offered on a price basis and are rarely of satisfactory quality. Even so simple a product as plain copper wire is found to be unsatisfactory, failing frequently in service, presumably from inadequate annealing. Even copies of American designs are not up to standard. The writer has seen a milling ma- chine that was made in China, copying a certain well-known Ameri- can tool, but not a bit of surface on the whole machine had been ground or scraped. Such inferior goods are produced because of the high value of money in these markets. An American tool costs at least 50 per cent more in Asia than at the factory, and the buyer certaiiily finds it many times more difficult to raise a thousand dol- lars than does his American contemporary. It is not accurate to speak of these products " competing " with those from America. They are in a different class. If a man can be satisfied with a bicycle it is not possible to sell him an automo- bile, or if he wants the latter he will not buy the former if he is an intelligent buyer. The American sales problem is to educate the buyers so that their selections may be made intelligently. The same remarks apply to European machinery. Only rarely does English or German machinery, or machine-shop equipment, or much else, really compete with the American product. The differences in design are too wide, often being fundamental, and in this the American manufacturer has the advantage, because the buyers want to buy intelligently if they can only learn to discriminate. Possibly it is well to digress a little to consider the matter of copying. Many American manufacturers report that they avoid the Japanese market because after one sale they find their goods are copied. This policy is of doubtful value. In the first place, staying out of a market certainly does not bring in any business; and in the second place, such copies are in no sense duplicates. Only in the rarest instances is the quality satisfactory. Apart from eyeirything else, there is not the same selection of materials. By looking at an automobile axle a Japanese or Chinese mechanic can not tell whether it is vanadium steel or .30 carbon. Even though labor in the Orient is cheap, it is desperately inefficient and lacking in dignity. Even though it be known that a certain piece of high-quality steel is needed for a certain job, there is a strong probability that it will not be available in their limited market. This subject has been well thrashed out in the Japanese trade, and the better class of Japanese buyers do not ordinarily buy Japanese machinery if it can be avoided* Most Americans should overlook this matter of copying. With regard to the future the writer does not feel that either Japan or China shows any prospect of rapid development in machine building. Apart from what has been said about labor, the raw ma- terials coal, iron, etc. — are scarce and expensive, the selection of materials, knowledge of design, and shop practice inadequate, and 110291°— 22— — 3 22 ASIATIC MARKETS TOR INDUSTRIAL MACHINEKT. the matter of interchangeability of parts scarcely considered. Such experience as is so far available suggests that for equal quality the cost of the American product is in line, notwithstanding the im- • port duty and other delivery charges. On the other hand, British India offers a different situation. There the industrialists are just taking up the production of ma- chinery. The problem is being approached in a very different way. In the Tata Steel Works and other plants they seem to have sources of supply for pig iron and a few grades of steel at attractive prices. The policy of local manufacture has strong Government support. An effort is being made to put the work in the hands of qualified and competent men, with a certain amount of cooperation with Euro- pean manufacturers. It remains for the future to demonstrate the outcome. REASONS FOR SUPERIORITY OF AMERICAN RAW MATERIALS. Another point of view illustrating the superior position of the American machinery industry is developed when we consider the raw materials, iron and steel (copper might also be considered), available in each of the different countries. The peace treaty leaves the United Kingdom, France, and Germany producing nearly equal quantities, while the United States produces nearly as much as the other three combined. This preponderance has had a very beneficial effect upon the development and production of machinery in the United States, and its influence will become increasingly important hereafter. Germany has lost an important fraction of its former supply, and this must prove a handicap. Also, Germany and the United Kingdom have shown us what we may expect from them. But the genius of France remains to manifest itself. For the first time France has an equal (or possibly superior) supply of raw mate- rials. New development must follow. French engineers are very capable, as has been shown in artillery, automobiles, aircraft, and many other ways. France starts afresh, without much in the way of semiobsolete equipment. Munitions production during the war has given it the opportunity to learn all that America had to teach in connection with standardized production within narrow tolerances. It has imported very large quantities of machine tools from America, being at times our best customer along these lines, and it may easily happen that in a few years France will be more important in the machinery markets of the world than either the United Kingdom or Germany. The outstanding element in all discussions of Japanese or Chinese "competition" is the cheapness of oriental labor. Kecently one of the Japanese shipyards considered the project of manufacturing automobiles and, after studying the subject, their engineer is reported to have announced that the "low cost of labor will not offset the efficiency of the skilled American workman." " Even with the high- est type of automatic machinery " he doubts " whether equal resSts could be obtained." " UNIVERSALITY " VERSUS SPECIALIZATION. The only country in the world that exports machinery in amounts that are at all comparable with those from the United States is the United Kingdom. On subsequent pages of this report will be found STANDINGS OF AMERICAN MACHINERY IN WORLD MARKETS. 23 details as to the kinds and quantities of equipment that this country sends to each of the countries visited by the writer. It will be noted that very frequently the British and American lines are scarcely com- petitive. Eecent reports suggest that comparatively few British machine-tool builders have profited by their experience during the war. Many are continuing their pre-war methods. The difference in quality between British and American machinery is suggested by the following imports into England of American "metal-working machinery": 1910, $1,362,965; 1913, $3,417,655; 1915, $12,294,801; 1918, $19,296,903 ; 1919, $15,221,946 ; 1920, $11,135,567. If the British product is really competitive, how are these shipments to be accounted for? The war does not explain the earlier and later shipments. A similar argument could be advanced with regard to other classes of machinery — mining machinery, textile machinery, electrical ma- chinery, and a number of other lines. The trend oi British machine- tool design is toward universality — one tool for many tasks — while the trend in America is toward specialization, single-purpose ma- chines. It becomes a question as to the extent to which each type of equipment is needed in the markets of Asia; It is also a matter of salesmanship to demonstrate the possibilities of the higher-priced, high-production, accurate American tool. It should also be added that there seems to be some question as to whether British-made tools show the accuracy of the American products. The American position in the world's machinery markets is dis- tinctive and peculiar. It is sometimes said that we should sell a man what he wants, which may be all right if he wants the right thing, but because he so often thinks he wants the cheap thing the case usually requires more salesmanship than the above policy suggests. Because of the high degree of standardization adopted in America it is often impractical to supply the special article. Few buyers in Asi-a have any adequate idea of the costs involved in little special details. To finish an order of five sizes of electric motors in green where the standard is black involves trouble and expense that is out of all pro- portion to its apparent importance. Other national^ are confronted with this same problem, as is shown by the following quotation from a British writer : ^ A great deal has been said about the German manufacturer and merchant being more inclined to study and deliver the exact requirements of foreign markets than his British counterpart. This charge against the British manu- facturer is, for the most part, wholly false and, in the writer's opinion, has its origin in the fact that Germany has at home a bigger house industry as opposed to our bigger factory industry. It can easily be seen that when a German toy dealer was asked to supply 10,000 boxes of tin soldiers in khaki instead of scarlet uniform, all he had to do was to buy khaki instead of scarlet paint, give out so much paint and so many soldiers to each family round 4ibout and deliver the goods as required. As opposed to this, let us suppose that a York- shire manufacturer recfeives an order for 10,000 pieces of woolen cloth, with the stipulation that it is to be made 4 inches wider than before ; very probably he would have to buy and install new looms to make this extra width of cloth, and he would likely enough have to refer the order bajCk with the information that he could not execute it unless given a very long time and a very much higher price. This is undoubtedly the explanation of the bad reputation we have given ourselves. The writer has had many opportunities of putting new and strange requests before both British and German manufacturers, and can not recollect a single . instance In which a British manufacturer showed un- ' From the very interesting booklet " British versus Germans in China," by Dennis K. Moss, published' by the Hongkong Daily Press, 1917. 24 ASIATIC MABKETS FOB INDUSTKIAL MACHINEKY. willingness to do all m his power and reason to meet new conditions or manu- facture articles specially designed to meet Chinese tastes. And the same can be said for the German manufacturer. We produce and export to all countries in the world many articles of such excellent quality and standardization that it would be a crime to change them in order to gratify the changing whims of fashion in many parts of the world. The Germans have also a smaller number of such standard and typical products. One can not imagine that the distiller of the well known " 4711 " brand of eau de cologne would be willing to change his famous quality number because the digits add up to the unlucky number 13, but similar requests are made daily and for similiar and most trivial reasons. Owing to the superior and standard quality of many British productions the British producer is often unjustly blamed for his refusal to cut his own head off. These same remarks apply to American machinery with consider- ably greater force, as these products are usually of manifest superi- ority and are much more highly standardized than is the case with foreign equipment. FOREIGN COMPETITION AS AN ASSET. But it should also be realized that foreign competition is helpful as well as hostile, and it is well to meet it in a cordial and friendly spirit. This attitude is shown in the following quotation from a British author, with most of which the present writer heartily agrees. It is taken from " The British in China and Far Eastern Trade," by C. A. Middleton Smith : American competition will help us. Our Anglo-Saxon trade rivals work well with us in China. They do good pioneer work. They show us how to " push " things, but they will forgive an admirer for reminding them that they have not had the experience in trade or in engineering (sie) that the Briton has had. But they will be with us in the maintenance of the ideals of our profession. Their technical goods may be less finished than ours, but they do not disgrace the reputation of engineering work. Americans give me the impression that they expect much bigger profits on their capital outlay than do the British. Wherever they go they spread the gospel of the English language and the " get-on-wlth-it " point of view. They have made up their minds to get into this market, but there is any amount of room for them and for us. It is absurd to suppose that they can drive us out. We may slip off the car because we are asleep, but they will never push us off. It is right to add that usually they are more popular with the Chinese because they are rather less of what they call " the high-brow " type than the average Briton. They do not hesitate to mix freely with the Chinese. We suffer just a little in China from the traditions of the Anglo-Indians. GENERAL NATURE OF THE SALES PROBLEM. Foreign visitors to the United States are usually tremendously impressed by the extent of our mechanical development, and this applies to an endless variety of industries. Our railways are far in advance of those of every other country , our skyscrapers and their mechanical equipment are greatly superior to anything of their class to be found abroad; our steel production is some 40 to 50 per cent of that for the entire world and, with our high-priced labor, is only maintained on a competitive basis by the superiority of the mechani- cal equipment used in the whole process from ore and coal mine to finished product; the precision of our standardized production is unsurpassed ; the ingenuity of our automatic machinery, from watch- factory equipment to printing press, is generally recognized to be unknown elsewhere. Whenever one can get a fran'kly 'moartial state- ment from qualified foreigners, the superiority of .Vmerican ma- chinery, American processes, and American engineering is usually STANDING OF AMERICAN MACHINERY ,IN WORLD MARKETS, 25 readily conceded. This, after all, is only to be expected when it is realized that we have the necessary materials in abundance, that our oj)erations are conducted on a larger scale than those in other coun- tries, and that the wage paid labor is very high. Under these con- ditions it is obvious that the machinery produced must be of high quality and of highly standardized types and must be sold at a high price. This means that when it is offered in the open markets of the world it can be sold successfully only if the campaign is sup- ported by adequate salesmsinship and advertising. Fortunately this is not so difficult as the bare statement might suggest — as is dem- onstrated by the successes of many American manufacturers — but it does indicate the nature of the organization required. SUCCESS OF AMERICANS IN EXPORT TRADE. During recent years there has been a tendency on the part of certain people to claim that Americans are new to export trade and, being new, are not able to handle such business on proper lines. There has been a similar disposition to claim that America is new to the business of shipping and can not make a success of it, and these arguments have formed the basis of a hostile propaganda in certain places. At the same time it has been customary to make correspondingly flattering statements about the businesslike ways and wonderful successes of the representatives of Great Britain and Germany. But the facts do not support such claims. Long before the Franco-Prussian War, before Germany had a merchant marine of consequence or had developed its present industrial system, Amer- ican foreign trade was of very serious importance and world-wide. American ships were trading in all the important markets, and their business and prestige grew until even the British found the com- petition most "salutary." The situation in the China trade of that time is described by a well-known British writer as follows : Larger and finer ships were constantly being added to the American fleet, until they almost monopolized the trade not only between New York and San Francisco but also between China and Great Britain. British shipping was, in fact; reduced to the greatest depression, the falling off in the supply of new tonnage being almost commensurate with the increase of that of the United States." Elsewhere, referring to the wonderful tea clippers that raced from China to London at the beginning of the season each year, the same author writes : For the beginnings of that struggle we have to go back to the year 1851, when the Leith clipper Ganges raced two Americans, the Flying Cloud and the Bald Eagle, from China to London, finishing up with an interesting tack-and- tack contest up the Channel from Weymouth, the English ship passing Dunge- ness six hours ahead. At that period the odds in numbers were so overwhelm- ingly against the English vessels that such occasional victories as the above were calculated to inspire the builders with courage to persevere.' The history of American foreign trade and the American mer- chant marine of that day is a thrilling story of the successes of the enterprising pioneers. But the merchant marine fell from its premier position, not because of any inaptness of the American people but as incidents of the privateering during the Civil War, as, for in- ' " The Englishman in China," by Alexander Mitchle, vol. 1, p. 230, published in 1900 by William Blackwood & Sous, London. ' " The Englishman in China," vOL 1, p. 240. 26 ASIATIC MARKETS FOE INDUSTRIAL MACHINERY. stance, the well-known case of the Alabama, coupled with the change from wood to steel and sail to steam vessels^ But this dpes not im- ply that American foreign trade dwindled, for the United States has been an important exporting Nation for decades, the compara- tive importance being shown by the following returns for 1913, computed at par of exchange : United States exports, $2,465,884,149 ; British exports, $2,552,692,105 ; German exports, $2,403,311,000. Ob- viously, Americans are and have long been genuinely successful in foreign trade. Furthermore, those companies that have the most perfect or- ganization for world-wide trade are, to a large degree, American, and their activities date back many years. The showing of Ameri- cans in international trade is one of which we can be very proud. AMERICAN POSITION AS SHOWN BY MACHINE-TOOL EXPERIENCE. If desirable this subject can be narrowed down to the machinery field. On page 23 is a statement showing American exports of metal- working machinery to the United Kingdom. In the chart on page 27 is shown the record of the exports of metal-working machin- ery since 1909, from which it will be noted that even before the war American exports were increasing far more rapidly than either the British or German. Subsequent experience requires no com- ment, but it should be'noted that the values indicated for the Ger- man trade are deceptive because they are too large. The German classification includes a number of kinds of equipment not included by the others. The significant factor in a diagram of this sort is not the value indicated but the slope of the curves. The relative position of the three countries in the world's markets is shown by an investigation made in South America in 1915,^ which showed that there were then 461 machine shops in 12 Latin American countries. About 70 per cent of these plants were visited, including aU of the larger shops. In the plants visited the following tooE were found: Lathes 3, 417 Planers 885 Milling machines Boring Drilling Grinders Various (including wood-working). 425 522 1,695 997 3,740 Total 11, 681 The nationality of these tools was found to be as follows : Per cent. British 43. 2 United States 39" 3 German 13''4 French 3' 2 Belgian |g All others I4 100.0 ±uu. u It should be remembered, as has been stated on page 11, that Ger- many sold more factory machinery in pre-war days in Latin America "Made by Duncan M. Hood, of the McGrawHlll Co. See American Machinist, April STANDING OF AMEBICAN MACHINERY IN WOELD MARKETS. 27 hian in Africa, Asia, and Australia put together, but regardless of cs reputation as a factor in international trade and its special nancial arrangements, Germany only managed to do about one- lird as much metal-working machinery business as either the United [ingdom or the United States, and about one-eighth of the total — a [lowing that is a wonderful testimonial to the merits of American- lade machine tools when one remembers the inadequate sales effort apporting them. EXPORTS OF METAL WORKING MACHINERY 1903 1910 1911 1912 1913 1914 (915 1916 1917 1918 I9ld I9Z0 Iftll SOOOO / \ / \ / \ J \ / \ V / \ • / \ SCRMAN / ( - I C ^^jiiS^^ F ■SPORTS ■^ ^ 4-l5Tlf1ATIl> ANU.ICAK TOTAL ton. 1321 B-I57ffl4TIIl- aiXJMA TOTAl TOIL 1320 C-ISTMATII JtlTBH TOTAL TOl, 1921 Fig. 3. British participation in this business at that time was not an xpression of the price or engiheering merit of the machines. To ise the words of the American Machinist : The reason for the predominance of British-made machines is undoubtedly ound in the financial arrangements that have existed between South American ountries and English capitalists. British gold has 'financed South American ailroads, mines, and other enterprises. Many of these projects have been irganized and operated by British engineers. It was very natural, therefore, hat they should buy British machinery. * * * It is evident that there 3 nothing disheartening to American machine-tool builders in these statistics. The position of the British machine tool in post-armistice foreign rade is shown further by the diagram in Figure 4, from which it dll be noted that as late as August, 1920, or 22 months after the irmistice, the United Kingdom still imported a greater value of aachine tools than it exported. These imports were largely from he United States, and this patronage testifies to the superior qualities if the American product. The downward slope of the curve, repre- 28 ASIATIC MARKETS FOR INDUSTEIAL MACHINBEY. senting imports, indicates the business situation then existing, and it will be noted that British export experience was similar after December, 1920. The American machine tool is a very high-class product and leads the world, being superior to all others. Other classes of American machinery also occupy a similar position. To a very great degree there is no real competition for American machinery, but it does need to have better representation in foreign markets. Interested manu- facturers should devote much more attention to their foreign sales. It should also be recognized that our country is very large and contains an element that has had no adequate experience in export business. During the years when the market was so abnormal — when it was a "sellers' market" — this class entered into foreign trade FlQ. 4. with results that have been so unfortunate as to become conspicuous. It is not necessary to elaborate on this subject. The conclusion is obvious. There is no substitute for knowledge. Organization plans and methods which it has taken the competent exporter years to work out and develop through patient effort can not be duplicated over- night. Concerns with a scant knowledge of the intricacies and vari- ations of foreign trade will only develop a satisfactory business by adopting the same painstaking methods. Those who will succeed are those with knowledge, experience, and business judgment. In planning for foreign trade it is necessary to follow sane, sound busi- ness methods established on a scientific basis and developed with clear thinking. But there are most promising opportunities abroad for those who will consistently pursue these methods. EFFECTIVE MEANS OF PROMOTING MACHINERY SALES IN ASIA. FUNDAMENTAL FACTORS TO BE CONSIDERED. In preceding paragraphs it has been demonstrated that the Ameri- can problem in developing a campaign for greater machinery sales in Asia is that of marketing standardized products of superior quality and relatively high price in competition (if that word is appropriate) with the products from the shops in other nations, where ordinarily designs have not been given the Same thoughtful care, materials are not selected with such good judgment or else are not obtainable, and workmanship, especially if judged by the standards of accuracy and interchangeability as distinguished from paint and unnecessary polish, is not so good. Obviously such a sales problem involves the . application of superior salesmanship backed by an appropriate organization. It also introduces the problem of advertising, which can be employed effectively in many instances. No campaign for foreign business should be started until the necessary -domestic organization has been developed. Instances have been known where firms have actively advertised in foreign ; countries and later, when confronted with an export order, did not know how to execute it. Such methods are inexcusable and discredit the manufacturer at home and abroad. Export business is good busi- ness and worth sustained effort. Some large American firms depend almost entirely upon their foreign business. It has been shown that the average American machinery manufacturer exports 17 per cent of his product. Also, this business can be secured on terms that are clean and attractive, but to sell without proper preparation is but to sell trouble. ISeglect of foreign customers, bungling methods, in fact, all of the long list of export sins accumulate " bad will " against the day when a serious effort is to be made. Also, these failures create a handicap for other Americans who are overseas. Manufacturers should keep out of foreign trade until prepared to handle it properly. These remarks should not be interpreted to mean that foreign trade is difficult, for, properly approached, it is easily handled and clean buaness and Americans can handle the trade as well as anyone else, as is demonstrated by the volume of machinery sales, totaling nearly $400,000,000 i^ 1920, as shown on page 2. While it is possible to imagine any number of different forms of organization that might be employed in the sale of American ma- chinery in these markets, the problem is really very simple, for all industrial machinery sold in Asia, whether American or European or of other types, is sold through the machinery dealers that are established in each of the Asiatic cities and that act as import merchants there. It is true that in some of these Asiatic markets offices will be found bearing the names of well-known European or American manufacturers of machinery — as, for example, Fraser & 29 30 ASIATIC MARKETS FOR INDUSTRIAL MACHINERY. Chalmers, in 'Singapore — ^but in every case it will be found that these companies act as agents for a number of other manufacturers, thereby becoming in reality merchants, as distinguished from the branch offices of manufacturers, as known in the United States. Even in those cases where the manufacturer's name is used abroad, the branch is frequently a separate corporation. The fact remains that the sys- tem of selling machinery through merchants is the only one that has been foUnd a marked success in the sale of factory machinery in Asia. As has been explained in " Selling in Foreign Markets," it is most important that a definite foreign sales policy be established. This policy may be different for the differing conditions of varying territories, but for each case it should be definitely decided whether the manufacturer will quote only f. o. b. works or f. a. s. New York (or equal) or c. i. f. destination; whether he will open a branch, send his own salesman, grant an exclusive agency, or operate in an open market, etc. In order to employ genuinely constructive salesmanship the best method, in Asia, is to arrange an exclusive agency for each particular market, at the same time arranging to have' the agent employ a sales engineer who has been trained by the manufacturer. WTiere this is not practicable the next best plan is to make a similar arrangement where the salesman has been trained by another firm. Beyond this there are many other plans that may be followed, but they all depend upon the careful selection of an agent. SELECTION OF AN AGENT. Unquestionably the best way to select an agent is to gather all possible information in America and then visit the ports of Asia, investigating the matter and coming to an agreement on the spot. When conditions justify, this should be done, but, if attempted, it should be done properly. It requires about 17 days and, say, $350 to cross the Pacific Ocean, and expenses will be not less than $10 per day for the barest necessities afterwards. Most executives will spend between $15 and $20 per day. Conditions in the Orient are very different from those in the Occident, and it is a great mistake to feel that it is possible to rush in, acquire the necessary informa- tion, make a decision, and hurry on in a short time. Furthermore, each country has its own peculiarities, so that it is scarcely safe td draw conclusions from one with respect to another. Each constitutes a separate sales problem and deserves a careful study. The trip abroad gives most valuable opportunities for establish- ing friendly connections and learning market conditions. When conditions prevent the executive from making such a trip, sometimes it is wise to send a substitute if a qualified man is available In any case, this method of selecting foreign representatives is the most satisfactory, and when the circumstances justify it should be em- ployed. On the other hand, it is expensive in time and money \s is sug- gested by the map opposite page 1 such a trip from Yokohama to Bombay would require from six months to a year and would cost several thousand dollars. Many manufacturers have been able to establish a good series of agencies by correspondence and by ne Special Agents Series No. 215. FIG. 5. — OKURA & CO., TOKYO. FIG. 6.— MITSUI BUSSAN KAISHA, KOBE. Special Agents Series No. 215. FIG. 7.— HORNE CO., OSAKA. FIG. 8.— ALEX ROSS & CO., HO NGKONG. EFFECTIVE MEANS OE PROMOTING MACHINERY SALES IN ASIA. 31 gotiating with the American offices of eligible export firms. Lists of the machinery dealers in the various cities of Asia that should.be valu- able for the above purposes can be obtained from the Bureau of For- eign and Domestic Commerce, Washington, D. C, upon application. The bureau has a very good collection of such information covering the entire world. When circumstances onake it at all practicable, the best results will be obtained by a personal visit to the bureau, as a great deal of information is collected there regarding the qualifications and limitations of these dealers which it' is not practicable to issue through the mails. The commercial library in the Department of Commerce is one of the best in the world. It is remarkable what a wealth of information can be collected in this manner. Also, in addition to the above sources, further information regarding these dealers can be obtained through the consuls, commercial attaches, and trade commissioners who are maintained in these foreign coun- tries by the Government and who will gladly answer specific re- quests for information. These reports can be verified and credit information secured through the banks and credit bureaus. In some cases the various manufacturers' associations can assist. Business friends can often be helpful. Ordinarily the idea of granting an exclusive agency agreement is to stimulate the merchant to creative, constructive sales effort, thereby adding to the profits of both manufacturer and agent. If business is not stimulated the arrangement is a failure. To make a success, an agent first of all needs to have an organization for and an interest in the sale of machinery, and he must be in a position to cover the entire territory under consideration. He should have his engineering department in the hands of qualified engineers who understand the class of machinery involved and the country in which they are to work. The matter of covering the territory adequately is very impor- tant. Many of our people use the political boundaries, thinking that they. mark out the business districts. This is a great, though common, mistake. The fact that a firm has an office in Shanghai is.no proof that it can cover properly the Hongkong or the Peking districts. In point of time Peking is as far from Shanghai as Salt Lake City is from New York. Very often a Calcutta firm is not prepared to cover either Burma or Bombay. There is, one need scarcely say, a great difference in firms. _ To a remarkable degree they each develop a bent for a certain kind of trade. Each has its own business methods, its special clientele, and a certain line of work that commands its attention, and it will prove (Correspondingly more or less valuable in selling a given commodity. Unless elaborately organized, if a given firm specializes in machine tools, it will give inferior results m the sale of textile machinery or ice plants. The direction of this bent can often be discerned from a study of the list of its agencies (often in the hands of the Bureau of Foreign and Domestic Commerce). From time to time these firms may discover special opportunities because of which they may want what might be called an " outside agency," but the inter- ests of the manufacturer lie with the man who will give his line con- secutive sales effort. Similarly, from a list of agencies it may be possible to make sure that the candidate does not already represent competing equipment. 32 ASIATIC MARKETS FOR INDUSTRIAL MACHINERY. Agents do not always act in good faith. As has been pointed out in " Selling in Foreign Markets," agency agreements are sometimes so- licited in order that the manufacturer's sales efforts may be throttled. Under other circumstances an agent may be so placed as to be peculiarly fitted to market a given line of machinery. One already weU established in the sale of- tex^tile machinery would be in a good position to sell humidifying equipment. A dealer who is well estab- lished in the sale of pumping machinery would probably be in a position to handle filters and water softeners to advantage. One who has a reputation for selling machine tools would be in a position to market files. With a little effort it will ordinarily be possible to collect a good deal of information about a prospective agent, not only along the lines already suggested but also with regard to his moral and financial qualifications, and such effort will usually be well rewarded. In gen- eral these merchant firms and the men employed by them are of a very high class. The larger of these companies are strong enterprises, doing a very large business of many kinds and supported with ample capital, owning a great variety of important properties and with a name that represents a very substantial good will. In the more im- portant cities these firms are established in well-built office build- ings, with all modem improvements, that are sometimes of very pleasing appearance and occidental in style. In the smaller or less important cities these merchants are housed in less pretentious build- ings and have a smaller staff, but ordinarily will employ the same general business policies. . « In these same cities, large and small, are other companies engaging in the same class of business, but not so well equipped as regards re- sources, personnel, or good will. These smaller companies often pre- sent a good appearance on a letterhead or in a directory. In some instances they specialize in a definite way and for such trade are very useful. In other instances they employ men of limited ability and experience and poor business methods, with results that are far from satisfactory. PLACING A SALESMAN IN THE FOREIGN OFFICE OF THE AGENT. When arranging for the appointment of an agent the manufac- turer should also arrange for such supervision of this agent as is necessary to protect and promote the interests of the manufacturer. There are many ways by which this can be done. More and more the better merchants and manufacturers are arranging to have a quali- fied salesman (really sales manager) join the staff of the agent in each imporant foreign office. The details of the arrangement vary a great deal, but the plan is very effective where circumstances make it practical, and it overcomes many difficulties. An alternative method is to have this man travel to supervise a number of offices— an arrangement that has been used a good deal in the automobile trade. If a man is to be sent abroad, extreme care should be exercised in making the selection. " Records of American concerns with interests in Buenos Aires, for instance, show that, of the men sent from the United States during the last four years to that city (one of the most attractive spots in South America), over 80 per cent returned, or EFFECTIVE MEANS OF PROMOTING MACHINERY SALES IN ASLi. 33 were returned, home inside of 12 months." ^ A good man can accom- plish a great deal. A poor selection is very expensive, not only be- cause of the way the representative spends money but also in the effect upon the reputation of his company. The man should be one with a fine sense of the better things in life and of demonstrated integrity. " Capitalists, as a rule, do not intrust their interests abroad to persons without character. The character of their repre- sentatives abroad is even more important than the character of their representatives at home, because a larger responsibility rests on those who serve them abroad." ^ " Many American firms make the mistake of thinking tha,t they can establish a permanent business by sending to South America the well-known ' rough and ready ' type of Anier: ican salesman, who wears his hat and smokes a cigar in his customer's office and who has no interest beyond sending in orders. These men often get an initial order, but the business is apt to end there. The South American does not do business that way." ^ In Asia a special representative of a manufacturer occupies a position of real importance, corresponding somewhat to that of a branch-office manager at home, except that he has greater respon- sibilities. He is in competition with the whole world. He is thrown into intimate contact with Europeans and Asiatics of all sorts and must maintain his position and adequately represent the interests of his principals at all times. He must be equal to any emergency. If anyone makes a mistake, whether in the home office, in the factory, or on. the 10,000-mile line to the ultimate buyer, this man must " absorb the shock," rise above all complications, and handle the matter in a creditable way. He is a " business ambassador " and should not be sent unless he knows his business, his line, and is loyal to the interests of his principals, with confidence in their products and organization. Without full confidence satisfactory results can not be secured. Unless the manufacturer has full confidence in the representative he should not be selected or sent; unless the repre- sentative has full confidence in his- principals he should decline to go, because in Asia he will meet endless difficulties in the day's work. An exchange of letters will require two or three months; cables are very costly and often mutilated. Lost orders, sacrifices in commissions, heat, discomforts, disease, and a thousand other annoyances tend to undermine one's determination, and real stamina will be needed. This man should be intensely American. While this requirement has always existed, it has recently become of increased importance. Although the writer feels that it is unfortunate that nationalism is emphasized abroad, the fact remains that Europeans do so emphasize it that it is not at all uncommon to find men in important positions who look at the matter from a very narrow piont of view. The American engineering salesman abroad sells more than an individual machine 6v even a complete factory. He sells the American way of doing things; his machines will not prove to be a real success unless they are operated in the American way, and the American way differs from the European or Asiatic way." Of what value is automatic machinery unless it produces a standardized product? Why have a 1 " Selling in Foreign Markets," p. aSS. » " American Foreign Trade," p. 296. • Wall Street Journal. See also, Commerce Reports for Aug. 28, 1S22. 34 ASIATIC MAEKETS FOR INDUSTEIAL, MACHINERY. standardized product unless interchangeability is important? Through quantity production, inventiveness, and clear thinking American engineering has been raised to a position that is in advance of all others, and it requires men vrho are thoroughly familiar with these American methods and ideas to properly represent American goods abroad. FOREIGNERS AS AGENTS. This suggests that it is not usually advisable to grant agencies to foreign firms. Experience shows that this is somewhat da,ngerous. Entirely apart from those who deliberately act in bad faith, it is very seldom that foreigners sufficiently appreciate the merits of American designs to represent them properly. They do not ade- quately understand American ideas of economy of labor, speed in production, standardization of method as well as product— in short, the work of a production man. Their sales ?ind advertising methods differ from those followed by Americans, making it difficult to link up the foreign office plans with those of the home office. These re- marks apply with peculiar force in English-speaking countries. In territories where sales are to be made to those unfamiliar with English, good results can sometimes be secured through foreign rep- resentation, not because the above remarks do not apply but because it is difficult to find Americans who are sufficiently familiar with the foreign language and ideas. In Japan a Japanese firm un- doubtedly has certain advantages in the appeal it can make to persons of that nationality. In Java the Dutch have a similar advantage. But even under these favorable circumstances it will be found diffi- cult to Americanize the sales campaign. In selling engineering equipment in these markets the salesman sells American ideas as much as he sells American machinery. The outstanding problem in working through these foreign firms will be to convince the ultimate buyer of the superiority of the American method — ^to arrange for one Japanese to persuade another Japanese to adopt American methods in his shop, or to manage so that one Hollander persuades another Hollander to adopt American practices. It is always very desirable to arrange to have the agent employ a good American salesman, preferably one who has been trained in the plant of the manufacturer. COST OF LIVING IN ASIA. From what has been said above it is clear that the man needed abroad is a superior type of engineer with a really good commercial instinct, who has moral qualities that will surmount the temptations of the East and social qualities that Avill make him persona grata with all the world. Such a man has qualifications considerably above those of the ordinary domestic salesman and can command a good salanr at home. His standard of living in Asia is necessarily high. In his home he will have from 3 servants or more in Japan to 5 or more in China and not improbably 17 in India. Much of what he eats and all that he wears is imported, as are also his medi- cines and luxuries. His doctors, dentists, and entertainment are very expensive. His membership in various clubs will cost from $150 to $400 per year, according to circumstances. If he has children their EFFECTIVE MEANS OF PEOMOTING MACHINEEY SALES IN ASIA. 35 education is a very serious problem and is expensive, and if they are to have university trailing at home (as their father undoubt- edly had) much costly traveling is involved. In addition to all this (which deserves a good deal of sympathetic consideration) the man must feel some inducement to Iceep him abroad. No such man wants to " lose touch " and fossilize on forgotten shores in Asia, and ordinarily will not be satisfied to remain abroad unless he can show a substantial net saving each year. The salary paid must allow for the cost of living at the standard usual in Asia, and this can not be compared to conditions in America. In India, as has been stated, a man maintaining a home corresponding to that of an average professional man in America will probably re- quire 17 servants. In this country it is difficult to keep one. In America an automobile probably would not be considered a necessity, but in Toyko, Shanghai, Manila, and most of the eastern cities it is really needed. This subject is so complicated and at the same time so important that a number of investigations regarding it have been made at different times. Also, the cost of living is rising so rapidly all over Asia that the matter needs to be reviewed frequently. In order to emphasize the variation in the cost of living in the different cities of Asia, it is well to summarize certain totals (of monthly expenses) appearing in the journal of the British Chamber of Commerce of Shanghai: Young bachelor. Young married couple. LocaUties. "Mess. " Boarding house. Hotel. Bented house. Boarding ■ house. Hotel. Burma. £. s. d. 30 5 58 39 15 10 47 7 7 37 0}0 £. s. d. 30 11 llj 42 18 7 42 16 40 6 3 £. a. d. 34 16 7| 63 4 4 48 8 1 60 5 10 £. s. d. 79 17 7| 85 14 7 102 17 7 78 1 £. «.' d. 63 16 i 72 7 7 88 1 9 67 3 £..s. d. 73 -4 lOJ 111 Tientsin... - 102 14 9 105 15 2 Fuel has been included in the Tientsin figures and omitted from the Shanghai table. Telephone, medical attendance, and contingencies are excluded. Also, this represents the standard of living of those in subordinate positions. An interesting contrast appears in the figures for a young married couple in a rented house when it is assumed that the man holds a position of responsibility and that there are children 7 and 9 years old ; their minimum net expenses are calcu- lated at $1,146.70 Mex. per month. In Japan the cost of living is hisrher than in Shanghai. A some- what similar inve'stigation made by some business nien in Tokyo showed that a married man without children, in a position carrying no social responsibility whatever, as for instance one sent to supervise the erection of a plant, could not possibly get along on less than 800 yen (practicaly $400) per month. COST OF OPENING A BRANCH OFFICE. In view of the cost, only a limited number of manufacturers will feel that they are justified in sending one of their own men abroad to handle their own line exclusively at the manufacturer's expense. Fewer still will be in a position to open up a branch office. 36 ASIATIC MARKETS FOE INDUSTRIAL, MACHINERY. Eent in a modern-style office building in Tokyo, with steam heat and electric light, costs from $1.50 to $3, per square yard per month, according to conveniences and location. Japanese old-style buildings with no heat or light and very indifferent conveniences can be secured as low as $0.60 per square yard per month, or, say, $35 per month, for a small office of two or three rooms. A Japanese salesman will cost about $150 per inonth and, in addition, will need the incentive of about 1 per cent commission on his sales. A European stenographer can be secured for about $150 per month. Japanese stenographers can be secured at from. $75 to $150 per month, according to ability. A typist, incapable of shorthand, will expect $50 per month or more. A girl to carry messages is paid $15 to $20 per month. To operate an automobile costs about $125 per month, exclusive of depreciation and the more expensive repairs. The chauffeur is paid about $40 per month. On graduation from engineering school the young engineer starts his career at about $75 per month. The office boy without un- usual education starts at $7.50 per month, minimum. When he is promoted to elementary desk work he gets about $12.50 to $15. A tally clerk, qhecking goods into and out of warehouse, is paid $37.50 to $50 per month. These were the rates paid in 1920, but they are rising rapidly. RAPID INCREASE IN EXPENSES. These figures are presented in an effort to show the true position as it is now in Asia, because experience shows that the situation is not well understood. Prior to 1900 living there was cheap. A tourist could have a most enjoyable time at very modest expense, and the world still seems to feel that the conditions of the last century con- tinue to exist. That is where many have made serious mistakes. Among Asiatics the standard of living is rising rapidly, and life there has become very expensive. Japan is now one of the most expensive countries in the world — a fact that is having a serious effect on its' foreign trade. Living in China is also costly, but less so than in Japan. India and Java are no longer cheap. In all of these places hotel bills will approximate $8 to $10 per day, American plan. Because of the costliness of maintaining direct representatives, most American manufacturers of machinery will secure the best re- sults by making an agency arrangement with one of the machinery dealers (importing merchants) in each of the more important. of these Asiatic cities, and this appears to be the most successful method followed not only by American producers but by British, German, Swedish, and other producers also. Even the largest of our manu- facturers — firms that export from $1,000,000 to $3,000,000 worth of machinery per month, firms that export 60 per cent of their produc- tion — have agency arrangements with these machinery importers in the various cities of Asia and, when necessary, send experts to co- operate with the merchants. Before leaving the subject of agents and salesmen abroad we should refer to those firms that are disinclined to appoint an agent of any kind anywhere. There is nothing constructive in such a policy. It is absolutely without method. If the product has high inherent merit it may " sell itself " for a time, the result being a more or less Unseemly scramble for the business on the part of the merchants but no one has any inducement to maintain the market and ultimately EFFECTIVE MEANS OF PROMOTING MACHINERY SALES IN ASIA. 37 it will probably fail from a variety of causes. Although it is ex- pensive to live in Asia, the merchants there more than justify them- selves. The best plan is to work through these merchants and as constructively as possible. RELATION OP MACHINERY EXPORTS TO CAPITAL EXPORTS. There are other ways of promoting machinery sales in Asia to which our nianufacturers should give careful thought. Until about 1916 the United States was a debtor nation and invested practically no money abroad, but did pay Europe perhaps $500,000,000 per year in interest. Since we became a creditor nation conditions have be- come a little confused, but our growth has been very rapid and it seems safe to conclude that we have at least $1,000,000,000 per year available for foreign loans. During both 1920 and 1921 several hundred million dollars were actually placed in such loans through the New York market; 1922 and subsequent years will show a much larger business of this sort than appeared in 192'0. Heretofore these have been to a very large extent unrestricted loans to governments. On the other hand, such capital can be so placed as to be of much greater value to American interests. The situation is illustrated by a paragraph that appeared in an English technical paper: In the past, British municipalities have borrowed hundreds of thousands of pounds to build a power plant or a waterworks, and have then placed con- tracts for the whole of the machinery with foreign countries. * * * in con- nection with the development of the power supply of the Rand at Johannesburg something like £2,000,000 was borrowed in London for this purpose, and prac- tically the whole of the machinery purchased with this money was procured from Germany.' In connection with loans made for railways in China, and other enterprises elsewhere, European agreements have often stipulated that equipment should be purchased from the country supplying the funds. " All material used for the execution of this work not already in the country will have to be of French origin and transported on ships flying the French flag" is the provision in connection with a French loan for a railway in Indo-China. The effect of large transactions on international exchange rates may be very serious and neutralize the profits from the loan. To use the words of a re- cent writer on foreign trade : " The new era is essentially the era of the trade that follows foreign investments. The prime need, therefore, in order to secure a large volume of new business in South America is for the United States to export some of its capital as well as its products." ° The situation in Canada has recently been such that manufacturers establishing branches there could gain as much as 15 per cent profit through exchange on funds remitted for construction and other work there, and it is estimated that there, are more than 600 American-owned plants now in Canada — an ar- rangement that operates to the advantage of both countries. The Monetary Times of Canada recently drew attention to the fact that about $1,000,000,000 of American capital had been invested in Can- ada during the last five years, thus going far to correct the trade 'London "Engineering," July 2, 1920. ^^ " American Foreign Trade," pp. 228, 291. 110291°— 22 i 38 ASIATIC MARKETS FOR INDUSTRIAL MACHINERY. balance of $1,257,464,903 shown by the customs returns to be in " favor " of the United States. American capital can place American machinery in foreign coun- tries. ENGINEERING EXPERTS— EDUCATIONAL METHODS. Another way in which trade in American machinery can be pro- moted in Asia is through the engineering expert. When an Amer- ican consulting engineer is employed in Asia he makes a great suc- cess. Being familiar with the superior methods employed^ here, he is not satisfied with equipment from foreign sources. It is not at all unusual for one such expert to arrange for the purchase of several hundred thousand dollars' worth of American machinery, and he wants none but the best. Similarly, when Asiatic students are trained in our universities they also learn the superiority of our machinery and our manufacturing methods. During the travels con- nected with the making of this investigation the writer learned of the records of many Asiatic engineers who had been trained in our schools, and although these men, as engineerSj were far more expert than those trained in other countries they did not, as a rule, seem to measure up to the American standards. Realizing the influence these students can exert, the British and French are making great efforts to attract Asaitic students to their schools. American interests need have no fear of these methodsj provided the students that are educated in the United States are given a good practical education, as distinguished from a theoretical, bookish training which seems to be the result of present methods. These remarks should not be taken as a reflection on these men. They are a splendid type and some of them are fine, capable engineers, but if we may deal in generalities, one gathers the impression that they have returned to Asia too soon after graduation. They need more of the " shirt- sleeves " type of training in an American environment. They need to be developed on more practical lines. Asiatic students that have been trained in America enjoy a better standing than those trained elsewhere, but it should be an easy matter to raise their standing to a much higher level. American manufacturers will find it very much to their advantage to cooperate in this matter and if they do so they have nothing to fear from Asiatic students who may be trained in Europe. HOME ORGANIZATION. VITAL IMPORTANCE OP SOUND METHODS AND HIGH STANDARDS. About 1830 " Lord Macaulay said that a broken head in Coldbath Fields produced a greater sensation in London than three pitched battles in India. Lord Dalhousie, 20 years later, wrote that nothing short of a great victory or a great defeat in India was suiRcient to rouse in English society even a transient interest in Indian affairs. Things indeed have advanced since then, but not to the extent that one might have anticipated. Only a few weeks ago Mr. Montagu, the Secretary of State for India, remarked that the indictment in its main essentials remains true." ° This weakness seems inherent in all nationalities in all decades, and is observed by our colleagues « From an address by G. IMndlay Shlrras, M. A., F. S. S., Director of StatisUcs, India. EFFECTIVE MEANS OF PROMOTING MACHINERY SALES IN ASIA. 39 in Asia at all times. One of the really important things in develop- ing foreign business is to develop a home organization that can do its share of the work and is interested in Asia. " America needs sane, sound business. It can have it only by study of business on scientific, clear lines. It can not have it by reliance on dumb luck and awkwardness, regardless of how great is the Nation's natural wealth or how advantageous its position by reason of the war. Europe, knowing trial and long adversity by reason of the war, will be forced to study and practice economies as never before. America can not continue its wasteful practices and hope to retain its place." '' In domestic business it is necessary to adopt sound business methods. In foreign trade the need is far more urgent. In domestic trade errors can be corrected. It is easy and not expensive for the branch office to write or telegraph in case of trouble. Branch managers can often step on a train in the evening and be at the plant in the morning. The business has the advantage of the verbal message and close contact between factory and user, but in business with Asia these methods are not possible. To visit the plant is impractical; the telephone does not connect; cablegrams are very costly, and letters require about a month each way., Mistakes are very expensive and must not occur. Substitutions mean trouble and dissatisfaction. No matter how perfect the organization abroad may be, it can accomplish only as much as the home organization makes possible, and for a given standard of performance the foreign department needs to be far more perfectly organized than that for domestic business. The standard established for the foreign de- partment must be set as high as possible. Errors must not get out. Prevention is far better than cure and is also far cheaper. SUPEBVISION OF EXPORT DEPARTMENT. In domestic business the head office must ordinarily take the initiative in matters of policy; it must supervise the whole organi- zation, and it must cooperate with the branches. In foreign business this is all necessary to an even higher degree. " The export busi- ness requires perhaps a greater amount of executive oversight than any other portion of your business if you decide to embark in the export trade, and, if you decide to establish a department for han- dling the business, that department should be put in charge of no less an officer than a vice president. If the size of your establishment does not warrant the organization of a separate department for the export trade, the export business should then have the personal attention of the executive head of your business." * A staff should be developed that can be depended upon to handle correspondence and documents with a full realization of their meaning. The routine of shipping, insurance, and customs should be fully under- stood, as should also the meaning of various terms used on bills of lading, insurance policies, etc. The division of responsibility be- tween manufacturer, carrier, export merchant, and consignee as involved in oversea trade should be fully appreciated. Weakness in these matters results in discredit abroad, while punctilious atten- ' Commerce and HUnance. ' " Selling in Foreign Markets," p. 21. 40 ASIATIC MABKETS FOB INDUSTRIAL MACHINEKY. tion to them goes a long way toward establishing confidence not only in the manufacturer but also in his products. The foreign customer buys service. The machine offered may be the best conceivable equipment for a given purpose, but it is useless unless it can be put into operation. There are countless difficulties that may arise before it is running in Asia. The home organization is expected to over- come these difficulties or, failing that, to be sure that all responsi- bility for failure lies elsewhere. Business depends upon confidence. Errors, substitutions, alterations, etc., destroy this confidence. On the other hand, if buyers abroad can be made to feel that the organi- zation is thoroughly competent in business as well as engineering matters a good will is established that is invaluable. The writer knows of cases where business involving millions has been secured at a 25 per cent higher price because the buyer had confidence in the American firm making this quotation and did not have confidence in the German company offering the lower price. RE1.ATI0N OF EXPORT DEPARTMENT TO AGiaJTS. The home office should carefully plan to furnish agents with mate- rials needed in promoting sales. They require a liberal supply of catalogues and advertising matter if they are to do constructive work. For each salesman in each foreign office there should be a complete price list, discount sheet, and set of any confidential sales data issued. If at all practical, agents should have 60 days' notice of price changes, especially for the larger transactions. Their oriental customer does not like to meet a price advance just at the moment of closing a deal. It goes far toward disturbing his confi- dence. Whenever a line of machinery involves unusual technicali- ties a cable code should be provided that will offer facilities for communication on these subjects, having regard to emergencies and unusual transactions as well as to routine matters. It will also probably be found necessary to consult with the agents on the subject of advertising. This subject is given separate atten- tion elsewhere. Sometimes a manufacturer can promote his own sales by assisting an agent to secure control of a line of supple- mentary equipment. For example, a manufacturer of saws should encourage his agent to sell a complete line of filing-room machinery and supplies. If a manufacturer takes interest in his agent and establishes credit relations with him, it then becomes easy to exercise supervision over these foreign sales. Obviously nothing will be gained by mere inter- ference, but constructive efforts will be appreciated. Close contact will demonstrate the value of a given territory, the reason why orders are secured or business lost, and the needs of the sales organi- zation. Frequently it will be discovered that the agent needs addi- tional sales data. Ordinarily he is not an expert in every particular line and needs supervision and instruction. This raises again the question of the sales policy. Manufacturers seem to be guilty of confused thinking on the fundamentals of an agency arrangement. Some seem anxious to receive everything and give nothing, anxious to develop a good business abroad, unable to do so for themselves, and unwilling to allow an agent such an oppor- tunity and such protection as are necessary if constructive methods EFFECTIVE MEANS OF PROMOTING MACHINERY SALES IN ASIA. 41 arc to be applied. Pioneering work in the building of business is hard, costly work, and a merchant is not justified in incurring the expense it involves unless he is assured that he will participate in its profits. If a manufacturer wants to develop a territory and expects an agent to do constructive work to that end he should have a clear understanding on the following points : 1. Are all inquiries from the territory to be referred to the agent without exception ? 2. Is the agent to be protected, say, 10 per cent (sometimes more), on all quotations that he may ask to be made direct? 3. Is the agent to receive commission on sales made in his territory througt others? Will these be paid before the agent asks them? 4. Is he to have full details regarding these sales, so as to derive advertising value from the installations when this may be possible? 5. Are prices quoted to him to equal the lowest domestic price less the cost of domestic sales? (His sales expense corresponds to that of the domestic sales force.) 6. Is a definite amount of product to be allocated to his territory even to the disadvantage of the domestic business in prosperous times? 7. Is he to be allowed an appropriation for advertising comparable to the domestic allowance? 8. How will the home organization cooperate with the agent? 9. How is the sales-promotion work to be supervised? These questions are only suggestive and offered because experience in Asia shows the necessity of clearer thinking and sustained efforts along these lines. The energy and activity of the agent can go only as far as the cooperation of the principal allows. In America in- quiries from the tei/itory of a branch office are answered through that branch. European manufacturers make it a practice to find out the destination of the goods before quoting and do not quote direct for plant to go into an agent's territory. Loyal adherence to this policy is being adopted more and more by well-organized firms. Most of the governments of Asia have purchasing offices in New York or London. If the agent is expected to advertise among the departments of these governments in Asia and personally solicit their business, he is entitled to control prices quoted to the above- mentioned purchasing offices. A clear understanding on the above points is very necessary, and ordinarily a manufacturer will find that his interests are served best when the first seven of the questions listed above are answered positively, emphatically, and, without exception, in the affirmative. Similarly, the agent should be remem- bered and protected in those cases where buyers return to America to place orders, as presumably this is more or less tJie result of the activities of the agent. EXPORT POLICY IN TIMES OF DEPRESSION. « There is something far more enduring about an agency agreement than is usually realized. Many of these contracts are concluded in a somewhat casual manner and treated casually thereafter — a method tliat is not to be recommended. These agreements, if successful, are lasting. There are many of these agreements that are more than 20 years old and, to all appearances, are going to live 20 years more. In America, for a given line of machinery, there are, say, 10 com- peting manufacturers; sometimes there are many more than 10. Similarly, in each of the competing European countries there are other manufacturei's. But in each of the cities of Asia the number 42 ASIATIC MARKETS FOE IKDUSTRIAL MACHINERY. of really good distributers is small. A manufacturer who has a satisfactory agent has an asset of value. Also, as the years pass a reputation is built. The name of the agent is associated in the minds of the purchasers with that of his principal and the product. The common good will becomes a real asset. When conditions develop as they did in 1920-21 and manufacturers find the market gone, their stocks heavy, and " overhead " absorb- ing all of the profit of the business and more, there is a tendency to be strict with the agent. But it should be realized that the agent is in a worse plight than the manufacturer. His stock,' though probably smaller, represents a larger proportion of his working capital. He probably has bank loans outstanding against it. The banks are demanding settlements. Interest rates are higher. Freight^ duty, and other charges have been advanced. The cost per unit is very high. The market to be supplied is greatly restricted. His clients have repudiated their contracts. All foresight is wasted because of unsuspected developments. The profits of years are reabsorbed by the business in a very few months. At such times an agent deserves sympathy. Aiid if he asks a credit to cover at least a part of the shrinkage of his inventory, consideration should include due allowance for the good work done during a long period of years. The entire future of that market is involved in the decision. It is more than a matter of cooperation. If the agent has overstocked his market the manu- facturer has similarly oversold the same market and that equipment will hang over that market until it is liquidated. There is no escape. Furthermore, no constructive development can take place through any agent until this liquidation is complete. As a market the ter- ritory is demoralized. Unsympathetic treatment at such a time encourages disloyalty. If the dealer abandons the line for products of foreign manufacturers the work of years is destroyed; the old stock still hangs over the market and no other dealer can develop new business. In dealing with agents the export department should realize that the businesses of manufacturer and dealer continue to be associated decade after decade, and it should develop constructive plans to cor- respond with that realization. SUPERVISION OF AGENTS. In the above it has been recommended that the manufacturer should supervise the work of his agents. This is of great conse- quence, for otherwise it is not possible for the manufacturer to defend his interests; but, on the other hand, this supervision must not de- generate into mere meddlesomeness. The relation between principal and agent must be thoroughly businesslike. An amusing, if not absurd, situation arises almost invariably when a manufacturer first sees a quotation as issued by his agent. The manufacturer is accus- tomed to sell, say, at $10,000, and here is his agent — in Japan, for example— offering the equipment for, say, 32,000 yen ($16,000). From this moment the manufacturer is unable to concentrate his mind on anything but 32,000 yen. At one moment he feels that his business is being ruined by a greedy and unfaithful agent. At the next moment he wishes to devise methods whereby he can partici- BETECTIVE MEANS OP PROMOTING MACHINERY SALES IN ASIA. 43 pate in these splendid profits. Although obviously a seasoned busi- ness naan, he seems in a panic ; his imagination is excited. He makes a rapid niental or penciled calculation of cost, exchange, freight, duty, and is convinced that the price quoted is very high — and almost invariably he is absolutely wrong. In the first place, he will always underestimate dll of the items he does include, and he will' omit many ' that he either forgets or never heard about. But, ordinarily, the manufacturer is wasting time if he worries about this matter. He can rely upon it that the agent knows his business and is not trifling. He is not going to kill his own business by charging inordinate profits. Competition restrains the agent as much, if not more, than it does the manufacturer. In these transactions the agent exercises certain very legitimate functions, and they should be left to him. If the manufacturer goes beyond manufacturing and attempts to act as aoa export merchant, he is very apt to find it expensive. in attempting to check up on the cost of delivering a certain machine to a certain place in Asia, it should be remembered that it is very difficult to make these estimates correctly. The applica- tion of varying rates for freight, landing, and delivery, with the complication of different lift scales for each, followed by a calcula- tion of the duty, results in an intricate calculation. "Rule of thumb" is very dangerous. But there are other items entering into the problem that even experienced men sometimes omit. Also, there are, further considerations that upset the whole analysis ; one of the most important of these results in including an allowance for negotiation in the quoted price. Asia does not do business on a one-price basis. Even the sale of a piece of soap is a matter for haggling and negotiation and includes a " squeeze " for somebody, and sometimes several " somebodies." Practically speaking, very few sales are made without offering a price concession upon con- cluding the bargain. This also introduces the subject of secret commissions. Business in Asia pays many secret commissions, but it should be remembered that the commissions are not always illegitimate. The oriental peoples do not employ the same methods that we use. Their methods of bookkeeping are very different. Rarely do they give depreciation, obsolescence, and kindred subjects adequate considera- tion, and stockholders are often unwilling to ' make a reasonable allowance for promotion expense. Consequently, as the promoters can not reimburse themselves openly, they manage the mattp by means that, to us, seem to be of a questionable nature. The follow- ing quotation from "Britons versus Germans in China," pages 49 to 51, gives an interesting British view of this subject: Having made several references to the fact that the Germans seemed espe- cially to favor the method of obtaining their business by means of large secret commissions paid to Chinese officials and others, there is at least this to be said about the morality of such a proceeding. To the Chinese mind there is nothing wrong about the method. Prior to the revolution of • 1911, which resulted in a republican government for China, all officials were paid such small salaries that It was quite understood they were at liberty to supplement their Incomes by means of all kinds of " squeeze." From the officials down to the lowest coolie, " squeeze " is a recognized feature of Chinese life. * * * From the foregoing it m.ust be observed that the moral principles involved by the employment of such methods constitute a nice point in China, however certain we' may feel that l^^uropean trade has no room for such practices. 44 ASIATIC MARKETS FOE INDUSTRIAL MACHINERY. It is only necessary to add that these remarks apply with sub- stantially equal force to the other countries of Asia, and that the custom IS older and more widespread than the influence of the Manchu regime in China.. For success in foreign trade it is necessary to conform to the customs as well as the laws of the country in which one finds himself. Without going into further details, it will be obvious that the manufacturer is scarcely in a position to carry supervision of his agents to the point of controlling their sales prices, and experience abroad shows that efforts of this kind are usually misdirected. Such "supervision" degenerates into meddlesomeness and is unwise. What is needed is intelligent, forceful salesmanship. This coopera- tion will bring orders to the home factory. The sales policy adopted should allow the agent ample profit. Then he will be interested. If the manufacturer gets his price, it should be satisfactory to both if the volume of sales increases. " DIRECT TRADE." In the Orient one hears a great deal about " direct trade." In America we hear demands for improved banking facilities and the need for more liberal terms in connection with our foreign business. Much of the comment is the result of confused thinking. It has been shown that, from the practical viewpoint, the machinery-manufac- turing corporation, whether American, British, or German, is not in a position to act as a sales organizjition in Asia. It is interesting to analyze the matter a little further. The following table shows the different functions inherent in placing an American machine abroad, and, no matter what the nature of the organization, if the trade is handled properly, some one performs each of these func- tions and there is a fair cost chargeable to each one of these tasks : 1. Manufacturer. — Produces the goods ; initiates railway shipment ; issues invoices. 2. American distributer. — Sells products of manufacturer. 3. Export merchant. — Receives goods from railway; initiates ocean ship- ment ; insures shipment ; finances shipment ; draws draft on importer. 4. Import merchant. — Meets the draft ; receives the ocean shipment ; delivers the goods to the user. 5. Vser. — Buys the consignment. The manufacturer will always perform function 1 and his sales department will usually cover function 2. It is impractical for him to perform function 4. The cost of performing function 3 is, say, 24 per cent. It should be noted that the demand for " direct trade " is a plea put forth on behalf of the small importer in Asia to escape dealing through an export merchant in America. The big houses with branches in this country prefer to do business the other way. If a merchant undertakes "direct trade," he must expand his or- ganization to do the work that would be handled by these export offices — function 3. This work involves responsibility and expense, and if a given manufacturer quotes the same discount to a firm in Bombay that it quotes to the New York branch of a firm in Cal- cutta it is really allowing the Bombay house an extra 2J per cent, provided the manufacturer's organization arranges for ocean ship- ment and draws the draft — all of which may be aU right if it is done consciously, but is all wrong if it is done unconsciously. Cor- EFFECTIVE MEANS OF PROMOTING MACHINERY SALES IN ASIA. 45 respondingly, it will be noted that the question of foreign credits and sales terms does not enter the problem if a manufacturer con- hnes his transactions to machinery dealers in Asia that maintain oflices m the United States. These merchants will usually pay cash against the documents at port of export. The credit question nar- rows itself down to the credit of the American office during the period of manufacture, perhaps six months, as contrasted with the problem of examining the credit of an unknown foreigner, 10,000 miles away, who probably will not relieve the manufacturer of financial responsibility in less than a year. Furthermore, in case of difficulty, the problem of collecting from an American in this country is simple as compared with the task of collecting on a repudiated draft in a remote city under alien laws. This also is a situation where it is all right to arrange to deal directly with merchants in foreign cities and extend them terms of, perhaps, D. A. 120 days, provided the manufacturer does so deliberately and in so doing realizes all that is involved. If done unconsciously, it is wrong. The amount of work and financial responsibility added to the duties of the manufacturer's organization by absorbing the tasks of the exporter (function 3 above) is very considerable. ROUTINE OF HOME ORGANIZATION. Success in foreign business involves punctilious attention to a large volume of detail work. Every shipment requires a bill of lading, an insurance policy, an invoice, a packing list, and sometimes a certificate of origin, an agency certificate, or other forms of affi- davit — all to meet the requirements of manufacturer, railway, ex- porter, export customs, steamship company, insurance company, bank, importer, customs officials, erecting superintendent, etc. — and a varying number of copies of each of these documents will be needed, according to the country of destinatioli. Omissions and inaccuracies will cause trouble" somewhere, usually at destination. Usually, also, they will involve expense. All should have the same mark of identification and the same description, otherwise there may be loss in an insurance or steamship adjustment or a fine in the customhouse. The packing list should be most carefully prepared to meet the needs of many people. For staple articles like canned peaches it is very simple, indeed, but for an article like a compound Corliss engine that knocks down into 20 to 40 cases, with endless bolts, nuts, lubricators, etc. (and no two alike), the matter deserves great care. The weights and dimensions of the heavy parts should be shown and the contents of each case so detailed as to properly identify each -item at the customs, for insurance purposes, in con- nection with pilferage claims and the like. Any one or any number of these cases may be lost through scattered shipments, fire, wreck, jettison at sea, or other cause. While these are exceptional experi- ences, they do occur, and it is very good policy to be reiidy at all times to duplicate correctly, and interchangeably, the contents of any particular case in answer to a cable request. This is not ab- stract theory. The writer has had experiences wliere it was most important. Punctiliousness in all these details is very necessary. Very re- cently the writer saw a bill of lading for an oversea shipment which 46 ASIATIC MARKETS FOB INDUSTEIAL MAOHrSTEBY. called for "several packages of nails." Obviously there was no way for the consignee to protect his interests. There was no way to determine when delivery was complete and no way to be sure that all packages sent by rail actually got on board ship. Such a bill of lading is ridiculous. Similarly, others stamped with clauses relieving the carrier from responsibility for one thing or another are in themselves evidence that something was wrong with the ship- ment before it started. Barring those instances where it is obviously unreasonable, only clean bills of lading should be sent forward. Correspondence needs similar supervision in order that the recipient abroad may be protected from that endless variety of errors and omissions that creep into all but the most carefully prepared letters. In planning for foreign trade and laying down business policies for the guidance of the export department, manufacturers of machinery will ordinarily find it good policy to confine themselves strictly to the business of manufacturing, leaving the exporting and sales abroad to those who specialize in such work, at the same time build- ing up a home organization that will be entirely competent to handle the manufacturer's part of the transaction. In those cases where a manufacturer decides to absorb also the task of exporting and undertakes to deal with merchants in foreign ports, engaging in the so-called direct trade, it will also be found neces- sary to develop in the home organization a staff that will perform the work usually handled by the exporter. If attempted, this work should be thoroughly done, tracing the goods until they are actually on board ship and at sea. It is small satisfaction to a buyer in Asia to know that his goods have left the factory, if he is not also assured that they have left the country. The writer has known of many in- stances in which buyers in Asia have found it necessary to take up drafts there for goods that were still on the docks in America. In some instances the goods were lost on the American railways. Their embarrassment is obvious, especially where the delay drags on for more than a year. Such a situation is hard to justify, and probably would not occur if the merchant were represented in America by a competent exporting office. The difficulty seems to arise where a manufacturer agrees to quote c. i. f. and then fails to give adequate attention to the details of exporting. It seems to show that the ship- pers did not have a clear conception of export proceedings and re- sponsibility. Some of the better American firms cable a notification of the name of the ship carrying the particular goods covered by the order. Some of the less dependable firms absolve themselves from all responsibility after the goods have been delivered to the railway. As the foreign buyer can not have a traffic department in America, it is obvious that in the latter case there is a weak element in the dis- tribution, and no manufacturer should be satisfied with such a sys- tem. The manufacturer who is building a reputation and a future can not afford to do business in that way, for it should be remem- bered that European countries are comparatively small, and it is the practice there to follow up the shipment until it is at sea. If quotations are made c. i. f., the maker is responsible for delivery c. i. f. During recent years competition has not been keen, but for the future Americans must expect to be held fully accountable, and in quoting c. i. f. must deliver c i. f. PACKING. SUMMARY OF PRESENT SITUATION, ' , Packing is an old subject that has been worked over repeatedly, but like other problems it is up for consideration again because con- ditions have recently changed. Those American firms that have done a large export business for years find that packing that may have been perfectly satisfactory in 1913 or 1915 or 1918 is not ade- quate to-day. Something connected with the war has demoralized the stevedores of almost every country in the world. Cases are given much rougher handling; freight is slammed about; pilferage has increased enormously in practically every country. ITie home organization should give careful and sustained attention to this problem. Packing should be carefully designed and not left to the discretion of a carpenter who, though a good carpenter, has probably never seen cargo loaded on board ship. The subject is not so simple as it sometimes seems. In the past a great deal of criticism has been directed at the way in which American goods have been packed. Some of it was justi- fied, but those days are now largely of the past. Present-day pack- ing of American goods compares very favorably with that from other countries. Those American manufacturers who have organ- ized for the export trade have designed packing to protect their products, and in Asia one sees poof packing from Europe as well as from America. But as an old organization occasionally takes on a new packing-room foreman, it is well to put the principles of the problem on record. When goods are sold, packed for shipment overseas, the manufac- turer accepts responsibility for providing packing that is not only reasonably secure but will meet the requirements of carriers and insurance companies, and those restrictions have been developed through long experience. If goods are not in cases, even if crated, the steamship will ordi- narily add a clause to the bill of lading declining responsibility for damage to cargo that is " insufficiently packed." This prevents the consignee from making claim for damage, almost regardless of the way it is sustained ; moreover, the provision not only applies to the one or two crates in a shipment that may have caused the amendment of the bill of lading by the above clause but will be used to escape claims on any other package that may have been damaged. Steam- ship companies are not altogether ethical in adjusting these items. Except in those instances where it is obviously unreasonable, goods should be so packed as to secure a clean bill of lading. The cases must all be new cases. When goods are in second-hand cases the steamship company can not protect itself from claims for pilferage, and consequently it will not accept any responsibility for goods shipped in these old cases. The consignee has no recourse 47 48 ASIATIC MARKETS FOE INDUSTRIAL MACHINEEY. except to the manufacturer who did the packing. This also implies that cases should be so fastened or sealed as to betray at once the fact that they have been opened. This is the consignee's protec- tion against pilferage. Pilferage has become a most serious problem during recent years. The trouble is found all over the world. It is made the subject of reports in London. It has attained to great proportions in Aus- tralia. In Japan conditions became very serious. Insurance under- writers have reached the point where they decline to cover more than 75 per cent of the risk. The Steamship Owners' Joint Committee at Sydney even suggested " that the practice of utilizing the cases in which goods are shipped for advertising purposes and of indicating thereon the nature of the contents be discontinued. Wharf laborers and others handling the packages, knowing thereby the exact nature of the goods they were after, could put the packages away and make their choice later at their leisure." Goods should be so packed that anyone can detect pilferage at any time. COST OF SHIPPING LARGE PACKAGES. For a great many reasons the size and weight of packages should be kept down to low limits. In addition to the regular freight, steamships charge a " lift scale " on heavy or bulky packages. The lift scale in force on shipments to Asia in 1920 was as follows : Over 2 tons and up to 4 tons : Add $4 per long ton. Over 4 tons and up to 6 tons : Add $6 per long ton. Over 6 tons and up to 8 tons : Add §9 per long ton. Over 8 tons and up to 10 tons : Add $13 per long ton. Over 10 tons and up to 15 tons : Add $17 per long ton. Over 15 tons : By special contract. The rates named apply from and to ship's tackle and represent the increase over the basic freight rate, which varieS considerably from time to time. These charges compensate the ship for the use of special tackle and the delay involved in handling these heavy items. The writer traveled on a certain ship on which demurrage is calculated at $3,500 per day. The vessel was delayed a whole day in order to discharge six packages, each of which w«ighed about 10 tons. But the above charges are only those made by the ship. A similar and greater cost is involved every time the goods are handled, as, for instance, in lighterage in New York, lighterage in Asiatic port, transshipment charges, cartage to destination, etc. The following is the lift scale for handling goods in Kobe, Japan : By weight : In packages up to 2 tons : 5.50 yen per ton. In packages of 2 to 3 tons : 6.50 yen per ton. In packages of 3 to 4 tons : 8 yen per ton. In packages of 4 to 5 tons : 10 yen per ton. In packages of 5 to 7 tons : 12.50 yen per ton. In packages of 7 to 10 tons : 18 yen per ton. In packages of 10 to 15 tons : 22 yen per ton. In packages of 15 to 20 tons : 25 yen per ton. In packages of 20 to 25 tons : 28 yen per ton. In packages of 25 to 30 tons : 32 yen per ton. In packages of 30 to 40 tons : 85 yen per ton. In packages over 40 tons : Special. z < I a 3 o tr I 1- O < C3 < < >- PACKING. 49 By measurement (40 cubic feet equals 1 ton) : In packages up to 2 tons : 3 yen per ton. In packages of 2 to 3 tons : 3.50 yen per ton. In packages of 3 to 4 tons : 4.50 yen per ton. In packages of 4 to 5 tons : 5.20 yen per ton. In packages of 5 to 7 tons : 7 yen per ton. In packages of 7 to 10 tons : 10 yen per ton. In packages of 10 to 15 tons : 12 yen per ton. In packages of 15 to 20 tons : 14 yen per ton. In packages of 20 to 25 tons : 18 yen per ton. In packages of 25 to 30 tons : 22 yen per ton. In packages of 30 to 40 tons : 25 yen per ton. In packages over 40 tons : Special. In considering these figures it should be remembered that the landing facilities in Kobe are as good as those in any other port in Asia. Similarly there is a lift scale for pieces of abnormal length. The ocean lift scale for such pieces is as follows : For lengths 40 to 49 feet : Add $4 per long ton. For lengths 50 to 59 feet : Add $9 per long ton. For lengths 60 feet arid upward : Special contract. DIFFICULTY OF HANDLING LARGE PACKAGES. From the above it is obvious that shipping large packages is ex- pensive even under the most favorable circumstances. In addition, it involves delay and abuse. Calcutta claims to be the most impor- tant city in the British Empire except London. Bombay claims to rank third. The following is from a report prepared by an Ameri- can consulting engineer, Stewart W. Marshall, who has done some very important engineering work in India and has been interested in importing there all of the equipment purchased for the Tata Iron & Steel Co. This report was prepared in 1920 : At the present time large quantities of machinery and supplies are being imported into India, and it is the experience of the Tata Iron & Steel Co. that the facilities of Calcutta are totally inadequate to handle the tonnage now passing through the port. The berths at the docks and jetties are in- sufficient. Handling equipment (such as cranes) is too small and the- ware- house space too limited. Unloading at the jetties is done by hydraulic cranes of about 2* tons capacity, and, when larger pieces must be handled, this must be done either at MuUick's Ghat or at the Kidderpore Docks. At the first place the pieces must be loaded overside by the ship's tackle and a lighter and warped at MuUick's Ghat, where a single overhead gantry crane, not very modern, of 30 tons capacity, serves a storage space of approximately 10,000 square feet. This space is constantly crowded and much valuable machinery is stored in the mud outside the jetty line. The machinery in this position is partially under water at high tide. Heavier lifts can only be made at one point at the Kidderpore Docks, where there is a 100-ton tripod. As much of the machinery for the newer industries and the railways weighs more than 2J tons, there is a great deal of unnecessary movement and rehandling required. In some cases vessels must be berthed three times before unloading completely if the loading is such that the heavy lift comes when the vessel is partially unloaded. The distance from the middle of the jetties to MuUick's Ghat is about half a mile up the river, while the heavy lift crane is nearly 3 miles downstream and Inside the dock gates. The congestion at the port is so great that at times these vessels are com- pelled to moor in the river for several weeks before securing a berth. Except for Shalimar, the terminus of the Bengal-Nagpur Railway, the nnloading points are aU on the Calcutta side of the river. There is a 30- ton crane here, but as the river at this point is so badly silted that lighters can be placed under the crane only during a few hours at high tide, it is of little 50 ASIATIC MARKETS FOB INDUSTRIAL MACHINERY. service. In addition, it Is required almost exclusively for the railroad com- pany's service at the present time. The Bengal-Nagpur Railway has a car ferry from Garden Beach below Kidderpore to Shalimar. The car ferry can take only a limited number of the long bogje wagons, which are generally nec- essary for handling large or heavy pieces. All of the docks and jetties on the Calcutta side are served by the Port Commissioners' Railway. Frequently as many as 30 or 40 of the commis- sioners' wagons are kept standing under load for days at a time because of the lack of wagons for dispatch or storage space on the jetties. ^ ^ . . Little improvement has been made to the port facilities since the beginning of the war. The traffic is much greater than at any time in history and will probably continue at the present rate indefinitely. Some of the new indus- tries are counting upon export markets, but unless the port be materially im- proved, the benefit which they expect to derive from improved railway facil- ities will be nullified by congestion in Calcutta. These remarks are not quoted as a criticism of the Calcutta author- ities. It is not at all surprising that harbor improvements were in- terrupted by war and, in view of conditions in the steel and money markets, have not been renewed since the armistice. But this quo- tation is inserted to show the diiEculties encountered, under the best conditions, in the handling of large packages. The Calcutta author- ities charge as follows for the use of their cranes : For each lift not exceeding 2 tons : 1 anna per hundredweight. For each lift exceeding 2 but not exceeding 4 tons: li annas per hun- dredweight. For each lift exceeding 4 but not exceeding 10 tons: 3 annas per hun- dredweight. For each lift exceeding 10 but not exceeding 30 tons: 6 annas per hundredweight. For each lift exceeding 30 but not exceeding 100 tons: 8 annas per hundredweight. The weight of the sling is charged for separately in addition to the weight of the package. A 6-ton package, 120 hundredweight, would cost 360 annas — 22 rupees 8 annas (about $9) — per lift, plus a minimum crane hire of 60 rupees and a considerable addition for coolie hire. The computations become complicated, and ordinarily the charges would accumulate to about double the values suggested by the above. TRANSSHIPMENT OF HEAVY PACKAGES. In the above account consideration has been given only to the problem of handling large and heavy packages on the best ocean- going vessels and in porte with the best equipment. For shipment to some of the other ports of Asia the problem becomes very much more serious. The following is the lift scale for shipments from Calcutta to Kangoon and also to ports in the Straits Settlements and the Far East, as used by the British India Steam Navigation Co. (Ltd.) : Weights. Calcutta to Rangoon. Calcutta to Straits and Fm* East. Up to 1 ton Ordinary .rate. Up to li tons Ordinary rate. . One and one-half times ordinary rate. Between H ^^^ 3 tons Twice ordinary rate Between 2 and 3 tons Twice ordinary rate. Between 3 and 5 tons Three times ordinary rate Between 3 and 4 tons Two and one-half times ordinary rate. Botween 5 and 10 tons Five times ordinary rate. Between 4 and 5 tons i Three times ordinary rate. PACKING. 51 Other rates are computed in like manner. All shipping and land- ing charges are to be defrayed by shippers and (or) consignees. Correspondingly, the following are the charges for the coastwise boats m Japan for bulky, heavy, and lengthy cargo : Heavy cargo : Over li tons and up to 2 tons : 50 per cent extra. Over 2 tons and up to 3 tons : 200 per cent extra. Over 2 tons and up to 4 tons : 300 per cent extra. Over 4 tons and up to 5 tons : 400 per cent extra. Over 5 tons and up to 7 tons : 500 per cent extra. Over 7 tons and up to 9 tons : eOO per cent extra. Over 9 tons and up to 11 tons : 700 per cent extra. For every additional 3 tons over 11 tons : 100 per cent extra. Over 20 tons : Special rate. Bulky cargo: Over li tons and up to 2 tons : Base rate. Over 2 tons and up to 3 tons : 20 per cent extra. Over 3 tons and up to 4 tons : 40 per cent extra. Over 4 tons and up to 5 tons : 60 per cent extra. Over 5 tons and up to 7 tons : 80 per cent extra. Over 7 tons and up to 9 tons : 100 per cent extra. Over 9 tons and up to 11 tons : 120 per cent extra. For every additional 3 tons over 11 tons : 20 per cent extra. Lengthy cargo: Over 30 feet : 30 per cent extra. Over 35 feet : 60 per cent extra. Over 40 feet : Special. Following are the formulae to be followed for calculating freight : Heavy and bulky cargo.— For packages such as boilers, etc., on which measure- ment tons exceed weight tons, freight is calculated as follows: Weight tons at heavy cargo rate, plus (measurement tons less weight tons) at bulky cargo rate. Heavy, bulky, and lengthy cargo. — On packages where weight tons exceed measurement tons, freight is calculated as follows: Weight tons at heavy cargo rate plus lengthy cargo rate. On packages where measurement tons exceed weight tons, freight is calculated as follows: Weight tons at heavy cargo rate, plus (measurement tons less weight tons) at bulky cargo rate — ^plus lengthy cargo rate. EXCESSIVE COST INVOLVED. To illustrate the cost of handling such packages: The following is the cost for freight on a 6-ton package assumed to measure 18 tons of 40 cubic feet, from Kobe to Chemulpo : Yen. Weight, 6 tons of 2,000 pounds (heavy cargo), at 8 yen (freight per ton 2,000 pounds to Chemulpo) 48.00 Plus 500 per cent of 8 yen extra for heavy cargo (as per tariff), 40 yen per ton 1 240. 00 Plus difference of measurement tons 18, of 40 cubic feet (bulky cargo) and weight tons 6; 12 tons, at 8 yen per ton 96. 00 Plus 140 per cent of 8 yen extra for bulky cargo (as per tariff), 11.20 yen per ton 134. 40 518, 40 This statement omits the cost of discharging ^nd unloading at Kobe, which would probably involve some lighter demurrage and also the cost of landing at Chemulpo. Even if we assume a freight rate of $20 per ton from American port to Japan, it is plain that the ship- ment of such a package from Kobe to Chemulpo would cost far more than is involved in the shipment from New York to Kobe. 52 ASIATIC MAKKETS FOR INDUSTRIAL MACHINERY. These general remarks apply to all parts of Asia. Transshipment consignments that must be carried on the comparatively small and indifferently equipped vessels that engage in coastwise trade or pur- sue similar routes in China, the Dutch East Indies, the Philippines, etc., may involve a great deal of expense. Such vessels are often of a type that can not possibly carry a package weighing more than perhaps 7 tons, and, as the hatches are probably less than 5 feet square, it is not possible to stow bulky packages below deck, which is a serious matter in these stormy waters. It should also be re- membered that excessively bulky packages, even though light, involve excessive charges for freight. DESIRABILITY OF SHIPPING MACHINERY KNOCKED DOWN. This illustrates the need for a competent home organization. It is all very easy to turn the packing of foreign shipments over to men who are not experienced in these matters, but the consequences are costly and react on the manufacturer just as any other unbusiness- like practice reacts. In Manila the writer saw a certain three- cylinder oil engine, which had not been knocked down at all, but went forward from, the manufacturer as a single package weighing about 33,000 pounds — just under 15 long tons. This involved the importer in about $250 for excess freight, besides extra handling charges at each terminal — a sum that would have paid for a great deal of boxing. On arrival there was absolutely no way to handle it. The package was too much for either interisland boat or railway. It was not only heavy but big. Consequently it became necessary to unpack, dismantle, and repack the engine on the pier. Not only did this involve expense, but the work had to be done by men who were not trained in the handling of machinery. The risk of loss or dam- age to parts involved in such an experience is too great to be justified. The above is not an isola,ted experience. In nine years in Asia the writer has encountered a great many cases where packers in Europe and in America have either used very bad judgment in packing equip- ment or else were not qualified for the work in the beginning. The packing room should be put in the hands of men experienced in boj^ing for export. LIMITATIONS OF RAILWAYS IN ASIA. The railways of Asia are not built to the standards prevailing in the United States. Frequently they are of narrow gauge, but even where the gauge is 5 feet 6 inches the loading is in many ways re- stricted as compared with American practice ; the tunnels are small, the bridges low, the cars of small capacity, with narrow doors. Large and heavy packages involve complications out of all proportion to those experienced in America. As these standards vary greatly from railway to railway, the subject is taken up further in connection with the reports in succeeding pages covering the various countries visited. In all of these countries the railways have followed European practice more than American practice. The carloads are small and the trainloads light, the traffic is not dense as compared with PACKIKG. 53 American lints, the si^aling equipment, the principles of manage- ment, the switch and siding equipment are not American, and one gains the impression that there is room for improvement. LIMITATIONS OF OTHER METHODS OF TRANSPORT. In Asia more cargo is handled by men than by animals and more by animals than by motor truck or railway. Probably the com- monest method of removing cargo from ship side is by the shoulder of a coolie. The size of package that can be handled depends upon the men's strength, which varies greatly. The small men of Java are not nearly so strong as the powerful stevedores of northern China. When the package is a bag and comfortable to handle, a coolie can carry up to about 120 pounds, but, depending on the port and the length of "carry," it can be increased in some cases, even exceed- ing 200 pounds. If the package is a box and two can be carried on a pole over the shoulders, this weight should be divided, so it is convenient to pack in cases of possibly 60 to 100 pounds each. But this is not really important, as two men can easily work one pole, thereby caring for loads up to 200 (sometimes 300) pounds. Beyond this point the package becomes a more difficult problem, and yet it is astounding what these men can do. They are very clever in distributing shoulder poles around a load. In Shanghai the writer saw (and heard) 42 coolies carry a case weighing 1,800 pounds. In Java 15 coolies were seen carrying an ordinary piano, while a similar piano was carried by eight men in Calcutta, where it was reported that such instruments are sometimes sent 300 miles and to 5,000 feet elevation entirely by this method. The subject becomes entertaining, but obviously it is well to keep weights and dimensions down as much as is at all reasonable. One seldom sees mules used in Asia, though it is done. Packages for these little burros should be kept down to about 80 pounds on each side. Camels are used in some districts but not very com- monly, and for camel back the load should not exceed 170 pounds on each side unless the distance to be covered is short. Bullock carts (or their equivalent, camel carts in Karachi, horses in Japan) are of a great variety of type and are common almost everywhere in Asia, except China, where there are few roads. The Philippine type has a capacity up to about 1,600 pounds and, on good roads, can make a speed of about 3 miles per hour. For a load as illustrated opposite page 48, the weight of each package should be less than 500 pounds and every dimension less than 5 feet. POSSIBILITY OF DELIVERING HEAVY PACKAGES. Without going into greater detail, it is apparent that, within reason, machinery shipped to Asia should be sent forward in small packages, but, except for the most unusual installations, it is not necessary to go to extremes in this matter. It is a case of ijQcreased convenience and reduced costs rather than a matter of dealing with the impossible. On the other hand, the problem of delivering a 10,000-kilowatt , steam turbine from ship to power plant in any of these eastern cities is reaUy very difficult because they are parts that can not be knocked down. An instance was reported of a dredge 110291°— 22^ — 5 54 ASIAnc MARKETS FOR INDUSTRIAL MAU±ilJ-»P>ieated subject is a^lyzed it ■^comes^S^S^o MISCELLANEOUS FACTORS AFFECTING SALES POLICY. BANKING AND TERMS OF PAYMENT. Certain manufacturers have asked for information regarding bank- ing facilities in Asia. Much has been written about the credits ex- tended by Germans in pre-war days. As applied to transactions in factory machinery the matter is simpler than for other merchandise of a more staple nature, as these usually represent investments in fixed plant as distinguished from a merchant's inventory. Prac- tically all of this machinery is sold through agents or importing merchants in the different cities abroad. From the nature of their business it is necessary to keep their capital turning as rapidly as possible, probably once in 60 days or less. It is customary for the American export merchant when shipping such equipment to finance these exports through an exchange bank, sending the draft forward attached to the bill of lading (and other documents) through that bank. Usually on selling his draft to the bank the merchant can pay the manufacturer in fuU, and from that point of view his in- terests are satisfied. However, at destination the exporting merchant needs time to collect from his customer. During the war some manu- facturers required that orders be accompanied by an irrevocable credit. It will be plain that this imposes a real hardship on the merchant in Asia, as that amount of his capital is tied up and inactive possibly for months. Although this procedure is safe enough, ordi- narily it will not be found practical in normal times. Sometimes the draft is D/P (documents against payment). In this case the bank holds the shipment as security ujitil actual pay- ment is made. Unfortunately, this also does not satisfy the im- porter, who wants to collect from his customer, if possible, before he himself needs to settle the account. , If the manufacturer covers a given territory through a merchant firm as agent, he has very little occasion to worry about terms of payment, provided his agent has an American office, as that office will finance the shipments, but if the agent has no office in America it then becomes practically necessary for the manufacturer to absorb in his own organization the duties of the export merchant, which include financing the shipment. Under these conditions it is not only legitimate but almost necessary to increase the selling price enough to correspond to the charges of the export merchant, which for ma- chinery transactions wiU approximate 2J per cent. Under these circumstances it will also be necessary to decide what form of draft wUl be issued. Normally the agent overseas will want it drawn D/A (documents against acceptance) 30, 60, 90, or more days. As the exchange banks require two names on all such paper, it is clear that the manufacturer is accepting a real responsibility if he concedes this point, which will usually be necessary ; this demonstrates one of several reasons why the agent should have an American office. 73 74 ASIATIC MARKETS FOR INDUSTRIAL MACHINERY. It is in this connection that certain criticism is directed at the banks. If a manufacturer is to extend credits to importers in Asia, he commonly can get his credit information only from the banks, which in turn always refuse to extend the credit they recommend be- cause of this two-name rule — ^yet this is the general attitude of the exchange banks. However, it is not recommended that manufacturers engage in unbusinesslike practices, nor is it to be inferred that European manu- facturers do so. On the contrary, if it is found that liberal terms are extended, most probably some safe method has been developed. It is not possible to take up here the various methods followed, but one example will serve as an illustration. USING THE BANK TO ASSIST IN MAKING SALES. In some countries there are discount banks (not to be confused with the exchange banks). If a buyer wants a very long time in which to pay and the importer agrees, the transaction is followed in the usual way, except that on delivery the buyer issues an accept- ance to the importer, which the bank discounte. In this way the manufacturer, exporter, and importer are all paid in full and the transaction stands in effect as a loan from the bank to this buyer. When the acceptance is discounted " without recourse," the bank has full responsibility, but this is seldom done and the importer's name is commonly on the acceptance throughout its life. In some places people speak of discounting "del credere," which at first suggests that the acceptance is " without recourse, " but there are certain supplementary clauses that restrict this very much. Almost everywhere in Asia one can find plenty of banks to enable him to take care of ordinary exchange transactions. It is true that there is probably plenty of room for more competition. Sometimes the existing banks seem somewhat arbitrary. There is a great short- age of discount banks. From the above it is plain that the manufacturer has few responsi- bilities if he sells " cash against documents f . o. b. factory " or even " cash against documents f. a. s. New York " (or equal), but as soon as he undertakes to quote " c. i. f. Asiatic port " he needs men in his organization who understand the meaning of all these and other terms and can distinguish clearly between the responsibilities of railway, stevedore, steamship, insurance company, and consignee and also appreciate clearly the differences between the different kinds of insurances " f. p. a., " " w. a., " " all risks, " " war risk, " etc. But there is another angle to this banking situation that is of great importance to American manufacturers of machinery, and that is the influence of nationalism and investment banking in controlling the competition for business. Probably 90 per cent of the railways of China are forced to buy their materials in markets that are in- ferior to those of the United States because these roads were built under foreign loans, the agreements for which stipulate that pur- chases shall be made in the lending country. The principle applies to other countries as well as China and to industries and mines as well as railways. Frequently where Euro- pean capital is employed it has been very difficult for American manufacturers to supply the equipment, even though they might MiSCELLASTEOUS S'ACTOKS AFI'ECTING SALES POLICY. 7S offer better goods at a cheaper price. But, in the future, it will probably be even more difficult. The war has intensified nation- alistic feeling everywhere. There is a tendency for manufacturers, merchants, banks, and diplomatic services of the several countries to coordinate their efforts along nationalistic lines, and this, of course, implies a certain discrimination against outsiders. Unques- tionably Americans are at a disadvantage in these matters. Re- gardless of what views we may have as to the unwisdom of such a strongly nationalistic policy on the part of others, American busi- ness IS still forced to depend upon foreign banks very commonly even for routine services. Obviously it is simple wisdom to encour- age American banks in their foreign efforts. Also, now that the United States is a creditor nation, it will be desirable, if not neces- sary, for us to invest large sums abroad. The American manufac- turer of industrial machinery has a very active interest in having these investments so made as to stimulate his business, as has already been indicated on page 37. European countries have engaged in the " peaceful penetration " of various districts through coordinating the activities of diplomatic services, railroads, and banks, and while the present writer does not in any way recommend this method for the United States it will undoubtedly assist American diplomats and interests generally if our manufacturers will take a more active interest in these problems. It is at this point that business, banking, and world politics mingle. The subject becomes involved and will not be pursued further here, although it is of absorbing interest. PATENTS, TRADE-MARKS, AND COPYRIGHTS. In all the countries of Asia there is a tendency toward the copying of designs, the pirating of trade-marks, the imitation of labels, con- tainers, etc., as well as other abuses from which manufacturers wish to be protected. The laws covering these matters are not so well developed as in many other countries, but in most instances there is a certain amount of legislation whereby patents may be issued and trade-marks and copyrights registered. Flagrant disre- gard of the various laws is exceptional, and manufacturers should arrange for appropriate protection before establishing a line of products in these markets.^ This must be done according to the laws of the several countries, and it is necessary to be very punctilious in conforming closely to all details so as to comply not only with these foreign laws, but also to keep within the practices of foreign juris- prudence. In some instances unauthorized parties apply for the registration of American trade-marks for speculative purposes — a procedure that may prove profitable in those countries that base ownership of marks on priority of registration regardless of prior use by anothen When these fraudulent registrations are secured it is practically equivalent to the acquisition of an exclusive agency for the products involved unless the manufacturer is willing to adopt a new trade-mark for ■ The Bureau of Foreign and Domestic Commerce has collected a great deal of Infor- mation on this subject in the Foreign Tariff Division and can supply, on request, informa- tion and advice on specific problems. 76 ASIATIC MARKETS FOE INDUSTRIAL MACHINERY. that particular market, and this in turn usually involves the sacrifice of good will that may represent a ^eat deal of expensive advertising, A similarly embarrassing situation develops sometimes when it is found that registration has been made in the name of the local agent or importer. As long as the agent is satisfactory there are no com- plications, but when the* principal wishes to make a change the agent may have the power to prevent the importation of the pro- tected goods, unless it be done on terms he may dictate. During the war similar complications arose where the agent's name was placed on the enemy trading list, as happened in some instances. Agents should be instructed to obtain registration in the name of the prin- cipal. , When an agent is a man of integrity and dependability he can often be of great service in matters of this sort, but ordinarily it is a legal matter and should be handled by competent attorneys. Also it should be remembered that these rights will not protect theniselves, and the manufacturer should be prepared to resort to litigation should this be necessary. This must be conducted under the laws of the foreign country involved, and the case must be handled in accordance with the alien procedure. One should be very careful to handle these matters so as to be sure of having a good case at court if litigation should be necessary. PLANNING A TRIP TO ASIA. NECESSITY OF ACCURATE INFORMATION AND PROPER CAUTION. Those who are considering their first trip to the Orient seem to find it difficult to plan intelligently. If the individual is of a methodical turn of mind, there is a temptation to work out an itinerary for months in advance; but this is not wise if arrange- ments make it necessary to adhere closely to such a schedule, for the unexpected frequently develops and usually it will be found that an oriental trip requires much more time than is anticipated, for the traveler should usually allow a good deal of time iij which to get ah understanding of each new country. Conditions in Java or China or any of these other countries need to be seen to be appre- ciated and will usually require thoughtful study on the ground in addition to what can be learned by reading, though, of course, a trip to Asia deserves a good deal of related reading. People who are rather impulsive sometimes fail to give sufficient care to their plans, and in Asia it is amusing to observe the things that happen to such individuals. For example, in Calcutta there are 13 successive holidays early in October. Allowing for the de- moralization preceding and following this celebration, one landing there about September 20 is very apt to ;waste an entire month in expensive surroundings. But matters can easily become even more serious. By reaching certain districts in the, very hot or rainy season one can come near wasting his time and money altogether. In 1919 there was a war on the Afghan border of India, followed by a peace conference at Rawalpindi, in northwestern India. These negotiations were con- ducted, to a very large extent, on days when the thermometer went above 120° F. That may be all right when really necessary, but MISCELLANEOUS FACTORS AFFECTING SALES POLICY. 77 one should endeavor to find a better season in which to conduct ordinary business if it is reasonably eaSy to do so. In Calcutta, Bombay, and other business 'cities of India the temperature rises above 110° F., with high humidity. It is not true salesmanship to attempt to do business in the hot districts of India during the " hot weather." One should not arrive before September, nor stay after February. This matter is of such great importance that one's entire trip should be planned with this feature foremost. AVOIDANCE OF EXCESSIVE HEAT AND POSSIBLE INFECTION. The very hot season is also commonly the season when there is the greatest danger of infection. It seems to be agreed among qualified physicians that the white man can travel anywhere and work hard in any climate, provided he is protected from infection, but the conditions in most of these countries make it very difficult to escape. At any time of year in the entire area between Yokohama and Port Said one should avoid uncooked food and drink and by so doing will probably escape that long list of enteric diseases, some of which are very dangerous and all of which are at least a serious inconvenience. As mosquitoes carry malaria, dengue, and probably a number of other fevers, they should be avoided to the greatest practicable extent. Ordinarily by the exercise of a little care a trip through Asia can be made very pleasant and is to be strongly recommended as a splendid experience. It is not a matter of lazi- ness or softness, but it is good business to visit these countries at those seasons when work is easiest and effort and traveling expenses are invested to the best advantage. It is not a matter of endurance of the traveler, but rather a matter of good salesmanship, to visit customers when they are under favorable conditions. In the above emphasis has been placed on the discomforts of hot weather, but at the other extreme, winter will be found very severe everywhere north of Shanghai, except that the largest cities in Japan are not really cold, though as most of the buildings are in- adequately heated, work there often becomes difficult. The writer has suffered more from the cold with the thermometer above freezing than when it was lower, and it is not entirely a matter of dress, for one sometimes feels disposed to put an overcoat on in the house and take it off for a walk in the street. SUMMARY OF CLIMATIC CONDITIONS IN PRINCIPAL LOCALITIES. Eemembering that a trip should be so planned as to avoid India between March and September, and adopting the principle that one can work to the best advantage when comfortable, the following particulars have been prepared to assist in planning so extensive a trip as one to Asia so as to derive the greatest advantage from the investment. Apart from time, salary, entertaining, automobile, etc., an eight months' trip to Asia will probably cost between $3,500 and $5,000 — an investment that should be made with care. Calcutta.— November to March: Cool and pleasant. April, May, and June: Hot ; very hot. June to October : Humid and uncomfortable. Bombay. — ^November to March: Cool and pleasant. May and October: Hot. June to October : Kainy and hot ; travel difficult and unpleasant 78 ASIATIC MAEKETS FOB INDUSTRIAL MACHINEET. Rangoon.— 'November to March: Cool and pleasant, March to September: Hot and rainy. Rangoon gets about 90 inches of rain per year — about three times as much as Chicago. Note.— In India it is inadvisable to pay business calls on mail day, which means Friday and Saturday In Bombay, Thursday in Calcutta, etc. Also, calls should not be made before 10 a. ra. or after 4 p. m., or at tiffin time between 12.30 and 2 p. m. In making an itinerary plenty of time should be allowed for India. Colombo.— A delightful spot that may be visited at any time. The 'tem- perature is never above 92°, F. nor below 65° F. February, March, and April are the hottest months and August the coolest. May, June, July, September, October, and No\eraber each have more than 17 days with rain per month. Colombo is best in December and January. The northeast monsoon brealss between November 1 and 15. The southwest monsoon breaks between May 10 and 20. Singapore. — Also a delightful place that can be visited at any time. March is apt to be the hottest month, with a record of 92° F. as the maximum. No- vember is the coolest, with a record of 73° F. as the minimum. Humidity is highest in December and lowest in April. Rain is rather evenly distributed, but heaviest in January and lightest in May — 176 rainy days per year, totaling 130 inches, about four times as much as Chicago. Batavia and Java. — The temperatures are very uniform. In Batavia the warm months are May and October, with a mean temperature of 79.5° F. Cool months are January and February, with a mean of 77.6° F. Rainfall is 72 inches per year, 70 per cent of which falls between November and March. August is the dryest month, having only three to five days with rain. Other parts of Java differ somewhat. The best season is April to October, which alternates nicely with the season one should devote to India. Business con- ditions in Java and the other islands of the archipelago differ very much from those in India and China, and plenty of time should be allowed for studying them. Indo-China and Siam. — Haiphong and Hanoi are reached most easily from Hongkong or, once a month, from Manila. Bangkok is reached best from Singapore ; the most comfortable way is by water, leaving Saturday and arriv- ing Wednesday. The trip can be made by rail in five days, involving a stop- over of nearly a day at Penang and a night each at Alor Star, Tung Song, and Chumphon. The rail trip is tedious and uncomfortable. The weather is con- trolled by the monsoon, which is very regular, the variation being within one or two days. The best season is during the northeast monsoon, October 15 to April 15, when the temperature is 78° F. to 80° F. by day and 68° F. by night in Saigon. During the southwest monsoon, April 15 to October 15, there are daily rains, and tornadoes occur. The temperature is about 84° F. day and night. April and May are the hottest months, from 86° to 93° F., with high humidity. Manila. — Seventy-five per cent of the rain falls between June and October, and the period is cloudy. July, August, and September have 21 rainy days per month. From May to September there are many severe thunderstorms and typhoons. February, March, and April are the dryest months (three rainy days per month). January is coldest, at 77° F. mean temperature. May is hottest, at 83.4° F. mean temperature. The hottest record is just over 100° F. Hot season, April, May, June ; cool season, November to February ; interme- diate season, March, also July, September, and October. Humidity low in April; high in September. Can be vjslted any time of year, but most comfortable from January to April. Hongkong and South China. — December to March 15 is a cold, dry winter; the lowest temperature ever recorded was 32° F. ; the mean January tempera- ture is 60° F., and the thermometer may go up to 75° F. or 80° F. Dress is a problem under such conditions. Spring — March 15 to May — is damp, misty, cloudy, and unpleasant. Summer — June to September — is hot and trying; mean temperature, 83° F., highest ever recorded, 97° F. Early summer is cloudy and rainy, the precipitation decreasing later. Autumn — Octoter and November— is a pleasant season and best suited for a visit. Shanghai and Noj-th China. — Summer is hot and unhealthful, July and August being very trying and June and September difficult at times. Winter is cor- respondingly cold, going to 12° F. in Shanghai and much lower in the north. January and February are the coldest. October and November are the most MISCELLANEOUS FACTORS AFFECTING SALES POLICY. 79 pleasant months. March, April, and May are spring months not unlike those in the United States, except that dust storms may be encountered in the north, where the climate is dryer than in most sections of America. Japan cities. — ^About June 15 the 20-day rainy season starts, which is followed by heat until September 15. From then until Christmas there is ideal autumn weather. From Christmas until about January 4 there is a series of holidays that make business difficult. From January until March 15 there is an un- pleasant winter season. Between March 15 and June 15 there is a delightful spring, somewhat more rainy than the autumn. CLOTHING. It is customary to dress for dinner everywhere from Yokohama to Suez and beyond. A gentleman will require both full dress and dinner coat, white tie and black. A lady will probably need three evening dresses as an absolute minimum, and most women will feel that they want more. It is necessary to conform to these customs. In the hot weather a sun hat is worn in all of these countries and with it a suit of white duck, pongee silk, or equal. As these require frequent washing, one will probably require at least a dozen suits if traveling so as to be beyond the reach of a laundry for several days at a time. Such clothing can be purchased quickly and cheaply in all of the more important cities. Other clothing will be found expensive. On the map opposite page 1 will be found a table indicating roughly the amount of time required to travel from city to city on the usual steamers. Trunks weighing more than 200 pounds are apt to receive an abnormal amount of damage. As the methods of han- dling baggage usually follow European as distinguished from Ameri- can methods, it is ordinarily wise to restrict the weight to even lower limits. ESTIMATING THE VALUE OF ASIATIC MARKETS. From the data given, in the tables on page 6 and also on page 3 and in other parts of this report it is plain that Americans have an interest in these machinery markets that may be estimated at $50,000,000 to $70,000,000 per year. It has also been shown that these markets are growing and that there is very good reason to expect them to grow. Consequently they are far too important to be neg- lected. On the other hand, it is not wise to overvalue them as is sometimes done. The following amusing paragraph is quoted from " British versus Germans in China," page 73 : It takes very little to influence people one way or another, and the writer knows of an actual incident which seems to illustrate the case in point. A cer- tain American manufacturer of shaving soap suddenly came across the fact that there was a population of 400,000,000 souls in China. Probably he acquired the information from his morning paper. At all events he wrote his agent in China asking why orders had not been sent for about 200,000,000 shaving sticks and at the same time terminating his agency agreement, little realizing that not one Chinaman in a thousand has the means or inclination to treat himself to a perfumed shaving stick. The writer has had similar experiences, and this failing is not at all peculiar to Americans. The purchasing power of human beings earning less than 30 cents per day and clothed with less than 25 cents' worth of apparel will not absorb many shaving sticks, although these people exist by the millions. On the other hand, if their condition can be improved so that each has a 50-cent wardrobe they may require an astonishing number of additional spindles and thousands of horsepower in first-class American-made cotton mills. 80 ASIATIC MAPKETS FOB INDUSTRIAL MACHINERY. Asia is backward and handicapped in numberless ways. For centuries efforts have been made to open these countries up. For decades people have tried to install railways, telegraphs, and indus- tries, and it has been difficult and tedious work. But, as pointed out in discussing advertising, very important progress is being made. The value of these markets should be studied calmly and organi- zation for work in them established with practical deliberation. It is not to be concluded from what has been said that Hankow will become a Pittsburgh in a decade, let alone over night. Bombay and Osaka, with their tremendous spinning mills, will be a very long time in rivaling Manchester. Notwithstanding this, a really impor- tant opportunity does exist and good managers will take advantage of it. In fact, this is the crucial time in Asiatic trade. The markets should be adequately worked, but not on the basis of an overestimate of their purchasing power. This problem is not new but has existed through all the centuries of tradfe with the Orient. From the beginning, and practically at all times, the too eager trader has netted losses, while probably at the same time more careful managers have amassed fortunes. In the period 1845-1850 an investigation by the British House of Commons disclosed that the whole China trade was being conducted at a serious loss and yet was carried on year after year in a "hope-on- hope-ever " spirit. And again regarding the same period it is writ- ten: "Every traveler in every port of China is astonished at the quantity and variety of merchandise which is constantly on the move. It is this that inspires confidence in the boundless potentiali- ties of Chinese commerce, which seems only waiting for the link of connection between the resources of the Empire and the enterprise of the western world." ^ , ■, , , The Empire is now a Republic, but the old problem remains. Decade after decade we have seemed to be on the verge of that boundless expansion, yet ever, like the gold at the end of the rain- bow it is still before us. And the case apjjlies not only to China but to all Asia. Always the overzealous person has overdone the matter and failed. It is remarkable how few of the merchant firms are really old and how few of the names of the firms of by-gone days remain. _ PAST GROWTH OF ASIATIC TRADE. But there is another side to this story, for, simultaneously, other merchants have prospered wonderfully. This same Anglo-Chinese trade that has for so many decades caused men to " hope on, hope ever" for the promised development shows the following growth in British exports to China : 1842 £1,500,000 1852 2,500,000 1861 4,500,000 1900 7,000,000 1907 12,600,000 1910 9,450,000 1913 : 14,600,000 1917 (war year) 11,000,000 2 " The Englisbman in China," by Alexander Mitchie, published In 1900, vol. 1, pp. 172 and 209. MISCELLANEOUS FACTORS AFFECTING SALES POLICY. 81 Although this business is not large as such things go, it shows creditable and reasonably consistent growth, and every other country in Asia could probably show equal or better proportionate develop- ment. Nothing is to be gained by exaggerating or disparaging the possibilities, but we have long known of the " China merchant " as a prosperous type of man, and, if handled on a businesslike basis, trade in these markets is profitable and increasingly important. It should be remembered that development usually accelerates, and in view of the new spirit that has spread over the Orient, the desire for industrial development described above, it is very probable that this development will be abnormally rapid during the next few years. Enough has already been done in establishing railways^ textile mills, mines, electric power plants, sugar centrals, steel mills, blast fur- naces, shipyards, and a great variety of factories to cover the pioneer stage. Asia is now ready for the development stage and may be expected to repeat upon a large scale the boom experienced by Japan after 1904, following the Russo-Japanese war. PRESENT STATE OF ASIATIC MARKETS. • In the ensuing sections of this report an effort is made to give a picture of the industrial development of each of these countries, with a view of showing their value to the American manufacturer of machinery. To do this, it is necessary to use data secured from a great many sources. It is hoped that the limitations of these returns will be appreciated. Particulars indicating the area, the population, and the population per square mile are of value, but, as has been indi- cated, it is necessary also to consider the development of the people and the development of the territory.. New Guinea is large, fertile, blessed with good soil and population, but is poor as a market. It has neither railways nor highways to any adesquate extent, and the people are as undeveloped as the country. Borneo is in a similar plight. Even when there are transportation facilities they are mferior to those known in America. Even when there is adequate population, the individual purchasing power and working power are very low. China is reported to have four times the population of the United States, but certainly has not the capacity for produc- tion that is found here. It has been estimated that the power em.- ployed in industry in that part of the United States between Wash- ington, D. C, and Boston, Mass. (the superpower zone), is equal to the producing capacity of more than 3,000,000,000 slaves. China has never possessed any such helpers. Although the writer has great admiration for the industrial capacity and economic efficiency of the individual Chinese, it is only right to add that he still falls short of the American in these respects. Similarly, it has been necessary to use the trade statistics as pub- lishel by the customs authorities of the different countries. These figures are very useful and valuable, but have their limitations. They are compiled from the invoices accompanying each shipment by men who can have only a limited knowledge of the many commodi- ties they are required to inspect. Questions of classification are sometimes very difficult. If a steam boiler is shipped as part of a sugar miU, it may easily be classed as " sugar machinery." in com- paring the statistics of two different countries, it is not to be ex- 82 ASIATIC MARKETS FOR INDUSTRUL MACHINERY. pected that they will agree. Apart from the problem of classifying each given shipment, as mentioned above, there is the question of meaning of words. For example, it is said that tl expression in the German language corresponding to " machine ^ .Is " embraces not only those machines we include in that classify :tion but also most metal-working machinery, woodworking mt inery, stone- cutting machinery, and other items. In addition i.j these difficul- ties, some countries use the calendar year and some an arbitrary fiscal year. Also, goods recorded as exports from Europe or Amer- ica in December would not be entered in the imports of a Far East- ern country until some months later, certainly in the .lowing year. Goods are commonly entered as from the country o. ';he last port of shipment, but frequently they have another origin, ""he Chinese returns for 1919 acknowledge receiving 1,144,222 T an taels' worth of textile machinery from Canada and only 800. . . Haikwan taels' worth from the United States. Probably all of machin- ery was manufactured in the United States, the shipm. sent via Vancouver being credited to Canada. American mach jry trans- shipped in the United Kingdom, the Netherlands, Hongkong, or Sin- gapore would usually be credited to those countries on arrival in China. Also, there are times when some foreign customs authorities apply arbitrary values. For instance, in the Dutch East Indies an automobile is valued at about 3,000 guilders, regardless of its actual value. This simplifies the collection of duties, but in the an- nual returns the importation of a thousand car^ would appear as, say, 3,000,000 guilders, while on comparison with the American returns it might appear at two or three times that valui'tion. It is not wise to be too positive about conclusions derived from these sources of information, as they are subject to criticism as in- dicated, but, on the other hand, they have a very definite value. If one is interested in air compressors and Japan acknowledges having received 1,000,000 yen's worth in a given year, those compressors, of whatever type or origin, were delivered, and a foreign i ales man- ager would be justified in planning his work accordingly. Other discrepancies between the returns of different countries arise from the fact that they are usually valued at port of export on the f. o. b. value and at port of import on the o. i. f. value. The rates of exchange employed are also frequently arbitrary and may often differ a great deal from the banker's rate for the day. The following sections of this report have been prepared to show the present and prospective development of each of the several mar- kets for American machinery in that part of Asia covered by this investigation. The circumstances of the case require that these mar- kets be considered as separate countries, but in reality the separate markets are the different cities. India is in reality five different markets. In the table on page 6 an effort has been made to show the comparative value of these various markets. That table also demonstrates, a most astounding growth in the 1915-1918 period. Information as to the way that growth has been sustained, together with further and more recent details, will be given in the following pages. Special Agents Series No. 215. FIG. 19— MAP OF INDIA AND CEYLON. With outline nnap of United States, on same scale. 110291°— 22. (Face p. 83.) INDIA. EXTENT AND GENERAL CHARACTERISTICS OF THE MARKET. American interest in the machinery markets of India in the past may be summarized in the following figures from the Indian cus- toms returns, showing the imports of machinery to British India: Years. Total imports. Imports from the United States. Percent- age from United States. Yearsr Totat imports. Imports from the United States. Percent- age from United States. 1913-U 1914-15 1915-16 1916-17 £6,076,606 8,304,660 3,882,306 3,297,580 £112, 170 123,659 152,075 206,373 1.8 2.3 3.9 6.2 1917-18 1918-19 1919-20 1920-21 £2,579,292 3, 268, 240 8,652,879 21,004,032 £490,590 798, 198 2,631,968 3,463,640 19.0 24.5 29.3 16.5 American manufacturers have a very distinct interest in any mar- ket that absorbs $102,000,000 worth of machinery in a year. The interest is intensified when it appears that $16,850,000 worth of this machinery was American. The interest increases further in a coun- try where American participation advanced from 1.8 to 29.3 per cent in the short space of seven years. American machinery shipments have multiplied over 30 times since 1913. The machinery business of India is not new. The cotton-mill in- dustry was started there in 1851 ; the railways date from about 1853. For many decades the country has been developing industrially in a solid businesslike sort of way, and the situation as of 1917 was as follows : Kinds of establishments. Number of estab- Ush- ments. Number of em- ployees. Kinds of estabhshments. Number of estab- hsh- ments. Niunber of em- Cotton spinning and weaving. Jute mills Cotton ginning and pressing . . Railway and tramway work- shops Eioe mills Engineering workshops: Arms and ammunition Iron and steel producing works 284 75 1,775 97 542 161 17 282,297 264,373 133, 323 115,529 4^114 39, 112 33,287 17,145 Sawmills Woolen mills.. Sugar factories OilmiUs others Total.... 127 20 40 138 1,549 11,672 11, 152 9,847 7,757 265,802 4,827 1,238,410 India ranks sixth among the cotton-spinning countries of the world, being exceeded in number of spindles only by England, the United States, Germany, France, and Eussia. It has more spmdles than Latin America, China, and Japan combined. In jute it has practically a world monopoly. It has a larger acreage devoted to sugar than any other country in the entire world. Also, it has been 83 84 ASIATIC MAKKETS FOR INDUSTRIAL, MACHINERY. estimated that India produces 40 per cent of the world's supply of rice and is the world's greatest exporter of this commodity. The iron and' steel industry has not yet become large, but seems to be established on a business basis. It is said that pig iron has been produced at prices that make it possible to market it competitively in San Francisco, and the original plants are rapidly being followed by several others. These particulars are submitted merely to indi- cate that India has been an important market for machinery for a long time. No list of industries or description can adequately de- scrioe the possibilities of this territory. NEW POLICIES ENCOURAGING INDUSTRIAL DEVELOPMENT. Although the above particulars are important, there have recently developed changes in the policies of those in control that are of far greater importance. Up to about 1905 there had been no considered and general policy on the part of the Government in encouragement of industry if we except railway encouragement, etc., but at that time a Department of Commerce and Industry was established- In 1907 a conference at Naini Tal resulted in certain efforts being made in the direction of employing Government aid in developing certain industries, and from time to time other similar enterprises were suggested. In connection with one of these in 1910 Lord Morley, as Secretary of State for India, wrote that the results of the attempt to create new industries were not of a character to remove his doubts as to the utility of State effort in this direction. But "the attitude of Government did not satisfy the important section of Indian public opinion which desired the industrial regeneration of the country. The revisal of the policy enunciated by Lord Morley was frequently demanded," and the success of Japanese industries, brought home forcibly to India by a very large increase of Japanese imports, was cited as an instance of what a previously backward Eastern nation could accomplish with Government encouragement." ^ The outbreak of the war drew forcible attention to the extent of India's dependence upon countries outside the British Empire, par- ticularljr upon Germany and Austria, for the supply of many of the necessaries of life for its people, and some time after the commence- ment of the war the Government of India resolved to examine the question of the industrial policy which the Government should pur- sue in the altered state of things in India. In their dispatch to the Secretary of State, dated November 26, 1915, the members of Lord Hardinge's Government put the case for a change of policy in very clear and forceful language. They said : It is becoming increasingly clear tliat a definite and self-conscious policy of improving the industrial capabilities of India will have to be pursued after the war, unless it is to become more and more a dumping ground for the manufacturers of foreign nations who will be competing the more keenly for markets, the more it becomes apparent that the political future of the larger nations depends upon their economic position. The attitude of the Indian' pub- lic toward this important question is unanimous and can not be left out of account * * *. » " Report of Indian Industrial Commission," 1916-1918, p. 80. INDIA. 85 Finally the Government said : After the war India will consider herself entitled to demand the utmost help which her Government can afCord, to enable her to take her place, so far as circumstances permit, as a manufacturing country.' This policy appears to have the support of public opinion not only in India but in the United Kingdom, both private and official, technical and financial, and the change is so comprehensive that India of to-day is pursuing not at all the same business policy that it was before 1914. The country is aroused and will, undoubtedly, develop very rapidly and, in developing, will require industrial equipment in large quantities and in much greater variety than could have been anticipated only a few months ago. The first systematic study of the productive possibilities of indus- trial India was made in 1917-18 by the Indian Munitions Board, which was organized to determine " whether more could not be done to develop Indian resources for war purposes, so as to relieve the United Kingdom as far as possible from the necessity of meeting extraneous demands."* This board accomplished a great deal and in reality laid the foundation for scientific development by planning for the establishment of key industries first, to be followed by the de- velopment of related industries subsequently. In this work the en- tire Indian Empire was studied in an effort to discover supplies of the various raw materials. Very important progress has resulted. About the same time, May 19, 1916, the Indian Industrial Com- mission was appointed and has made a very comprehensive study of the entire problem. The experience of the war itself has been responsible for a new attitude on the part both of Government and of leading industrialists. They realize that it is necessary to creatfe in India the manufactures that are indispensable for Indus- trial self-sufficiency and for national defense, and that it is no longer possible to rely on free importation of essential articles in time of war.* The work of the Munitions Board and of the Industrial Commis- sion have been coordinated and a definite plan of industrial develop- ment worked out. This growth has taken place at the same time that the new political organization of India locally known as the "re- form scheme " has been established. The fundamental principle^ in the new Government system is provincial autonomy. Consequently the development of industries was delegated to the provincial gov- ernments, and in each a director of industries has been appointed and suitable organizations are being developed. These new departments are collecting data relative to the development of old or the establish- ment of new industries. They are provided with an increasing staff and are a very powerful influence, although they are still very new, and it will be some years before their greatest effect will be apparent. The nature and. importance of new enterprises actually promoted during recent years can be noted from the following record of new 2 Note by tlie Hon. Paudit Madau Mohau Malaviga, published on pp. 314, 315 of " Report of Indian Industrial Commission," ISlB-iiaiS. ' Indian Munitions Board, " Industrial Handbook, 1919," p. 1. « " Report of Indian Industrial Commission," 1916-1918, p. 122, 110291°— 22 86 ASIATIC MARKETS FOB INDTJSTKIAL MACHINEEY. companies incorporated in British India, Mysore, and Baroda in the fiscal years ending March 31 : [Values In thousands of rupees.] 1913-14 1917-18 1918-19 1919-20 1920-21 Kind of enterprise. Num- ber. Total author- ized capital. Num- ber. Total author- ized capital. Num- ber. Total author- ized capital. Num- ber. Total author- ized capital. Num- ber. Total author- ized capital. Banking andinsur- 129 5 6 121 12 3 1 5 2 4 3 1 7 27 7 8 4 73,769 8,520 26,800 528,569 8,375 6,596 150 720 75 396 1,050 150 1,180 5,780 1,695 4,950 700 46 2 3 116 4 2 1 . 6 1 1 130,076 900 2,800 84,012 8,200 10,000 100 1,400 2,000 20 33 1 8,758 45,000 91 9 830,166 212, 500 108 6 1 557 46 1 4 21 4 22 2 5 21 37 28 18 28 256,245 Navigation 21,500 Eailways and ttam- 39,000 Shipping, printing, and trading Cotton Trn'TlH 153 6 74,709 38,825 497 40 10 9 11 860,645 234,076 53,800 61,350 18,850 466,578 194,550 15,000 Wool, siUc, hemp ,etc . Cotton and jute 4,600 4 1 3 1,426 1,400 9,075 24,900 3,200 Rice mills 18 6 8,475 3,850 27,473 1,000 Sawand timber mills Other mills and 1 4 43 18 8 4 1 1 200 12,210 12,514 6,650 23,350 10,160 688 60 1 6 34 26 14 2 2 250 1,400 8,290 9,725 8,625 695 172 1,620 14,650 24 92 48 22 15 18,700 41,397 31,145 210,870 85,800 31,175 29,250 other mines 44,075 Land and buildiTig - . 81,320 Ice manufacturing. . Sugar manufaoturmg 4 2 5 870 505 303 1 5 7 150 5,525 78,050 5 13 38 2,620 3 1 4,900 6 64,400 15 16,716 134,511 Total 356 669,153 276 322,055 290 212,755 905 2,756,347 965 1,457,667 The importance of this new growth in India is also appreciated in the United Kingdom, and the data in the following statement, showing the amount of new capital issued in London for enter- prises in India and Ceylon, indicate the sincerity of thope support- ing the new arrangement: Six months ended June, 1920 fl, 514, 000 Six months ended December, 1920 3,513,000 Six months ended June, 1921 14,638,000 Six months ended December, 1921 14, 904, 000 This increase in the amount of London capital so invested is most significant as expressing the actual development of the new policies. It should be noted that £14,000,000 (say $60,000,000) is a very con- siderable sum to float in any market at any time on behalf of rela- tively small enterprises located some 8,000 to 10,000 miles away. Also, the London market has not been an easy market during the above periods. There is something very substantial about the new industrial program in India which should be of very great interest to American manufacturers of machinery in view of their partici- pation in the supply of industrial machinery as shown in the first paragraphs of this chapter. GOVERNMENT AID, TO INDUSTRY. From the foregoing it is clear that the business and official com- munities are committed to a policy of industrial development for India. The nature of the aid extended by the provincial govern- INDIA. 87 ment is, ordinarily, along the lines of scientific research, the loan of experts, the collection of data, and technical assistance for advice, research, or maintenance. The central government is also main- taining a Department of Industries for very similar purposes, but as the tendency in Government matters is toward decentralization, the influence of this central department is through the provincial de- partments, although, from the nature of the circumstances, this central bureau can exercise the stronger influence in certain direc- tions. But in certain instances the assistance of the Government will be far stronger. Through the placing of contracts it is possi- ble to support an enterprise, and in some cases the Government has guaranteed to place certain orders over a period of years. In other instances it will be possible to make a cash grant or extend a loan from the provincial treasury. Obviously these powers have been restricted in certain ways, but the procedure is possible and for certain enterprises probably will be followed. Following out the plans indicated above, certain specific problems have been referred to committees which have made very compre- hensive studies. For example, a sugar committee has devoted more than two years and visited every Province in India in an effort to improve the condition of the sugar industry. A railway committee has examined the shortcomings of the railways. A hydroelectric survey has been studying water-power possibilities since 1919. In these and other directions the Government has extended very defi- nite aid to industry. NEW PROBLEMS CREATED BY EXISTING SITUATION, The increased industrialization of India and the increased par- ticipation of American manufacturers in the industrial-machinery trade there create a new series of problems for the American foreign- sales manager to face. Some of these problems are obvious, but there are also complications. Previously the railways, the mines, the plantations, in fact all of the large corporations maintained offices in London and made their purchases there. The 1913 rules for the purchase of stores in India stipulated that "Articles which are not manufactured in India should be obtained by indent upon the State Department of the India Office." ° For these reasons the market for industrial machinery in India was, to a large degree, located in London. Coincident with the demand for the establishment of industries in India, thej-e has also been a demand that the Government, public utilities, and large enterprises encourage these enterprises by patron- izing them. The " swadeshi " movement has been a popular effort to encourage Indians to patronize home industry. These ideas recur from time to time, and the feeling among the Indians becomes very intense. In 1921 the mob in Bombay burned imported cotton goods in order that greater patronage might go 'to the mills of India. Re- cent reports indicate that changes have been made in the arrange- ments for purchasing Government stores and suitable offices yill be opened in India, authority being given to purchase materials of Indian manufacture when practicable and to purchase imported "Indian Trade Journal, July 31, 1913, p. 214. 88 ASIATIC MARKETS FOB INDUSTRIAL MACHINERY. stores from merchants in India under certain restrictions. Some reports even suggest that these stores may be purchased "in the cheapest market." Full information has" not yet been received, but it can be definitely stated that there is a strong tendency toward increasing the amount of purchasing done in India and decreasing correspondingly the influence London exerts in this connection. This V7ill have a strong influence on even private purchases in India, mak- ing it necessary to exert greater sales effort in that country than has been the case heretofore. Machinery dealers have been established in India for a long time. Some of these companies are quite large and enjoy very good repu- tations. In some instances large stocks of machinery are carried. In all probability the changes indicated above will increase the busi- ness and influence of these merchants, and it is to be expected that new companies will enter the field. The old companies have long acted as agents for a good many British manufacturers. But in view of the conditions mentioned above, it is obvious that the past is an unsatisfactory index of what may be expected in the future. The more one studies conditions in India the more the con- viction is strengthened that the demand for machinery wiU increase rapidly and that America's share will also expand. PHYSICAL FEATURES— POPULATION— SOCIAL CONDITIONS. It is not possible to describe India and the conditions existing there without conveying impressions that are inaccurate. The country is very large, with almost every conceivable climatic and topographical condition. In the deserts of the northwest there is practically ' no rainfall. Karachi is said to have about 5 inches per year, all of which falls in about two hours on the breaking of the monsoon. At the other extreme is Cherrapunji in northeastern India, one of the wet- test places in the world, with an average rainfall of 458 inches (more than 10 times the average in New York of 43.27 inches) , where an unusually wet season may mean possibly 10 or 15 feet more rain than the normal. The northern boundary of India is in the Himalaya Mountains, which include an area some 250 miles long and about 50 miles wide, with many peaks higher than 18,000 feet and with Mount Everest, highest of all mountains, at about 29,000 feet. The people show as great variety as the climatic and topographical features. From the dawn of history India has been subjected to re- peated invasions and perhaps ceaseless wars. Aboriginal types still exist; As a result, there is a very complex mixture of race, type, language, religion ; in fact an endless variety of methods of thought, standards of living and morals, and ways of doing business. The methods of living and the methods of travel, even railway travel, have little or nothing in common with those known in the United States. But, on the whole, India is a most important territory, capable of producing a wonderful assortment of raw materials and manufac- tured products in very large quantities. The abundant population makes development possible, as contrasted with conditions in, say, Australia or South America. India deserves the careful attention of all interested in world-wide business. INDIA. 89 Opposite the first page of this section of this report is a map of India, superimposed upon one of the United States that is drawn to the same scale, and the relative areas and distances are as accurate as is practicable in commercial map work, so that the relative im- pressions conveyed are accurate. India, with an area of 1,802,657 square miles, is about 60 per cent of the size of the United States (area 3,026,789 square miles) and is one of the largest countries of the world, ranking seventh in size, but ranking either first or second in population (depending upon the accuracy of the estimates made of the population of China, said by some to be less than 300,000,000 and by others to be in excess of 400,000,000). India has a decennial census, and the result in 1911 gave a total population of 315,156,396 (1921 returns are not yet available) as compared with 105,710,620 (1920 figure) in the United States. But mere numbers give no satisfactory measure of the relative importance of these countries. It has been estimated that the industrial development in the United States multiplies the individual productive capacity by 30. India's industrial development is still limited; it lacks these mechanical aids, so that it is quite probable that its total productive capacity is less than 20 per cent of that of the United States, establishing a stand- ard of living perhaps one-fifteenth of that known here. It is very diflScult indeed for an American to imagine such conditions. They have to be seen and felt before their significance can be realized. Of the people of India only 59 per thousand are literate in any language, and there are 220 separate spoken languages of 5 different ethnological groups. There are also a large number of mixtures or " patois." It is said that " the language changes every 10 miles." There is a corresponding confusion of religions ; one meets Moham- medans who include ffindu concepts in their faiths, and Hindus with Mohammedan ideas, all complicated with a multitude of sects and the evils of the caste system. In such a country where travel is difficult, communications inadequate, and education lacking, progress is necessarily very slow. The caste system alone is one of the most powerful systems devised for resisting change and yet, in spite of all this and more, India is developing very rapidly and must adopt the industrial systems of the Occident. Apparently it will adopt these systems not only willingly but anxiously and to the great advantage of the people. Although the average density of population is high — 175 per square mile — ^the variation is greater than in the United States. In the northwest where rain is insufficient Jaisalmer State has a density of only 5 inhabitants per square mile. Baluchistan has even less. At the other extreme there are one or two small areas in the fertile Ganges Valley where, in agricultural districts, the popula- tion is 1,800 to 1,900 per square mile. Generally speaking, the population is most dense in the Ganges Valley, the south of India, and narrow fringes on the coast where the density is between 175 and 600 per square mile over large districts. Labor receives a very small wage. The average day's pay in the Bengal coal field in 1916 was 7^ annas (say, 15 cents). Labor on the Bombay docks receives from 9 to 16 annas (18 to 32 cents). Labor in Calcutta jute mills receives 13 rupees per month (say, $4.53). Other classifications are paid to correspond, so it is not uncommon to find men whose wardrobe represents an investment of 90 ASIATIC MARKETS FOB INDUSTRIAL, MACHINERY. less than 25 cents. Similarly, many are underfed. The Government finds it necessary to relieve famine from time to time. Obviously, these free rations for the vast number involved are reduced to a minimum, and yet it will be found that a whole group will have gained an average of 14 pounds in weight during the relief period. Disease also handicaps development. Careful tests have revealed that in certain groups of laborers from 60 to 80 per cent or even more are infected with hookworm. Malaria is comparatively com- mon and rather severe. Dengue fever also disables many. Cholera, smallpox, dysentery, plague, and influenza kill millions. Adequate medical and sanitary help is not available. The loss in effectiveness and the suffering resulting from these conditions are staggering. Industrial processes are primitive. Land is still cultivated with the wooden type of plow that has been used for centuries. Water is lifted from wells for irrigation, and vegetable oils are extracted by rather crude bullock-driven appliances. Similar examples could be added indefinitely, but the redeeming feature is that a new spirit is at work and, whatever may be the cause, the extreme conservatism of both Indian and European seems to have been broken. All classes — Indians, Europeans, Government officials, private citizens, men of influence in India and in London — invite development. India is progressing. The task is large, difficult, and complicated, but is being faced intelligently. BRITISH INDIA AND THE NATIVE STATES. British dominion in India started at Calcutta and spread over Bengal and farther. It has been a gradual growth, and there have always been a number of native States having greater or less inde- pendence. At the time of the great mutiny, in ' 1856, .several of the princes assisted the British, and for their loyalty the British Gov- ernment has guaranteed that these princes and their lines shall rule these States in perpetuity. In most cases these princes are theoreti- cally absolute despots so far as the internal affairs of each State are concerned, but the British control all foreign affairs. In practice the British also restrain excesses in domestic matters. British India is the name applied to those parts of the Indian Empire where the British exercise authority in the local governments. This represents about 60 per cent of the area — 1,093,074 square miles— and 78 per cent (244,267,542) of the population. The combined area of the native States is 709,583 square miles, and the population is 70,888,854, divided among 631 States of the greatest variety as to size, strength, and wealth, with the political standing of their chiefs varying from that of practical independence in local affairs to that of complete dependence. Some of the States are ahnost unbe- lievably small, as, for instance, Darkut, having an area of about 5 square miles, and a population of 595; or Bija, with an area of 4 square miles, and a population of 1,171. Others are very important, as, for instance, Hyderabad, with an area of 82,698 square miles, and a population of 13,374,676 (Kansas has an area of 82,158 square miles, and a population of 1,769,257) . Yet, even in this century, the Nizam of Hyderabad is the absolute overlord of this great State, possessing untold wealth and all that one would expect of a Mohammedan oriental potentate. o I o a. z o H O UJ z z o o a ui 1/) > ul z I o < S < o a: H O Ui INDIA. 91 The most important of the Native States are shown in the follow- ing table: Indian Native States. Area, in square mUes. Population. American States comparable in extent of territory. States. Area, in square miles. Population. Hyderabad Kashmir... Jodhpur Mysore Owalior Bikanir Jaipur Bewah Baroda 82,698 84,432 34,963 29,475 25,133 23,315 15, 579 13,000 8,182 13,374,676 3,168,126 1, 075, 269 5,806,193 3, 102, 279 700,983 1, 385, 750 1, 514, 843 2, 032, 798 do Maine South Carolina. West Virginia. . do Maryland Massachusetts.. 82,158 33,040 30,989 24,170 12,327 1,769,257 768,014 1,683,724 1, 463, 701 1, 449, 661 '3,85^356 Hyderabad is the largest of the native States; and although it is compared to Kansas above, it can scarcely be compared other than as to area and population. The Nizam's State Eailway (operated by a private company, but with returns on the investment guaranteed by the State) has a length of 330 miles. The railways in Kansas are 9,386 miles in length (even in 1870 there were 1,501 miles). In other ways Hyderabad conveys the impression that it is not yet well developed. On the other hand, it has its own post office, mint, and a generating station with a capacity of 3,000 kilowatts, and it is reported that this plant will soon be extended to have a capacity of 9,000 kilowatts. JMysore enjoys the reputation of being the best-developed Native State. It has a water-power plant at the falls of the Cauvery Eiver that has been developed to a capacity of 22,650 horsepower, and it was reported that it would be extended to a capacity of 32,000 horsepower. Mysore also has, as a State monopoly, the production of sandalwood oil. The authorities are developing a plant to produce charcoal iron and have many other plans. Operations like the above command respect, and in the Native States, as in other parts of India, there is a great desire to industrialize the country. Undoubtedly other enter- prises will be developed when the opportunity is seen and the neces- sary funds are available, and the matter of money will not ordinarily be found too difficult, as the princes ruling these larger States are reported to be very wealthy. One of them is said to have a hoard of 500 tons of silver. Baroda enjoys the reputation of being the most enlightened State, and the Gaekwar has tried hard to improve the condition of his peo- ple, even going so far as to pay wages to the children attending school ; but the ignorant parents do not appreciate this very much, because the children are often transferred to work in the fields when the agri- cultural wage is a little higher than the Gaekwar's gratuity. This prince is more enlightened and progressive than his people. The railway mifeage in all of the native States is slightly over 5^000 — 14 per cent of the Indian total, in 40 per cent of the area, and for 22 per cent of the population. It should also be remembered that there are a number of small bits of territory in India that are held by France and Portugal, as at 92 ASIATIC MARKETS FOB, INDUSTBIAL MACHINERY, Pondicherry, Goa, Diu, etc. industrial importance. These are not of great commercial or RAILWAY DEVELOPMENT. Carrying further the comparison shown by the map at the begin- ning of this section, it is interesting to note that on March 31, 1919, India had 36,616 miles of railway m operation, an amount approxi- mating the total in the United States in 1865, at the close of the Civil War, or, if we correct to allow for the smaller area of India, the mileage corresponds to that in the United States in 1871. At that time in this country the railway gauge had not been standardized, and similarly India now has several gauges, as follows : Miles. Gauge of 5 feet 6 inches (Indian standard) 17, 994 Meter gauge (3 feet 31 inches) 15,078 Gauges of 2 feet 6 inches and 2 feet 3, 544 Total 36, 616 This total represents rapid progress (allowance being made for the complications introduced by the war), as the total mileage has increased, as indicated by the following figures : Miles. 1853 20 1863 2, 507 1873 5, 697 1883 10, 458 1893 18, 504 1903 26, 956 Correspondingly there has been an increase in the volume of traffic, as shown herewith : Miles. 1913 34, 656 1915 ' 35, 285 1917 ' 36, 286 1919 » 36, 616 1920 " ' 36, 735 Year. Total number of passengers carried. Total tons of freight carried. Year. Total number of passengers carried. Total tons of freight carried. 1909 329, 380, 000 410,013,000 457, 718, 000 60, 902, 000 78, 880, 000 82^613,000 1915 476,039,000 436,563,000 471,630,000 88,738,000 89,500,000 98,875,000 1911 1917 1913 1918 In the United States in 1918 the railways carried 1,084,997,896 passengers and 2,305,824,940 short tons of freight. But the traffic develops more rapidly than the facilities, and the railways do not give satisfactory service for either the passenger or freight traffic — this condition becoming so pronounced that, on Oc- tober 9, 1920, the Government of India appointed a special committee to consider problems pertaining to railway administration, manage- ment, and finance. The report of this committee recommends some very material changes. It is anticipated that these will result in great improvement, but it is also probable that it will not be practicable to develop railways in India so rapidly as to keep up with the grow- ing demands of more than 300,000,000 people who have definitely embarked upon a program of industrialization. " Fiscal year ended March 31. ' A further 1,822 miles have been sanctioned for construction. INDIA. 93 IRRIGATION. Probably in no other direction can such progress be shown for India as in irrigation, and those in authority deserve great praise for what they have accomplished. Although a certain amount of work has been done since prehistoric times, the modern phase of irri- gation in India dates from the appointment of a special commission in 1901 which substituted a definitely constructive policy for what had previously been more in the nature of spasmodic effort combin- ing grants for famine relief with measures that would assist in com- bating famine. The commission found that, out of an area of 226,- 000,000 acres aimually under crop in the Provinces of India employ- ing irrigation, some 44,000,000 acres (say, 19^ per cent) were ordi- narily irrigated. Of the area irrigated, about 18,000,000 acres (say, 42 per cent) were cared for from State works, and 25,500,000 acres (say, 58 per cent) from private works, of which rather more than half was from wells. By the end of the fiscal year 1918-19 the capi- tal outlay on Government irrigation had expanded to a total of £50,941,270, and 16,270 miles of main canals and branches and 38,810 miles of distributaries irrigated 18,912,213 acres. The revenue re- ceived was £3,794,005, or 7.45 per cent on the total capital outlay. In the United States, up to June 30, 1919, Government irrigation totaled 12,294 miles of canals, and while it is not possible to compare distributaries, the total irrigable acreage was 1,636,159, and the total disbursements (1920) $153,225,912. As in the United States, the incidental values of the irrigation works of India are very important, as the canals are used for trans- portation and water power. Irrigation in India is very well devel- oped, but is still progressing well, as is shown by the following : Years. 1909-10 1914-15, 1918-19. Miles of canals. 15,404 15,887 16,270 Miles of distribu- taries. 32,032 35,706 38,810 Acreage irrigated. 16, 114, 788 17, 810, 518 18, 912, 213 Net revenue. jt2,464,3go 3,262,003 3,794,005 It would appear that there is a very large opportunity for the use of machinery in connection with irrigation from wells in India. It is not easy to secure accurate figures on such a subject as this, biit the following statement seems to be dependable: In the United Provinces there are about 1,500,000 wells used for irrigating about 6,000,000 acres. As shown above, there are in all India about 13,- 000,000 acres irrigated in this way, suggesting a total of more than 3,000,000 wells. Obviously there are a great many types of well in use, but it will probably be sufficiently accurate for the purpose of this report to describe these as pits, possibly 40 feet in diameter having a capacity of, say, 40,000 to 50,000 gallons per day, all of which may be removed in perhaps four hours out of the 24. The distance from th.e ground to the water varies widely, of course, but it is probably safe to say that it seldom exceeds 40 feet. The depth below the water is also variable, but might be taken as 6 feet. All 94 ASIATIC MARKETS FOB INDITSTEIAL, MACHINEEY. these conditions vary as the water is. pumped down during the day, and also changes as the season advances. Probably the commonest method of raising the water is by the so-called "Mhote," which consists of a pigskin or other receptacle for water that is raised to the surface by one or two bullocks or a corresponding form of power. But there seems to be reason to believe that this system is being supplanted by mechanical power, although the change has scarcely started. There are in the south of India alone at least 1,000 pumping stations using small mechanically driven pumps, most of which are equivalent to, say, a 3-inch cen- trifugal pump driven by a small kerosene engine. It has been dem- onstrated that the mechanical method is cheaper than that using bullock power. It has been stated that the agricultural engineer of the United Provinces had at one time a list of more than 600 land- holders who had applied for pumping installations as soon as they could be supplied. It is clear that India will probably absorb a very large number of these small pumping units during the next few years. In this connection it should be remembered that the authori- ties are also encouraging the use of a larger number of wells, and it is probable that ultimately the acreage served by wells will be double that now so served. In certain districts the government is assisting by boring " tube wells." The use of mechanical pumps for this purpose is largely the result of the pioneer work of Sir Alfred Chatterton, who has in the past arranged for special designs to be developed for this purpose. Sir Alfred was so kind as to inform the writer that it seemed that the volume of this business was so large as to justify the develop- ment of a special type of pump for the purpose and that a unit operating on the principle of Humphrey's gas-pumping engine would probably be very attractive if successfully developed in these small sizes. Electric power is not yet available for the above pur- poses except in certain very restricted districts and is a negligible factor in the problem. PRODUCTION AND CONSUMPTION OP COAL. The production and consumption of coal in India provide an interesting indication of the industrial development of the country, and a special survey made during the war provides very interesting data; the annual consumption of coal per capita in 1911 is stated as follows: Tons. India 0. 04 Russian Empire . 19 Japan . 25 Austria-Hungary . 52 Soutli Africa . 92 France 1. 44 Australia 1. 65 Tons. New Zealand 2. 00 German Empire 2. 00 Canada 3. 03 Belgium 3. 21 United Kingdom __ 4.08 United States 4. 54 In the warm climate of India only very small quantities of coal are required for ordinary heating. Consumption in residences is practically nothing. The railway mileage per capita is very low. The steel industry per capita is very small indeed. Yet there has INDIA. 95 been a very definite development, as indicated in the follo^ring returns, which are compared with those of Japan : * Year. Production of coal. Imports Of coal. Exports of coal. Consumption of coal. India, Japan. India.' Japan. India.' Japan. India. Japan. 1906 1907 1908 1909 1910 1911 1912 1913........ «:::;:::: i;::;:::: Lang tons. 9,783,250 11, 147, 339 12,769,635 11,870,064 12,047,413 12,715,534 H 706^,339 16,208,009 16,464,263 17,103,932 17,254,309 18,212,918 20,722,493 22,628,037 Long tons. 13,043,874 13,496,044 14,587,098 14 732,970 1^429,303 17,251,466 19,324,116 20^973,384 21,82^753 20^161,431 LoTW tons. 226,365 301,588 385,323 m,^i 315,996 318,669 560,791 644,934 418,758 190,654 34,033 4^818 Long tons. 34,525 18,164 30,148 129,858 171,805 256,565 303,374 567,502 942,318 599,999 647, 173 701,620 Lon^tons. 1,003,192 658,194 660,633 563,940 988,375 862,384 898,996 759, 210 579,763 753,105 882,454 409,215 LoTig tons. 2,402,354 2,875,521 2,817,102 2,798,563 2,770,788 3,250^816 3, 412, 136 3,808,394 3,529,161 2,854,264 2,968,460 2,768,246 Long tons. 9,006,423 10,790,733 12,494,325 11,796,545 11,375,034 12, 171, 819 14,368,134 16,093,733 16,303,258 16,541,481 16,405,888 17,848,521 Long ions. 10,676,045 10,638,687 ll,80Sl44 12,064,265 12,830,320 14,257,205 16,215,354 17,732,492 19,238,910 17, 907, 166 20,11^232 23,871,128 1919^ 1 Excludes Government stores. A census of coal consumption was taken in India as for the year 1917, when the total coal production was 18,213,000 tons, imports 45,000 tons, and exports 409,000 tons, with the consumption divided as follows: Industry. Consump- tion. Percent of total produc- tion. Industry. Consump- tion. Per cent of total produc- tion. Railways and railway shops . Bunker coal for shippii^ Admiralty and Royal In- dian Marine Jute mills Cotton mills Foundries and workshops. . . Steamships on inland wa- terways Brick, Ule, pottery, and ce- ment plants...' Cotton gins and pressers for cotton and jute Tea gardens Flour and rice mills Harbors and dockyards Tons. 5,620,000 1,514,000 1,429,000 1,026,000 927,000 807,000 508,000 358,000 294,000 248,000 225,000 201,000 30.9 8.3 7.8 5.6 5.1 44 2.8 2.0 1.6 1.4 1.2 1.1 Arms and ammunition plants Paper mills Oil mills Waterworks Electric power plants Tramway worlffi Goldmines Sugar factories Gasworks Lime works Breweries and distilleries. . Petroleum refineries others Total Tons. 178,000 170,000 160,000 124,000 96,000 85,000 84,000 77,000 63,000 61,000 54,000 51,000 507,000 14,867,000 1.0 .9 .9 .7 .5 .5 .5 .4 .3 .3 .3- .3 2.8 81.6 Adding to the above total the net exports of 363,000 tons leaves a little more than 2,600,000 tons as representing the wastage and con- sumption at the mines, the consumption in dwellings, and the un- enumerated items. Reviewing the three tables published above, it is at once apparent that the per capita consumption of coal is probably much lower in India than in any other important country in the world. In 1906 Japan had scarcely finished the war with Eussia and Japanese in- 'The figures in this table and much of the other data presented herein are from th€ publications of the Government of India, to which, in some instances, data from other sources have been added. 96 ASIATTC MARKETS FOE INDTJSTRIAX, MACHINERY. dustrial development was a very new phenomenon, yet even at that time the total coal consumption in Japan exceeded that of India, entirely apart from discrepancies in size, resources, and population. Even for 1917 India consumed only the amount of coal used by Japan in 1913, and in that year the smaller country used 34 per cent more coal than the larger. Since 1917 there have been very important changes. Demand has increased very rapidly, and in spite of increased imports it has been necessary to place an embargo on exports, and the coal supply is not suiRcient to meet the demands of the country. To a very large degree the fuel problem is a labor problem. With the increasing demand, wages have been advanced, and the produc- tion has declined as these advances have been made. The supply of labor is drawn from the agricultural classes and is always more or less inadequate, conditions being poorest when the rains make agri- cultural conditions best. The following quotation from the 1921 report of Thomas M. Aincough, O. B. E., senior British trade com- missioner for India, describes the situation: The problem of coal supply is becoming most serious. At the present time, the raisings, which in 1920 amounted to 22,628,000 tons, are not sufficient for the requirements of the country, even since the embargo was placed on exports of coal. Many factors contribute to this unfortunate position. The supply of labor in the fields is always more or less inadequate, and now that increased rates of pay are being given, it is understood that the output has declined, as the miners work fewer days per week. Transport has been a further diffi- culty, the number of wagons being frequently short ; and, also, in some places the siding accommodation Is inadequate. Until recently mechanical coal cut- ters have proved unsuccessful ; but the machines recently introduced are, it is understood, better suited to Indian conditions. The leading companies are now making serious attempts to introduce coal cutters and mechanical labor- saving devices of all kinds in order to overcome their labor diflSculties." As all concerned are committed definitely to the policy of promot- ing the industrial development of India and as this development is dependent upon increased coal production and improved railway fa- cilities, it seems clear that important improvements will be made in the near future. The above returns from the 1917 coal census provide an indication of the size and relative importance of the various industries of India, but it should be remembered that there are also a number of im- portant water-power developments and that the cotton industries in particular are so driven, and it is not wise to place too much em- phasis on this one table. The following table, showing coal tonnage produced per annum per employee (above and below ground), provides an interesting com- parison of the cost and efiSciency of labor in various countries. " Thla is one of the many items that confirm the statements made in the general sec- tion o£ this repprt as to the desirabiiity of employing labor-saving devices in Asia. In spite of its low wage, oriental labor is not cheap, and Is extraordinarily difiicult to handle. It is also usually desperately ignorant and inefflcient. The average number of laborers employed in the Bengal coal field In 1916 was 135,093, the average daily wage per capita was 7.6 annas (15 to 25 cents, depending upon the exchange rate selected) and for all India the amount of coal raised per head of labor employed below ground was 169.4 tons, as compared with 323 tons In the United Kingdom and 800 (lone) tons in the bituminous fields of the United States. Obviously coal mine managers In India have urgent need for " labor-saving devices of aU kinds " and American engineers have developed these devices to a point not equaled elsewhere. INDIA. 97 Regions. 1906 to 1910 average. 1911 1912 1913 19U 191S 1916 Cape of Good Hope. India Japan Bussian Empire Belgiuni Austria France Natal German Empire. . . United Kingdom . . Orange Free State. Transvaal Canada Australia New Zealand United States Tont. 59 100 109 151 163 18? 192 228 247 275 301 333 439 462 470 Terns. 71 109 119 G) 157 191 193 243 248 260 274 485 481 613 Tms. 72 111 127 G) 155 207 200 262 268 244 292 459 472 542 503 660 Turn. 70 112 122 ^^53 >214 >201 250 288 259 298 463 506 531 444 681 222 2S7 ^ Returns not available. 'Provisional flgnres. Generally speaking, since 1912 the average number of employees in the Indian coal fields has been between 130,000 and 170,000. It does not seem at all probable that the nmnber can be increased to correspond with the increasing demand for coal, and the conclusion in favor of labor-saving devices seems definite. As the apparent coal reserves of India represent as much as would be needed in nearly 400 years at the present rate of consumption, it seems that the coal can be secured if the properties are developed adequately.^" COAL COSTS. Coal also interests the manufacturer of machinery in so far as it measures the importance of fuel economy, and this is a problem that would have a different answer for every different city in India. It is also difficult to offer a satisfactory statement as to quality. All Indian coal is bituminous, and most of it seems to be friable and of only medium quality. The coal commonly sold is probably Desh- erghur (named from one of the seams in the Raniganj field), the prices of which were as f oUows in rupees, annas, and pie : Year. 1906. 1907. 1908. 1909. 1910. 1911. 1912. 1913. 1914. 1915. 1916. 1917. F o.b. cars at mine. K.A. 2 10 3 5 Z 12 3 4 2 13 2 11 3 11 3 12 3 13 3 6 3 9 3 15 Calcutta. B.A.P. 4 10 6 t 6 12 4 4 4 97 3 12 6 3 7 80 50 5 8 1 4 00 Bombay. B.A.P. 13 15 11 15 10 13 7 13 13 17 18 16 17 25 27 Karachi." B. 13 17 19 16 14 13 17 18 18 19 20 24 4 8 8 4 9 4 8 12 10 3 4 13 a Trimmed into bunkers. i» In other sections of this report the fuel problems of other oriental countries are men- tioned On the average, during the years 1911 to 1915, India exported coal as follows: Cevlon 479 000 tons ; Straits Settlements,' 157,000 tons ; Sumatra, 96,000 tons ; Aden, 11 OOo'tons '• Java 4,000 tons ; Mauritius, 2,000 tons ; others, 22,000 tons ; total, 771,000 tons The present embargoes on exports will correspondingly embarrass the above coun- tries, although it is probable that certain British interests wlU be provided for. 98 ASIATIC MARKETS FOR INDUSTRIAL MACHINERY. An estimate of the quality of this Desherghur coal can be made from the comparison with the price of Cardiff coal at Bombay, which was as follows : Year.i Desherghur. Cardiff. Year.! Desherghur. Cardiff. E.A.P. 12 13 15 11 15 10 13 7 13 3 R.A.P. 16 2 18 12 21 11 21 4 17 10 18 14 1912 R.A.P. 13 7 8 17 6 4 18 5 8 16 5 8 17 3 6 R. A.P. 20 1 8 1907 1913 23 2 2 1908 1914 24 5 1915 23 14 1916 39 2 8 1911 1 12 pie= 1 anna; 16 annas- 1 rupee. During the above period the rupee was ordinarily worth between 31 and 33 cents. First-class Bengal coal rarely contains less than 12 per cent of ash, is rather high in volatile matter, and forms a strong coke. GEOGRAPHICAL VARIATION IN FUEL PRICES. Besides affording a measure of industrial development, coal data also provide information indicating the extent to which one is justi- fied in investing capital in devices to secure fuel economy, it being remembered that American machinery employed in these ways rep- resents a capital investment some 50 per cent or more above the price in the United States. Figures piven above show that steam economy and furnace efficiency are far more important in Bombay than in Calcutta. The table below shows the influence of freight and similar charges on the price of Bengal coal delivered in various parts of the cojmtry. These data, are based on a price at the Bengal mine of 5 rupees per ton. In some instances coal from districts other than Ben- gal is available, in which cases an effort has been made to show the price of the other grades as well. These figures represent conditions as they existed in 1917, but are reasonably representative of the gen- eral situation: Cities. Asansol Calcutta Sasaram Cawnpore... Saharanpur.. Amritsar.... Peshawar.. Multan Quetta Sukkur Karachi... Eotab Eatnl BUaspur... Kinds of coal. Bengal- . d§;; do., do., do.. Punjab. Punjab. Punjab Benral Local Bengal Baluchistan Bengal, by sea. Bengal, by rail. ^lengal .do Umaria Bengal Umeula Price. R.A. S 9 "6 11 8 13 8 15 11 17 10 16 12 19 9 17 8 U 8 6 10 8 8 8 Cities. Wadhwan. . Nagpur Bombay Barsi , Domakal... Vizianagram. . Ooa. Madras. Bangoon Chittagong... Uymenslngh. Sadiya Kinds of coal. Bengal , /....do \BellarpuT Bengal, by sea.. Bengal, by rail. . Bengal Singareni Bengal Singareni Bengal, by sea. . Bengal, by rail. , Singareni , Bengal, by sea. . Bengal, by rail. . Singareni Bengal, by sea.. Bengal, by rail. Singareni Bengal, by sea.. Bengal, by rail. Local Assam Price. B.A. 16 12 12 7 8 16 D 17 8 18 12 10 17 6 13 12 12 urn 13 e 16r* 12 .'0 16-0 15-0 6 9 • I I' STEEL AND IRON INDUSTRY. ' t India has only lately developed into a steel-producing country, although iron has been produced since 1875, but this development INDIA. 99 promises to be of very great importance and the success already attained seems to indicate that it will ^have a very pronounced effect upon the imports needed in the industrial development of the country. The first important plant was installed at a point on the Bengal- Nagpur Railway, 155 miles west of Calcutta. The railway station near by was called Kalimati and the actual site of the plant Sakchi. More recently the name has been changed to Jamshedpur in honor of one of the founders. The company was formed in 1907, and pro- duction started in 1912. Largely because of the ability of American experts, this plant was demonstrated to be a pronounced success about 1914, and its production has been : Years. Pig iron. Finished steel. 1916 Tons. 152,460 167,868 198 064 88,990 Tons. 36,595 1917 72,670 1918 : 71,089 1919 120,570 1920 1 Figures not at hand. The significance of this development is outstanding, and in view of its newness and changing conditions in a developing country it has been difficult to plan the plants in a consecutive way. The plant includes 180 Coppee nonrecovery coke ovens, 50 Koppers by- product coke ovens, and 200 Wilputte-type coke ovens, which with a Simon Carve sulphuric-acid plant, produce coke, coal tar, sulphate of ammonia, gas, and benzol. There are six blast furnaces complete. Slag is used for making granulated slag bricks. The steel plant consists of a number of open-hearth furnaces and steel mixers, and, according to the plans, the larger of the mixers is to have a capacity of 1,200 tons. There are also to be two 25-ton Bessemer converters, a 200-ton tilting furnace, a 6-ton Heroult electric fur- nace, a 40-inch blooming mill with 11,000-horsepower engine, a 28- inch finishing miU, with 12,000-horsepower engine, a second and larger rail mill, one 16-inch and two 10-inch bar mills, an electri- cally driven plate mill for widths up to 84 inches, a sheet equipment, including bar and billet mill and sheet mill to produce sheets up to 38 inches wide, a wire mill to handle 20 tons per day, a bolt and nut shop to produce 50 tons per week, all with laboratories, shops, offices, and yards complete. To a large degree the above plant seems fully equipped, but, on the other hand, a plant of this sort is never com- plete and many of the above details may have been altered, as condi- tions in India have been changing very rapidly. As matters stood in 1921 it was planned to develop a plant that would be able to sell 174,000 tons of pig iron and 425,000 tons of finished steel per year. This will be done provided the railways can be persuaded to furnish the transportation facilities needed to support such a plant. At any rate, by 1917 the above company employed about 13,000 men, at which time contractors employed 10.000 more in building extensions. Owing to the success of the Tata Iron & Steel Co. others are embarking in the business. An older company, the Bengal Iron & Steel Co., has been producing pig iron since about 1875. The 100 ASIATIC MARKETS FOB INDUSTRIAL, MACHINERY. poor quality of the ore used by this company is said to be responsible for the failure of their early efforts to make steel. Their plant in 1917 had four blast furnaces, each with a capacity of 80 tons of pig a day, or, say, 10,000 tons a month, but during the war a demand for ferromanganese developed and one furnace employed in this way had a capacity of 1,200 to 1,500 tons a month, the product being exported for war purposes. This company employs about 10,000 men. The name has recently been changed to the Bengal Iron Co. (Ltd.). The Indian Iron & Steel Co. (Ltd.) is building some blast fur- naces at Asansol. Some other companies are being promoted by im- portant interests in the steel industry of the United Kingdom, as, for instance, the one in which Cammel Laird & Co. will participate. This is reported to be a very large and substantial plant, capitalized at more than $75,000,000. Bird & Co., the well-knowii Calcutta firm, will be associated in this venture. In view of this development of the steel industry, there has been a distinct tendency toward the establishment of subsidiary plants near Jamshedpur, to make additional articles from the steel pro- duced there. During the industrial boom of 1919-20 some 17 of these subsidiaries were well on toward promotion and were to pro- duce machinery used in the jute industry, zinc, chemicals, railway wagons, locomotives, agricultural implements, wire products, tin plate, enameled ironware, cables, and reinforcement steel. Not much progress has been made with these during the last few de- pressed months, but there is reason to believe that these projects have only been postponed, not abandoned. From the above it will be recognized that there is a good industrial future for India. Pig iron has been exported from the Tata plant to Burma, the Straits Settlements, Ceylon, Java, China, Japan, Australia, New Zealand, the United States, the Eiver Plate, etc., affording evidence that India can produce iron and steel at a favor- able price. But the undeveloped state of the iron and steel industry, the shortcomings of the railways, the problem of increased coal production, and certain other factors create an involved industrial problem that will require much work and possibly some time to overcome. On the other hand, the progress of the country is far more rapid than is ordinarily realized. It is not easy to demon- strate this concisely by statistics, but it should be noted that every index shows betterment in the trade of the country and the living conditions of its people. Increased railway facilities and acreage under irrigation steadily diminish the consequences of poor crops in a bad season. Famines are no longer as serious as they were. The poorer classes are living better than they did. More food, better clothing, and better health conditions are now available and the standards of living are rising. It is true that they are rising slowly, but they are rising to the great advantage of the entire world. Although the problems involved are tremendous, the authorities are making real efforts to combat disease, to improve sanitation, to pro- vide education, to eliminate the harmful social customs, and to strengthen the forces making toward bettered conditions. All of this involves an ever-increasing demand for industrial machinery in a great variety of directions; a few of these can be considered in INDIA. 101 further detail, but it should be realized that they are only illustrative of what is happening in many other directions. COTTON SPINNING AND WEAVING. POSITION OF INDIAN INDUSTRY. The most important industry in India is that of spinning and weaving cotton, and India ranks fifth among the countries of the whole world as a producer of cotton yarn, being exceeded in number of spindles only by Great Britain, the United States, France, and Germany (Austria and Russia being very uncertain in view of pres- ent conditions). The situation is mdicated by the following data issued by the International Federation of Master Cotton Spinners' and Manufacturers' Associations under date of July 31, 1920, and indicating a total world spindlage of 145,701,462, exclusive of Aus- tria and Eussia, which were thought to have some 8,500,000 spindles altogether : Spindles. Great Bivitain 58,692,410 France ,__ 9, 400, 000 Germany 9, 400, 000 Italy 4, 514, 800 Czechoslovakia 3, 584, 420 Elsewhere in Europe 8, 488, 062 Total in Europe 94, 079, 692 Spindles. United States 35, 872, 000 Canada 1,200,000 Mexico 720,000 Brazil 1, 600, 000 Total in America.. 39, 392, 000 India 6,689,680 Japan 3, 690, 090 China 1, 600, 000 Total in Asia 11,979,770 Although the above returns are open to a certain amount of criti- cism, especially as regards Germany, it wUl be noted that of all the countries of the world that do not manufacture their own textile machinery, India is by far the most important market, having more spindles than Japan and China combined. Also, it should be noted that the industry is not only large but old and substantial. The following figures from the report of the Bombay Mill Owners' Association Slow the growth of the industry, which was started by a Parsee in 1851 : Years. Number of mills. Number of spindles. Number of looms. Years. Number of mills. Number of spindles. Number of looms. 1876 47 95 155 217 263 268 1,100,112 2,281,561 3,932,946 5,279,595 6,357,460 6,463,929 9,139 17,445 37,270 52,668 85,352 88,951 1913 272 271 272 266 263 262 6,596,862 6,778,895 6,848,744 6,839,877 6,738,697 6,653,871 94 136 1886 1914 104' 179 1896 1915 108 009 1906 1916 110' 268 1911 1917 114, 621 1912 1918 116 484 Of the above 262 mills, 258 were in operation and 4 in course of erection. Since 1918 the importations of textile machinery into India have been very heavy. For decades British manufacturers .of textile machinery have held a most important position iji the markets for this kind of ma- chinery throughout the world, and the importance of India as a mar- ket for textile machinery can probably be shown best by the follow- ing data, indicating by figures of exports from the United Kingdom 110291°— 32 8 102 ASIATIC MABKBTS FOB INDUSTRIAL, MACHINEEY. where British manufacturers have secured their business and the comparative importance of the various markets : Countries of destination. 1907 1913 1920 First 11 months of 1921. India France Japan Cluna Netherlands Brazil Belgium Germany. . . Bussia Tom. Tom. 47,654 50,287 13,962 12,630 11,588 19,688 2,404 3,321 4 184 12, 171 8,305 11,863 13,339 10,314 21,960 13,917 5,190 15,308 Tom. 21, 434 13, 895 11, 647 2,275 1,285 .2, 173 1,707 Tom. 17,946 17,017 8,051 2,616 1,374 ^] Tom. 54,591 21,907 20,695 14, 514' 2,215 8 275 188 319 2 1 Too small to be listed separately. It is clear, therefore, that the cotton textile industry of India is of very great importance to the country and establishes India as an industrial nation. It is also believed to indicate the possibilities of other industries in India, and now that a definite policy of indus- trializing the country has been established, the record of the cotton- spinning industry lends important support to the claims of the newer industries. Also the importance of India as a market for textile machinery suggests the present and future importance of this same market for other classes of machinery. Up to 1914 British manu- facturers supplied over 90 per cent of the machinery absorbed by India, and obviously this business formed the basis of their trade in many instances." GREATLY INCREASED SPINDLAGE POSSIBLE. In preceding paragraphs an effort has been made to show the past and present importance of the cotton textile industry in India, but it should not be inferred that the market for textile machinery is saturated, as there is reason to believe that India could employ a vastly greater spindlage than it now has. In considering this sub- ject it is necessary to take into account Inxiian export possibilities and also the domestic demand, and for this purpose it seems best to refer to the experience of a pre-war year. For the season 1912-13 the consumption of raw cotton per capita was: India, 4.5 pounds; China, 6.7 pounds; Japan, 12.5 pounds. Corresponding data for occidental countries are : United States, 28.1 pounds ; Germany, 12.5 pounds; France, 10.5 pounds; Great Britain, 9.4 pounds; Italy, 8.7 pounds. In every case the above figures have been corrected to include imports and exclude exports. The returns for China are least de- »i The Importance of this trade is so great that this one item tends to disturb the per- spective of the whole yiew as represented by this report. The 50,287 tons of textile machinery sent to India by the United Kingdom in 1913 was valued at about £1,992,629, or about $9,681,000. In tlie same year Great. Britain shipped to Japan and China about 23,000 tons of textile machinery, which may be assumed to be worth about $4 400 000 additional, so that the British shipments of textile machinery to Asia in 1013 were worth nearly $15,000,000, a fact that distorts esUmates of the value of the world's markets for industrial machinei-y as presented on page 3 of the introductorv section of this report. Since 1913 American manufacturers of textile machinery have devoted more attention to export bUBlness, shipping out nearly $21,000,000 worth of such equip- ment in 1920 and nearly $20,000,000 worth In 1921, with the risult that the distribiition of the business of supplying " industrial machinery " to the various marljets has been entirely changed. This fact does not explain the increase in American exports between 1915 and 1919 as shown on page 3. A number of other influences caused this raree increase in American machinery exports to .isia, which has since been maintained INDIA. 103 pendable, but are based on Noel Murray & Co.'s estimate of the Chinese crop at 5,300,000 bales for 1912, to which have been added the net imports of cotton and cotton goods. There is also great uncertainty as to the actual population of China. Another fact that encourages the belief that India can employ a greatly increased spindlage is the relation with Japan. In spite of the fact that it is something like a three or four weeks' voyage from Bombay to Kobe, India exports a great deal of raw cotton to Japan and imports an important amount of manufactured cotton from Japan. The figures are as follows: Ejcports ol Indian raw cotton to Japan (weight, in hundred- weight). Imports of cotton textiles from Japan. Years. Yam. Piece goods. Hosiery. 1914-15 4,454,931 5,917,663 6,153,531 5,187,705 2,797,491 5,918,980 3,353,620 Pownis. 921,730 701,929 4,007,635 4,206,491 27,280,388 1,917,956 20,122,799 YtTis. 16,042,064 39,101,998 100,122,516 94,655,510 238,261,157 75,953,569 170,339,538 £443,618 376,041 »i9 682 1915-16 1916-17 1917-18 610,631 1918-19 490 617 1919-20 1,223,903 1,393,074 1920-21 No fundamental economic reason seems to exist that justifies such a situation as this. In Japan practically all of the mills depend upon steam power, while in Bombay many mills use power ob- tained from the 4:2.000-horsepower hydroelectric plants, which is sold at about 1 cent per kilowatt hour. Bengal coal is as good as Japan coal, and it would seem that Bengal should have a great advantage over Japan in a matter of this kind, yet Bengal has very little spinning-mill equipment. Most of the Indian mills are near Bom- bay rather than Calcutta. If labor is cheap in J apan, it is certainly cheaper and more abundant in India. If Japan improves the quality of the yam by an admixture of American fiber, India can do so equally well, and has a certain advantage in connection with long- staple cotton from Egypt, India, and possibly Mesopotamia. As the cotton mills of India, China, and Japan all pay liberal divi- dends,' it would appear that the above situation merely represents a shortage of mill capacity and that Japan profits by the slowness of the development in IncMa. A report on the profits of the Indian miUs for 1920 shows that they earned a profit of 165,300,000 rupees. The spinning mills earned 124 per cent, and the stockholders re- ceived dividends of 55 per cent on the original capital. One mill earned 2,105,000 rupees per annum net profits on a capital of 250,000 rupees. Undoujptedly these returns are abnormal, but it also seems certain that the profits have been so large as to aUow Japan the opportunity indicated. In fact, one would expect that if the day ever comes when these oriental markets for textile machinery become saturated, India would be able to drive the mills of Japan out of the export business, even to the extent of supplyng the demand in China, and the volume of this Japanese trade is now very large and is growing rapidly. No limit as to the market for spindles in India is as yet in sight — a 104 ASIATIC MARKETS FOR INDUSTRIAL MACHINERY. statement that is supported by the rate at which new spinning com- panies are being established. Following are figures for new cotton mills incorporated in India : Years. Number. Aggregate autnorized capital, in rupees. 1913-14 12 4 6 40 46 8,375,000 1917 18 8,200,000 1918-19 38,326,000 1919-20 234,075,000 1920-21 194,550,000 Although it is undoubtedly true that the two years last indicated were years when India was feeling the effects of the most pronounced boom of recent years, it is also plain that there is a distinct demand for textile manufacture there and the point of saturation is not in sight. As India is definitely committed to a policy of protection di- rected toward the greatest possible stimulation of industry there, it is clear that an effort will be made at least to discontinue the im- portation of yarn and piece goods made in Japan from Indian cot- ton if it is at all possijble to buy the textile machinery needed for this purpose. In the early months of 1920 British manufacturers of textile machinery were not offering delivery sooner than two years after receipt of order. Apart from the situation in relation to Japan, as set forth above, there is a much larger opportunity for the Indian manufacturer of textiles in supplanting the supjjlies imported from other sources. This is indicated by the following figures, representing the total Indian imports of textiles from all sources : Years. Twist and yam. Piece goods. 1914-15 Pounds. 42,864,340 40,426,924 29,529,569 19,400,439 38,095,413 15,097,204 47,333,495 Yardj. 2,445,661,682 2,148,100,211 1,933,521,578 1,555,508,775 1,121,974,998 1,080,747,882 1,509,720,055 1915-16 1916-17 1917-18 1918-19 1919-20 1920-21 These figures are presented to show the demand and should not be misinterpreted. The decrease in volume during years of war and reconstruction is more or less offset by the unit increase in price. The piece goods, for example, always represented a value between £25,- 000,000 and £33,000,000. Because of the large number of people in India having only a small purchasing power, it is always possible to stimulate purchases by decreasing prices, provided the balance of trade is not so unfavorable as to offset this by fluctuations in exchange. It is also interesting to note, in connection with the question of the probable future growth of textile-mill capacity in India, that the equipment so far installed has not yet reduced the number of hand-power spinners and weavers to any appreciable degree, if one can draw conclusions from the returns of the Indian census, the ex- perience gained in times of famine, etc. INDIA. 105 As compared to the other countries of Asia using textile ma- chinery, India is a large market with a large number of spindles and looms, but is capable of great additional development in the sense that there is a further demand for spindles and also for looms. The following comparison may be of value to those who are more familiar with conditions in Japan or China than with India : Items. India. Japan. China. Number of mills Number of spindles Average spindles per mill. Number of looms Spindles per loom 262 6,653,871 25,396 116,484 57 198 3, 813, 580 19,261 50,583 75 »70 1,972,000 28,171 9,175 215 1 Estimate. The spindles-per-loom figure in the United States is about 49 and in Great Britain is about 74. It is remembered, of course, that Great Britain and Japan export yarn, while India and China em- ploy many hand weavers and import large quantities of yarn. TEXTILE CENTERS OF INDIA. According to the 1918 report of the Bombay Mill Owners' Asso- ciation, the mills of India are distributed as shown in the follow- ing table, and from this it is plain that machinery manufacturers in soliciting business from the cotton mills of India will need to cul- tivate the markets in Bombay, which is probably ten times as impor- tant as any other point in India, although there is an important number of spindles that can be reached from Madras, Calcutta, or even Karachi : Location. Bombay Island: Working In course of erection Bombay Presidency (other thanisland): Working In course of erection Total Bombay Presidency United Provinces Bengal Presidency Madras Presidency Central Provinces Pondieherry Punjab Central India ' Hyderabad Berar Rajputana Mjreore Travancore Chandemagor Total Number of mills. 190 1 178 •262 Number of spindles. 2,882,648 1, 794, 190 4,676,838 460,356 361, 801 420,422 222,312 124,580 116, 981 70,455 64,730 46,100 23,192 40,544 25,560 6,653,871 Number oflooms. Total number of em- ployees (average) 59, 162 34, 198 93,360 4,798 2,479 2,696 4,455 965 3,092 1,634 *853 981 718 423 116,454 71,727 195, 926 15,192 11,407 22,519 14,145 2,663 6,558 5,450 2,547 2.431 1,083 1,634 672 282,227 Cotton consumed. Bundreir- weigM. 3,739,722 1,391,460 5, 131, 182 497,994 358,204 459,648 336,413 72,499 154,688 76,405 60,557 52, 563 20,335 50,519 28,966 7,299,873 • OfthemillslistedinBombay Presidency but not onBombay Island the returns of the Government of India for 1917 show 65 mills in Ahmedabad and 7 at Sholapur, with 22 scattered. > One in course of erection. • Four in course of erection. 106 ASIATIC MARKETS FOB INDUSTBIAL MACHINERT. The Bureau of Foreign and Domestic Commerce has the names' and addresses and number of employees of most of these mills. The list is too long to insert here. The class of spinning equipment required may be estimated in part from the following tabulation of the total yarn spun in India (de- rived from the report of the Bombay Mill Owners' Association) : Classes. 1916-17 1917-18 1918-19 Counts 1 to 10 Pounds. 110, 682, 164 369,932,533 171,487,582 24,081,681 4,577,334 345,937 Pounds. 100,462,492 346,001,810 183,667,136 24,388,708 6,842,190 223,279 Pounds. 87,319,699 314,540,680 189,204,470 19,189,215 4,555,242 231,158 Counts 11 to 20 Counts21to30 Counts 31 to 40 ■ Above 40 Wastes, etc Total 681,107,231 660,578,615 615,040,464 CONDITIONS AFFECTING EFFICIENCY OP MILLS. In general the mills of India, so far as could be seen on a hurried trip devoted to a very wide range of subjects, are of a type familiar to those who know British practice and may be briefly described as having Lancashire boilers, Corliss engines, rope drive, and all that goes with equipment of this class. At the same time it must be added that in such plants as the Buckingham and Camatic Mills in Madras better engineering was found. One gathers the impression that it would be easy to improve greatly upon the engineering employed in the design of textile mills for India and that this should be one of the fundamentals of any sales policy directed toward this market Practically all of the cotton mills of India are owned, managed, and operated by Indians, although some of the more important mills are controlled by Europeans. Labor is cheap, the monthly wages being as follows in 1918 (rates appreciably above those paid in 1914) : R. A. Drawer (card room) , 23 6 Eeeler ~ 17 4 Warper 40 g Rover 24 1 DofCer (card room) 12 10 Weaver ~~ 45 15 (One rupee=16 annas. Exchange has fluctuated widely. The rupee has been as high as 50 cents and as low as 27 cents since 1920. Probably a fair value is 32 cents or, roughly, 3 rupees per dollar and 2 cents per anna.) Elsewhere it has been pointed out that Indian labor is inefficient and Ignorant, suffers from debilitating diseases like hookworm and malaria, and is deficient in individual strength. These and other considerations indicate that labor-saving machinery should be very useful and there should be a demand in India for mills representing the very best engineering known in America. On the whole, it would seem that India offers a very attractive market for American spinning and weaving machinery and accessories that appertain l/06F6LOa INDIA. COTTONSEED-OIL INDUSTRY. 107 Closely associated -with the cotton-textile industry is the cottonseed- oil industry, and most Americans visiting India will be disposed to feel that a real business opportunity might be found there, as scien- tific utilization of the greater part of the Indian supply of cottonseed has never yet been attempted. The United States plants something like 32,000,000 acres to cotton in an ordinary j'ear, harvests something like 10,000,000 bales (more or less), and from this secures about 4,000,000 tons of cottonseed of a value between $100,000,000 and $400,000,000, depending upon the market price. The yield of cotton- seed oil IS from 160,000,000 to 200,000,000 gallons, worth from $70,000,000 to $200,000,000, depending somewhat upon prices. Cor- respondingly, India plants about 20,000,000 acres to cotton in an ordi- nary year, yielding about 3,200,000 bales (of 500 pounds), from which are obtained about 2,000,000 tons of seed. The use made of the seed varies a great deal from year to year, as in time of scarcity much of it is used for cattle feed. About 10 per cent of the crop is retained for planting and about an equal amount is ordinarily fed to live stock. Clearly India can not afford to sacrifice a valuable asset, and if Indian seed were equal in quality to American seed it seems certain that India would now have a well-established cottonseed-oil industry. But the seed is inferior, wiih the result noted. On the other hand, a little has been done in connection with this matter, as is shown by the following figures for exports of cottonseed oil from India : Years. Quantity. Value. Years. Quantity. Value. 1913-14 aallons. 2,607 12,471 43,030 84,156 £347 1,059 4,031 10,004 1917-18 Gallons. 76,308 9,356 132,486 18,977 £9,595 1 183 1914-15 191&-19 1915-16 1919-20 38', 643 6,312 1916-17 1920-21 . . There is just enough business here to suggest that the industry is susceptible of real development — a conclusion that is supported by the following record of the exports of cotton seed, practically all of which went to the United Kingdom (apparently the shipments fell off when the freight rates became too high) : Years. Quantity. Value. Percent- age to the United Kingdom. Years. Quantity. Value. Percent- age to the United Kingdom. 1913-14 . . Tons. 284,327 207,789 95,664 39,630 £1,416,743 1,004,624 445,077 203,940 98 97 98 94 1917-18 Tons. 1,675 1,454 248,749 i.9,900 £9,587 11,810 3,665,628 1,036,495 1914 15 1918-19 1915-16 1919-20 98.2 1916-17 . .. 1920-21 98.5 Indian cotton seed is valued in Europe on the basis of 18 per cent oil, but on the average the yield from Indian seed is considerably lower and in Burma the oil content is normally assumed to be only 10 per cent. American seed contains upward of 30 per cent. It is tliere- fore plain that the cottonseed-oil business in India will be a very dif- ferent trade from that known in the United States. In addition to 108 ASIATIC MARKETS FOB IJSTDUSTRIAL MACHINERY. this difference in the oil value of Indian seed it seems that the indi- vidual seed is only about 30 to 50 per cent of the size of the American seed and suffers a further handicap in that it is a fuzzy seed having an inner layer of fluff or lint besides the outer layer of true cotton fiber. As it has not been the custom to either delint or decorticate these seeds in treating them for oil recovery it is plain that the lint will absorb a substantial amount of the oil. (Most Indian cotton is ginned in roller-type rather than saw-type gins, and this fact also influences the problem of oil recovery.) It is therefore apparent that Indian seed is now used in the United Kingdom as a source of supply for cottonseed oil. In view of the fnct that a small amount of the same business has been conducted in India for many years, this indicates that the industry has actually been proven to be practical and commercial. On the other hand, it is un- doubtedly a very different industry from that known in America. It is probable that the industry in India will grow to much greater im- portance than at present, and Americans should be better able than any other nationality to solve the mechanical and technical problems connected with it, in view of the extensive experience of American ma- chinery manufacturers. At the same time the problem in India will probably be found to involve many conditions not found in the United States and will need to be handled with care. The situation seems to imply that the extraction should be carefully checked by competent chemists and will call for very scientific supervision — a requirement that was not met in any plant of any kind visited by the writer in India, with perhaps two exceptions. OTHER VEGETABLE OILS. In addition to cotton seed India produces a very important amount of a number of other oil nuts and seeds, the total export of which probably amounts to 1,500,000 to 2,000,000 tons per year, besides the important domestic consumption of oils and seeds. The oils extracted locally are often secured by primitive processes, but in a number of instances there are reasonably modern mills which have been a com- mercial success for a number of years. It is believed that competent Americans could offer improved methods and machinery and that there is a distinct opportunity for the sale of American machinery for these purposes in India, though it also seems certain that unusual problems will confront those who undertake this business. The position of India in the supply of oil-bearing seeds in interna- tional trade is indicated as follows : Kinds. Total ex- ports from producing countries. Exports from India, 1913-14. India's per- centage of world ex- ports. Linseed Tom. 1,808,000 779,000 858,000 .385,000 135,000 264,000 .537,000 33,000 26,000 4,000 Tone. 414,000 364,000 284,000 254,000 135,000 112,000 .38,000 33,000 19,000 4,000 Peanut Cottonseed Rape and mustard seed Castor seed Sesame seed Copra Mowra seed Poppy seed Niger seed INDIA. 109 Practically all of the above exports went to Europe, about one- third going to the United Kingdom and large amounts to France and Germany. It would seem possible to improve greatly the present oil-mill industry ; this includes some plants of modern type, but the bulk of the work is done in bullock-driven mills of a primi- tive type which are very inefficient. , The following table shows the 1913-14 exports of vegetable oils extracted in India: Kinds of oil. Quantity. Value. Principal countries of destination. Oallom. 1,091,477 1,077,001 407,178 288,190 208,053 102,360 2,507 135,321 £155,073 92,504 48,624 30,013 28,699 17, 493 347 12,900 United States, United Kingdom, Germany, Sweden, Castor oil. Belgium, Netherlands. Australia, New Zealand, Straits Settlements, Mauritius. Mustard and rape oils. . . United Kingdom, Ceylon. Mauritius, Natal, Kii, British Guiana. Ceylon, Mlauritius, France. , Maskat, Aden, Ceylon, German East Africa. Sesame oil Linseed oil . . New Zealand, Hongkong, Australia, United Kingdom. other vegetable oils Germany, Belgium, Ceylon, United Kingdom. India in the same year exported about £1,000,000 worth of oil cakes, most of which went to the United Kingdom, Ceylon, and Japan. The United Kingdom absorbed about 32,000 tons of peanut oil cake (chiefly for cattle feed) out of a total of 62,000, and Japan 45,000 tons of rapeseed oil cake for use as a fertilizer. But the total export trade as indicated by the above tables is a very inadequate indication of the Indian demand for vegetable oils and of the extent to which it seems probable that modern machinery could be employed in extracting them — ^because a great quantity is absorbed in the domestic trade of India. It is very difficult to esti- mate the amount consumed in this way, but it is very large. Ee- turns are available giving the acreage and yield of these crops, but the disturbances during the last five years resulting from the war make it impossible to analyze the situation satisfactorily. It is anticipated that, under the more methodical regime recently in- troduced, better agricultural methods in the production of these seeds (and also probably better methods of extraction) will be em- ployed. Probably large-scale mills of a modern type could be used very advantageously in connection with this domestic trade, but the success of these mills in producing oils for export depends as much on the tariff policy of the importing countries as upon the improve- ments made and efficiency shown. The Indian Industrial Comniis- sion recommended measures that are intended to provide scientific and economic assistance to the seed-growing and oil-extracting in- dusfjFics • In addition to the oil-bearing seeds mentioned above, it should be added that a demand may be expected to develop for machinery as used in the production of oil from rubber seeds on the rubber plantations of India, the acreage of which totals about 125,000, as compared with 220,000 in Ceylon, 500,000 in the Malay Peninsula, and 400 000 in the Dutch East Indies, as well as for extracting palm oil and palm-kernel oil from the fruits of the African oil palm, which is bfeing introduced on plantations m this part of the world, and tea oU, which is produced in quantity m China but probably has not yet been produced in India. 110 ASIATIC MABKETS FOB INDUSTRIAL MACHINERY. JUTE INDUSTRY. ' Just as the cotton-textile industry centers around Bombay, the jute industry is confined to those parts of the country reached through Calcutta, but with the important difference that India prac- tically monopolizes the production of this fiber — the cheapest of all commercial fibers. The industry is so large that it is the most im- portant in India excepting only the cottop industry. Jute is grown mostly on the wonderfully fertile land in the alluvial valleys of the Ganges-Brahmaputra delta, probably among the most fertile areas in the world, with plenty of rain (about 56 inches) and ample labor. It seems strange that such desirable areas should be devoted to the production of such a low-quality material. All jute appears to be spun and woven either in India or in Dundee, Scotland. Originally jute was spun and woven by hand in India, but in 1838 the flax and hemp spinners of Dundee began to use jute, man- ufacturing fabrics on power looms. In spite of the fact that the hand- weaving industry of Bengal showed great vitality, it ultimately-felt the force of this competition and has disappeared, although hand spinning still continues. For a good many years Dundee has ab- sorbed about 1,200,000 bales (400 pounds each) except when war interfered. The first power mill to spin jute in India was started in 1855 and the first weaving mill in 1859. The following table represents the growth of the industry since that time. Years. Number Number Nimiber Number of mills of em- of of at work. ployees. looms. spindles. 21 38,800 5,500 88,000 24 52,700 7,000 138,400 26 64,300 8,300 172,600 31 86,700 11,700 244,800 36 114,200 16,200 334,600 46 165,000 24,800 510,500 60 204,100 31,400 645,900 68 216,400 33,100 682,500 59 201,300 32,900 677,600 61 204,000 34,000 708,700 64 216,300 36,000 744,300 70 238,300 38,400 795,500 70 254,100 39,900 812,400 74 262,500 29,600 824,300 76 266,000 40,600 834,000 76 270,000 39,300 823,700 1879^0 to 1883-84... 1884-85 to 1888-89... 1889-90 to 1893-94... 1894H95 to 1898-99... 1899-1900 to 1903-4.. 1904-5 to 1908-9 1909-10 1910-11 1911-12 1912-13 1913-14 1914^15 1915-16 1916-17 1917-18 1918-19 By this time the capital invested in these mills had risen to 144,720,000 rupees and the mill consumption (1917-18) had risen to 5,447,000 bales, compared to an export of 1,756,000 bales (in war time ; it had been 4,340,000 in 1913-14) . For 1918-19 India exported 583,096,000 gunny bags, 1,103,211,000 yards of burlap cloth, and 7,000 tons of other jute products, in addition to an export of 2,229,627 bales of raw jute, which went to the United Kingdom, the United States, France, Italy, Spain, and some other countries. Before the war Germany and Austria also absorbed important quantities. On March 1, 1916, the Government of India levied an export duty on raw jute of 2 rupees 4 annas per bale of 400 pounds, or approxi- mately 5 per cent, and similar duties on manufactured jute. In view of the protective policy of the Government, this important industry will probably be encouraged as much as possible, even though mills in other countries suffer. INDIA. Ill iliiitirely apart from the spinning and weaving equipment that form the major part of the machinery used in the jute mills of Cal- cutta and the cotton mills of Bombay, there is a very large amount of accessory equipment and the supply of belting, lubricants, etc., is a large and regular trade. GINNING AND PRESSING FACTORIES. Kelated to the jute and cotton mill industries of India and yet in a sense independent of them are the factories where cotton is ginned and baled or, correspondingly, the establishments where jute is baled. Altogether there are a very large number of these pressing factories, the number and relative importance being suggested by the follow- ing figures representing the year 1917 : Industries. Cotton spianing and "weaving mills. . Jute mills. Cotton ginning and pressing factories. Jute presses , 282,297 264, 373 133,323 25,504 (There are slight discrepancies between the figures in this tabh; and those used elsewhere — representing the difference between th(i re- turns for the calendar and those for the fiscal year. The above returns are for the calendar year 1917, except that the number of gins is for the ginning season 1918-19.) Cotton is probably the most important single crop in India except food grains. In 1918-19 cotton represented 42 per cent of the total exports of Indian merchandise from the Bombay Presidency, and in 1913 India produced about 15 per cent of the world's cotton crop. The staple produced is of a great many varieties, and it is probably safe to say that cotton is grown in every Province, so that the gin- ning and pressing plants are scattered widely, the principal districts being represented as follows: Districts. Number of plants. Number of em- ployees. Districts. Number of plants. Number of em. Bombay Presidency Central Provinces and Berar. United Provinces Madras Presidency S21 426 156 149 39, 014 27,660 14, 214 12,915 Punjab Central India.. Hyderabad Baroda 120 107 147 7,728 8,563 8,152 6,260 This leaves 66 plants and 8,817 employees in the other parts of India. It will be noted that on the average these plants for all of India employ 75 persons. In contrast to the cotton indtistry, the jute presses are concen- trated, being located as follows : District. Nimiber of plants. Number of em- ployees. Bengal Bihar and Orissa — Uadras Presidency.. 117 4 4 24,848 454 Total.. On the average these plants employ 204 persons. 112 ASIATIC MARKETS FOE INDUSTRIAL MACHINERY. The differences in regard to the ginning, baling, and pressing are almost as many as the Tarieties of cotton grown. In the Punjab and Burma, for instance, the ginners buy the seed cotton; elsewhere they mostly gin on commission. In the south of India, however, where the ginners are also exporters, they buy only the lint after ginning. The greater part of the crop is machine ginned, but (except in Dhar- war, where the American saw gin is used) chiefly with roller gins. In many of the more important cotton-growing centers the big Euro- pean cotton exporters have their own gins. " Though the loose bundles of ginned cotton, if intended for Indian mills, are sometimes only half pressed, the bulk is steam-pressed in steel-hooped bales up country and so railed down to the port. The density of pressing varies from 45 to 65 pounds per cubic foot." ^^ The use of the roller gin in India again introduces the question of labor. It is said that because of the shortness of the staple of Indian cotton it is much better to use the roller type of gin, but it also seems to be difficult to persuade the wotkmen to maintain the saws. So long as the saws are sharp it seems that this type of gin gives the better result, but when the men relax their efforts and the saws are dull the fiber suffers correspondingly. In 1917 there were 41,621 gins in India, of which 30,863 were active. The baling of jute seems to be a very simple process. Unlike cot- ton, there is very little loss in weight in cleaning and baling jute for. market. The standard bale is 400 pounds. RICE MILLS. nice milling also illustrates some peculiar differences as to the way in which a given problem is handled in several territories. It has been estimated that India produces about 40 per cent of the world's yield of rice, or possibly 36,000,000 tons per year — a truly magnificent total. Also, India is the largest exporter of rice in the world, shipping from 1,300,000 to 2,400,000 tons per year. Burma contributes the greater jpart of this export total and is in an excellent position to do so, as rain failure is unknown there. But it should also be remembered that Bengal, Bihar, and Madras grow more rice than Burma, though they export less because of the greater domestic consumption. As the yield per acre is low as compared with Japan and Egypt, the acreage is high, and, altogether, the crop is probably planted on about 80,000,000 acres. In former times in certain districts rice was polished, among other ways, by plunging a wooden pestle onto the rice contained in the equivalent of a mortar. Sometimes this was operated by a primitive water wheel, but more often by foot power. When carefully handled this method produced a very attractive, highly polished grain. But as the method involved a great deal of labor, it is disappearing with the rising standards of living in Asia. As a substitute, some simple machines have been devised which aim to polish the rice quickly by power. These simple devices are not altogether successful, for although they improve the appearance of the rice there also seems to be a good deal of breakage, and broken grains result in a lower price. A certain American make of rice huUer and polisher that is ^ From " Handbook of Commercial Information for India," p. 124. INDIA. 113 a more perfect design than those just mentioned is very popular in most of the Indian markets and commands a big sale. In other dis- tricts — as, for instance, in the Philippines— more elaborate units are employed, where the rice is subjected to possibly three operations in the cleaning and polishing process. Even these installations can scarcely be called miUs, though the various machines are often con- nected by a set of steel framework with appropriate conveying equip- ment. On the other hand, the rice mills in Burma are often very large plants, giving much the same impression as an American flour mill of 500 to 1,000 barrels capacity. The largest of the Burma mills wiU turn out 700 tons of rice a day with about 1,350 employees. In these large mills the rice is first run over shakers and sieves to remove stones, dirt, straw, etc., this being followed by a win- nowing process. Next it is passed between grinding stones, which remove the husk, and is again winnowed. In some instances the rice is marketed in this condition. For white rice it is further milled by cones which remove what might be called the bran, following which it is carefully sifted so as to remove the broken grains. In some cases the rice is again winnowed and bagged, but for the higher qualities it is subjected to further polishing in cylinders of wood and wire gauze in which revolv.e rollers covered with sheepskin, fol- lowing which it is again sifted. It will be plain that such a process constitutes a genuine milling operation and is not to be compared with the simple processes mentioned above. Because of the care and gentler treatment at each operation the products of these mills should be better and the percentage of breakage less than in installations where an effort is made to complete the process in a single opera- tion. For these reasons it is very desirable that a clear distinction be drawn between the different types of " mills " used. The larger plants in the Bangoon district are the most elaborate seen anywhere ; nothing of this type was seen in Japan, China, or the Philippines, although the larger installations in French Indo-China, at Saigon, show a tendency to follow the same principles that are used in Burma. The following classification shows the distribution of rice mills in India : Provinces. Mils having more than 100 em- ployees. Number of mills. Nmnher of em- ployees. Mills having fewer than 100 em- ployees. Number of mills. Number of em- ployees. Bengal Bihar and Orissa.. United Provinces. Punjab Burma Madras 200 25,710 2,877 61 8 1 2 251 113 2,506 273 22 118 9,096 5,731 The grand total for British India is 521 mills, employing 46,533 persons; in addition there were about 10 mills, some of fair size, not operating. Of the above, about 15 mills were combined with sawmills or other enterprises, and this fact probably raises the num- ber of employees a little- In addition, in the Native States there are 114 ASIATIC MARKETS FOE INDUSTRIAL MACHINERY. 20 small rice mills employing 551 persons, but no one of these plants employs more than 60 persons, and 19 of them are in Hyderabad. ENGINEERING WORKSHOPS. According to the returns of the 1917 list of "Large Industrial Establishments in India" (published in 1920) the classification next in importance after " Eice mills " covers the " Engineering work- shops," in which are included "electrical engineering workshops, shipbuilding and engineering works, iron and brass foundries, and canal foundries and workshops." The classification excludes plants producing " arms and ammunition," of which there are 17 ; " dock- yards and port-trust workshops," of which there are 15 ; " iron and steel producing works," of which there are 2 ; and " railway and tramway workshops," as follows : Shops. Number of em- ployees. Engineering workshops Arms and ammunition Dockyards and port-trust workshops. Iron and steel producing works Bailway and tr.imway workshops Total 228,101 If it is correct to consider the above group as a unit, it is clear that establishments of the above types constitute an industry that is one of the most important in India, for if importance is measured by the number of employees it ranks ahead of all except the cotton and jute mills. Also, as an industry it is of peculiar interest to the American manufacturer of machinery. The railway and tramway workshops are owned by the various lines and located at convenient points, thereby being distributed over the entire country to a greater or less extent. In some cases the Government owns the railway and also the workshops. In other instances the line is owned by one of the native States. There are also a large number of lines owned by private corporations. Some of these shops are quite large and well equipped; for instance, the East Indian Eailway shops at Jamalpur (Bihar and Orissa) employ more than 11,000 hands. At least one shop has built complete loco- motives. The railway shops owned by the Government are distrib- uted as follows : Provinces. Number of shops. Number of em- ployees. Provinces. Number of shops. Number of em- ployees. Assam 1 5 3 7 24 6,994 4,88-4 i2,094 Ajmer-Merwara 2 1 9,082 239 Bengal Baluchistan Uulfed Provinces Total Punjab 19 33,317 The only railway shop operated by the government of a native State is the one at Jodhpur, in Rajputana, employing 1,538 person.-. The raihvay shops that are operated by companies are distributed as follows : INDIA- US Provinces. Number of shops. Number of em- ployees. Provinces. Number of shops. Number of em- ployees. Bengal 9 3 2 4 7 1 15,098 2,363 703 11,675 7,541 125 Punjab 1 3 19 17 94 Centra IProvinces and Berar. . 1,061 14 510 Assam BibarandOrissa 23,843 United Provinces Total Dellir 66 77 013 In addition, there are three shops not provided with power, em- ploying 1,032 persons, and the tramways in the several leading cities have eight shops and 2,629 employees. The two iron and steel plants that were in operation at that time have already been mentioned. The Government has three dockyards in Bengal with 4,085 em- ployees and one in Bombay with 4,898 employees. Private inter- ests have five dockyards in Bengal with 5,098 employees, two in Bombay with 6,061 employees, and two in Burma with 2.273 em- ployees. The shops connected with the harbors at Madras and Eangoon have 616 employees and those at Bombay 1,004. The facilities for producing munitions are suggested by the fol- lowing : Establishments. Aircraft workshop at Peshawar Ammunition factory at Dum-Dum Gun and shell factories: Cossipore Ishapur Rifle factory, Ishapur Ammunition factory at Kirkee, Poona. Cordite factory at Nilgirus Arsenals; Kirkee, Poona Madras Employ- 132 3,742 5,859 6,649 4,523 2,870 1,353 475 419 Establishments. Arsenals — Continued. Allahabad Rawalpindi Ferozepur Rangoon Quetta Army clothing factories: Patua Shajahanpur Alipore Madras Employ- 1,143 160 746 200 1,073 473 1,246 The Government also has 16 engineering workshops; the largest has 419 employees, and the total is 2,724. The iron and brass foundries of India total 48, with 7,939 em- ployees. The largest individual plant is the BycuUa Iron Works at Bombay, which, with accompanying machine shops, employs 958. The distribution is as follows: Eistricts. Burma Bengal Bihar and Orissa. United Provinces. 'Punjab Number of found- Number of em- ployees. 1,404 467 55 662 697 Districts. Dellir Bombay Presidency. Madras Total. Number of found- ries. Number of em- ployees. 133 3,483 1,03S 7,9 Six of these foiindries are combined v/ith other industries — a dockyard, a rice mill, an ice factory, two machine shops, and a rope shop. Correspondingly, the report mentioned above lists 66 "engineering workshops" with 16,683 employees. These machine 116 ASIATIC MARKETS FOB INDUSTRIAL. MACHINEKY. shops are mostly found in Bengal, and in Bihar and Orissa. The distribution is indicated below: Districts. Number of shops. Number of em- ployees. Districts. Number of shops. Number .of em- ployees. 43 5 3 6 7,980 18,223 870 1,901 3 6 296 Bihar and Orissa Burma 410 Total "RoTTiT^fty .,..., 65 16,683 1 The Kumiirdhubi Engineering Works at Maublum employs 4,8i kind in India. i and is the largest single shop of its , India is expected to show very rapid development in the direction of machinery production. The situation in the past is indicated by the following quotation from the report of H. Burkinshaw, con- troller (electrical and mechanical) Indian Munitions Board, which was written about the end of 1918. This report reflects between its lines the problems confronting the board in time of war and the desire to stimulate industry in India for times of peace, particularly in the direction of restricting imports : At the outbreak of war India found itself singularly ill equipped to cope with its own demands for mechanical and electrical machinery and appliances. Large imported stocks were, however, available, and these, for some time, served to relieve a situation which might otherwise have been disastrous. The reduction in imports of all manufactured goods necessarily increased the pressure upon Indian factories, and this, in turn, created a very large demand for machine tools, without which it was impossible to manufacture new ma- chinery and spare parts for existing machinery. These machine tools were supplied almost exclusively from imported stocks, but a number of the simpler kinds were manufactured to meet very urgent cases. Hitherto, private enter- prise does not appear to have attempted to manufacture machine tools capable of working with that degree of precision and speed demanded by modern methods. That such machinery can be produced in India has been clearly demonstrated, and notable examples are the exceptionally high-class lathes manufactured in the Lllooah workshops of the East Indian Railway. The manufacture of machine tools in India is of the utmost importance, as, with- out them, no other machinery can be produced and all industry must be hampered. It is fortunate, therefore, that the manufacture of machine tools in India is likely to be established in the near future. Heavy machinery requiring no great degree of precision In manufacture, such as slow-speed steam engines, hydraulic presses, pumps, looms for coarse fabrics, mortar mills, colliery haulages, etc., is readily manufactured in India, and many such machines are in successful operation. Several engineering firms have now standardized these machines, and their productions are at least equal to those previously imported. It has been possible to comply not only with the normal demands but also with those from the army, and there appears to be no reason why the import of this class of machinery should again rise to its pre-war value. , ^ Portable engines, traction engines, and road rollers are not manufactured in India. Small vertical and Lancashire-type boilers have been made in rare cases, but the total output is small enough to be practically negligible. This type of machinery is required In large quantities, and India is dependent entirely upon imports. Before the war, engineering firms in India principally concerned themselves with the nonrecurring demands for machinery not usually imported, millwrlght- Ing, repair work, and steel structural work. They have since had to turn their attention to the manufacture of a diversity of machines and parts of machines for which their workshops were Imperfectly equipped. The results obtained reflect great credit upon the perseverance and ingenuity of individuals, and it has generally been possible to obtain from them anything which was of vital urgency. But, in the present state of industrial development in this country, these eilorts must be regarded for the most part as tours de force and, when INDIA. 117 peace conditions return, for a time at any rate, India must expect to a great extent to fall back to lier pre-war dependence on imported machinery. Tlie reason of this is obvious. Modern engineering worlds use largely certain prod- ucts which they do not themselves manufacture. Amongst these are pig iron, mild steel tubes, wire, plates, and sections, copper and brass rods, tubes, bright- machined screws and nuts, wood screws, split pins, ■rt'ashers, tool steel, twist drills, cutters, springs, etc. With the exception of pig iron and mild steel sec- tions, engineers in India are dependent for all these almost entirely upon imports, and until these conditions are altered the manufacture of machinery to meet the very large demands can not well be undertaken. Thi! manufacture of electrical machinery, such as dynamos, motors, trans- formers, etc., has not been attempted in India on account of the difficulty of obtaining the requisite material. The principal materials required are cast iron of high permeability, mild steel, thin iron plates with special magnetic properties, copper wire, copper bars of special sections, cotton yarn and tape, mica, press-spahn, and certain varnishes, in which shellac is usually an in- gredient. After experiment it would doubtless be possible to produce suitable cast iron, but there is no immediate prospect of producing from indigenous sources the thin iron core plates, electrolytic copper wire and sections, cotton yarn and tape, and press-spahn. The cotton tape and yarn required must be made from fine counts, entailing the use of long-staple cotton, and the finished product must be entirely free from dressing and of uniform dimensions. This has not yet been produced In India. , A certain amount. of switch gear for direct current has been manuf.ictured in India during the war, and the results reflect great credit upon the firms concerned, the gear comparing very favorably with similar imported articles. The difficulties of manufacture have been great, as, with the exception of pig iron for .the castings, recourse has had to be made to imported* copper sheets, brass bars, etc., and in almost every case it has been necessary to utilize such material as was obtainable rather than that which would normally, have been used. All small pins, screws, nuts, springs, and washers have had to be manu- factured, either by hand or upon unsuitable machinery, and this has resulted in increased cost of production and the sacrifice of Interchangeability. A notable achievement has been the successful production of electrical por- celain, the insulators now produced in India being in every way equal in qii-Mty to the usual Imported types. None were made in India before the war, a. . if the existing factory is extended to supply insulators in large quantities there appears to be no reason why the Import of this article should not cease. If electrical porcelain becomes readily available, factories could be established for the manufacture of such accessories as celling roses, tumbler switches, wall plugs, cut-outs, distribution fuses, etc., all of which are at present Imported. All such electrical fittings as water-tight lanterns, deck fittings, ironclad plugs and sockets, hand lamps, table lamps, plain glass globes, and the like are now manufactured in sutflcient quantities to meet the present curtailed demand. In many cases they are superior to the imported article, and only in rare Instances is there a marked inferiority. No attempt has been made to produce insulated conductors and insulating material (except porcelain), and the whole of the requirements have been met from imported stocks. The rubber now produced in southern India, however, is of a very high grade and eminently suitable for electrical purposes, and there is no insurmountable obstacle to be overcome for the production in India of all types of insulating materials and insulated conductors. Although manufacturing firms have at present to depend so largely on im- ported materials for their work, practically all the raw materials required for mechanical and electrical engineering manufacturers are indigenous to India, and there is no reason why these resources should not be developed. Mills for the production of steel, copper, and brass plates, rods, tubes, and wire are ■ urgently required, and also the establishment of works for the production in bulk of machined bolts and nuts, screws, gudgeon pins, washers, split pins, etc. * * * There are excellent prospects of many of these products being manufactured in India in the near future, and should these materialize, the manufacture . of practically all types of machinery and electrical appliances could be undertaken with a certainty of success. There remains the labor factor, and it is satisfactory to note that the results obtained in the State workshops (which have not been mentioned in this note as 110291°— 22 9 118 ASIATIC MARKETS FOE INDUSTRIAL MACHINERY. their resources are not usually directly accessible to the public), and in up-to- date privately owned shops demonstrate that the Indian workman can produce work of a markedly high quality when he is given proper facilities. It is true that expert labor is not equal to the demand, and this will no doubt at first hamper the expansion of Um engineering industries. But the capacity is there, and the lessons which the Indian will learn from the imported skilled artisan and the training and education which he will receive, if the recommendations of the industrial commissions are carried out, should result in time in the pro- vision of an ample indigenous labor force. To sum up, the engineering manufacturing resources of India are not yet sufficiently developed to compete with imported machinery, but the possibilities for development are enormous, most of the raw material is available, the labor can either be procured or trained, and the market for the products is assured. It remains for private enterprise to avail itself of its opportunity. Mr. Burkinshaw's interesting statement shows clearly how the sit- uation stood a year before the armistice, but he seems to underesti- mate India's absorption of machine tools, as the £84,559 of metal- working machinery imported in 1919-20 is far above the £9,731 ab- sorbed in 1913-14, and indicates that the industrialization of India will proceed much faster than he anticipated, creating a demand for machinery far beyond the present resources of the country. The truth appears to be that India — in fact, Asia — is developing much more rapidly than is generally realized either there or in the countries of the Occident, and this development will probably be the outstand- ing feature of the next two decades. SUMMARY OF INDUSTRIAL DEVELOPMENT TO JANUARY 1, 1918. In presenting the above brief descriptions of some of the leadinj^ industries of India an effort has been made to show the present stages of development that has been reached. Inevitably such a descriptioii is unsatisfactory. In such a large and well-populated territory, with splendid resources, one would expect to find greater development, and yet some persons seem to feel that in the " unchanging East " therb would be no progress worth mentioning. Neither extreme is repre sentative of the facts. There has been a great deal of progress, and there is reason to believe that a period of rapid development has re- cently started. The following table shows all of the industries in British India ^nd the Native States, together with the average daily number of operatives employed therein during 1917 : British India. Indian States. Class of establishments. Owned by Government and local bodies. Owned by companies or individuals. Owned by State dar- bars. Owned by companies or individuals. Total. Num- ber. Per- sons. Num- ber, Persons. Num- ber. Per- sons. Num- ber. Per- sons. Num- ber. Persons. Textiles: Clothing agencies 7 1 3,967 685 7 275 9 4 75 4 3 967' 243 7 3 74 259,820 834 136 263,778 1 1 845 55 30 1 1 20,058 '"m 281,40* Cotton spinning and weaving establish- ments not classed as mills Hosiery factories Jute mills 1 595 264,373- 40& Shawl weaving estab- lishments 4 406 INDIA. 119 British India. Indian States. T( Class of establishments. Owned by Government and local bodies. Owned by comnanies or individuals. Owned by State dar- bars. Owned by companies or individuals. )tal. Num- ber. Per- sons. Num- ber. Persons. Num- ber. Per- sons. Num- ber. Per- sons. Num- ber. Persons- Tex tiles— Contin ued . Silk mills 45 3 6 4 3,337 ,595 1,142 7,039 1 46 3 8 6 2 12 3 337 '595 Woolen carpet weav- ing estabUshments-- 2 1 1,760 531 2,902 7 720 WyTiiftm TP'ils 1 150 Woolen weaving fac- 2 124 124 MiiSPf^llf^itAniiR 12 1,461 1 461 Total, textiles 10 5,397 397 538,142 4 1,024 40 22,891 451 567,454 Minerals: Aluminum factory . 1 1 2 93 185 1 2 4 60 2 6 20 7 7 93 185 Gold washing works 4 698 693 Iron and brass works and foundries 3 830 67 2 6 20 7 7 8,297 17,145 1,130 1,011 11,556 1,306 9,127 Iron and steel produc- 17,145 1,13» liock and cutlery works 1,0H 11,556 1 306 Total miners^ 3 830 102 40,723 4 698 109 42,251 Transport: 1 4' 1 1 19 132 8,983 426 190 33,317 1 1 13 1 1 89 11 1 132 9 13,432 1 22, 415 1 426 Port trust workshop.. Railway workshops . . . Shipbuuding and en- 190 69 11 8 1 78,045 8,533 2,629 200 1 1,538 1 112,900 i 8,533 2,629 1 200 Total, transport. . . 26 43,04S 98 102, 839 1 1,53S 126 147,425 . Food, drink, and to- bacco: 1 89 1 3 17 14 9 16 48 20 1 542 40 14 48 89 3 17 14 1 10 44 10 169 1,923 4,273 70 866 4,452 1,232 169 1,923 4,273 8 2 863 192 933 1 86 3 4 316 105 1,460 4,557 Ice, mineral and aer- ated water factories. Opiom factories 1 23 1,255 1 1,559 1,55» 522 36 14 45 46,563 9,589 5,901 5,046 20 4 551 258 47,114 9,847 Tobacco firms and f ac- 5,901 3 626 5,672 Total,food,drmi, and tobacco 12 2,703 725 80,084 2 109 34 1,856 773 84,752 Cbemjcals, dyes, etc.: 13 8 16 58 126 2 2 7 1,703 1 485 3,152 4,753 6,752 689 242 1,905 13 9 19 59 138 2 2 8 1,70S 1 3 1 12 40 465 571 1,005 1,525 3,617 5,32* 7,757 689 24? Uiscellaneous 1 55 .1,960 Total, chemicals, dyes, etc 232 20,681 18 2,136 250 22,817 1 1 - — 120 ASIATIC MARKETS FOR INDUSTRIAL MACHINERY. British India. Indian States. Class of establishments. Owned by Government and local bodies. Owned by companies or individuals. Owned by State dar- bars. Owned by companies or individuals. Total. Num- ber. Per- sons. Num- ber. Persons. Num- ber. Per- sons. Num- ber. Per- sons. Num- ber. Persons. Faper and printing: . 2 7 109 614 5,147 16,752 2 8 148 514 5,407 30,738 ■Pnpflr Tnil]R 1 4 260 479 Printing presses 3r, 13,221 3 286 Total, paper and printing 32 13,221 118 22,413 3 286 5 739 158 36,6S9 Processes relating to wood, stone, and glass: Carpentry 2 240 8 2 25 7 5 18 8 125 40 172 2 810 464 3,155 469 454 3,364 3,289 11,372 4,512 20,015 628 10 2 25 8 6 18 9 127 48 182 2 1,050 464 3,155 519 504 3,364 3,359 11,672 8,932 23,196 Cement worlcs Coach building and motor-car repairing works Furniture workshops . 1 50 Glass factories 1 50 I/ime works Potteries 1" 1 8 9 90 150 4,420 3,109 Sawmills ; ' 1 150 Stoneworks Tile and brick factories 1 72 Miscellaneous , Total, processes relating to wood, stone, and glass . 3 312 412 48,512 2 200 20 7,819 437 56,843 Processes connected with skins and hides: Leather factories 1 3 3,470 492 12 307 2 5,688 17,925 265 2 9 160 475 15 319 2 9,318 18,892 265 Tanneries Miscellaaieous Total, processes connected with slrins and hides. 4 3,962 321 23,878 11 635 336 28,475 Miscellaneous: Arrtls and s^mmuTiition 6 7 24,996 4,733 6 7 3 2 1,775 3 3 85 6 2 5 1 2 125 23 3 6 1 1 2 3 7 1 26 12 Arsenals 4,733 Brush works 3 819 Canal foundries and workshops 2 614 614 Cotton ginning, clean- ing and pressing 1,409 3 2 66 108,292 594 140 16,683 2 768 364 24, 263 133,323 594 Dispatch box manu- factories Jllectrical engineering workshops 1 17 6 SO 3,728 691 190 Engineering work- shops 2 237 J'orage presses. .... '591 ■Galvanizing works 2 4 244 1,228 244 <3as works 1 1 145 3,117 1,373 3,117 <3un carriage factory. . Jewelry workshops 2 125 23 3 6 479 25,504 6,290 354 7S3 Jute presses 25,504 6,290 354 Keroserie tinning and packing works Manure works ; i Match factories 1 Mathematical instru- ment factory 1 2 353 175 2,777 Mechanical transport repair workshop Minis 175 2 777 Motor works 3 470 '470 Municipal wo-kshops. 7 1.161 Postal workshop 1 '155 '155 Rope works i? 3,228 1 1 50 1 9 11 1,547 3,035 4,775 5,085 Rubber works INDIA. 121 British India. Indian States. Class of establishments. Owned by Government and local bodies. • Owned by companies or individuals. Owned by State dar- bars. Owned by companies or individuals. Total. Num- ber. Per- sons. Num- ber. Persons. Num- ber. Per- sons. Num- ber. Per- sons. Num- ber. Persons. Miscellaneous— Contd. Sappers' and mineis' workshop 1 134 1 14 2 1 2 1 10 47 134 Silk filatures 11 S88 3 2,427 3,015 329 Stores factories 2 329 Surgical instrument factory 1 180 180 Telegraph works 2 790 790 TTmbreUa factory 1 58 58 Waterworks 10 3 93i 180 931 Miscellaneous (not enumerated above).. 32 2,579 1 150 11 3,785 6,694 Total, miscellane- ous 71 44,959 1,714 168,563 5 1,155 398 37,057 2,f88' 251 734 Grand total 161 114,432 4,119 1,045,835 17 4,312 530 73,831 4,827 1,238,410 _NoTE.— Figures in some cases do not agree with those published in the "Statistics of British India, vol. I — Commercial, 9th issue," because of the inclusion of revised figures subsequently received. . The total number of gins In the cotton ginning factories in British India and in the Indian States in 1917 were, so far as information could be proourei 31,883 and 8,653, respectively, of which 23,164 in British India and 7,048 in the Indian States were reported to be at work during the ginning season 1918-19. A total of 4,827 factories, employing 1,238,410 persons, represents a very considerable industrial development. It is regretted that it is necessary to offer particulars covering a year so far back as 1917, but as these data were published in 1920 they represent the latest details obtainable. For purposes of comparison hereafter it may be interesting to add that in 1917 the number of factories inspected under the factory act was 3,241, with 1,076,201 employees. In 1918 this had become 3,318 factories, with an average of 1,123,072 em- ployees, and these returns are the most recent available, being pub- lished in the " Statistical Abstract Relating to British India " issued in 1921. INDUSTRIES IN COURSE OF DEVELOPMENT, The above statements cover only the industries that have actually been developed, representing the concrete accomplishment in this territory, but the statement is not complete without reference to those things that are in course of development. As has been pointed out, the Government and other interests are devoting a great deal of energy to new projects. It will require some years for the new organ- ization made up of the provincial departments of industries and the various committees to show the full effect of the plan, but the plan is at work and it would be a serious error to estimate the future of industry in India entirely from what can be seen from statistics show- ing its past achievements. India is profoundly impressed by what it has observed of the effects of Government guidance for industry in Japan and to a greater or less degree will be guided by the example of that most successful Asiatic country, where the problems that have been faced bear a certain resemblance to those that India still has to meet. " The success of Japan in its war with Russia appealed strongly to the imagination of educated Indians, who saw in Japanese progress 122 ASIATIC MARKETS FOR INDUSTRIAL MACHINERY. and efficiency an example of what could be accomplished by an eastern nation. It was to the policy of the Japanese Government that the great industrial advance of Japan was ascribed by them."" India IS now leaning heavily on its Government for guidance in matters relating to industrial development, and the Government is making a great effort to respond. The directions in tchich this effort is bein^ exerted are far too numerous to repeat here, but a few examples will ' be considered. HYDROELECTRIC DEVELOPMENT. The following table is a summary of the water-power development that had been attained in India up to 1919, the statement of existing hydroelectric plants being abstracted from the " Preliminary Report on the Water-Power Resources of India": Provinces. TTndertakiiig. Capacity installed in electric horse- power. Proposed ultimate capacity in elec- tric horse- power. Bengal. , Bombay Presidency Do Do Burma Do Kashmir Do Madras Mysore Northwest Frontier Province Fatiala Punjab T)o'.v^v".'"".'.'.'.'.'.'.'.'.'. Travancore United Provinces Do Darjceling mijnicipallty BhatRhar dim. . . ; Ooka^ Water Power Co Tata Hydroelectric Power Supply Co Burma ruby mines Kanbank wolfram mines Jammu Jhelum Uovernment cordite &ctory Cauvery Falls Malakhand Fatiala , Aniritsar New Edgerton woolen mills Simla municipality Puli vasal Ganges liead works Mussoorie-Delvia 6?; 600 3,000 67,000 960 750 L3W 20,000 1,350 32,0)0 TOO 2,000 3,000 2, MX) There were three additional enterprises of importance under con- struction. The Andhara Valley Power Supply Co. (Ltd.) (associated with the Tata Hydroelectric Supply Co. (Ltd.) project was credited with the installation of 68,000 estimated horsepower, and plans for an ultimate capacity of 90,000 estimated horsepower. A certain American manufacturer has supplied six 15,000-horsepower water wheels for this plant. The Burma Mines (Ltd.) were installing 9,750 horsepower out of an ultimate capacity of 13,400 horsepower. Bum & Co. were at work on a large undertaking at Laglap-ya in Sikkim, regarding which details were not available. In the neighboring countries, Afghanistan and Nepal, there are two more water-power plants. A very large percentage of the generating and other machinery in the above plants is of American manufacture, and the superiority of American equipment of this sort, in its hydraulic, electrical, and transmission aspects, is recognized. In order to secure adequate data regarding the possibilities of further hydroelectric development the Government has arranged »• " Eeport of Indian Industrial Commission," 1918-1918, p. 74. INDIA. 123 for a hydroelectric survey, and in its report submitted in May, 1919, it indicated that, including plants already installed and plarces under consideration, there were, all told, more than 130 actual sites to which attention has been drawn involving a total of about 1,774,000 horse- power actually in sight. " The total is of course vastly below the actual available power which the final results of the survey will dis- close." There are vast possibilities in the way of hydroelectric development that the survey had not been able to include at the time the above report was prepared. One interesting side light included in the first report of the above survey was a rough census of the power of all kinds actually beijig used in India in 1919 ; in a number of items a certain amount of ap- proximation has been necessary, notwithstanding which the follow- ing table is of interest : Provinces. Brake horse- power. Provinces. Bral:e horse- power. 22,550 25,318 176,200 2,325 32,872 750,000 17,750 32,773 39,568 Bengal (exclusive of Calcutta area) Madras Presidency a!w Bihar (exclusive of coal mines, etc.) Bombay Presidency '- United Provinces 38,548 Total Burma (exclusive of rice mills, sawmills, etc) 1,153,638 > Undetermined. It should be added that the Tata interests are actually construct- ing a third water-power plant to supply Bombay at Nillamulla, which in 1919 was thought to be suitable for a total capacity of 75,000 horsepower. Owing to disturbed conditions in the money and ma- terial markets it was understood that the machinery for this plant had not been ordered up to 1922. They also have made surveys for a plant to develop about 300,000 horsepower in the Koyna Valley about 115 miles south of Bombay city, which would involve a con- siderably longer transmission line. Machinery for this will prob- ably be purchased in 1923. Also, it would appear that with their other plants the Tata interests can furnish Bombay with 232,000 horsepower and presumably would have difficulty in selling this ad- ditional 300,000 horsepower there. It has therefore been planned to use this power for manufacturing aluminum, calcium carbide, ferro- alloys, caustic soda, abrasives, etc., and probably this would involve the building of a new city and the development of a new port, prob- ably somewhere on the Jaigarh Peninsula. This project wiU possibly cost about $20,000,000, which with other developments would run the cost up to $80,000,000 or more. The project has been advanced to the point where the Tata interests have secured a three-year option on the site, but as the market conditions have not been suitable for the launching of such a project recently it is probable that it will be carried along some little time further before actual development. The project is in strong hands and may be expected to materialize.^* " For details regarding the electrical characteristics and the equipment of these plants, see report on " Jllectrical Goods in British India and Ceylon," by E. A. Lundguist, Special Agents Series No. 213. 124 ASIATIC MARKETS FOR INIJUSTEIAL MACHINERY. SUGAR. PROBLEMS OF PRODUCTION. Sugar production in India is a very serious and complex problem, and this, like the water-power problem, illustrates the way in which the Government is devoting its energies to the development of the country — a method that is being applied to other problems also. The following account suggests the development to be expected in other directions. India was probably, the original home of sugar cane and has a larger acreage under this crop than any other country in the world, hating on the average, for the nine years ended 1910, devoted 2,718,000 acres to cane. But the yield of sugar per acre devoted to cane has been very unsatisfactory, as shown in the following com- parative statement : Long tons per acre, Hawaii 4. 91 Oava 3. 84 Australia 2. 43 Peru 2.23 Cuba ■ — 2. 19 Fiji Islands 2.04 Porto Kico 2. 02 Spain 1. 54 Mauritius 1. 53 Long tons per acre. British Guiana 1. 46 Egypt 1. 36 Trinidad and Tobago 1. 23 Louisiana 1. 17 Barbados 1. 11 Argentina 1. 03 India , . 905 Philippines . 86 Japan and Formosa . 84 Because of the fact that the large population of India has a con- siderable appetite for sugar, even though the per capita consump- tion is low, the demand is enormous and the production is inade- quate, with the result that India regularly imports a large amount, although there Avas a time when India exported sugar. The amount of the imports during the four pre-war years 1910-1914 averaged 723,915 tons, valued at 127,100,000 rupees, and during the four war years 1914^1918 averaged 531,713 tons, valued at 134,800,000 rupees, the high price evidently restricting demand unless this decrease may also represent the work of the food controllers. It is A'ery evident that the economic condition of India would be very greatly improved if it were possible to improve production so as to eliminate imports or possibly develop exports, and this would probably involve a 35 per cent increase or a yield per acre a little above that secured in Louisiana, though still far below that" of the other leading sugar- producing countries of the world. In view of the climatic ad- vantages of India and the abundant labor, it would seem to be per- fectly possible to do this. The agricultural and manufacturing methods used in India are very primitive, and it would seem that India .could easily be made seli-supporting in this respect. For ex- ample, " from cane with the same sugar content factories in Java recover 9.75 per cent of marketable sugar against an average of 6.85 per cent in Indian factories." In other Avords, if all Indian cane could be handled in mills equal to the standards followed in Java it would be possible to eliminate the importation of 125,000,000 rupees' worth of sugar per year. As a consequence, the Government of India appointed the Sugar Committee in October, 1919, to investigate and report upon problems connected with the production of sugar in India. This committee has spent nearly a year in travel, visiting every Province, including INDIA. 125 nearly a month in Java — all of which involved traveling more than 38,000 miles. The members have studied the problem from all angles and presented a report of about 500 pages. They plan to do as much as possible for sugar in India and offer specific suggestions regard- ing improved agricultural methods, Government assistance, educa- tional facilities, and improved manufacture. As indicated above, industry should develop rapidly in India if supported strongly by the Government, as indicated here. SUGAR MANUFACTURE IN INDIA. The Sugar Committee found 22 factories in India or, if refineries arc included, 33 (in Java there are nearly 200 large, modern plants). The report does not indicate the capacity of these Indian plants, but it is stated that no mill has more than 11 rollers (a crusher and three 3-rolIer mills) while one factory had only a crusher and one 3-roller mill. Most of the factories have a crusher and two 3-roller mills. The plants seem to represent poor engineering and design and, despite the fact that the cane carries 16 to 18 per cent of fiber, purchase a great deal of supplementary fuel. Only one factory in India avoids this; one purchased a weight of only 0.67 per cent of the cane crushed, another 2.3 per cent, a third 3.3 per cent. The average for the remaining factories was 4.31 per cent on the cane crushed or ^3 per cent on the sugar produced. Of the fuel so con- sumed, 48 per cent was wood and 52 per cent coal. The following excerpt is from the "Eeport of the Indian Sugar Committee," 1920, pages 324 to 327 : As a rule, the factories in India are well equipped with machinery for making sugar, but the arrangement is frequently faulty. In many plants the machinery is not well balanced. One part of it has a greater capacity than another, which results in low efficiency and diminished output. * * * An efficient factory should produce not more than 2.5 to 3 _per cent of molasses from cane as compared with 9.5 per cent of sugar. Most Indian factories turn out a much higher percentage of molasses than this. According to the returns we have received, only one produced less than 3 parts of molasses per 100 parts of c4ne ; five produced between 3 and 4 parts, six between 4 and 5 parts, and six more than 5 parts. We saw evidence of excessive acidity and fer- mentation in some of the factories we visited, resulting from undue inversion. Although, as a result of the absence of mechanical appliances for dealing with cane and juice, the disparity between the number of hands employed in Indian factories and in other parts of the world is especially marked in the milling department, it is also very noticeable in other branches of the factory operations. The returns that we have examined on this point show that only one factory employs, on an average, less than one hand for each 100 tons of cane dealt with during the season. The majority employ from one to three hands to each 100 tons of cane, though in a few cases the proportion is much h:gher than this. The modern factory in St. Kltts in the West Indies employs less than one hand to every 200 tons of cane worked up during the season. It employs only a little more than 400 hands to deal with 1.000 tons of cane a day, whilst some Indian factories employ as many hands or more to crush no more than from one-fourth to one-half of that amount. Even allowing for the comparative inefficiency and -also the cheapness of Indian labor it will therefore be seen that there is considerable scope for reduction of labor costs in India by the introduction of labor-saving appliances and also by more sys- tematic control. This makes it obvious that most of the cane produced in India is crushed in small mills, for the 22 plants mentioned above would scarcely be considered "factories" in any other of the important sugar-producing countries. Practically all of India's cane is, and long has been, crushed in mills of very small individual capacity. 126 ASIATIC MARKETS TOR INDUSTRIAL MACHINERY. Up to about 50 years ago the work was done in a charki, a bullock- driven mill operating on the principle of a mortar and pestle. This type is still found in some of the countries of Asia operating on vegetable oils if not on sugar, and surprising claims are made for its effectiveness. However, it is now rarely used on sugar in India, having been supplanted by a roller mill using wooden rollers. This type of mill is still found in some remote parts of the country, but has been largely superseded by mills with iron rollers, and these are now used all but universally all over the great cane-growing sections of India. The most common form is the 3-roller mill, although the less efficient 2- roller mill is still fairly common in some sections. The report quoted above says, on pages 276, 277, and 280 : i Experiments carried out on Government farms have sliown that a high ex- traction of juice can Jbe obtained b^ the best type of 3-roller mill when it is working properly. Indeed it is doubtful whether any type of mill could be evolved which would give a higher extraction of juice from a single crushing. But it is obvious that the better the extraction from a mill worked. by bullock power the heavier the strain on the bullocks. All the witnesses before us who had practical experience of the crushing of the cane crop by bullock mills laid great stress on this point and were agreed that the deterioration of the cattle in consequence of the heavy demands presented a serious obstacle to the introduction of better methods of cultivation. There can be no doubt that, if this deterioration cqulfl be expressed, in terms pf. money, the figure would be a very high one. To show what can be done under the best conditions — that is, ^-hen a 3-roller mill in proper order is worked by cattle of goOd quality — we give the following results which were obtained in the United Provinces from the medium indige- nous cane known as " Dikchan " : Type of mill. Maunds i of cane crushed per hour. Maunds of juice ex- pressed per 100 maunds of cane. Maunds of juice ex- pressed per 100 maunds of juice 3-rolIer iron builoclc mill with 8-inch roUers- . . j-(oller iron buUoclc Tnill with 6-inch rollers . 2.53 1.83 66.8 59.7 80.5 74.7 1 There are many kinds of "maunds," hut in this instance the maund equals 82f pounds. Such high efficiency as this can not, however, be obtained for any length of time by cultivators with their light and often underfed cattle. Our examina- tion of the megasse from numerous village mills made only too evident the loss of efficiency which results from the loosening of the mill in order to reduce the strain on the cattle and so to enable them to get through the crop. * * * We estimate that, over India as a whole, the cultivator obtains on an average not more than 55 parts of juice per 100 of cane. * » * It has, we think, been made clear in the preceding paragraphs that the de- velopment of the gur industry must proceed on two main lines. The first is the introduction of power crushing on a relatively small scale by mills of better design than the present 3-roller mill. Such mills would be driven either by oil or steam, and we consider that the most convenient unit would be a mill crush- ing 1 or 2 tons of cane an hour. * * * There is. In our view, no agricultural operation to whicli power-driven ma- chinery can be more effectively applied than for crushing cane. If increased outturns are to be secured, it is above all essential that improved methods of cultivation should be adopted. They can only be adopted to the extent that the number of cattle available and their condition permit. * * * One of the most pressing problems in Indian agriculture would be in a fair way toward solution if the bullocks could be relieved of two of the agricultural operations which make the heaviest demands on their strength — the crushing of cane and the threshing of the " rabi " crop. They are both' operations which can be carried out by power-driven machinery; and, in our opinion, the successful INDIA. 127 introduction of such machinery presents fewer difficulties than do most changes in the agricultural practice in India. Following the above paragraphs the report points out the diffi- culties that have been experienced in earning profits with the experi- mental plants that have been used. These very small mills arc neces- sary largely because the system of land tenure seems to %iake it impractical for a large mill to secure adequate supplies of cane. On the whole, it would appear that India may be expected to install a few large plants in certain sections of Assam and Burma where the necessary land can be secured, but for the large existing acreage ad- vancement will probably be in the direction of improvements upon the present bullock-driven mills and the boiling equipment used therewith. Among the improvements suggested is the addition of an extra pair of splitting rolls to the 3 -roller mill, making it into a 5-roller mill, and the development of special designs on these lines — one for a capacity of 1 ton of cane per hour (requiring probably 6 brake horsepower to drive) and one for a capacity of 2 tons of cane per hour. The Industrial Commission pointed out that by improving the extraction 10 per cent by methods such as the above and by increas- ing the yield of cane 20 per cent by the use of fertilizer and better cultivation India could be made self-supporting. All of this seems perfectly feasible, but will involve the use of possibly 200,000,000 rupees' worth of oil en^nes. In this connection it is interesting to add that it has been proposed to establish a corporation to manufacture in India the machinery needed for the sugar industry there, placing the works near the Tata steel plant in order to secure a favorable supply of raw materials. It has been suggested that this company be capitalized at 50,000,000 rupees (about $16,000,000) and arrange for technical guidance and cooperation with qualified sugar experts in Great Britain or the United States. KINDS OF INDUSTRIAL DEVELOPMENT ANTICIPATED. In the above discussion the methods followed in stimulating de- velopment in connection with hydroelectric projects and the sugar industry have been treated with a good deal of detail in order to illustrate the policies and methods employed and to show why India may be expected to develop. These problems are being approached with splendid spirit, and in India, at least, it is felt that the country will come to take its place as one of the important manufacturing countries of the world. The list of opportunities under consideration is a long one, as suggested by this incomplete list : Structural-steel fabricating. Machine-tool manufacture. Textile-machinery manufacture. Tea-machinery manufacture. Tea-lead manufacture. Railway-car building. Locomotive building. Mining machinery. Steel pipes and tubes. Galvanized sheets and other articles. Rivets, bolts, and nuts. Enameled ironware. Tin plate. Fire brick and silica brick. Sulphuric, nitric, and hydrochloric acid, ammonia, caustic soda. Dyes. Fertilizers. Leather and tanning materials. Shoes and harness. Portland cement. Paints. Varnishes. Soap. Paper manufacture. Glass production. 128 ASIATIC MARKETS FOR INDUSTRIAL MACHINERY. The list might be extended much further. Clearly India has started on an extensive program of industrialization, and consider- able progress has been made. The production of cotton goods, iron, steel, etc., has been shown, but that list is far from complete. In addition, there are many other large industries. There is lumbering in Burma ; Indian cement plants now produce more than Y5,000 tons annually; 57 soap factories produce more than 23,000 tons of soap each year; half a dozen paper mills produce about 13,000 tons per annum, etc. The Government is encouraging development, and it seems certain that important expansion is at hand. AMERICAN INTEREST IN MACHINERY TRADE OF INDIA. The volume of the machinery imports of India and the volume of American exports to India are shown on page 83, and it may be noted that the American share expanded from about $540,000 in 1914 to about $16,850,000 in '1921, and the participation rose from 1.8 per cent to 16.5 per cent. The participation of others in this trade is shown more fully in the table below. These data are taken from the customs returns as published by the Government of India and are very dependable, but they make the position of the United States appear a little worse than the facts justify, because transshipment cargo is credited to the last port of shipment, and American ma- chinery shipped via London, for example, is credited to the United Kingdom. It seems that impoi-tant quantities of this equipnEjent are so handled. '*' TOTAL VALUE OF MACHINERY AND MILLWORK IMPORTS INTO INDIA.i Countries of origin. 1913-14 1915-16 1916-17 1917-18 1918-19 1919-20 1920-21 United Kinedom. Other British ter- £5,596,301 25,031 £3, 616, 889 16,810 £2,943,995 16,598 £1,861,119 26,709 £2,192,304 31,295 £3,840,545 47,680 £16,780,199 80,373 Total British Empire 5,621,332 214 287,643 12,384 17 4,013 12,564 10,423 112, 170 15,846 3,633,699 1,245 2,199 627 11,813 24,461 2,962,393 4,339 390 1,887,828 12,598 2,223,799 13,018 3,888,225 53,688 16,-860,572 174,915 147,810 80 58,608 21,301 Switzerland Italy 9,848 19,242 22,&i3 13,645 34,780 13,386 27,491 21,902 51,873 152,075 4, 514 88,623 206,373 0,170 133,411 490,590 18,367 164,788 , 798, 198 10,071 60,900 2,531,968 38, 109 118,957 3,463,640 114,960 United States Total 6,076,600 3,882,306 3,297,380 2,579,292 3,238,240 8,652,879 21,004,032 PERCENTAGES FROM TWO PRINCIPAL COUNTRIES. 1 These figures exclude sowing machines, typewriters, agricultural machinery, and machinery for Gov- ernment railways and other departments. The pound was worth approximately »4.86 in 1914, but in 1915 to 1917 it stood at about $4.76, while in 1919, 1920, and 1921 it fluctuated a great deal and at times fell below J3.30. Although these returns are given in pounds they are originally ciSlected as rupees, the conversion being made into pounds at an arbitrary rate which at times diflered materially from the current bank rates, particularly m 1919. Clearly American machinery manufacturers have a very impor- tant interest in this market, and tlie tendency toward industrial ex- pansion described in the preceding pages of this report indicates INDIA. 129 that the value of this trade to Americans should grow rapidly dur- ing the coming years. Obviously Great Britain has been able to secure a greater proportion of this trade than the quality, price, or engineering merit of, its products would justify. It is very doubt- ful whether the British ratios for the earlier years could be equaled in any of the other markets of the world. It is worth noting that in India, one of the largest of colonial machinery purchasers, the German participation was less than 5 per cent. It would appear that Americans are in a position to be of particu- lar service in solving the engineering problems of India. This has already been shown in the work of American specialists in connec- tion with the steel, water power, petroleum, automotive, and other engineering problems ther-e. Also, one would conclude that Ameri- cans are especially well fitted to solve many of the other problems still unsolved there, such as the establishment of a cottonseed-oil industry or problems connected with the sugar industry and rail- way transportation. In fact, American engineering would demon- strate its superiority in most lines. It would seem that the present balance of trade would justify Americans in expecting a larger share of the Indian import trade, as in some recent years we have purchased from India more than six times as much as it has purchased from us; in the last eight years our excess of imports has totaled more than $485,000,000. Having purchased so liberally in the past, we have a certain claim for corresponding consideration for American products. The par- ticulars are shown in the following table of American-Indian trade : Years. iDlDOrtS to United States from India. Exports (rom United States to India. Excess of im- ports. 1914 $fi3,083,948 59,309,076 88,656,980 101,057,067 129,688,009 140,081,000 176,073,650 78,188,776 JIO, 378,806 15,709,580 23,891,754 33,599,396 40,392,458 67,505,528 99,827,517 56,769,898 152,705,142 43, .599, 496 62,765,226 67,457,671 89, 295, 551 1915 1916 1917 1918 1919 72,675,472 76,246,133 21,418,878 1920 1921 In this connection it may be added that throughout this entire period more than 85 per cent of the imports from India were ad- mitted to the United States free of all duty. The Pittman Act similarly justifies us in expecting consideration at the hands of Indian purchasers. But the factor of greatest interest to Americans is that the mar- kets of India have been absorbing from $12,000,000 to $30,000,000 worth of industrial machinery per year for a good many years and give promise of absorbing much larger quantities. To a large ex- tent these markets have been neglected — very badly neglected. • American machinery manufacturers should arrange for more ade- quate representation and better salesmanship in India. CONDITIONS AFFECTING DISTRIBUTION. In all of the foregoing discussion the machinery market of India has been considered as a whole, and to a great extent this is neces- 130 ASIATIC MARKETS FOR INDUSTRIAL, MACHINERY. sary, because the customs returns in many instances are not sub- divided, but in reality India contains five distinct markets, which are a long distance apart and differ greatly in many respects. Bom- bay is 1,223 miles from Calcutta by railway, and the best trains require 46 hours for the trip — a distance that compares with that between New York and Kansas City in distance but between New York and Denver as to time. Obviously a man selling' steam engines in Denver could have but little influence on engine sales in New York, and the situation as between Calcutta and Bombay is similar. Correspondingly, Madras is 1,032 miles, or 42 hours, from Calcutta — a distance that compares with tliat from New York to St. Louis and in time with that between New York and points in western Nebraska. From Madras to Bombay is 794 miles and 36 hours, comparing with the distance from New York to Indianapolis in miles or from New York to Omaha in time. From Madras to Colombo is also a rail journey of about 36 hours, but owing to de- lays the rail journey from Calcutta to Colombo is 88 hours — ^ days 16 hours — corresponding roughly to the trip from New York to the Grand Canyon or Salt Lake City. Rangoon and Burma are separated from India by mountains that, as yet, have prevented the railways from opening a through connection, so that one goes from Calcutta to Rangoon by steamer, a distance of 776 miles, cor- responding to that between New York and Charleston, S. C., in about three days, of one day less than from New York to Key West. From Rangoon to Colombo is 1,256 miles, much the same as the distance from Calcutta to Colombo. From Rangoon to Singa- pore is 1,164 miles, corresponding to the distance from New York to Habana. These distances, together with the comparative map published at the beginning of this section, will perhaps convey an impression of the size of this territory and the sales problems in- volved. As a territory Burma extends about 1,200 miles from north to south, a distance similar to that from New York to St. Louis, and Rangoon is the market for all of it. The fifth market of India is Karachi, a city on the seashore but in a desert — a city where it seldom rains and where the climate is particularly favorable. Karachi has railway connection with points on the Baluchistan frontier and supplies the more productive districts in the Punjab. In a sense it is also the port through which to reach Kashmir, Peshawar, and the whole northwest. This is the territory it serves, for the Sind Desert lies between Karachi and India proper, and to travel by rail from Bombay invohes a circuitous, dirty, and un- pleasant trip of 992 miles in about 48 hours. As a consequence one usually travels more directly by boat in about 40 hours. Unfortu- nately there are usually only two boats per week. The territory served from each of these cities is more or le&s obvious. Rangoon supplies the territory reached by the railways and other transportation facilities of Burma. Calcutta supplies the Brahmaputra Valley and the Ganges Valley up to perhaps Delhi; it also extends its influence down the eastern shore of the peninsula. Madras serves the central part of the peninsula, competing with Calcutta on the north, Colombo on the south, and Bombay on the west. Bombay supplies the western part of the peninsula, and its influence is felt over toward Madras and up toward Delhi and Lahore. Karachi extends its influence up the railway and through INDIA. 131 the Punjab, supplying the northwestern part of the country and. exerting an influence toward Lahore and possibly beyond, toward Delhi. Distances are great in this part of the world, where life is often somewhat primitive. From Penang to Madras or Calcutta or Ran- goon is a longer voyage in time than from New York to Liverpool or from New York to Galveston. These matters are emphasized in this way because experience shows that the impressions gained from small maps published by steamship companies or in atlases and school geographies are de- ceptive; moreover, the distances are more serious in Asia because the railways and steamships operate more slowly and less frequently. But from what has just been noted it is obvious that a manufacturer can not expect a representative situated only in Calcutta to have any influence whatever on business in Burma, Madras, Bombay, or beyond, and a merchant asking for an agency agreement covering all of India should be asked to demonstrate his ability to furnish adequate representation in all of these markets. In fact, he should also be able to cover Colombo, as parts of southern India are reached from there. These different markets should also be studied with regard to their differing demands. It has already been pointed out that, ordinarily, cotton-mill machinery will be used in Bombay, and jute- mill machinery in Calcutta. Similarly, coal-mining equipment will go to Calcutta and sawmill, rice-mill, and oil-well equipment will go to Rangoon. There are many distinctions of this sort. As there are so many different kinds of industrial machinery, and as each has its own peculiar market problems, it is not practical to discuss each in detail in this report. Also, to a large extent, it is necessary to rely upon the customs returns for the information required, and these are seldom satisfactorily complete. Furthermore, the classifications differ from one country to another, making comparison very difficult. For this reason it has seemed necessary to be content with merely publishing at the end of this chapter the customs returns covering the machinery classifications as issued by the Gov- ernments of India, Great Britain, Japan, and the United States. It is felt that with these data any manufacturer can make a complete statistical survey regarding the market for his products in India, so far as the data available make this possible. The returns here- with presented are the most recent available at the time this report is published. An effort has been made to have this statement com- plete and up to date. It should be explained, with regard to these returns, that where shipments are credited to Bengal it practically means Calcutta, for the amount of machinery shipped through the smaller ports i? comparatively of little importance, and even if shipments were made to, say, Chittagong, the market is still Calcutta, for that is where the dealers all have their offices. Similarly, the returns for Bombay technically include imports into some of the smaller cities in the Bombay presidency, but practically all of the machinery goes to the city of Bombay, and that ie where the dealers are. Most of the shipments for Madras pass through the city of Madras. These districts are all densely populated and supply large areas. The re- turns for Sind refer aiimost entirely to imports at Karachi, which. 132 ASIATIC MARKETS FOR INDUSTRIAL MACHINERY. as has been stated, lies in a desert, and the machinery is then sent several hundred miles, upcountry over a dusty railway, where the summer temperatures often exceed 110° F. Most of this eguipment is distributed in the Punjab. Imports into Burma j)ractically all go to Eangoon, although there are a number of other harbors along the coast. These goods- are distributed northward by rail and south- ward by coasting vessels. In making a study based on these tables it should be remembered that Bombay and Karachi served as bases for the military operations in Mesopotamia and Persia and those against the Afghans and fron- tier tribes, and that this fact influenced private as well as Govern- ment purchases in a very marked degree. Also these returns are a definite. record of the past, but do not measure the future very satis- factorily. India is progressing very rapidly, and in previous pages an effort has been made to show what sort of development is to be expected. In planning a sales campaign in these markets allowance should be made for orders placed in the United Kingdom. The mines, private railways, and other large companies often buy in London, although there is a tendency to place more and more busi- ness in India. With these thoughts in mind it is hoped that it will be possible to estimate the value of each of these markets with rea- sonable accuracy. STEAM-BOILER LAWS, There is a great deal in the engineering now found in India that probably would not meet the approval of American engineers, although it does represent British practice. For example, rope drives are far more common than in the United States. Corliss engines are commonly equipped with direct-connected feed, circulating, and air pumps, according to circumstances, and frequently the flywheels are provid.ed with barring engines. In other ways and' with other classes of machinery the designs, equipment, and methods are British, but most of these matters are purely questions of convenience. But there are matters in connection with which it is necessary to meet the local requirements, as in electrical installations, where it is neces- sary to pass the local inspection, which is very commonly based on British frequencies and voltages as distinguished from the corre- sponding American standards. There is a tendency in the direction of demanding that important installations conform to the British standard. However, electrical development has not yet progressed very far in India, and, apart from a few large water-power plants, there are no important transmission lines. Installations to date represent an assortment of isolated plants or small municipal plants of a great variety of electrical characteristics. The Calcutta Electric Supply Corporation still furnishes direct current throughout the municipality. But in connection with steam boilers it is necessary to comply with the local laws governing their manufacture, installation, and opera- tion, and each Province has its own particular set of rules, which differ from each other and from the codes used in Europe. The Department of Commerce, Washii%ton. has on file the rules for most of these territories, but some are now out of print. Also a committee is preparing a new code that is planned to cover all of INDIA. 133 India and supersede the several existing provincial codes. It is not yet possible to say when this code will be ready or what it will con- tain, but it seems safe to say that it will have the early attention of the authorities. In general the old codes of the various Provinces follow the British rules. They require a weighted type of safety valve on all sta- tionary types of boilers, which is unfortunate, as the operatives tie bricks on the weights or wire the lever so as to hold the valve on the seat. The spring-loaded valve properly locked and sealed in place seems a far better design, but can not be used, as it is not approved. Meanwhile explosions continue. Similarly, the quad- ruple-riveted joint is not yet recognized and should not be used on boilers for India. The writer encountered instances where impor- tant installations were required to reduce the working pressure 15 pounds for this reason. There are many other details that should be watched in order to be sure that the boiler laws are not violated. IMPORT DUTIES. The paragraphs of the British Indian customs tariff applying to machinery are quoted below in full. In a general way, the situation may be summed up by the following statement : Machinery generally pays 2^ per cent, railway plant and rolling stock 10 per cent, and machinery not power driven 15 per cent. MACHINERY (21 PER CENT DTJTT). r No. 81. Machinery, namely, prime movers and component parts thereof, In- cluding boilers and component parts thereof; also including locomotives and portable engines, steam rollers, fire engines, motor trupks designed for purposes other than agriculture, and other machines in which the prime mover is not separable from the operative parts. Machinery (and component parts thereof), meaning machines or sets of machines to be worked by electric, steam, water, fire, or other power not being manual or animal labor, or which, before being brought into use, require to be fixed with reference to other moving parts ; and including belting of all materials for driving machinery. Provided that the term does not include tools and implements to be worked by manual or animal labor, and provided also that only such articles shall be admitted as component parts of machinery as are indispensable for the work- ing of the machinery and are, owing to their shape or to other special quality, not adapted, for any other purpose. Note. — ^This entry includes machinery and component parts thereof made of substances other than metal. RAILWAY PLANT AND BOLLING STOCK (10 PEE CENT DUTY). No. 95. Railway material for permanent " way and rolling stock, namely, cylinders, girders, and other material for bridges, rails, sleepers, bearings and fish plates, fishbolts, chairs, spikes, crossings, sleeper fastenings, switches, inter- locking apparatus, brake gear, couplings and springs, signals, turntables, weighbridges, engines, tenders, carriages, wagons, traversers, trolleys, trucks, and component parts thereof; also the following articles when imported by or under the orders of a railway company, namely, cranes, water cranes, water tanks, and standards, wire, and other materials for fencing. Provided that for the purpose of this entry " railway " means a line of railway subject to the provisions of the Indian Railways Act, 1890, and includes a railway constructed in a State in India and also such tramways as the Governor General in Council may, by notification in the Gazette of India, specifically Include therein. 110291°— 22 ^10 134 ASIATIC MARKETS FOE INDUSTEIAL, MACHINEKY. Provided also that only such articles shall be admitted as component parts of railway material as are indispensable for the working of railways and are, owing to their shape or to other special quality, not adapted for any other purpose. MACHINERY (15 PER CENT DUTY). No. 82. Machinery and component parts thereof, meaning machines or parts of machines to be worked by manual or animal labor, not otherwise specified. No. 118. Packing— engine and boiler— all sorts, excluding packing forming component part of any article included in Nos. 81 and 95. There has been a marked tendency in British India toward advance of the import duties on all articles, including machinery. Thus far (1922) there has been no discrimination in favor of British machin- ery, although the subject of imperial preference has been actively discussed for some years and has been the subject of special inquiry by the Indian Fiscal Commission. Serious discrimination along these lines is not anticipated ; Americans will find it rather in the opera- tions of the India Office in connection with Government purchases and in the attitude of the British toward alien sellers. SIZE AND WEIGHT OF PACKAGES. In the earlier section of this report attention has been called to the need of keeping the size and weight of the packages in a con- signment within reasonable limits, and especial attention has been drawn to the difficulties met in landing heavy cargo at Calcutta. Conditions in the other cities are worse rather than better. The mere delivery of a heavy or bulky package becomes very expensive. If transshipment is involved this expense multiplies very rapidly, as shown by the lift scales mentioned in those pages. If a package is to be delivered over one of the railways, this subject needs further consideration, as the railways in India are built on four different gauges arnd the maximum size of package that can be handled varies correspondingly as shown in the following table of maximum sizes : Items. Gauge. 5 feet 6 inches. 2 feet 6 inches. Width Height Length (estimate) Weight (estimate) Fl. in. 10 8 7 3 19 Tons. 19 Ft. in. 8 8 7 6 Tons. 14 Ft. in. 7 8 7 i Tom. The matter of length is dependent upon a variety of factors. There are special cars that can carry unusual weights, but generally speak- ing it will be found that complications will develop whenever the above limits are exceeded. Unfortunately, corresponding data apply- ing to the 2-foot railways are not available. In cases where it is necessary to rely upon other methods than the railways for the delivery of machinery, it is very much more desirable that the weights be limited as much as possible. On the INDIA. J. 3 5 roads it is necessary to rely upon bullock carts and laborers and carts. Animals and men are all deficient in strength, and the roads are often poor. When delivery can be made by water the boats are often light and weak, and there is a good deal of risk involved in landing such paclcages from these small craft at points where the facilities are poor. REPRESENTATION. In each of the principal machinery markets of India, namely, Calcutta, Bombay, Madras, Eangoon, and Karachi, tlaere are im- porting firms that act as machinery dealers. In some instances these firms are native, and in others they are European. In Calcutta and Bombay some of these firms are large and strong and employ com- petent engineers on their staffs. But American manufacturers will probably find it difficult to obtain satisfactory i-epresentatives unless they succeed in concluding arrangements with one of the very few American companies established there. It will be found that the native and European firms, even if they employ trained engineers, have no adequate appreciation of American mechanical cquiijmcnt or the ways in which it should be used. American manufacturers will find that their representatives in India should be of the high- est possible standard, and whenever practicable manufacturers should maintain a competent employee in the territory. When it becomes necessary to rely upon the existing importing firms and their present organization, manufacturers can secure a great deal of information from the files of the Department of Com- merce in Washington, where a rather complete collection of data may be examined, though it is scarcely practicable to distribute this information by mail. Some of these firms are large, others are small, many are old and well established. Each has 'its own particular bent, and care should be exercised in appointing agents in order to secure the most effective representation possible in each district and to establish proper boundaries for the district. Wlienever no better method is available, the Department of Commerce is prepared to send lists of dealers by mail, but this method has somewhat narrow limi- tations. Whenever circumstances allow, the best results will probably be secured through the American firms. In other cases probably one should try to arrange to have an employee taken into the territory by the agent. When such a man is sent to India he should be of a decidedly superior type. His most important qualification should be that he has the implicit confidence of the manufacturer, so that aU concerned will be assured that full reliance will be placed upon his reports. He must have a personality that will assure his con- tinuance as persona grata with the British and Indian community with which he will live. He must be fully qualified and have a thor- ough knowledge of the machinery he is to offer and its 4ises, and, so far as possible, should be familiar with competitive material from European sources and the ways in which it is employed. It is also desirable that he be well posted on general engineering subjects and able to controvert detractors of American products. The best man available will find the situation a real test of his abilities, and prob- ably the opportunities will appeal to his ambitions. 136 ASIATIC MARKETS FOB INDUSTRIAL MACHINERY. Generally speaking, the importing firms will be found to have good financial standing and no difficulty will be experienced on the score of credits or terms of payment if the usual care is taken and the usual arrangements made. ADVERTISING. It has been pointed out elsewhere that India has more than 200 different languages and overwhelming illiteracy. The result is that English is the language of commerce, and ordinarily those interested in factory machinery will have an adequate knowledge of English. On the other hand there are very few competent engineers in India, and most Americans would be disappointed in their engineering ac- complishments. For these reasons newspaper advertising will prove of more value than elsewhere if a well-conceived campaign is pur- sued Probably the composition of these advertisements should be left to some one in India, familiar with conditions there. In addi- tion to the newspapers there are a number of commercial, industrial, and trade periodicals that can be employed. Agents in the country should be equipped with a liberal supply of catalogues, but it was noticed by the writer that literature mailed in from abroad is largely wasted. MERCHANDISE MARKS ACT. Goods having a counterfeit trade-mark are not admitted to India. 'J'he amplification and interpretation of this idea sometimes leads to embarrassment and fines for persons handling American machinery, for it is held that commodities marked with words in the English language will be presumed to have come from the United Kingdom unless there is a clear marjj indicating some other origru. As prac- tically all American machinery bears some mark in the English: language it will also require a mark indicating the country of origin. While this mark may have a variety of forms it will probably be best to use the expression " Made in U. S. A." " Made in Boston " would not suffice, as there is a Boston in England. TTie act also pro- vides that every application of the name or trade-mark must be ac- companied by a definite indication that the goods have been made beyond the limits of the United Kingdom and British India, and this indication is to be in letters as large and conspicuous as any letter in the name or trade-mark. This rule is often very disconcerting. For instance, watermarked paper made in the United States must have the watermark also show " Made in U. S. A." in large letters on each sheet marked if it is to be shipped to India. This may introduce complications if, in cutting, the watermark is not entirely on the sheet. Another rather difficult article is a spark plug. As ordinarily manufactured these often bear such a mark as " Pat. 41144." The article is so small as to make fur- ther marking awkward. But as the above is evidently from the Eng- lish language and as the article was made outside of India and the United Kingdom, it is necessary to indicate the country of origin, and unless it is also marked " Made in U. S. A." there is a strong proba- bility that it will be confiscated or the importer fined. An outboard bearmg pedestal for a steam engine or other unit arrives at the cus- toms as a separate package and may bear the maker's brand or trade INDIA. 137 name. Unless it also indicates " Made in U. S. A." in letters of ap- proved size the importer may be fined, even though this indication of origin may be on the base casting and the two would be very closely associated on the assembled unit. The matter has become so much involved that the Government of India has issued a " Merchandise Marks Manual " covering the whole subject, a copy of which is on file in the division of foreign tariffs, Department of Commerce, Washington, D. C. The table below shows the number of instances in which goods have been detained by the officials under the authority of the above act. The first column may be considered a measure of the dishonesty detected and indicates how important it is to take advantage of the trade-mark registration offered, inadequate though it may be. The second column, in a sense, measures the instances where importers are annoyed because of carelessness on the part of a shipper. The "Total" column under "Number of detentions" indicates that the act is enforced rigorously and suggests that importers are annoyed needlessly in many instances and thereby emphasizes the reality of the need for being punctilious about observing these rules. Number of detentions. Cases where detention was fol- lowed— Years. Counter- feit trade- marks or false trade de- scrip- tions. Nonde- scription or false descrip- tion of origin. Un- stamped or insuf- ficiently stamped piece goods. Total. By con- fiscation. By release. With fine. Without fine. igiCMl J.. 680 506 481 794 388 196 442 192 389 245 1,159 1,152 1,580 1,622 553 1,705 1,668 2,071 2.213 1,953 304 246 285 385 258 290 828 647 610 807 2,143 1,904 2,346 2,801 1,199 2,190 2,938 2,810 3,212 3,005 6 2 1 1,100 1,022 1,445 1,634 614 1,01.-, 1, 776 1,649 2,001 2,060 1,037 1911-12 1912-13 1910, 1013, and 1915 are fiscal years ended June 30; the others are calendar years. INDIA. 149 191S Number. Dollars. 1920 Number. Dollars. 1921 Number. Dollars, AIr.compressiiig machinery Brewers' machinery Concrete mixers C!ottongIns Elevators and elevator machinery.... Electric locomotives Stationary gas engines Gasdliue^n^es: Autoittwile Marine.I Stationary Traction.. Kerosene engines....... Steam engines: Locomotives Marine Stationary Traction , All other engines Bmlers , All other parts of engines Excavating machinery Flour and grist mill madiinery Power laundry mactiinery liathes Other machine tools Sharpening and grinding machines . . All itomohile Marine 8 9 13 4 1 5,657 4,S60 8,110 1,731 8,062 11 1 255 Traction .., 8t*ain fli'ngi'np-i" RtfitinTiary , i 10,049 Boilers All otrhfir parts n' ft"gi"fts 1,281 7,602 59 1,855 3,924 501 10 16,374 2,107 lAthes...." ". 3,483 1,933 4,087 3,271 13,662 Other machine tools 1,289 Oil-well machinery ..T '. 6,956 Puzops and pumping machinery 14,579 4,052 810 7,788 6,930 Roadt-making ma'chinery .'. 95 108 Textile machinery 20 568 3,333 52,063 95 Sawmill machinery 232 343 All other machinery and parts of 41,302 22,084 Total. 118,054 150,232 50,673 1 1910, 1913, and 1915 are fiscal years ended June 30; the others are calendar years. According to the British Annual Statement, the exports of machinery Irom the United Kingdom to Ceylon have been : Classes. 1913 1914 1915 1916 1917 1918 1919 £107,124 62,833 £52,931 43,687 £15,276 £6,154 £2,473 £3,645 £6,899 TJn enumerated prime movers. . . 28,808 2,966 111,. 599 33,268 3,494 126,901 11,664 489 74,845 2,586 137 46,747 41,235 9,002 Allother 194,095 m, 392 110,297 TotaJi 364,052 238,010 168,649 169,817 89,371 63,115 167,433 1 This total tnclades sewing machines, typewriters, agricultural machinery, etc. Another publication, the British Statistical Abstract for Colonies, Dominions, etc.. No. 53, page 84, gives the following as the total amounts of machinery imported from the United Kingdom into 162 ASIATIC MARKETS FOB INDUSTKIAL, MACHINEKY, Ceylon. It is evident that different classes of goods are included, since marked discrepancies exist : 1901 ^ £98, 563 1902 63, 300 1908 7T, 121 1904 73, 687 1905 53, 764 1906 76, 301 1907 83, 010 1908 93, 361 1909 ^ 1. 121, 685 The pound may be taken as equal to approximately $4.86 United States currency, or 15 rupees Ceylon currency, throughout this period. In 1920 the form in which British returns were published was changed. The revised figures are shown below; these returns ap- pear to omit locomotives and some other items included in the earlier returns : 1910 £148,622 1911 183, 306 1912 234, 710 1913 293, 717 1914 186, 560 1915 146, 014 1916 205, 217 1917 153, 070 Classes. 1913 1919 1920 Tons. Value. Tons. Value. Tons. Number. Value. 46 v^ ^ £6,213 494 £41,325 228 389 34 80 21,949 37,095 TJnenumerated prime movers. . . Machinery, not elsewhere spec- ified 1,327 2,738 £62,833 131,255 100 834 9,002 72,204 389 1,369 52,733 161,720 Machinery parts, not elsewhere Special Agents Series No. 215.> 8° — 4° 98' 100" 102° 104° 106° 110291°— 22. (Face p. 163.) FIG. 22— MAP OF FEDERATED MALAY STATES. With outline map of Indiana and Ohiio, on same scale. MALAY PENINSULA. OUTLINE OF DEVELOPMENT. The map opposite this page shows the general size and shape of the Malay Peninsula. South of the Siam boundary the entire area is under British control. It is interesting to remember that although the British occupied Penang in 1786 and Singapore in 1819 they did not control the remainder of the territory and it was practically all jungle and very badly misgoverned as late as 1874. In that year the British intervened in, the aflfairs of the Malay Stated, and since then conditions have improved greatly. Previously the virgin jungle was unmolested, and the Malay population of about 300,000 lived in crude wooden huts with roofs of palm thatch. These settlements were always on the bank of a stream, and water was the only high- way. In the entire territory there was but one road, and that was only 12 miles long. The only cultivation of any consequence at all was a small rice-producing section in the extreme northwest, in Kedah. Within the lifetime of the present generation of business men this entire territory of most valuable land was given over to the most extreme barbarism, and within a short half century it has developed into a peaceful and prosperous territory of great produc- tiveness and is one of the most important tin-prodUcilig sections of the world as well as of the highest importance as a producer of rub- ber. The jungle is rapidly giving way to civilization, and great progress is to be expected during the next few years. The jirogress already made is indicated in the following paragraphs. GEOGRAPHICAL DIVISIONS AND POLITICAL ORGANIZATION. South of the Siam boundary are the " Straits Settlements," the "Federated Malay States," and the " Non-Federated Malay States," and it is necessary to distinguish clearly between these if one is to interpret trade statistics accurately. In various ways and at different times the British secured possession of Singapore, Penang, Malacca, Bindings, and Province Wellesley. Each of these is an isolated ter- ritory or settlement and in size might be compared with the District of Columbia. They were little more than trading posts at first, but as they were British soil they were pro vijded Tpith a government, a.nd it has been found convenient for administrative purposes to combine with them the other British settlements on the island of Labuan off the north coast of Borneo and' also the Keeling and Christmas Islands far off in the distant parts of the Malay Archipelago. To this group the British have given the name of Straits Settlements, establishing a capital in Singapore and placing the whole under a governor located there. ^ , „ , t.t • ^ , -t In 1896 the Malay States of Perak, Selangor, Negri Sembilan, and Pahang agreed to form a federation under the executive control of the Bntish which is exercised through a resident general at the 163 164 ASIATIC MARKETS FOR INDUSTRIAL MACHINERY. capital Kuala Lumpur; he, in turn, is under the direction of the gov- ernor of the Straits Settlements, the latter also having the title of high commissioner for the Federated Malay States. There were sev- eral States that did not join this federation; these are still under their Malay sultans and are the so-called Non- Federated States^ each being at least nominally independent, though British influence is strong in each of the four — Kedah, Kelantan, Trengganu, and Johore. In 1909 Siam ceded its rights over these States to Great Britain. For various reasons the Non-Federated Malay States liave not yet attained much development ; the Federated States have done remark- ably well ; while the Straits Settlements are merely shipping centers and as such represent very little in the way of either production or consumption. SINGAPORE AND PENANG AS MACHINERY MARKETS. The machinery markets of this territory are Singapore and Pe- nang. Some of the machinery merchants of these cities also main- tain branches and, possibly, repair shops at Kuala Lumpur or Ipoh. As has already been indicated on page 6, the total machinery trade of Singapore is $1,000,000 per year, more or less, and of Penang perhaps $400,000, so that these cities do not rank very high among the markets of Asia. On the other hand, one gets the impression that these cities are far more important tnan these bare figures in- dicate, because of the importance in world trade of the tin and rub- ber as well as other business centering there. The mere geographi- cal position of Singapore gives it great importance as a distribut- ing center for all this part of the Orient. At the end of this sec- tion are the usual statistical tables showing in detail, so far as pos- sible, the volume and the nature of the machinery imports of the Straits Settlements and also of the Federated Malay States. In stijdying these statistics the above distinction should be clearly drawn, for probably the only ports in the Federated Malay States that are used for the importation of machinery are Port Swetten- ham, Klang, and Port Dickinson. DESCRIPTION OF THE FEDERATED MALAY STATES. Under the report on the Dutch East Indies a brief description is given of conditions in Sumatra and Borneo. In the report on China IS a similar reference to the situation in Siam. The other territories drawing supplies from the cities of the Straits Settlements are the Malay States. No description of the Non-Federated States is nec- essary, as they absorb only a very small quantity of machinery. The following data applies to the Federated Malay States. Their area is 27,623 square miles (Indiana, 36,534 square miles). The forest reserves amount to 2,792 square miles. The area planted (consider- ing only estates of over 100 acres extent) is: Kubber, 672,106 acres; coconuts, 70,868 acres; tapioca, 1,740 acres; gambler, 1,511 acres; coffee, 1,301 acres; various, 4,565 acres; total, 752,091 acres, equaling 1,175 square miles, or about 4^ per cent of the total area. The population consists of the Malays, who are not very active; the Chinese, to whom should be given much of the credit for devel- oping the country, as they have done a very great deal in tin miniTig MALAY PENINSULA. 165 and merchandising, as well as some planting; the Indian element, brought in for plantation labor ; and the European element, the gov- erning and capitalistic eleipent. The 1911 census gives the follow- ing returns: Europeans and Americans, 3,284; Chinese, 433,244; Malays, 420,840; Indians, 172,465; others, 7,166; total, 1,036,999 (Indiana, 2,930,554) . It is estimated that by the end of 1918 this had become 1,279,859, an increase of 23 per cent. However, Pahang, the largest of the States and comprising over half of the area, is very lightly populated. Selangor is the most productive region Between Singapore and Penang is a railway that has been ex- tended northward and now connects through Siam to Bangkok, a total distance of 1,188 miles (to travel over which requires four days, as compared to about 22 hours for the 912 miles between New York and Chicago), built on a 3-foot gauge. From Singapore to Penang is about 490 miles, but including branch lines the Federated Malay States Railways had a total of 949 miles at the end of 1918. This is being rapidly extended, especially by a line along the eastern side of the peninsula. Paralleling and supplementing the above railway are 2,343 miles of first-class roads, which are well built and largely used by automobiles. Although the entire area south of the Siam bound- ary, including the Non-Federated States, is about the area of the State of Georgia, with a population of about 2,650,000 in 1911, the most productive section of the country is that along the railway, where in a district about the area, of the State of Connecticut, with a population of about 1,000,000, a very large part of the rubber and tin supplies of the whole world are produced. Apart from these in- dustries very little machinery is required in this section, but as these enterprises have been pushed to a very high development it is felt that they deserve special description. RUBBER PRODUCTION ON PLANTATIONS. The United States consumes about two-thirds of the world's rub- ber, but, except for a trifle from the Philippine Islands, produces none. The world's production has expanded from about 54,000 tons in 1900 to 265,000 tons in 1917, and it has been estimated that it will reach 660,000 tons by 1925. Consequently, as a people, we have a great interest in rubber. Eubber is produced from the sap of a variety of trees and vines, but the best market price is paid for " Para," which is obtained from a tree with the botanical name Hevea Brasiliensis, which grows wild over possibly 1,000,000 acres in the Amazon Valley. The sap is secured by making an incision in the bark and collecting the exuding milk in cups. This is gathered andj among other methods, the rubber is coagulated out of the juice by treatment with acetic acid. As this is usually done in an oblong pan, the resulting cake is a white curd not unlike blancmange in appearance. The surrounding watery fluid is wasted In the above form the rubber contains a great deal of water part of which is removed by being passed through rolls. Later'it is hung up to dry, and frequently is smoked to prevent the formation of mold. t> -i u ^u i i. Until 1913 the chief source of supply was Brazil, where the latex was taken from the trees as they were found growing wild in the 110291°— 22 12 166 ASIATIC MARKETS FOE INDUSTRIAL, MACHINERY. forests. In the Orient the tree is grown on plantations, and, although Ceylon plantations date from perhaps 1884, plantation rubber did not exceed 10 per cent of the world's supply until about 1910, at which time the world's production was about 70,000 tons and the price was $1.10 to $1.30 per pound. In 1920 the world's production had become about 343,731 tons, of which the United States imported 252,922 tons, or nearly 74 per cent. Of the 1920 importations 89 per cent were of " plantation rubber " and 11 per cent of " wild rubber." The story of rubber is a fascinating illustration of the way in which production by modern methods is superior to the less scientific proc- esses of earlier years. The following table, covering the world's pro- duction of crude rubber (from figures compiled by W. H. Dickinson & Son, of London, and tabulated by the National Bank of Commerce, New York) , tells the story : Years. Plantation. BrazU. Native areas other than Bra- zilian. Total. Percentage of planta- non. 1900 1901, 1902. 1903. 1904. }906. 1906, 1907. 1908. 1909. 1910. 1911, 1912, 1913, 19M, 1915, 1916, 1917. 1918. 1919. 1920. Orost torn. 5 8 21 43 14S 510 ■1,000 1,800 3,600 8,200 14,419 28,518 47,618 71,380 107,867 152,650 213,070 265,950 285,225 304,816 Otms toru. 26,750 30,300 28,700 31,100 30,000 35,000 36,000 38,000 39,000 42,000 40,800 37,730 42,410 39,370 37,000 37,220 36,500 39, 370 30,700 34,286 30,790 Oram torn. 27,136 24,545 23,632 24,829 32,077 27,000 29,700 30,000 24,600 24,000 21,500 23,000 28,000 21,452 12,000 13,615 .12,448 13,258 9,929 7,350 8,125 Qrosa tons. 53,890 54,850 52,340 55,950 62,120 62, 145 66,210 69,000 65,400 69,600 70,500 75,149 98,928 108,440 120,380 158,702 201, 598 265,698 295,579 326,860 343,731 1 1 3 5 12 19 29 44 59 68 76 80 86 87 1 Less than 1 per cent. It requires about six to eight years for a rubber plantation to develop into an active producer, and, as the business has been highly profitable, planting has been very active. Eubber is probably the only commodity that did not increase in price during the war, and during 1920-21 the price fell rapidly until early in 1922 it was down to about 16 to 18 cents. The price in July, 1914, was 60 cents. Of the 60 per cent of the world's supply of rubber absorbed in the United States, about 70 per cent is used in the manufacture of tires and tubes. Next to the United States, Great Britain is the largest consumer of rubber, but it absorbs only about 10 per cent of the world's production. Plainly the United States is the leading producer of machinery for manufacturing rubber and should be interested in machinery used in its production. The beginnings of the present plantations were experiments made about 1884, when the extensive coffee plantations of Ceylon were ruined by a disease which attacked the plant and destroyed the industry, and planters sought other products that might be grown. As a tree should not be tapped until it is about 8 years old, it MALAY PENINSULA. 167 required a long time to complete experiments and get into active production. Even in 1900 the reports refer to the sale of a parcel of 327 pounds of rubber in London, this having been taken from 82 trees. However, it was about this time that it became certain that the business would be very profitable, and in 1906 it was estimated that 40,000 acres had been planted in the Federated Malay States. The following figures show the areas devoted to rubber plantations: Federated Malay States (1918), 672,106 acres; Ceylon (1919), 308,687 acres; India (including Burma) (1918), 124,230 acres; Dutch East Indies (1918), about 500,000 acres. These returns were taken from the agricultural statistics of the several countries visited, but it should be remembered that this industry has been growing very rapidly. The following table showing the location and area of rubber plantations on January 1, 1920, was prepared by the British Rubber Growers Association and published by the National Bank of Commerce; the writer has not been able to verify these figures : Countries. Malaysia OutcSi East Indies . . . Ceylon South India Borneo and Sarawak Burma Ottier countries Total Planted. Acres. ,750,000 8SS,000 398,000 65,000 50,000 45,000 130,000 3,323,000 Per cent of total. Producing, , Acres. 1,250,000 570,000 267,000 43,000 30,000 17,500 60,000 2,237,500 Per cent of total. 56 25 12 2 1 1 3 Altogether it would seem that there are perhaps 800 to 1,000 plan- tations, scattered as indicated, each of which has its own factory for coagulating, squeezing, and washing the rubber. The mechanical equipment of one of these factories consists of an engine of from 20 to 100 horsepower. Usually these are oil engines of the semi-Diesel type, very commonly from such European makers as Homsby, Rust'on-Proctor, or Bronz. The mangles are sometimes driven by hand, but usually by power, and are equipped with different designs of rolls depending upon whether the product is to be sheet or crepe rubber. ' A certain amount of this sort of machinery is made in the local shops, but a great deal is also imported. The machinery used most commonly is from the European shops of Shaw, Robinson, Bridge, or Nering Bogel. So far as known, no American manufac- turer has entered this trade. ^ . , . Ordinarily the drjdng equipment is not of refined design, but there is some prospect that more scientific nlethods will be adopted. Also there is a possibility that a system of drying the latex will be substi- tuted for the present process of coa^lation with acetic acid (or its equivalent). This whole industry is still young, but it is being treated very scientifically on the agricultural as well as the manufac- turing side, and important results may develop at any time. In con- nection with the rubber plantations and also the coconut and African oil palm plantations of these districts, there will probably develop an im^rtant market for tractors of several different types. 168 ASIATIC MARKETS FOE INDUSTRIAL MACHINERY. The labor for these plantations is very commonly brought in from northern Ceylon and the Coromandel (Madras) coast of India, the laborers being mostly Tamils, of whom there were about 145,000 in 1911, the time of the last accurate census. However, the number has probably more than doubled since then. The coolie traffic thus leav- ing the Madras Presidency alone probably exceeds 1,500 per week. TIN MINING. The world's output of tin in 1918 is estimated to have been 131,000 metric tons, a small decrease from that of 1917. The output in the various tin-producing countries from 1913 to 1918 is shown in the table below. The figures given are based on official reports and, as far as possible, are those of mine output ; but for some countries, such as Bolivia, China, Siam, and Nigeria^ the figures represent exports. Where the output is given in the original sources in terms of tin- bearing concentrate — as, for example, it is for the Australian 'States — it is here given in terms of metal obtainable by smelting : Countries. 1913 1914 1916 1917 1918 Federated Malay States British-protected Malay States BoUvia Banca BiUiton and Singkep , China , Siam Nigeria Australia Cornwall Union of South Africa Other countries Total Metric Metric torn. tone. 50,920 49,820 1,800 2,700 26,760 22^360 13,940 14,630 5,300 6,090 8,390 7,120 6,660 6,740 2,950 4,590 8,160 5,520 5,370 5^140 2,050 2,000 1,410 1,500 Metric tone. 47,520 ^m 21,900 13,660 6,760 8,000 8,520 4,630 5,680 5,060 2,050 1,500 ifetrie torts, 44,570 4,450 21,330 14,460 6,780 7,630 8,960 5,150 5,550 4,770 1,900 1,700 Metric tOTU. 40,470 4,500 28,320 13,540 7,300 11,800 8,600 7,070 4.970 4,000 1,540 1,800 Metric Una. S7,m 4,1500 2^000 11,000 (L200 n,m &«od T^iOOO 4,900 4,000 1,500 2,000 135, 710 128, 210 129,450 127,250 133, 910 130,670 In this connection it should be noted that the Asiatic producing territories mentioned above are in reality one long field, starting in Banca and Billiton and passing northward up the Malay Peninsula through both Siam and Burma into the Province of Yunnan in China, and while exploration is in no sense complete it probably passes on into the Province of Kwangtung and possibly into Fukien. The tin produced in Siam is shipped out through the Federated Malay States. In Burma it forms a comparatively new industry, where it is also associated with the production of wolfram. An im- portant percentage of this Burma ore is also shimjed to the Feder- ated Malay States, the remainder to England. The production of China is largely shipped through Indo- China and Hongkong; at the latter place the trade returns indicate the receipt of 9,188 tons from French Indo-China in 1918 and 8,395 tons in 1919. Practically all of the tin produced in Asia is taken from alluvial deposits, and very commonly the methods employed are very primitive, although in other cases the problem is handled scientifically, as, for instance, at Banca and Billiton, in the Dutch East Indies. In the Federated Malay States 225,862 acres of land have been alienated for mining (1919), most of which is in the hands. of Chinese, who produce about C8 per cent of the tin. The following description of this process MALAY PENINSULA. 169 (from "British Malaya," by Frank Swettenham, K. C. M. G.) will interest manufacturers of pumping and dredging machinery : Tin mines in the Malay States are in the enormous majority of cases open workings, because the alluvial deposits are rich and their exploitation is much less expensive and Involves less risk than underground and rock mining. The presence of tin is ascertained by boring, by general appearances, and the prox- imity of existing mines, or by divination and the employment of a Malay " pawang " — in this ease a " tin finder " who, working on principles almost iden- tical with those used by " water finders " in England, prospects the surface of the land with a wand and declares that it contains or does not contain tin. The Chinese, the first real miners in the country, have always employed the " pawang " and followed his advice with great confidence, often with the hap- piest results; but in old days it was usual, especially in shallow ground, to support the " pawang's " opinion by digging pits ; nowadays boring is practi- cally universal. When a block of land has been selected and the authority of the land office obtained to work it, a great hole is dug in the ground, the spoil Is thrown on one side on worked-out land or wherever permitted by the mining' inspectors, and the tin-bearing stratum may be on the actual surface or at d^ths which vary in different localities from 1 or 2 to 250 feet. The average depth is about 25 inches from the surface. This stratum may be from a few inches to many feet in thickness, and it lies on bedrock consisting of limestone, decomposed granite, schist, or slate, or on beds of clay which in some cases are fine kaolin. In old days it used to be supposed that this kaolin rested on bedrock and that, whether that were so or not, there was no tin beneath it. That theory is now exploded, and a second and even a third layer has often been discovered at some depth below the layer of kaolin. The tin ore appears mixed with alluvial detritus in various forms — great bowlders and pebbles or, more commonly, fine or coarse, black or white or gray grains, mixed with ordinary sand. Sometimes also tin' ore is found mixed with stiff clay, which has to be " puddled " by hand or machinery. The layer containing this " wash dirt " is called " karang " in Malay, and the value of the mine depends upon the thickness and richness of the " karang " and, to some extent, on the depth of the overburdeil. The Chinese work their mines on a primitive but very effective plan. First, the land is cleared of jungle by Malays or aborigines. Simultaneously the erection of the living houses is commenced. The laying out of the mine and the arrangements for bringing in water for dressing the tin ores and working the water wheel for the Chinese pump next engage the attention of the miner. The Chinese method of bringing in water for the purposes of the mine is simple and economical. The miner may have to make a dam and lead the water by means of a race for some hundreds of yards. He is ignorant of the use of a level, and, dis- pensing with the services of an engineer, he makes his calculations entirely with his eye, with marvelous accuracy. In laying out the mine due care is taken to provide a suitable site for the washing of the ore and for the continua- tion of the watercourse at a suitable level as the mine is opened up. The preliminary operations concluded, the work of removing the overburden is commenced. This is done either by laborers on contract, in which case the owner of the mine takes any profit there may be, or by laborers working the land on tribute, in which case the landowner receives only his tribute and is not liable to the laborers if his mine does not turn out to be a financial success. Except in mines worked on tribute, the " karang " or " wash dirt " is generally raised by laborers on wages. The reason for this is that the " karang " does not lie evenly, with richest pockets often occurring in crab holes, or under huge bowlders, the removal of which would not pay the laborer working on contract. As the overburden is removed and the workings are constantly deepened, the bottom of the mine is reached by stepladders made by cutting flat steps, at an acute angle. In the trunk of a tree. The Chinese run up and down these ladders with bare feet, carrymg baskets of spoil slung at either end of a shoulder pole. The mine is kept comparatively dry by one or more endless Chinese lifting pumps, driven by a stream of water workUig on a small overshot wheel at the surface of the mine. For many vears all large mines have been drained by steam pumps. When the " karang " or " wash dirt " is reached, the surface is clpared of overburden and the wash dirt is carried up in baskets and stacked in heaps ready for washing. The washing is done in a coffin-shaped wooden trough, through which a stream of 170 ASIATIC MARKETS FOR INDUSTRIAL MACHINERY. water is run while one or two skilled coolies standing in the trough rake the " wash dirt " as it is thrown in. The floor of the trough is inclined at a slight angle, and as the " wash dirt " is constantly raked and pushed by the worker's feet to the top end of the trough the heavy ore remains while the sand and pebbles are carried away by the water. The clean ore is then ladled out of the trough, placed in buckets, and carried away to be smelted in charcoal furnaces, or done up in bags and sent to the smelting works of the Straits Trading Co. in Singapore and Province Wellesley. Clean ore of the oxide of tin yields about 70 per cent of pure tin. The above account wbLs written in 1905, since which time there has been great improvement along lines that will be familiar to those with knowledge of gold operations in California, where, it has been said, the sands were first worked by the white man, who was followed by the Chinese, and he in turn by the dredge. In the Malay Peninsula the Chinese are improving their methods largely through the use of occidental pumping equipment, and dredges are also in use. However, conditions are not very satisfactory. Since 1913 there has been a continued decrease in the production of tin. It has been estimated that in 1917 the production of ore from Chi- nese-owned mines was 21,771 tons less than in 1913, while the ?roperties under other than Asiatic control had increased 3,610 tons. 'he figures do not pretend to be accurate but do approximate the facts, and it is realized that the methods must be improved. All concerned also understand that this will involve the expenditure of considerable sums on plant and equipment, and, of course, this is the feature that interests American machinery exporters. So far as the old tin areas are concerned the days of the small mines are pass- ing rapidly. From now on the larger operations by dredge or other- wise will occupy the field, and it is recognized that Americans have much experience in this sort of work and should be able to supply the necessary plant. COAL AND OTHER MINERALS. It has been shown in reports covering the neighboring countries of Asia that the fuel problem is difficult. The same general situation applies to the Malay Peninsula. However, there is an important mining property in Selangor, operating under tlie name of Malaiyan Collieries (Ltd.), which has shown the following production: 1916, 101,846 long tons; 1917, 155,279 long tons; 1918, 168,740 long tons; 1919, 191,293 long tons. The production of 1918 was distributed as follows: Federated Malay States Railways, 67,437 tons; mines, 66,500 tons; other local consumers, 14,915 tons; export«d, 19,888 tons; total, 168,740 tons. The management of these mines aims to raise the production to 400,000 tons per year. Several other minerals are also mined. The Kaub Gold Mines in Pahang produce about 17,000 ounces per year. Tungsten has also been produced in important quantities. AMOUNTS AND TYPES OF POWER MACHINERY EMPLOYED. In connection with these data regarding mine properties, manu- facturers of power machinery will be interested in the following table, showing the amounts and types of equipment employed; of this total the Kaub and the Malayan CoUeries use 2,542 horsepower. MALAY PENINSULA. 171 Types. Steam Steam-electrlo Hydraulic Hydroelectric. Suction gas... Oilengines... Oil electric Total... HorstpowCT. 24, 810 4,255 17,911 3,549 2,203 3,851 1,495 58,074 1917 Hmsepower. 23,748 2,420 18,624 4,395 1,794 2,692 2,003 1918 Horsepower. 27,506 2,427 18,334 4,512 2,219 3,171 2,153 60,322 These data are from the report of the mines department of the Federated Malay States government, which further states that the increase shown in 1918 is mainly due to the reemployment of idle plant. The above data cover the plant in operation rather than merely the plant installed. Further data regarding the amount of equipment in service are obtainable from the 1918 reports covering the inspection of steam boilers and other machinery, from which the following is abstracted : Altogether, the total horsepower of plant registered tinder the ma- chinery enactment was 117,660 hoi-sepower, of which 3,400 horse- power represented water turbines. There were 1,968 steam boilers having a total of 79,817 boiler horsepower. The service on which they were employed was: Boilers used for— Mining Agriculturo. . General Government. Total.. 1916 1,549 135 62 215 1,961 1917 1,957 1918 1,515 1,523 157 180 72 71 213 214 Most of the above units on tin mining are of the portable type as made in Europe and have noncondensing steam engines. Very com- monly the fuel is wood. Corresponding data for the gas and oil engine installations fol- lows: Oil. Suction gas. Years. Number. Horse- power. Number. Horse- power. 1916 639 723 792 15,439 17,072 19,314 246 285 275 13,240 1917 14,108 1918 15,129 In 1918 these were employed as follows: Services. Ofl. Gas. 281 287 92 !20 112 38 195 cffia :::::;;::::::::::::;;::::::::::::::::::::::::::;—:;;.:" 23 19 792 275 172 ASIATIC MARKETS FOR INDUSTRIAL MACHINERY. These figures show that the oil engine is the most popular form of drive, especially for tin mines, except in cases where steam is used, but the popularity of suction gas plants, especially for plantation service, should be noted. Similar data regarding electrical installations show a total of 11,911 kilowatts of generating capacity and 11,900 horsepower of motors in- stalled. Out of 8,911 kilowatts used for power purposes, 8,634 kilo- watts is in mine service, while out of 3,000 kilowatts used for lighting 2,362 kilowatts is for government purposes. In addition to the above remarks, in which particular emphasis has been placed on the smaller installations (which are, of course, the most numerous), the plants at the Eaub mines and the Malayan col- lieries are really important, as has been shown. There are also 17 bucket dredges at work (with others not far away, but in Siam) , the capacity of these being between 2,000 and 4,000 cubic yards per day. One of these dredges has electric drive. It is underetood that the other dredges are all steam driven, and a good deal of wood is used for fuel. MISCELLANEOUS INDUSTRIES. The above paragraphs have indicated that a certain amount of power equipment has been employed for " general " purposes. Some estimate of the nature of this demand can be gathered from the statis- tics at the end of this section, although deductions made from these trade returns must allow for machinery shipped to the Straits Settle- ments that goes to Sumatra, Borneo, Siam, etc., as well as to the Fed- erated Malay States, and also for the fact that imports to the Malay States, while usually shipped via Singapore and Penang and so re- corded in the data for the Straits Settlements, may also travel via Port Dickinson, Klang, and Port Swettenham, which are not in the Straits Settlements; these shipments appear in the returns for the Federated Malay States. At Batu Caves is a cement plant which has shown the following production: 1916, 4,022 tons; 1917, 4,845 tons; 1918, 5,382 tons. All this cement appears to be used locally, none being exported. On the other hand, this plant does not fully supply the local demand, the im- ports into the Federated Malay States being : 1915, 70,114 casks ; 1916, 62,867 casks; 1917, 68,223 casks; 1918, 45,880 casks; 1919, 78,317 casks. This situation has encouraged a group of Chinese to install a large modem cement plant on the outskirts of Singapore which is equipped with rotary kilns and American machinery throughout and was ex- pected to start production some time in 1921. Scattered through the territory are a number of factories producing tapioca. There is a certain demand for machines to extract vegetable oils. Most of these handle copra, but there is also some call lor ma- chinery to handle the products of the African oil palm, which seems to require rather different equipment. There is at least one sawmill in service, this being equipped with American machinery. The dock- yards at Singapore, tne repair shops at other points, and the railway shops, of course, require the usual equipment. In connection with discussions regardmg the trade of Asia, writers and speakers often emphasize the possibilities of China, but it is in the Malay Peninsula that the Chinese are seen at their best. They con- MAIAY PENINSULA. 173 stitute about 42 per cent of the population of the Federated Malay States and a much larger fraction of the population of the Straits Settlements, and to them belongs a large share of the credit for the rapid development of the territory. Manufacturers interested in esti- mating the future possibilities of China should observe closely the progress made here. Some of these Chinese are very wealthy and ap- parently very influential. They manifest a progressive and patriotic spirit and have the confidence and respect of the European as well as the Asiatic community. Apparently they are prepared to establish industries as favorable opportunities develop. CHARACTER AND POSSIBILITIES OF THE MARKET. As has been stated, the machinery markets for the Malay Penin- sula are at 'Singapore, Penang, Kuala Lumpur^ Ipoh, and some lesser points, and their comparative importance is m the order in which they have "been named. In each of these cities there are merchants specializing in machinery, but most of the offices at Penang, Kuala Lumpur, and Ipoh are branches of Singapore firms and usually the manager for the district has his office in Singapore. For this reason it is apparent that the machinery business in this territory is con- trolled from Singapore, which is also the most important point, as the trade returns show that the larger part of the machinery is imported through that city. But, although this is the case, most of the machinery is "sold upcountry," the different Singapore firms having their engineering department at one of the upcountry cities already mentioned. Singapore, the center of this trade, is a clean, healthy city, 90 miles from the Equator, with a humid atmosphere, temperatures between 70° and 95° F., and plenty of rain. The total population (1911) was 259,610, of whom about 4,000 were Europeans; but as the city is the capital of the colony and a naval base there is a large official community, and the commercial population is smaller than might be expected. The island on which the city stands is 27 miles long and 14 miles wide ; this British territory is separated from the native State of Johore by a narrow strait. The machinery business of Singapore is handled by about 15 or 20 merchants, almost all of whom are British, and most American manufacturers of machinery will find it necessary to cultivate this territory through them. In this connection it should be remembered that all of these merchants do not cultivate the same territory, for while some pay most atten- tion to business in the Malay Peninsula, others are interested in Borneo or Sumatra, but the entire territory is developing very rap- idly. A list of these firms is on file in the Bureau of Foreign and Domestic Commerce. The settlement next in importance is Penang, also an island, about 500 miles from Singapore at the other end of the Straits of Malacca, close to the west coast of the peninsula. The port and city are legally known as Georgetown, but this name is now seldom used in commercial correspondencBj the word Penang being used for address- ing letters, cables, and shipments to the city. The population of Penang in 1911 was 101,182. The American population of the entire Straits 'Settlements in .1911 was 62, including missionaries. 174 ASIATIC MAEKETS FOB INDUSTRIAL MACHINERY, Malacca is another port in the Straits Settlements with a consid- erable history, but it has sunk quite low in commercial importance, importing almost no machinery. The comparative value of the machinery imports into these cities is shown by the returns as issued by the authorities of the govern- ment of the Straits Settlements, values being given in Straits Settle- ments dollars (worth about 56 American cents). The last year for which these segregated figures are available is 1920 : Glasses. Penang. Malacca. Total. Electrical machinery En^es, boilers, and parts other machinery., i Total Straits dollars. 1,887,946 1,426,749 5,479,696 Straits dollars. 178,480 803,559 181,541 Straits dollars. 7,200 4,740 66,489 Straits dollars. 2,073,626 2,235,048 5,727,626 8,794,291 1,163,580 78,429 10,036,300 For other years the total imports at all of the above cities were: Classes. 1913 1914 1916 1919 Electrical machinery Engines, boilers, and parts other machinery Total Straits dollars. 635, 106 1,10'6,647 1,479,380 Straits dollars. 436,269 800,138 1,188,304 Straits dollars. 340,200 611,053 862, 158 Straits dollars. 378,888 987,733 1,396,159 Straits dollars. 1,316,486 1,387,123 2,905,328 3,221,133 2,424,711 1,713,411 2,742,780 6,608,937 About 65 per cent of this machinery goes to the Federated Malay States. At the end of this section are further details indicating the countries of origin from which this machinery was shipped. English is the commercial language of this territory, and is used for business purposes even in dealing with the Chinese, for there are about 10 different Chinese dialects used in the colony. On the other hand, in dealing with labor one may be called upon to use either Malay, Tamil, or Chinese, but these languages are not needed in commerce; these people buy very little, or, if they reach a position where they can become purchasers, they have also acquired English. Machinery enters both the Straits Settlements and the Federated Malay States free of duty, and there is no discrimination against American products, except, as is always the case, when Europeans need to learn to appreciate American goods. Steam boilers, gas holders, gas generators, and electrical installa- tions must pass inspection and receive the approval of the Govern- ment authorities before being placed in service, and manufacturers should be certain that equipment will comply with the rules before they export it. The more carefully one analyzes this market the more strongly the impression develops that the United States can increase its share in this business, as that share was only 20.4 per cent in 1917. American electrical and power machinery is well suited to the needs of this dis- trict, and the United States absorbs more of the exports from this territory than any other country, taking about 35 per cent. One gathers the impression on visiting the country that Americans have MALAY PENINSTJliA. ' 175 made only a very small effort to introduce their machinery in this market, but the territory is developing very rapidly and, within the limitations of the market, as suggested above, deserves very careful attention. Care should be exercised to secure adequate representa- tion in Sumatra, Borneo, and Siam, as well as in the Malay Penin- sula itself. Purchases for the various government departments are made through the Crown agent in London (England), while the require- ments for the municipalities of Singapore and Penang are purchased by Lindsay & Pierce, municipal agents, 180 Hope Street, Glasgow, Scotland. CURRENCY, WEIGHTS. AND MEASURES. The Straits Settlements dollar contains 312 grains of silver, but is practically a token coin, normally worth 28^ pence, or $0.5678 United States currency, though the exchange fluctuates seriously. The following is a ^atement of equivalents for weights and meas- ures commonly employed : OBDINAKY WEIGHTS. 1 tahil=lj ounces avoirdupois. 16 tahU=l kati=lj pounds avoirdupois. 100 kati=l plkul=133j pounds avoirdupois. 3 pikul=l bhara=400 pounds avoirdupois. 40 pikul=l koyan=5,333J pounds avoirdupois. goldsmiths' weights. 12 sava=l mayain=52 grains. 16 inayam=l bongkal=832 grains (2 Spanish dollars). 12 bongkal=l kati=9,984 grains (1 pound 8 ounces 16 pennyweight). OPIUM WEIGHT. 10 tee=l hoon. 10 hoon=l chee. 10 chee=l tahil. MEASTTRES OF CAPACITT. 2 gills=l pau or quarter chupak. 2 pau=l pint or half chupak. 2 pints or 4 pau=l quart or chupak. 4 quarts or chupak=l gallon or gantang. 10 gantangs=l para. 800 gantangs=l kayan. DETAILED STATISTICS OF MACHINERY TRADE. The table below shows imports of three classes of machinery into the Straits Settlements, according to the customs returns of the colony : '' ELECTRICAL MACHINEBY. Countries of origin. 1913 1915 1918 1920 TTnited Kingdom <7erman7 British India and Banna. StraUi ioUars. 490,705 81,207 12,999 Straits dollan. 263,958 1,900 9,845 Straitt doVan. 14^961 1,6 StraUa dollan. 1,055,3! 176 ASIATIC MABKETS FOK INDUSTBIAL MACHINEKY. ELECTRICAL MACHINERY^ontinued. Countries of origin. 1913 191S 1918 1920 Honglcone Federated Malay States Non-Federated Malay States. Canada „ Australia Belgium..., Denmark France Italy Netherlands Netherlands East Indies Japan United States Other countries Total.. Straits dollars. 3,495 195 Straits dollars. 6,975 1,610 1,014 1,147 8,341 200 5,569 1,155 520 7,095 6,749 14,849 3,525 6,581 17,092 3,250 7^980 13,188 ^282 Straits dollars. 14,472 5,920 6,920 6,791 6,000 8,000 4,091 118, 339 78, 678 176,260 634,226 340,200 473, 052 Straits dollars. 66,997 9,732 2,515 217,700 8,783 4,860 40,950 15,200 49,074 74,362 9,367 102,542 402,735 13, 470 2,073,626 ENGINES, BOILERS, AND PARTS. .-ylH United Kingdom Britisli India and Burma. . Federated Malay States Non-Federated Malay States. Australia Belgium Denmark Germany Netherlands Netherlands East Indies Japan Slam and Siamese States United States Other ooimtries .' Total 1,106,647 Straits dollars. 925,104 6,215 5,000 14,720 328 750 61, 082 24,094 23,620 1,360 516 35,948 8,910 Straits dollars. 432, 319 '"'"i6,'65i' 3,314 2,615 33,000 4,700 4,900 900 1,200 7,812 3,642 511,053 Straits dollars. 325,857 2,720 20,149 19,108 8,550 319, 176 12, 750 700 80,800 14, 970 114, 727 « 77, 130 996,636 Straits dollars. 1, 792, 70S 11,952 46,180 6,3U 4,000 7,722 33,470 52,665 266,670 14,375 2,236,048 UNENUMERATED MACHINERY. United Kingdom British India and Burma Ceylon Hongkong Federated Malay States Non-Federated Malay States. Canada Australia Belgium Denmark France Germany Italy Netherlands China Frmch Indo-China Japim Siam and Siamese States Netherlands East Indies United States Other countries Total 1,466,735 Straits dollars. 1,095,113 7,847 4,822 2,661 52,369 3,167 20,740 20,100 6,233 10,646 69,157 6,130 6,983 1,015 340 2,150 2,602 9,514 132, 692 3,666 Straits dollars. 608,131 8,260 14,285 45,171 8,828 1,985. 9,654 3,200 25,228 83,036 10,076 862,158 Straits dollars. 661, 712 28,866 30,200 39^666 146,270 1^668 1^284 36,676 128,227 7,603 1,025 1,214 1,445 1,450 116,663 10,800 48,603 403,886 17^929 1,661,772 Straits dollars. ^987,971 23,142 6,310 9,293 103,763 29^798 3,000 220,780 &40O 70^925 10^695 46,596 7,840 26,100 14,321 43,500 61,071 6,150 86,640 1,928,775 35,667 5,727,626 •Includes China, S. S65,780. 'Brazil. MALAY PENnsrStTLA. 177 American customs returns give the following figures for exports of machinery to the Straits Settlements : Classes. 1910' Number. Dollars. 19131 Number. Dollars. Number. Dollars 19151 Stationary gas engines Gasoline engines: Automobile Marine Traction , §|team engines: .' Uiuine Stationary All other engines All other parts of engines Hour and ^ist mill machinery. Metal-workine machinery Oa-wdl machinery other mining machinery Pumi>3 and pumping machinery Befilgerating, including ice-maldng ma- chinery Sawmill machinery , Other woodworking machinery All other machinery and parts of 337 197 7,113 4,409 'i,"388' 3,S52 3,000 166 773 555 1,044 14,638 1 '292 9,476 4,643 57,267 8,431 5,786 120 1,355 2,008 3,514 30,309 22,606 10,458 16,695 561 18,068 6,563 14,628 Total.. 37,655 113,671 98,616 1919 1920 1921 Classes. Number. Dollars Number. Dollars. Number. Dollars. Air-compressing machinery Concrete mixers Elevators and elevator machinery. . Electric locomotives Statldnary gas engines Oasdine engines: Automobile Marine i Stationary Traction Kerosene engines Steam engmes: Locomotives Marine Stationary Traction ,... All other engines 13,992 3,497 2,100 4,600 16, 175 1,221 26,818 8,821 372,600 118,000 5,339 3,400 662 2,612 2,274 7 144 109 145 19 760 4,170 51,613 23,532 207,281 9,989 941 12,661 11,320 46,849 1,884 496,000 46 All other parts of engines ^cavating machinery lEloor and grist mill machinery.. Power laundry machinery 124,077 155 56,722 162 100 17,057 29,724 16,328 23,374 110, 516 64,7t)9 48 ler machine tools .rp ftTiing and grinding machines. . i^jOther metal-working machinery. f QH-well machinery. Other mining machinery. ""■Paper and pulp mill machinery .jgumps and pumping machinery Se&igerating, including ice-making ma- '\ Obinery Upad-making machinery Textile machinery i^wmill jnachinery other woodworking machinery All other machinery and parts of 5,156 12,498 860 10,656 39,800 14,800 4,701 32,246 9,567 9,931 16,343 476, 789 Total.. 1,392,672 19, 151 28,254 1,524 4,491 92,337 80,338 100 36,400 46, 171 44,693 70 111 1,649 16,327 2,691 7,148 183, 189 158,311 54,622 11,721 2,625 978 8,124 16, 521 330,275 1,219,463 54,224 2,834 1,268 2,820 103 119,769 1,252)419 » 1910, 1913, and 1915 are fiscal years ended June 30 ; the others are calendar years. 178 ASIATIC MARKETS FOB INDUSTKIAI. MAOHINEKY. Exports from the United Kingdom to the Straits Settlements and to the Federated Malay States are shown below. TO STRAITS SETTLEMENTS. Classes. 1914 1915 1916 1917 1918 Locomotives Internal-combustion engines Unenumerated prime movers Electrical machinery Electric motors and generators. . . Unenumerated electrical machinery.. Mining maciiinery All other ." 125, 534 25,027 £797 32,816 5,729 £1,142 41,942 7,743 £203 18,433 3,469 £7,186. 11,624 6,519 11,031 201,346 16,558 8,443 10,769 106,423 6,557 6,606 20,493 147^498 10,530 3,896 19,974 136,515 4,044 1,498 30, ?« 99,470 Total 1. 364,617 181,535 231,981 193,020 160,584 1 The total for 1919 is £373, 406 and for 1920 it is £830, 314. A change in classification makes it imprac- ticable to show separate items. TO rEDEKATED MAIAT STATES. Classes. 1914 1915 1916 1917 1918 1919 1920 Locomotives £40,857 £5,868 16,211 46,129 £13,100 1,064 28,686 £17,572 3,192 27,120 £2,024 '891 18,603 £2,186 £168,000 Electrical machinery other 48,228 37,438 133,491 Below is a statement of machinery exports to the Straits Settle- ments from Japan : 1915 1919 1920 Electrical machinery . Telephones Texme machinery Lathes Printing machinery . . other machinery Yen. 6,016 2,606 12,352 Total. 2,991 23,521 47,486 Yen. 13,659 Z76 5,443 31,231 50,609 Yen. 27,353 1,089 10,614 19,700 8,649 84,525 151,930 Yen. 53,207 591 5,023 36,473 22,277 429,369 546,940 Yen. 35,000 1,000 45,000 9,000 91,000 181,000 Yen. 62,000 1,000 1,000 3,000 6,000 61,000 124,000 Special Agents Series No. 215. 110291°— 22. (Face p. 179.) FIG. 23.— MAP OF NETHERLANDS EAST INDIES. With outline map of United States, on same scale. NETHERLANDS EAST INDIES. EXTENT AND GENERAL CHARACTERISTICS OF THE MARKET. In studying this territory one finds a situation different from any existing elsewhere in Asia, for the industries in the Netherlands East Indies are much older than those in other Asiatic countries. Sugar is the outstanding product of Java, and as long ago as 1894 the area planted was about 300,000 acres and the yield 2.81 tons of sugar per acre. The mere fact that su 1910, 1913, and 1915 are fiscal years ended June 30 ; the others are calendar years. 206 ASIATIC MAEKETS FOK INDUSTRIAL. MACHINERY. Classes, 1919 Number. Dollars. 1920 Number. Dollars. 1921 Number. Dollars. Air-ccmpressjng machinery Brewers' machinery Concrete mixers Cotton gins Elevators and elevator machinery. . , Electric locomotives Stationary gas engines : , Gasoline engines: Automobile . . ; ' Marine 1 Stationary Traction Kerosene engines .' Steam engines: Locomotive Marine Stationary Traction All other engines Boilers , All other parts ot engines Excavating machinery Flour and grist mill machinery Power laundry machinery Lathes Other machine tools Sharpening and grinding machines. . All other metal-worldng machinery.. Oil-well machinery.' ' Other mining machinery Paper and pulp miU machinery Pumps and pumping machinery Befrigeraiing, including ice-making, machinery, i.-. RjiadRmaking m^hinery. . i ' Shdemachinery. Sugar-mill machinery Textile machinery Sawmill machinery Other woodworking machinery All other machinery and parts of 74,303 2,000 7,775 303 26,327 2 192 135 47 25 19,079 91,621 91,389 68,248 18,409 ' 10,000 5,276 16,728 7,400 86,619 23,917 162,910 652 8,072 273,302 81,144 27,412 232,640 891.272 248,629 3,680 352,207 9,453 94,412 1,277 43,212 1,045 24,638 123,746 1,417,785 4 35 7 41 144 184 47 24,724 908 10,608 261 14,983 32,099 .4,084 3,555 21,298 66,226 352,725 20,833 6,781 9,300 68,040 41,688 116,804 21,500 295 86 88,826 80,186 25,577 131,497 687,682 153,307 1,422 239,760 2,330 . 91,306 425 183, 110 65,580 52,798 677,510 3 57 79 133 33 7 14 40 19 66,121 1,649 19,176 19,693 24,772 33,840 201,014 4,183 80,875 4,165 22,201 35,307 102,562 144,678 182 370, 845 76,512 104,560 17,165 163,059 2,673,950 84,218 9,427 374,837 1,585 .1,891 24 155,842 535 20,448 25,521 588,945 Total.. 4,546,249 3,962,705 5,061,080 British exports of machinery to the Netherlands East Indies are shown below : Classes. 1913 1914 1915 1916 1917 1918 1919 1920 Locomotives £2,960 12,827 38,745 £604 14,557 33,338 £244 . 14,165 £334 8,757 £570 14,298 Boad rollers Unenumerated prime movers '. £3,704 £2,758 £66,141 Internal-combustion 16,455 6,269 114,607 30,716 8,842 170,513 13,933 3,869 160,082 8,072 482 71,243 8 G) G) Mining machinery. . . Unenumerated ma- chinftry , , . , 20,661 273,132 8,942 242,013 ^ Total 348,225 299,454 151,740 219,162 181,588 82,555 » A change in classification makes it impassible to complete this table. The followine totals include typewriters, etc.: 1913, £442,344; 1919, £543,183; 1920, £1,0W,800. "«i.iuu= NETHERLANDS EAST INDIES. 207 Japanese exports to the Netherlands East Indies are shown below (the yen is approximately equal to 50 cents) : 1 Classes. -^ 1915 1916 1917 1918 1919 1920 Yen- 3,791 162 Ym. 14,968 152 Ym. 45,709 671 1,074 86,502 2,958 58,021 Yin. 275,467 41,515 4,267 314,302 20,380 431,118 Ym. 446,000 36,000 1,000 37,000 7,000 120,000 Yen. 338,000 1,000 ^T^ephones 6,000 10,000 75,000 477 13,947 i,i7i 24,315 Total 18,377 40,606 184,935 1,087,049 647,000 430,000 PHILIPPINE ISLANDS. EXTENT AND GENERAL CHARACTERISTICS OF THE MARKET. As distinguished from India, where the business of the country- is divided among about five cities, and Japan, where it is divided between at least two, and China, where it is also split up, foreign business in the Philippines is almost entirely concentrated at Manila. As a consequence the volume of machinery imported into Manila is very large, comparing quite favorably with any other city in Asia. The extent of the participation in this business by manu- facturers in the United States is very high, being 70 to 95 per cent in different years as compared with 3 to 30 per cent in India, 15 to- 30 per cent in China, and 30 to 80 per cent in Japan. In some years Manila absorbed more American industrial machinery than any other city in Asia. Probably Manila never has fallen lower than fourth place in this respect. As a consequence, the American manu- facturer of machinery has a very great interest in this territory, and as the trade is expanding very rapidly this interest grows correspond- ingly. Because of the large extent to which this business is in the hands of Americans it might almost be considered a part of the domestic market. The situation is shown in the following table, where the imports of industrial machinery are expressed in pesos, the value of which may be taken at 50 cents, as that value has been maintained through almost the entire period indicated, though there have been times when it went to nearly 15 per cent discount : Years. Total volume. Vdume from United States, including Hawaii. Percentage from United. States, in- cluding Hawaii. 1915 Pesos. 2,409,503 1,606,933 3,163,111 7,942,491 20,137,466 19,643,223 16,613,309 Pesos. 1,761,886 1,303,350 2,812,719 7,718,715 19,239,799 19,107,264 15,542,012 73 1 1916 1917 88 9* 1918 1919 1920 97 3- 1921 93 Confidence in the above returns is supported by figures from the returns of the United States customs, which show the following exports of industrial machinery to the Philippine Islands: 1910. $532,361; 1913, $1,489,836; 1915, $689,562; 1918, $3,753,054; 1919, $10,007,110; 1920, $9,861,830; 1921, $5,529,555. In all the above figures, adding machines, printing presses, sewing machines, and typewriters have been omitted. The returns of the customs seem to make it necessary to include tractors. At the end of this section the complete returns are given in much greater detail, the various classifications and countries of origin being shown. 208 opeciai Agents aeries no. 215. 118" 120" 122' 126" $ U T <: H I N B BATANES IS. \6 Balintang OCEAN PfllLlPPIjNE 19 ..INLANDS MINDANAO GENERAL DHAFTIHG CO INC .N Y 20' 16' 10° nsf FIG. 24.— MAP OF PHILIPPINE ISLANDS. With outline map of Indiana and Ohio, on same scale. 110291° — 22. (Face p. 208.) PHILIPPINE ISLANDS. 209 "ObTiously, Manila is a splendid market. Its growth has been Tapid, but It gives promise of sustaining and increasing the present demand for such machinery. In a sense the fact that Manila has become such an important market for machinery proves the success of American efforts in the islands and, conversely, the continued progress of the Philippines will insure an increasing demand of this sort. Among the other large business centers of Asia, Manila's nearest neighbor is Hongkong, a port that has long been well advertised, but it should be noted that Manila does more than three times as much machinery business as Hongkong, also ranking far above Singapore, Batavia, Saigon, and other points between Shanghai ;and Calcutta. As compared with the other markets of Asia, Manila is peculiarly attractive to the Ameifican manufacturer because the entire country shows an American spirit. Those who use machinery, those who do the pioneering and development work throughout the islands are ■usually Americans or Filipinos who are familiar with American methods and ideas. Such Filipinos know the different kinds of American machinery and recognize the superiority of this equipment. AREA AND RELATIVE ECONOMIC POSITION. The Philippines are essentially an agricultural country, the size and proportions of which can be appreciated from the map published at the beginning of this section, showing the archipelago superim- posed upon a map of the States of Ohio and Indiana drawn to the same scale. Blessed by nature with splendid, fertile soil, abundant rainfall, and a tropical climate, the Philippines can produce any tropical crop. The area, 114,420 square miles, is a little greater than the combined area of New York State and Pennsylvania (94,330 square miles) and the population (1920), 10,350,640, com- pares with that of New York State alone (1920), 10,385,227. But there are very few other ways in which these comparisons could be extended, as the mountainous nature of the islands and the way in which they are cut up into an archipelago, together with differ- ences of climate, history, standards of living, and the like, make the differences far more conspicuous than the resemblances. As oriental countries go, the Philippines are not very densely populated, only about 25 to 50 per cent of the arable land being cultivated. It has heen estimated that the area susceptible of cultivation is between 15 000 000 and 30,000,000 acres ; only about 8,000,000 are under culti- vation', of which in 1920 the distribution was as follows : Acrea. Kite 3,669,237 Hemp""""-- 1' 382, 193 Oorn " 1' 327, 284 Coconuts 981, 079 Sugar '*°'' '^^ Tobacco 249, 879 This acreage represents an increase of about 8^ per cent over that of 1917 and 17^^ per cent over 1910. The area devoted to sugar, co- conuts and maguey has more than doubled during the interval, but the area devoted to corn has decreased nearly 400,000 acres. AU of Acres. Maguey (a fiber) 75,532 Cacao 2, 891 Coffee 2, 941 Total 8,178,827 210 ASIATIC MARKETS FOE INDUSTRIAL MACHINERY. this suggests good, healthy development, which, it is anticipated, will be carried into the future, for even the ups and downs of world re- construction will not interrupt such pronounced growth. The above products are the foundation for the entire commerce of the islands. The more they produce the more they can buy, and the development in producing power indicated above demonstrates adequate and in- creasing purchasing power, which has not been exhausted in recent years, if one may argue from the balance of trade, which has been in favor of the Philippines since 1914, except for one year. Tlie trade balances, expressed in American dollars, have been: 1914, $100,981; 1915, $4,500,820; 1916, $24,440,845; 1917, $29,807,276; 1918, $36,595,270; 1919, $5,521,226 (unfavorable); 1920, $1,685,573. Such a situation is the reverse of the awkward exchange problem associated with the markets of Europe. The Philippines not only want to buy machinery but they are in a position .to pay for it. Tlie following interesting particulars regarding the progress of the country are taken from the " Report of the Special Mission [Wood- Forbes] to the Philippines": ^ The Postal Savings Bank was started in 1907, and by 1913 it liad 40,000 de- positors and $675,000 in deposits. In 1920 these had reached 107,000 depositors and $1,612,500 in deposits. The law requires that 1 per cent of the gross business done in the islands be paid to the Government in the form of taxes. This business was computed to be $200,000,000 a year in ]907, when the tax was first imposed, and had in- creased to $325,000,000 in ]913. In 1920 it had reached the figure of $863,000,000. The number of cigars manufactured had increased from 300,000,000 to 500,- 000,000. The total resources of commercial banks rose from $15,000,000 in 1906 and $31,000,000 in 1913 and are now estimated to be $215,000,000 ; this, however, includes the impaired resources of the Phflippine National Bank without re- duction for losses. Money orders sold increased from $8,000,000 in 1913 to $17,000,000 in 1920, and postage receipts, from $380,000 in 1913 to $780,000 in 1920. Telegraph receipts show a similar increase. The earnings of the Philip- pine Railway have risen from $380,000 in 1913 to $750,000 in 1920 and the Manila Railroad from $2,400,000 in 1914 to $5,900,000 In 1920 ; this latter, how- ever, is partially to be explained by the sharp increase in the mileage and rates. POPULATION. The archipelago is made up of 3,141 islands, but about 92 per cent of the area is concentrated in the 11 that are largest. The population in 1920, as stated, was 10,350,640, or about 93 per square mile. The corresponding population in 1903 was 7.635,426. But it should be emphasized that this population is not distributed at all uniformly even over the arable area, and the diversity of types is almost in- conceivable, for in this small group of islands, smaller than the State of New Mexico, are 43 separate ethnographic groups or tribes, speak- ing 87 distinct languages or dialects of most diverse origins, and the types vary from the very primitive people of mountain and forest to the college-trained Filipino. The important element of the popu- lation is that including the so-called seven Christian tribes, and these include about 92 per cent of the total population. This is the pro- ductive element of the population, and it shows very rapid progress. The leaders in this group are still very largely Spanish-speaking and Spanish-trained and have Spanish ideas and ideals, although this in- fluence is disappearing rapidly. In the short period since the Ameri- can occupation in 1898 a great transformation has taken place. PHIUPPINE ISLANDS. 211 COMMUNICATIONS. Communications have always been inadequate. At present there are 75t miles of railway of 42-inch gauge in the whole archipelago, of which about 625 miles is on the island of Luzon. Although the intensland shipping does much of the work that would be handled hj rail in other lands and although one must allow for the moun- tainous character of the islands, it is still obvious that there is an in- sufficient railway mileage. Allowance should also be made for the 2,920 miles of first-class roads and approximately an equal mileage of poorer roads. Taken altogether, the transportation facilities are much better than can be found in most Asiatic countries. All these facilities are comparatively new and are being improved and ex- tended. Improved transportation is exerting a strong influence on the development of the people and must, in time, tend toward greater uniformity of type and language. The problem of opening up the country has been and is difficult. Even now about 12 per cent of the area of the archipelago is entirely unexplored (an area larger than the State of Maryland). Large districts are not yet adequately supplied with roads, and large islands are in need of development. It is reported that in Mindanao there is an opportunity for a water-power development that would produce about a quarter of a million horsepower, but unfortunately the site is away from population and transportation, although only a few miles from the seacoast, and so it seems to be of no immediate value. COMPARISONS WITH JAPAN AND JAVA. In many respects the Philippines resemble both Japan and Java in that they are oriental, mountainous, island countries. The climate varies from one to the other, and their cultures have been derived from radically different sources, but the populations all seem to have been at least m part of Malay origin. The following table suggests the comparative value of these markets: Items. Philippines. Japan. Java. Area, in square miles Population Population persquare mile. . . Exports (1918) Exports per capita Imports (1918). Imports per capita Machineiy imports (1918) Machinery imports per capita. 115,026 10,350,640 93 $135,194,482 S12. 12 $98, 599, 211 $9.52 $3,971,245 $0.38 147,698 55,961,140 390 $981,050,334 $17. 55 $834,071,916 $14.90 $19,984,916 $0.35 50,970 34,157,383 671 $140, 392, 9& $4.10 $145,531,095 $4.26 $3,971,188 $0,116 Java has long been considered one of the garden spots of earth, and under the efficient management of the Dutch has been consid- ered one of the most productive colonies in existence. The f :ict that the Philippines, with perhaps one-third as many people, export prac- tically as much seems to indicate very rapid and substantial prog- ress. Also, Japan has long been considered as a country of phe- nomenally rapid industrial development, and yet it appears that the Philippines have an even larger per capita importation of in- dustrial machinery, indicating similar progress. 212 ASIATIC MARKETS FOE INDUSTRIAL MACHINERY. CITY OP MANILA. Tt has been pointed out that Manila is the market, the distribut- ing center, for machinery imported into the Philippines. II is the ■only city in the archipelago and has a population of about 280,000 {Eochester, N. Y., has 296,000) . No other community in the islands is a tenth as lar^e. Manila has a population of perhaps 4,500 Ameri- cans, an approximately equal number of Spaniards, 16,000 Chinese, and 1,000 Europeans of various nationalities. Although the city showS' plenty of Filjspino and Chinese life, it is clean, provided -irith good running water, sewage, cold storage, electric lights and cars, schools, university, hospitals, clubs, churches, and similar institu- tions. Most of the streets are wide and well paved and connect with the highways of the island. More than 3,000 automobile^ 'op- crate in the city, and it is easy to drive them about the island. The run of 130 miles to Baguio, the summer and health resort, is very popular. There are also about 500 motor trucks and public-utility automobiles in the city. More than 9,000 motor vehicles operate in the islands. The harbor readily admits the largest of trans-Pacific steamers drawing as much as 30 feet of water. These vessels go alongside piers and discharge direct into warehouses or, if desired, into lighters and transfer to the interisland steamers or to the rail- way. The port also has good steamship connections for all ports in the Orient, and telegraph, mail, and freight services are exception- ally good. The spirit of the community is alert, making it mucJi easier to conduct business than is the case in many eastern cities. The' machinery business is handled by about 20 merchant firms, most of which are American. There are great differences in the organization of these companies. Some are large, with departments handling other lines as well as machinery and organized to cover the whole territory ; some handle only machinery and supplies, with perhaps a hardware business included; some have machine shops and are prepared to make repairs or perhaps manufacture certain lines. Altogether, they represent as agents perhaps 100 foreign ma- chinery manufacturers, most of whom are also American. Although some of these merchants have branches at Cebu, Iloilo, and perhaps elsewhere, the bulk of the machinery business is placed in Manila ; in some instances, where the importance of the transaction justifies, buyers go to America. These companies have their offices centrally located. and are well equipped for their business. They employ some very good engineers, and almost any problem can be handled in a businesslike way. MANUFACTURING INDUSTRIES— LIST OF ESTABLISHMENTS. In the days of the Spanish regime very little manufacturing was attempted. Apart from purely native industries, such as the pro- duction of ''piiia" cloth from the fibers of the pineapple and the preparation of agricultural products for market — particularly rice and hemp— manufacturing was largely confined to tobacco and sugar, and most of the old sugar mills were destroyed during the insurrection. In the early days of the American regime sugar was produced in an inefficient manner, using small mills driven by steam, animal, or water piower. A certain amount of mining has Special Agents Series No. 215. Photograph by Philippine Bureau of Science. FIG. 25.— TOBACCO PRESS IN USE BY CfA. GENERAL DE TABACOS, TUGUEGARAO, CAGAYAN PROVINCE, P. I. ft g PHILIPPINE ISLANDS. 213 been carried on from the early times, and iron is still produced in a very primitive way. More recently there has been greatly increased activity in a variety of directions, both in the city of Manila itself and in the Provinces ; a general idea of this can be obtained from the following table, show- ing the factories and industrial establishments : Factories and industrial establishments. City of Manila. Number ottaa- toiles. Number of la- borers. Provinces.' Number of fac- tories. Number of la- borers. Total. Number off^ tones. „-ji weaving.. AAaca pressing.. Aerated water. . Ssikeries and sweetmeats. . ^Bi and tuba ^Uardpool BoHt construction Bsi^,9iid razor ,... and paving stones . Button factory Candle and candlestick Gars, pairiages, and other vehicles. OaiameL Omrpentry shops Gasoo construction Ch6c61ate Ogars and cigarettes . Charcoal Gpffee grinding Cviab Cfjpra "Btllleries nc-power plants Vectilizer firewood lirewor^ Bsbing, pearl, and sheU... EiSiiietanft trap idrjesandsmitheries. atnre hi«Bi and saddlery Native weaving and molding shops . Hemp braid Hemp industry Ice plant ink lAntem. I^me -- lumber cutting Machinery, foundry, and shipyards. Ifacuev- ....----.-•--.--«-------•••- Uarble and cabinet Hats Hatches Uinjng Nipa weaving Pail and baluster. Perfume Pottery.. Preserving factory. Printing shops Eafts 12 42 46 155 200 61 332 109 147 272 10,443 193 16 25 214 8 278 1,404 89 69 76 789 4 'i/ios' GO '253' 37 70 677 Rattan cutting ' 128 warehouses, employing a total of 2j463 laborers, and 10 (owners not included), are not included in this statement. 110291°— 22 15 18 38 28 1 1 646 393 1 15 131 5 157 2 25 3 4 4 46 6 2 1,030 71 19 4 1,443 380 149 74 16 20 2,829 126 39 1 2,050 483 2 397 308 110 3 712 6 106 16 9 1,0^ 9 4,727 590 111 54 145 8 5,841 4)417 1,101 942 56 41 71 95 488 5 144 1 151 1,229 397 48 1,726 666 18 9 16 2 325 837 18 38 4D 1 1 710 393 1 16 131 2 10 1 1 16 203 18 79 3 2 5 1,030 85 1 25 7 1 19 4 200 157 1 2 30 38 1 9 2 19 1 1 27 80 '22 3 16 15 1 8 48 8 barber shops each employing 1 laborer 214 ASIATIC MARKETS FOE INDUSTRIAL MACHINERY. City of Manila. Provinces. Total. Factories and industrial establishments. Number olfac- tories. Number of la- borers. Number olfac- tories. Number -of la- borers. Number of fac- tories. Number of la- borers. Rice threshers 5 283 2 197 4,409 60 5 285 4 4 107 1 79 19 610 78 5 2 13 15 3,213 38 1 57 12 69 175 44 197 2 2 4 66 135 14 ^476 195 Rope Sail making 14 Salt 107 1,002 1,002 5 1 21 18 268 40 >5 1,207 94 820 144 Sawmills . 68 1 342 38 a 1 13 2 3,213 38 1 47 10 18 175 43 1,841 1,736 128 78 28 43 5 110,300 80 4 170 83 36 6,454 778 3,048 95 Shoes, sUppers, and wooden 2,556 Soap . - 272 78 Spinnery 1 251 279 Stock farm ' 43 13 25 30 110,300 80 Tailor shops , , 4 10 2 51 43 103 118 213 Tile and bricks 186 164 6,454 1,067 1 279 1,047 21,828 9,536 160,289 10,683 182, 117 Obviously the above list includes a great many items that can scarcely be called " factories." Probably a much better basis is the 1920 census, which reported 239 manufacturing establishments, with a combined capitalization of $80,372,934. Manila is by far the most important industrial city, but it will be noticed that certain important activities have developed in the Provinces, especially in mining, tobacco, coconut oil, rice mills, and sugar. MINING. The mineral production of the archipelago in 1920 was as follows : Gold $1, 212, 303 Salt. Sand and gravel- Stone 697, 313 539, 525 6,135 Lime _. Coal— . Iron Silver . $5, 186 726, 100 20,095 9,630 The silver recovered is incidental to the gold with which it is associated. Geological conditions are very much against mining, for although evidences of minerals are frequently found, the volcanic origin of the islands has broken up the natural stratification probably to a greater degree than anywhere else in the world. Even if operations are conducted in a seemingly good vein, they may be ended any time through meeting a fault. On the other hand, evidences of gold, copper, coal, and oil exist and may develop into satisfactory mining projects at almost any time. There are also some interesting placer properties. LUMBER AND SAWMILLS. It has been stated previously that there are 79 sawmills in the islands, employing 3,045 laborers. The total exports of wood, both mp,nufactured and unmanufactured, in 1918 amounted to approxi- PHIUPPINE ISLANDS, 215 mately $900,000 and the business has doubled since 1915. But in all of these tropical countries the problems of lumbering differ radically from those in the domestic forests. In virgin American forests it often happens that the standing timber is all of one type or even of one variety over really large areas. On the other hand, a tropical jungle will often show several thousand varieties of trees and shrubs per square mile. The problems of cutting, extraction, and sawing that result deserve most careful consideration. lii the teak forests of Siam, Burma, etc., it often requires three years to get the wood to market after it has been selected in the forest. Only rarely is one justified in employing American mills of reaUy large capacity in the Tropics. On the other hand, machinery as so often supplied from European manufacturers is far from satisfactory and is greatly inferior to American standard equipment for such service. Before one designs a mill for the Tropics these conditions deserve most care- ful analysis. TOBACCO MANUFACTURING. In the table below are the figures for the Philippine cigarette in- dustry : Year. Number of factories. Production. Exportation. 1914 83 77 23 . 23 24 Number. 4,411,922,312 4,180,673,512 4,720,005,675 5,049,138,900 5,039,784,441 Number. 45, 628, 804 1916 45,224,542 1918 119, 025, 217 1919 154,192,300 1920 . 128,663,141 A very large number of these cigarettes are made by hand, al- though the principal production is by machinery ; the American stylo of machine is not ordinarily employed, as the market demands a cigarette that is closed at one end. Cigar production is developing more rapidly : Years. Number of factories. Production. Exportation- 1914 ... 83 77 82 79 91 Number. 243,134,200 271,868,278 484,674,450 499,059,234 510,800,333 Number. 152,609,443 1916 191,349,900 1918 ■ 367,022,982 1919 389,799,788 1920 414,603,650 There seems to be a reasonable demand for equipment used in con- nection with tobacco. The above figures show an increase in the scale of operations, and in various ways improved methods are being adopted. These manufacturers will be interested in anything they can learn on the subjects of curing, moistening, drying, rolling, wrap- ping, and boxing. 216 ASIATIC MARKETS FOE INDUSTRIAL MACHINEBY. COCONUT-OIL INDUSTRY. The coconut-oil industry is one of the most important in the Philip- pine Islands, and very large sums have been invested in machinery for its extraction. As it is not well understood in the United States, the whole industry seems to deserve brief discussion. In the world's trade, coconut products represent more than $350,- 000,000 per year, or perhaps twice as much as rubber. Expressed in another way, it is substantially equal in value to the total produc- tion of electrical machinery, apparatus, and supplies in the United States. The principal product is coconut oil, which is edible and very valuable, being largely used in the preparation of margarine, but also in a great variety of other ways, as for toilet purposes, as an illuminant, etc., and is in great demand in the markets of both Occident and Orient. It is obtained by subjecting the meat of the nut to pressure. The residue, a cake, is a by-product and is an ex- cellent feed for cattle. Sometimes it is used as a fertilizer. From the husks a fiber, coir, is obtained, which is used in making the door mats found in almost every home, and also for brushes, rope, etc. The milk, though nutritious, is often wasted. The market for the oil is highly competitive, as many other vegetable oils can be substituted for it, and also there is competition between different sources of supply, the Philippines growing only from 10 to 15 per cent of the world's production. Operations are conducted on ver}' narrow margins. Despite this keen competition an important quantity of coconut oil is extracted in Asia by means of equipment that is very primitive. In different countries different types of presses are used, and it is remarkable how effective these methods are ; but the best oil mills are equipped with modem hydraulic presses or other types of machinery designed for the work. When the extraction is made in modern mills, it is usually necessary to dry the coconut meat before shipment. In this form the product is called copra, which is shipped to mills in Europe and America in large quantities as well as to mills located in the various countries of Asia. The shortage of shipping during the war, with the accompanying freight rates, made it very profitable to operate mills in Asia, and more than 30 of these were organized in the Philippines, purchasing oil-extraction machinery, as suggested by the following import re- turns published by the Philippine customs : 1913 $8, 422 1917 $172, 427 1914 9,S12 1918 1,686,558 1915 144, 685 1919 _ x, 558 512 1916 37, 734 IttO 418, 267 The point has been reached where the capacity of the extraction plants exceeds the copra supply by a very substantial margin. Also it seems safe to say that in installing these plants under war con- ditions efficiency was sometimes sacrificed in order to secure large capacity. But the mills previously installed in America and Europe, especially in France and Germany, are reported to secure very high oxtraction and efficiency. There is now close competition between the mills in the Orient and those elsewhere, and it has even reached the point Where Philippine copra has been exported despite the fact that pressing-plant capacity is available locally. PHIIJPPINB ISLANDS. 217 This competition is greatly influenced by transportation costs. Copra is light and bulky, but can be shipped in bags. The oil some- times requires the more costly barrels, but both oil and cake are compact. It has been estimated that there is a saving of about $2.50 per ton in favor of pressing the copra before shipment. This arrange- ment has the further advantage of permitting oil and cake to be sent to separate markets, and the oil is less likely to contain acid if ex- tracted before shipment. On the other hand, if France, for example, levies a duty on the oU and cake but admits copra duty-free, French mills will have an advantage in that territory, and can draw their supplies from Indo-China, Ceylon, British India, Dutch East Indies, South America, Africa, and a variety of other places, as well as the Philippines. The present problem is to so modify the Philippine plants as to secure the utmost efficiency and an absolutely minimum production cost. Improvement can also be made in the method of drying the copra. The present methods are primitive. As stated above, there are in the Philippines 1,030 plants employing 4,727 laborers. The process commonly employed is not scientific or cleanly, and copra from other countries ordinarily commands a more favorable price in the markets of Europe, where copra from the Malabar coast of India (Cochin) is considerefl the best. That coast is exposed to the mon- soon (trade wind) and has practically continuous sunshine for six months in succession, so that the copra is not subjected to the frequent showers of other countries. It seems that there is need for a good copra dryer. Certain designs are being tested in Java. It will be difficult to design and market a suitable device, but once this is done it will be an exceedingly good thing for the Philippines, as well as for consumers of margarine. Coir also introduces an interesting problem. Of all the countries producing coconuts this particular product seems to come only from the Malabar coast, where conditions are peculiarly favorable for its production. It would be a. splendid thing for the Philippines if they could be placed in a position to participate in this business, since it is almost as important to India as the copra itself and has an important influence on competitive prices of copra, oil, and cake. The manufacture of coir in India is a cottage industry, most of the work being done by women. The coconut husks are buried from 8 to 16 months in pits that expose them to sea water in such a man- ner that the tide washes away the products of decomposition. After- wards these husks are removed and beaten on stones until a,ll pulp and particles are removed, leaving the fiber. Presumably this industry could be improved by the introduction of modern methods and me- chanical help. So far as known, no American manufacturer pro- duces machinery for this purpose. Something has been done in Europe, but it is felt that those methods could be improved. Some specialists who devote their time to such subjects have come to the conclusion that more profit can be secured per acre by planting the African oil palm than can be obtained from coconuts, and in certain sections of Asia the new plantations will probably be of this kind. This palm yields two different oils, palm oil and palm-kernel oil both of which compete with coconut oil for many purposes. Machinery manufacturers should note that the palm kernel is rather 218 ASIATIC MARKETS FOR INDUSTRIAL MACHINERY. more difficult to handle than copra, and the fruits from which the palm oil is derived are a very special problem, in that the oil must be extracted very promptly to avoid rancidity and acid. There will probably be a considerable demand for machinery to extract both palm-kernel oil and palm oil for several of these eastern countries within the next few years. RICE MILLS. As stated, the Philippines contain 3,380,734 acres planted to rice, producing in 1918 about 1,104,805 tons, to handle which there were 285 rice mills employing 4,475 laborers. In addition, 175,000 tons of rice were imported, representing a total consumption of about 235 pounds per capita per year. The returns of the Philippine customs give the following figures for imports of rice threshers, hullers, clean- ers, and parts thereof: Years. United States. United Kingdom. Gemumy. Japan. Total. 1913 $32,055 26^977 21,934 3, 152 12,101 19,847 73,260 184,393 118,234 $10,991 4,816 2,122 96 312 3,143 8,740 $61,763 65,990 2,9«- 1,615 $100 17 1 -2 5 106 61 938 $104,909 97,800 35,229 6,395 14,329 20,012 74,510 201,807 127,531 1914 1915 1916 1917 1918' 1919 mo' 14,232 557 1921 • China, $8. > China, $39. These figures are shown in detail in order to call attention to the fact that Germany and the United Kingdom participated rather more than one '^ould expect, and the figures for Japan and China are shown as an indication of the simple character of their products. American manufacturers enjoy an excellent reputation for their rice hullers and polishers — a line of comparatively small machinery. They are also in a position to supply mills of large capacity that show excellent performance. But the German firm of Nagel & Kaemp developed an intermediate grade of milling machinery con- sisting of a special grouping of equipment to which they gave the name " Filipina " and which includes a huUer, a sieve, a husk sepa- rator, a paddy separator, a polishing cone, a sifter, and an exhauster, together with belting, elevators, pipes, etc., mounted in an iron frame- work complete, thus comprising what might be called an elementary rice mill. These were offered in four different sizes, giving ca- pacities from about 400 pounds to about 3,000 pounds per hour. For districts where millers wish to exercise greater care in protecting the rice from breakage, additional polishing equipment is obtainable. From what could be learned, these sets were very popular in many of the countries of Asia, and it is suggested that American manufacturers might find it profitable to develop something that would do better work at these capacities.' > A copy of Nagel & Kaerop's gatRlogue. describing the above machinery is on file In the Bureau of Foreign and Domestic Commerce, Washideton, D. C. ' ' " PHILIPPINE ISLANDS. 219 It appears that imports of this class of machinery have been con- siderably reduced for several years and that a good demand can be stimulated if suitable plant can be offered, not only in the Philip- pines but elsewhere. SUGAR INDUSTRY. In ordinary years the sugar industry absorbs a much larger volume of machinery than the coconut-oil industry, imports to the Philip- pines in recent years being: 1913 $1, 000, 495 1914 170, 030 1915 114, 619 1916 124, 587 1917 $373, 356 1918 469, 489 1919 3, 375, 164 1920 2, 431, 974 A brief consideration of the history of this industry is necessary before one can appreciate the present position. Cane sugar has been exported regularly for more than a century, about 148 tons being shipped in 1795, which increased to 47,000 tons in 1854 and reached a maximum of about 200,000 tons, on the average, in the period be- tween 1890 and 1894. From this time on production was affected by a number of factors : (a) The insurriection which resulted in war and culminated in the country passing under American control. These disturbances re- sulted not only in the interruption of production but in the destruc- tion of most of the existing machinery. (6) Up to this time the cane sugar in the markets of the world was the old-fashioned "brown sugar" ("muscovados," etc.). But the development of the beet-sugar industry in Europe created a de- mand for better qualities, to supply which the producers of cane sugar required improved mills for its production. Other producing countries met this demand, but the disturbed political conditions pre- vented the Philippines from doing so. (c) An epidemic of rinderpest, about this time, destroyed more than 80 per cent of the work animals on the plantations. (d) During the period involved in the above-mentioned disturb- ances and the paralysis that resulted from them, the industry in the Hawaiian Islands, Formosa, and Java has been expanded until those countries are understood to be producing at full capacity, with but small promise of further increase. (e) The situation seems to indicate that the Philippine Islands can be developed to meet the: increasing world demand and that' a period of development may be expected. The methods of producing sugar have been unsatisfactory on both the agricultural and the extraction sides. The plowing has been only to a depth of perhaps 6 inches, and, as shown above, there are 3,213 mills, employing 110,300 laborers. Most of these are three- roller mills, often of wood, and driven by animal or water power, but sometimes by steam. o • •/• However, this phase of development is passing rapidly. Scientific methods of growing the cane are being employed, and there are now modern "centrals" in operation, with a total capacity of 21,870 tons of cane per day. The largest existing plant has a daily capacity of 1,800 tons. Also, there are 16 plants, each with a capacity of 500 220 ASIATIC MARKETS FOR INDUSTRIAL MACHINERY. tons or more of cane per day. These plants have run long enough to demonstrate that they are earning good dividends. The normal expansion of the sugar industry in this part of the world seems to center now in the Philippines, and the destruction of the beet-sugar properties in Europe during the war encourages the belief that mar- ket conditions will stimulate a very rapid development in this terri- tory. From what could be observed, the new plants represent the very best practice in this class of engineering, and in the near future the Philippines should be exporting increasing quantities of high- grade sugar. The position of the Philippines among the sugar-producing coun- tries of the world is indicated in the report covering India, but it should be remembered that Philippine, development is very rapid. The sugar production in recent years has been : Tons. Tons. 1910 168, 000 1911 268, 000 1912 267,000 1913 322, 000 1914 382, 000 1915 398, 000 The exportation quite regularly exceeds 200,000 tons and reached 370,000 tons in 1916. The most productive Provinces are Occidental Negros and Pampanga. During the period from January 1, 1916, to July 1, 1919, 24 sugar corporations were registerted with the authorities, involving a total capital of $11,824,154, or perhaps half a million dollars each. GENERAL INDUSTRIAL SITUATION. In connection with the above paragraphs regarding special enter- prises, and with due regard for the fact that we are dealing with an agricultural and tropical country, it is felt that a general picture of the present situation and trend of development can be obtained from consideration of the following table, which shows the new business corporations registered in the Philippines from 1909 to 1919, inclu- sive. Attention should be called to the large average capitalization of the sugar mills and the low average for the rice mills and electric light and power plants : 1916 : 386, 000 1917 400, 000 1918 437, 000 1919 417, 916 1920 180, 000 Types. Num- ber. Capital, Types. Num- ber. CapitaL Abated water Box factories Button factories Cigar and cigarette factories Cotton spinners Dlstillfflles Kleetrlo light and power Bngineermg construction and re' pair Fertilizer factories GaifactoriM Oeneralmailuf acturers IceiBctories and cold storage Lumbering...- Hatch factories Uacblneiy merchants $76,000 75,000' £0,000 3,629,000 600,000 4,733,500 3,364,350 4,931,500 50,000 25,000 1,043,000 243,000 2,779,500 400,000 676,000 Mining Oil factories Paper factories Prmting and publishing . . . Kice mills Sack and bag factories Sawmills Shoe factories Soap factories Sugar mills and refineries . Tanneries Telephone and tel^ra^.. . Transportation companies. Total.. 110 3: 25 S21,130,9N 4,625,6<» 250,000 830,855 519,733 40,000 15,000 281,000 5,000 11,899,153 2aoLoao 60,009 1(^*28^010 73,350,000 PHILIPPINE ISLANDS. 221 dS^^nnn/f,^^ exclude 35 foreign corporations with capital of over «i^ V^'^^ V^^n *i?*^ ^^ private partnerships with capital of more than $-1^000,000, all engaged m general manufactures. It is not possible to say how much of this foreign money is in the islands. ITiese particulars support the claim made in other sections of this report that industrial development has started seriously. A distinct demand is felt for greater facilities of various sorts, business men and (government officials are disposed to encourage the establish- ment of industrial enterprises, and the legislature has passed a number of bills for this same purpose. The Bureau of Commerce and Industry has been added to the Department of Commerce and Communications in order to give careful study to industrial matters and encourage improvements or new enterprises where practicable. Although the Eizal Cement Co. is producing cement, the demand for more and cheaper cement is so insistent that special legislation has been enacted creating the National Cement Co., in which the government holds stock. In like manner the fuel situation has been unsatisfactory, and the National Coal Co. has been organized and IS engaged in the development of certain mines. Needs having been felt in several other directions, the National Development Co. has been organized, and its charter provisions give it authority to engage in a great variety of enterprises. For these and other reasons it is felt that the development of the industries of the country will be continued as aggressively as circumstances allow. On the other hand, although the writer is convinced that the possi- bilities of the country are great, its limitations should be fully appre- ciated. The country is new and needs to be opened up. Few of the people understand what is needed if industries are to prosper, fewer still have had the experience of promoting a new corporation, and, although it would appear that a certain amount of capital is hoarded among the people, only a few men have succeeded in attracting it into legitimate industries. Labor is unfamiliar with machinery, good mechanics are very scarce, and native mechanical engineers are prac-^ tically unknown. FUEL. The fuel situation in the Philippines is very serious for the indus- tries there. In 1914 coal prices in Manila, for industrial purposes, were in the neighborhood of $4 per ton. In March, 1919, the writer was given data regarding an important order that was placed at $31.10 per ton. 'Kie Archipelago requires about 600,000 tons per annum. The amount of coal produced in the Philippines has been reported as follows : Metric tons. 1907 4, 123 1908 10, 035 1909; 30, 336 1910 28, 655 1911 ^— ^ 20, 000 1912 ,- 2, 720 1913 None. Metric tons. 1914 ^ None. 1915 None. 1916 None. 1917 5, 748 1918 L 15, 663 1919 32, 892 1920 58, 888 By far the largest part of the imported coal is from Japan. China and the Japanese-leased territory in China have also made important 222 ASIATIC MARKETS FOR INDUSTRIAL MACHINERY. shipments. Borneo, Indo-China, and Australia have supplied it from time to time. But the situation is very unsatisfactory. Coal has been found in the islands, but it has been difficult to produce it on a commercial basis. As mentioned above, the National Coal Co. has been organized in an effort to solve this problem and is under- stood to have produced the tonnage shown since 1916. It is to be hoped that it will prove an unqualified success. Petroleum traces have also been found. Possibly this will lead to a satisfactory fuel supply. At ajiy rate, the importance of developing a fuel snipply is fully realized. In the meantime it is not possible to estimate what the future cost of coal will be, but probably it will continue to be expensive. Wood and oil fuel also probably will be high in price. Equipment for use in the Philippines should be designed for high economy in steam consumption, and furnaces should be designed for maximum efficiency, suitable for operation on inferior coal of fri- able nature, high in volatile matter and high in ash, of chestnut size or smaller. It may be of interest to note that in the early part of 1919 condi- tions were such that the Manila Electric Bailway & Light Co. used copra cake as fuel to meet part of its steam requirements. Probably this will not happen again, as the cake is too valuable as cattle feed to be used in this way, but the incident illustrates the resourceful- ness sometimes needed in Asiatic countries. Because of the high price of coal other sources of power should be considered. Oil engines of many types are widely used, the customs returns of the United, States showing that 7,056 internal-combustion engines were shipped to the Philippines in the years 1914 to 1921, inclusive. In addition, a considerable number of such engines were imported there from Europe. Of these there are a great many gaso- line and kerosene engines of* moderate size for stationary, portable, and marine services. For larger installations the hot-bulb or semi- Diesel type is used, and there are a few installations of true Diesel engines. American manufacturers would probably be wise in pay- ing closer attention to the possibilities of gas engines, especially of the suction-gas type, as the high cost of coal and oil makes the* gas engine imusually economical. Coconut shells make an excellent charcoal for such use, and there are many other vegetable products that might be considered. Such units should have producers of ex- ceptionS size, but, when properly designed, they give satisfaction, and the operating costs are very attractive under the abnormal local conditions — a fact supported by experience in the Federated Malay States as reported heretofore. One gathers the impression that Euro- Eean manufacturers obtain a larger proportion of the business in >iesel, semi-Diesel, and gas engines than the circumstances of the situation justify. If the ihdustrial development of the country were more advanced, one would expect that the above conditions would stimulate hydro- electric development in sucii a mountainous country. No accurate survey has been made of available water-power sites, but the total applications for water-power rights since the American occupation and up to November, 1918, amount to 237,000 horsepower. Up to the same date the developed water power was 2,280 horsepower in six plants. It seems probable that there will be further development PHILIPPINE ISLANDS. 223 along hydroelectric lines, the rapidity of which will depend upon a number of rather complicated conditions. POSITION OF AMERICANS IN THE MARKET. More than 80 per cent of the industrial machinery imported into the Philippines is from the United States. There are a number of reasons for this comparatively favorable showing, and, also, it is felt that in some lines Europeans still secure more business than the merits of their goods and other conditions justify. Apart from the influence of Americans and American investments, the good steamer connections with the United States and the mail, telegraph, and banking facilities, the tariff operates in favor of Amer- ican products. American machinery is admitted free of duty, while that from other countries pays from 10 to 35 per cent, according to its classification. It seems best to quote those sections of the law that refer to machinery. Section 4 of the United States tariff act of October 3, 1913, con- cerning tariff relations with the Philippine Islands provides : C. That there shall be levied, collected, and paid upon all articles coming into the United States from the Philippine Islands the rates of duty which are required, to be levied, collected, and paid upon like articles imported from for- eign countries : Provided, Thiat all articles, the growth or product of or manu- factured in the Philippine Islands from materials the growth or product of the Philippine Islands or of the United States, or of both, or which do not contain foreign materials to the value of more than 20 per centum of their total value, upon which no drawback of customs duties has been allowed therein, coming into the United States from the Philippine Islands shall hereafter be admitted free of duty : Provided, however. That in consideration of the exemp- tions aforesaid all articles, the growth, product, or manufacture of the United States, upon which no drawback of customs duties has been allowed therein, shall be admitted to the Philippine Islands from the United States free of duty : And provided further, That the free admission herein provided of such articles, the growth, product, or manufacture of the United States, into the Philippine Islands, or of the growth, product, or manufacture, as hereinbefore defined, of the Philippine Islands into the United States, shall be conditioned upon the direct shipment thereof under a through bill of lading from the country of origin to the country of destination: Provided, That direct ship- ments shall Include shipments in bond through foreign territory contiguous to the United States: Provided, however, That if such articles become unpacked while en route by accident, wreck, or other casualty, or so damaged as to necessitate their repacking, the same shall be admitted free of duty upon satisfactory proof that the unpacking occurred through accident or necessity, and that the merchandise Involved is the identical merchandise originally shipped from the United States or the Philippine Islands, as the case may be, and that its condition has not been changed except for such damage as may have been sustained: And provided, That there shall be levied, collected, and paid in the United States upon articles, goods, wares, or merchandise com- ing into the United States from the Philippine Islands a tax equal to the internal-revenue tax imposed in the United States upon the like articles, goods, wares, or merchandise of domestic manufacture ; such tax to be paid by internal-revenue stamp or stamps to be provided by the commissioner of inter- nal revenue, and to be affixed in such manner and under such regulations as he, with the approval of the Secretary of the Treasury, shall prescribe ; and such articles, goods, wares, or merchandise shipped from said islands to the United States shall be exempt from the payment of any tax imposed by the internal- revenue laws of the Philippine Islands : And provided further. That there shall be levied collected, and paid in the Philippine Islands upon articles, goods, wares or merchandise going into the Philippine Islands from the United States' a tax equal to the internal-revenue tax imposed in the PhiUppine Islands upon like articles, goods, wares, or merchandise of Philippine Islands manu- 224 ASIATIC MARKETS FOE INDUSTRIAL MACHINERY. facture; such tax to be paid by internal-reventie stamps or otherwise, as provided by the laws in the Philippine Islands ; and such articles, goods, wares, or merchandise going into the Philippine Islands from the United States shall be exempt from the payment of any tax imposed by the internal-revenue laws of the United States: And provided further, That in addition to the customs taxes imposed in the Philippine Islands there shall be levied, collected, and paid therein upon articles, goods, wares, or merchandise imported into the Philippine Islands from countries other than the United States, the internal- revenue tax imposed by the Philippine government on like articles manufac- tured and consumed in the Philippine Islands or shipped thereto for consump- tion therein from the United States: And provided further, That from and after the passage of this act all internal revenues collected in or for account of the Philippine Islands shall accrue intact to the general government thereof and be paid into the insular treasury. It will be noted that it is important to demonstrate to the customs authorities when goods are of American origin. This is done by means of a " certificate of origin " described more f uilj elsewhere. Failure to have such a certificate usually results in serious expense in the form of duties, fines, or delays, according to circumstances. The duties paid on machinery from other countries a^e : Typewriters, mimeographs, Koneos, and other writing, duplicating, and mani- folding machines and devices, adding machines, comptographs, and other com- puting- apparatus, fare registers, and detached parts for any of the foregoing, Including ribbons, pads, stencil sheets, mimeograph silks, and similar accessories therefor, and stamp pads, 15 per cent ad valorem. Cash registers and detached parts therefor, 25 per cent ad valorem. Sewing machines and detached parts therefor (except needles), 15 per cent ad valorem. Automatic slot machines, not otherwise provided for, and detached parts therefor (subject to the provisions of section 3 of this act), 35 per cent ad valorem. Machinery and apparatus for weighing and detached parts therefor, not other- wise provided for, 20 per cent ad valorem. Electric and electrotechnical machinery, apparatus, and appliances : (a) Dynamos, generators, generating sets, alternators, motors, and similar machinery, not otherwise provided for, transformers and storage batteries, switchboards and switches, arc lamps, telephone and telegraph instruments, fans, buzzers, and annunciators, amme ers, voltmeters, wattmeters, and similar meas- uring apparatus, dry and wet batteries, and detached parts for any of the fore- going, and articles used exclusively in the Installation thereof, insulators and insulating compounds and materials used exclusively for electrical purposes, •carbon, and incandescent bulbs and tubes, 10 per cent ad valorem. (6) Cooking and heating apparatus and utensils, chandeliers, desk and table lamps, flatirons, soldering and curling irons, thermocauteries and cauterizing instruments, surgical, dental, and therapeutic appliances, including so-called electric belts. X-ray machines, vibratory apparatus, electroplating outfits, cigar lighters, other instruments, implements, utensils, and articles used in connection with, for, or by the application or production of electrotechnical, thermoelectric, galvanic, or galvano-tQagnetic force, and detached parts for any of the fore- going, not otherwise provided for, 20 per cent ad valorem. Engines, tenders, motors, steam boilers, pumps, and machinery, diving suits, common tools, implements, and apparatus ; detached parts therefor ; not" other- wise provided for ; shafting and gearing : (a) Of iron, steel, or wood, 15 per cent ad valorem. (6) Of other materials; emery cloth; 20 per cent ad Valorem. Machine belting of whatever material, 10 per cent ad valorem. Fine tools, implements, and instruments of whatever material, used in the arts, trades, and professions, such as measuring instruments micrometric gauges, mathematical and drawing instruments, manicure instruments (not pocket cutlery), watchmakers', jewelers', surgeons', dentists', engravers', carvers' glass cutting, and similar tools, instruments, and implements, any of the fore- going and detached parts therefor not otherwise provided for, 20 per cent ad valorem. PHILIPPINE ISLANDS. 225 In the statistical tables a* the end of this section are details show- ing the kinds and amounts of machinery imported from year to year and the countries from which this equipment came; from these it will be noted that in spite of the protection afforded American ma- chinery by the above laws Germany and the United Kingdom were able to supply an important and increasing volume of machinery. The German participation was as follows : Years. Bice and grain cleaning machinery. Flour-mill machinery. Internal- combustiOD engines. 1909 $11,000 13,000 14,000 11,000 48,000 $1,000 3,000 1,000 7,000 36,000 $1,000 1910 5,000 1911 26,000 1912 40,000 1913 38,000 A tendency to revive this trade is seen in the more recent customs returns published at the end of this section. Some very strange figures appear in the tables beginning on page 232f. For instance, in 1915, a war year, the United Kingdom supplied a disproportionate share of steam boilers, furnishing more than the United States, and in earlier years it did nearly as well. It will also be noted that Sweden supplied $34,000 worth of oil engines in 1914 and 1915. It is very difficult to account for these shipments from European sources during the more recent years. The Japanese returns also show some points of interest. Under the item " Electrical machinery " the Japanese figures for 1918 claim an export of 34,235 yen as compared with 3,814 pesos acknowledged by the Philippine customs, suggesting that the Japanese returns refer largely to supplies rather than " machinery." Similarly, the amount of "other machinery" shown in the Japanese returns for 1918 is largely explained by an item of 47,947 pesos' worth of oil-extracting machinery acknowledged by the Philippine returns, most of which, it is understood, was originally made in the United States, though Jap- anese manufacturers do export hydraulic presses. The total figure also includes 3,140 pesos' worth of pumps. Against the Japanese ex- port figure of 4,063 yen's worth of printing presses the Philippines ac- knowledge receipt of only 848 pesos, suggesting that an important percentage of these " presses " were accessories of a nature that would scarcely "be classed as "machinery." But regardless of how it is analyzed, most manufacturers will find that the opportunity in this market lies in its expansion. Except in a very few lines, such as cigarette machines, steam boilers, rice ma- chinery, and possibly oil and gas engines and one or two other lines, there is no need to overcome foreign competition, but the effort should be directed toward stimulating the demand from the territory. A great deal is possible in this direction. Conditions now favor such work. There has been a general awakening. Each class of equipment must be handled on its merits, but there are many who wish to dupli- cate the success of those who have made handsome profits from lum- ber, gold, coconut oil, and sugar, and hearty responses will come to the man who can indicate how this is to be done. 22G ASIATIC MARKETS FOB INDUSTBIAL MACHINERY. SPECIAL CONSIDERATIONS AFFECTING SALES METHODS. At the risk of repeating what has already been stated in the general section of this report, it seems desirable to emphasize that equipment sent to the Philippines will probably be subjected to extreme heat, frequent and severe rains, excessive humidity, periods of relative dry- ness, typhoons, and white ants, and, if it is to be a success, it should be so made as to withstand the ravages and decay that these things produce. However, if equipment is sent to the extreme south, as m Mindanao and neighboring islands, it will be out of the typhoon belt and will escape the high winds and the worst effects of some of the other sources of trouble. Special consideration should be given to the size and weight of package that can be handled when it is necessary to send large cases. So far as landing in Manila is concernied, any package of reasonable size can be delivered, but it becomes expensive if large enough to be penalized by the lift scales, applying to ocean freight and light- erage. In the city motor trucks up to 5 tons' capacity are available wherever suitable roads exist. If the machinery is to be handled on the railway it should be re- membered that this does not as yet connect with the piers. About a mile separates them. All lines of railway in the Philippines are of 42-inch gauge (except plantation lines). If it is necessary to transship onto the " interisland boats," it should be remembered that these small steamers have small hatches — only 4^ by 4J feet — and can not handle packages heavier than 7 tons. Also the facilities for landing and delivering cargo at and from the smaller ports are frequently limited, and special care should be exiercised in advance whenever it is proposed to ship heavy and bulky packages to locations having such restricted facilities. As explained in the general section of this report, it is always necessary to be sure to comply with the regulations of the customs at destination. In the Philippines there are several matters that require special attention. This whole subject has been covered very clearly in an article prepared by A. B. Cresop, general manager of the Luzon Brokerage Co., and published in the Manila Daily Bulletin. Even at the risk of repeating what has been mentioned before, we quote the following, as it covers the routine of shipping goods to the Phil- ippines in a very concise way : If this information is carefully impressed on your shipping department, there will result a great saving to yourself and your clients in the Philippine Islands, in addition to the satisfaction that will be experienced by your Philippine con- nection, which is sure to secure for you additional business. It is a positive fact that merchants of the Philippine Islands have been caused the loss of many thousands of dollars through either the laclc of knowledge regarding simple requirements of the Philippine government with reference to documents, or carelessness on the part of shippers in the United States. Customs regulations, especially those pertaining to documents required by the customs authority, are simple and, if followed by the shipper, no inconven- ience or loss would be sustained by the importer. All merchandise imported into the Philippine Islands is delivered by the carrier to the collector of customs at the port of debarkation and is delivered by the collector of customs to the lawful owner thereof, who must present, to establish this ownership, a properly indorsed " negotiable bill of lading," and the collector of customs is responsible under bond to make delivery to such lawful owner. PHILIPPINE ISLANDS. 227 It is therefore most important that the Importer have In his possession, upon arrival of the merchandise, a properly indorsed bill of lading. Not having- this, in order to obtain possession of his goods he is compelled, first, to state under oath that such bill of lading has not been received ; and, second, in lieu of It, file a fidelity bond for the value of the goods, including freight and an additional 10 per cent. These bonds must be furnished by a surety company recognized by the Philip- pine government, or cash. Individual sureties may be accepted, but the formali- ties, under the lavrs of the Philippine Islands, make this almost impossible. Wittx one exception, it is hardly necessary to state what constitutes a negotiable bill of lading, and that is : Importers doing business in the United States and in the Philippine Islands very often consign goods to order, being of the im- pression that their ofiiee in the Philippine Islands may sign for their United States ofiice. This can not be done unless a power of attorney is given for that specific purpose, a copy of which must be on file with the collector of cus- toms. BiUs of lading of this nature must be returned to the United States for their indorsement, thus necessitating bond for later production, properly in- dorsed. It is very important that documents should accompany the shipments, either by the same steamer or a steamer which precedes the shipment. There is now being operated, established from the Pacific coast, a service from San Francisco to Manila, via Honolulu, direct, of 23 days. Undoubtedly, such a service will either leave Vancouver or Seattle. Obviously, documents which do not accom- pany these steamers will be from 10 to 15 days late, as the ordinary steamer is. 30 days making the trip. In cases of this kind, where the documents do not accompany the steamers, bonds will always be required at not only an addi- tional cost to the importer but a considerable confusion in efCecting delivery, which must be made from the steamer's manifest, which gives only the packages in general terms. In order to obtain delivery of imported merchandise into the Philippine Islands there must be filed with the collector of customs an entry, in duplicate,, which must be accompanied by the bill of lading and two copies of invoices. The tarifiE law pertaining to the Philippine Islands prescribes, under section 16, the following: " Sec. 16. That all invoices of imported articles, goods, wares, or merchan- dise shall state the true value thereof in the currency of the place or country from whence imported, or if purchased, in the currency actually paid therefor, shall contain a correct description of such articles, goods, wares, or merchandise, with true numbers, weights, and quantities in the tariff terms of this act, and shall be made in quadruplicate and signed by the owner or shipper. If the mer- chandise has been actually purchased, or by the manufacturer or owner thereof, if the same has been procured otherwise than by purchase, or by the- duly authorized agent of such purchaser, manufacturer, or owner." These invoices may be in four forms: (1) For dutiable merchandise, whether coming from the United States or for- eign ports, where the value is more than $100 United States currency, the invoice must be presented to a United States consul, vice consul, collector of customs, or commercial agent of the United Statps of the consular district in which the merchandise was manufactured, purchased, or shipped. (2) If the merchandise is of the growth, product, or manufacture of the United States as provided for in section 12 of the United States tariff law per- taining to the Philippine Islands : " Sec. 12. That all articles the growth, product, or manufacture of the United States and its possessions to which the customs tariff in force in the United States is applied and upon which no drawback of customs duties has been allowed therein going into the Philippine Islands shall hereafter be admitted therein free of customs duty when the same are shipped directly from the coun- try of origin to the country of destination: Provided, That direct shipment shall include shipment in bond through foreign territory contiguous to the United States. Said articles shall be as originally packed without having been opened or in any manner changed in condition : Provided, however. That if such articles shall become unpacked while en route by accident, wreck, or other casualty, or so damaged as to necessitate their repacking, the same shall be admitted free of duty upon satisfactory proof that the unpacking occurred through accident or necessity, and that the merchandise involved is the iden- tical merchandise originally shipped from the United States, or its possessions- 228 ASIATIC MABKBTS FOR INDUSTRIAL MACHINERY. as hereinbefore provided, and that its condition has not been changed except (or such damage as may have been sustained." A commercial invoice, having a certificate of origin made a part thereof and signed, shall be presented as prescribed by Customs Administrative Circular No. 626: " Pab. 111. The original and duplicate invoices for merchandise, the growth, product, or manufacture of the United States, shall have the foUavying certifi- cate printed, viritten, typewritten, or stamped thereon : " ' I hereby certify that the above-described articles are of the growth, product, or manufacture of the United States, or its possessions, and that no drawback of Import duties has been or will be claimed thereon, and that this invoice is true and correct in all particulars.' " This certificate shall be signed on both original and duplicate invoices by the manufacturer, seller, or consignor of the merchandise, or by a duly author- ized agent of such seller, manufacturer, or consignor, and both invoices (except for shipment by post) shall be mailed to the consignees of the merchandise for filing with the customs entry pertaining to the importation." (3) Importation of foreign merchandise the value of which Is less than $100. A commercial invoice without the consular certificate is sufBcient. (4) Importation from the United States where the value is less than $10 and the collector of customs is satisfied that the merchandise referred to is subject to " free entry " under section 12. The certificate referred to before is not rectuired. Many exporters in the United States seem to be of the impression that foreign goods which have been Imported into the United States and paid duty upon their entry are " free of duty " upon importation into the Philippine Islands. This is not the case. All foreign merchandise imported into the Philippine Islands is subject to duty regardless of the fact that it may have paid duty upon entry into the United States. One of the greatest sources of loss of the Philippine merchants on foreign merchandise imported from the United States is from the fact that importers in the United States will ship foreign merchandise together with domestic merchandise in one invoice and fail to make notation of this on their Invoices, and in the majority of cases, even certify that the entire invoice is of American origin or manufacture. In cases of this kind, the importer is subjected to a fine of from one to five times the duty ; In almost every case, at least the minimum is imposed. In addition to this loss caused to the importer, by oversight or carelessness on the part of the shipper, the shipper is naturally placed under suspicion and all importations coming from him are most carefully scrutinized. It should not be necessary to call the shipper's attention to the necessity of proper packing. It is, however, a fact that shippers in the United States * * * do not seem to realize that their merchandise must travel many thousands of miles and in many cases be handled a number of times. Their shipping department is In the habit of making shipments to local points with one or two hapdlings, which does not require heavy packing. It is strongly recommended that, in all shipments where the contents are of any appreciable value, an export packing be used — in other words, a packing which is especially heavy, for foreign shipments. Another very important matter is that of marking. Marks should be plain, in big letters. If stencils are used, they should be placed at least on two sides of a package. Ninety-eight per cent of unclaimed merchandise which is sold in the Philippine Islands annually, and which runs into thousands of dollars, is [unclaimed] because the marks have been rubbed off, or so mutilated that they can not be read, or because the merchandise has been packed Insufficiently and can not be identified when It arrives in the Philippine Islands. If the requirements referred to herein are carefully followed, it will certainly result in a greater volume of business for those shippers. Nothing will increase business more than the complete satisfaction of clients and the correct- ness of documents, and properly packed merchandise is probably the cause of more business than any other factor. When competition Is keen, prices are about the same from one Importer as another, and service alone will increase the business. If there is any merit in all that has been said in recent years about the value of " service " in business, it is plain that punctilious atten- tion to the matters mentioned by Mr. Cresop will pay. Failure in PHUJPPINE ISLANDS. 229 this respect discredits the manufacturer and his countrymen not only in the Philippines but in all foreign markets. BUSINESS OPPORTUNITIES. Manufacturers of factory machinery are always interested in the establishment of new industries and should study carefully the nature of oversea investments of American capital, as some invest- ments have no effect whatever upon the demand for American ma- chinery, while others result in the purchase of important amounts of such equipment. The Philippine Islands need capital, and in some senses industrial development there has been delayed because it has been lacking. It is not possible here to show just what opportu- nities exist, but there are a great many projects where American capital can be employed profitably, and those in authority are re- ported to be sympathetic to such investments. Adequate banking facilities exist for normal requirements of this sort. It may be of interest to add that under the law Americans can participate in Philippine enterprises or can conduct enterprises in the Philippines. Coal lands can only be leased in blocks up to 2,965 acres (1,200 hectares) each for a period not exceeding 50 years, but leases are renewable. A corporation may purchase land and may secure plantations of large area from private parties, but the law provides that public lands may only be sold in blocks of 2,530 acres (1,024 hectares) or less. Lumber concessions are controlled by the Philippine Bureau of Forestry. Of course special legislation may be invoked when it is felt necessary, and it is said that Americans can rely upon cordial treatment. DISTRIBUTION— PROPOSED " FREE PORT " AT MANILA. In planning an organization to cover the markets of Asia the problem sometimes arises as to where the manager for the Far East should have his office, or correspondingly where a distributing center could be established. This problem is felt with considerable force by those who manufacture supplies, belting, etc.,- and is illustrated by the tire manufacturers' problems in connection with the auto- mobile trade. Certain important manufacturers maintain ware- houses in perhaps a dozen different cities in the United States. The same need is felt in Asia but with the further complication that "nationalism" is injected. The subject is also associated with the " free-port " idea, which is that of having an area in which to relieve certain reexport cargo of the restrictions imposed by the collection of customs duties. Ham- burg is a free port, and it is felt that much of its prosperity grew out of this fact. London, in a free-trade country, has a business similar to that of a free port, and much of its prosperity is derived from its consignment market. In the Far East the British have free ports at Singapore and Hongkong, as well as elsewhere, which are used as distributing cen- ters for the markets of Asia. The Dutch use Batavia and Soerabaya as distributing centers. The Japanese distribute largely from Kobe, and freight rates are so adjusted as to make this economical. It is U029l°— 22 ^16 230 ASIATIC MARKETS FOE INDUSTEIAL, MACHINERY. said that the Germans plan to develop Macassar in Celebes (a Dutch island) to meet their requirements. It must be remembered that a " free port " is not necessarily free of all restrictions and control. For example, at the moment, Ameri- can dyes are f pee to enter Hongkong but can be reexported from there only under license, and the formalities in this connection re- quire the merchant to tell more about his trade than he would ordi- narily care to do. Several other ports suffer from disadvantages that are largely the result of discrimination arising, more or less, from the nationalism of their populations. The circumstances of each particular business will control the location of the distributing center, and Kobe, Shanghai, Manila, Hongkong, and Singapore might all be given more or less consideration, depending upon the circumstances. It seems desirable to call attention to the advantages Manila has in this connection. There is printed, opposite this page, a map showing how Manila lies in the Orient, and the distances to the principal ports are indi- cated. Most steamers leaving the Pacific coast for Japan and China ports go to Manila. Ships running from Australia to Japan usually call at Manila. Vessels from San Francisco to Calcutta call at Manila, Singapore, and Saigon. Japan and China have about four steamers a month from Manila, or more, depending upon the port considered. Indo-China has one or two ships a month, usually to Saigon. For Hongkong there are about eight sailings a month. British India, the Dutch East Indies, and Siam are reached via Singapore at least once a month. It should be recognized that any such statements are necessarily incomplete because the shipping of the world is undergoing great changes. It has been suggested that Manila may have a more favor- able freight rate than the other ports of Asia, as well as direct serv- ice. Shipping facilities will increase rather than decrease. Also, there is talk of providing Manila with a free port. A good basis for such a trade exists, as is shown by the volume of the Asiatic commerce of the Philippine Islands in 1920 : Countries. Jspsa China... Hongkong French East Indies British East Indies Dutch East Indies. Siam Total Imports from— $16, 10, 4, 2. 2! 4, 089,115 743,762 537,269 678, 143 870,070 399,060 314,948 41,632,367 Exports to — $7,443,020 2, 259, 277 6, 942, 838 435,299 1, 952, 653 363,095 61,777 19,447,969 Total. $23, 13, 7, I 4, 632,135 003,039 480,107 113,442 822,723 762, 155 • 366,725 61,080,336 Eemembering, as has been stated before, that Manila absorbs more American machinery than any other Asiatic port (except Yokohama and Kobe, which could scarcely be used as distributing centers) and also gives promise of increasing both in absolute and relative importance, one concludes that this would probably be the most desirable location from which to supply the markets of Asia. A considerable business of this kind has already been done, as is PHILIPPINE ISLANDS. 231 '^ INDIA CAicurrA .BOMBAY J^ BANGKOK / „^f,i^)^ SAieoN \RABlAfl\{ JiCA ^^^ 11 \BCNCh ifOiO«#o j,fcBaa,oi -•flUA \BOH /CAR0UNEI9. ■n><^ ;??* ■?^o. J0/IA8a9a BAIA VM^v^^iJ a • 11, 510 > It is probable that these were largely Diesel oil engines. ' > Subsequent returns were difficult to interpret. > It should be noted that the figures for this year do not check; the reason for this discrepancy is not at)paTent. PHIUPPINE ISLANDS. Exports from Japan to the Philippines have been : 23T Classes. 1915 1916 1917 1918 1919 1920 Ym. 3,897 160 Ym. 11,479 187 112 4,679 Yen. 20,325 22,168 Ym. 34,235 6,184 4,063 73,955 Yen. 43,000 2,000 Yen. 44,000 3,000 TPrTtiln TPiw^>ii"ftry ... . 5,541 23,647 23,000 21,000 Total 9,598 16,457 66,140 118,437 68,000 68,000 Note. — The yen is worth very nearly 50 cents United States currency, so'is of almost the same value as. the Philippine peso. In 1918 the Philippine returns show only 3,814 pesos' worth of electrical machinery imported from Japan, suggesting that the above figures apply more strictly to supplies as distinguished from machinery. A like criticism applies to some of the other d.aasifi~ cations. CHINA. GENERAL SITUATION IN MACHINERY MARKETS. A general statement of the situation in the machinery markets of China is presented in the following table, which was worked up from the returns of the Chinese maritime customs and includes the imports at all of the 49 treaty ports extending from Aigun, Manchouli, or Suifenho in the north to Yatung, Mengtze, or Szemao in the south. All these 49 ports are shown on the map opposite this page. The table shows the imports of industrial machinery into China : Year. igu, 1912. 1913. 1914 1915 1916 1917 1918 1919 1920 Japan. Saikwan taeU. 4S5, 122 388,475 548,522 852,934 851, 185 1,991,031 2,419,813 3,569,909 3,604,905 3,727,604 United Kingdom. Saikwan iaels. 2,330,209 1,762,916 3,241,590 3, 749, 149 1, 994, 518 2,350,903 1,648,869 1,313,604 2,073,968 5,229,026 Per cent from United King- dom. 35.5. 37.5 45.4 46.0 44.5 38.4 27.6 16.7 14.4 23.2 United States and Canada. Httikman taels. 382,054 179,803 673,227 681, 170 ■ 659, 722 1,078,530 1,411,141 2,390,332 6,407,727 12,181,382 Per cent from United States and Canada. 5.S 3.8 9.4 8.3 14.7 17.6 23.6 30.4 45.0 54.1 Total from an countries. Haikwan iaels. 6,561,020 4,704,485 7,137,048 8,157,270 4,485,867 6,131,258 5,982,715 7,860,290 14,328,249 22,536,254 Ex- change rate.' to. 65 .74 .73 .67 .62 .79 1.03 1.26 1.39 1.24 Value of total in United States dollars. 4,323,163 3,481,319 5,210,045 5,465,371 2,781,238 4,843,694 6, 162, 196 9,903,965 19,916,266 27,944,955 > Value of the haikvan tael in terms of dollars. It should be explained that these returns represent values origi- nally stated in an arbitrary monetary unit called the haikwan tael, which is used only for custom purposes but not for business pur- poses of any other kind — a circumstance that has a very consider- able influence on its exchange value. Theoretically the haikwan tael is 583.3 grains of pure silver. As a consequence, the value of this tael as expressed in gold units fluctuates rapidly and widely, depending in part upon the New York price for bar silver, but being somewhat influenced also by the trade balances not only of China but, to a certain extent, of all international trade. In making the above conversions it has been necessary to use the annual average value, but this may in fact differ a great deal from the value at the time when certain consignments were imported. An attempt has been made to show the value of these markets to American manufacturers by indicating the amount credited to the United States by the authorities of the Chinese Maritime Customs. This is similarly inexact, as the shipments are always credited to the country represented by the last port of shipment, so that machinery transshipped at Hongkong or ports in Canada or Japan would be 238 opeciai Agents series No. 215. 110291° — 22. (Face p. 238.) FIG. 28.— MAP OF CHINA. With outline map of United States, on same soaie. CHINA. 239 credited to those places, even though it originated in the United Stati s. For example, 1919 returns credit Canada with $1,600,000 wortii of textile machinery. Probably all of this equipment was made m New England and shipped via Vancouver. Inasmuch as the United States has supplied from 30 to 80 per cent of the machinery imported into Japan in different years and from 30 to 47 per cent of the machinery shipped into Hongkong, it is clear that the United States has supplied a good deal of machinery in addition to -that strictly credited to it in the above statement. Additional details of these returns are presented farther on in this report. While China absorbed only about $250,000 worth of American machinery in 1911 and $132,000 worth in 1912, it took about $16,000,000 worth in 1920, if we include an allowance for Hong- kong and Japan transshipment consignments. It seems safe to infer that this larger volume of business will be reasonably well sustained, for 1911 was the year the old monarchy was overthrown by revolu- tion. From what could be learned on the ground, machinery dealers anticipated that, as normal conditions were resumed, the trade would shrink from the high values of 1920, but would settle down on a basis of perhaps 60 per cent of that volume. This, of course, is a mere guess, but has value as representing the sentiment of persons in Asia. It is most gratifying to note that in 1920 the markets of China were abouti sixty times as valuable to the American manufacturer as they were a decade ago. For many years the American engineer has been handicapped in these markets by a most unusual combination of cir- cumstances, some of which were suggested by developments at the Washington Armament Conference, but the above figures show that he has now reached a position of most decided supremacy in this territory. It is obvious that the next few years will result in very keen competition in all of these Asiatic markets, so American manu- facturers will be wise if they plan such sales compaigns as are neces- sary to maintain their present position. After a little time China may be expected to absorb increasing volumes of equipment and at least duplicate the record of 1920. For the sake of completeness it should be noted that in 1917 and 1918, when the United Kingdom and the United States were fully occupied with the war, Japanese participation in the China ma- chinery trade rose rather high, but has since been reduced: The record is as follows : 1911- 1912_ 1913- 1914- 1915- Japanese percentage. 7. 8 8. 2 7. 7 10.5 19.0 1916- 1917- 1918- 1919- 1920- Japanese percentage. 32.5 40. 5 45. 5 25.2 16. 5 The entire situation as shown by the returns presented on the pre- ceding pages is shown clearly in Figure 29, but it should be noted that as this is plotted on a percentage scale it does not indicate the increas- ing value of the China markets as represented by the great increase in the volume of the imports during this period. Comparison should also be made with Figure 40 on page 286. 240 ASIATIC MARKETS FOB INDUSTRIAL, MACHINERY. DIFFICULTY OF REACHING ACCURATE CONCLUSIONS REGARDING CHINA. Since the days of Genghis Khan or earlier, the boundaries of China have been flung far beyond the area inhabited by peoples that are strictly Chinese, and imaginative writers, both modem and those of earlier periods, show a tendency to enlarge upon a very large subject There is a tendency to speak of the " 400,000,000 of China," to de- scribe the amiable characteristics of the race, to refer to the vast areas in the country, and to enlarge upon the mineral resources, which, while known to exist, are a very uncertain quantity. But it is really astonishing how difficult it is to establish any fact, even the simplest, about the country. Apart from the excellent returns of the customs, CENT Percent of Total Value of Imports of Industrial Machinery *into CHiNA.ORteiNATiNG IN CooiHTBiES Indicated, 19U-1920. *AlU MAtMPNEBY. EXCEPT AftBlCULTUBAL. E N BROI DEOl NG. KNITTING. AND 5EWINC MACHINERY lUO 90 80 ro 60 50 40 30 ZO 10 19 U.S.-CAN. •U.K., JAP O.C. ^y uiAl"iSP-' li'NGDOM^ ■**«.. ^^.'' ^ y y • » • ■ > ay-.oT^f '^°", > •< X \ ^ \ '^.'' • £^ >*^ \ ;>'" <: =:C> --^^ ■^ *'^ '"""'"■ ^' :•> 1 1912 1913 1914 1915 1916 1917 1918 I91S 19 20 Fig. 29. it is difficult to get any real statistics or to interpret such as are obtained. No one seems to know anything about even the population. For example, two different estimates of the population of Szeohwan were made in 1913. One result was 23,000,000 and the other 78,711,- 000 — and yet it is upon such data that we are told, without qualifica- tion, of the 400,000,000 people of China. GEOGRAPHIC AND ECONOMIC COMPARISONS WITH UNITED STATES. As shown on an ordinary map the boundaries include Mongd.ia, Sinkiang, and Tibet, the so-called "outlying territories," but these are negligible as a machinery market. Aside from these the remain- ing 21 Provinces are credited with an area of 1,896,495 square miles, which compares with 3,026,789 in continental United States. In CHINA. 241 other words, these 21 Provinces have about the same area as the 38 States east of the Eocky Mountains. The agricultural resources of China are prob.ably superior to those of this country. Its mineral resources are reported to be very good, but in reality no one knows a great deal about them. The western boundaries of these Chinese Provinces are walls of mountains even higher and rougher than the American Rockies. Beyond them lies the plateau of central Asia; much of this is reported to be arid and unpopulated, but as history indicates that vast populations have existed there, it seems probable that this aridity is exaggerated and that examination would show conditions resembling those in Kansas or Nebraska. In other re- spects China is most unlike the United States. In the whole country there are probably fewer miles of -road that can accommodate a wheeled vehicle than could be found in even one county of Rhode Island. It is true that at one time China had a definite system of some 2,000 miles of roads, but these have been allowed to degenerate. The wear of traffic through the years and a total absence of mainte- nance (with the dust carried away by the winds 0;r washed away by the rains) result in the gradual excavation of a channel that in time becomes a waterway in wet weather and soon becomes impassable for anything on wheels. The great caravan routes are very rough and rocky, all commodities are carried on the backs of animals or men, and the path is a very difficult one. In and out of Hongkong a motor car can operate over a- total of perhaps 260 miles of road, which does not extend more than about 20 miles from the city; Canton has a corresponding total mileage of about 26, all of which is in the city and very new ; Shanghai has a good mileage of fine roads, but these do not extend more than about 20 miles out from the city ; Peking probably has the best system of highways, but, apart from a difficult dirt road to Tientsin, one can not get farther than Tungchow, about 16 miles out. All told, outside of the treaty ports, China in 1920 probably did not have more than 250 miles of road suitable for an automobile. Famine-relief and other organizations have since built perhaps an additional thousand miles of road north of the Yangtze. Correspondingly, the total railway mileage is less than 7,000 as compared with more than 36,000 in India and 266,059 in the United States, and the railways that have been opened are not up to the American standard despite the fact that most of them operate through territory that is densely populated and the lines are assured a heavy traffic. Consequently, lack of transportation is a great obstacle to the trade of China and the territory is not to be com- pared with the United States. It is true that water transportation has been stimulated and that very heavy traffic exists on ocean, lake, and river and also on the remarkable system of canals, most of which have been in operation for centuries. INADEQUATE TRANSPORTATION RESTRICTS MARKET. Because of lack of transportation great areas and vast popula- tions in China are beyond the reach of occidental commerce. The Province of Szechwan, mentioned above, is shut in by mountainous boundaries said to be 8,000 to 10,000 feet high; practically its only commercial traffic is on the Yangtze River, but as this must pass through the famous gorges and rapids it is da,ngerous and expen- sive and affected by the variations in water level. In fact, so far as 242 ASIATIC MARKETS FOR INDUSTRIAL MACHINERY. American trade is concerned, until better facilities are available it probably does not make much difference whether the population of Szechwan is 23,000,000 or 78,711,000, for, even if pig iron were avail- able at $2 per ton or wheat at 15 cents a bushel in most parts of that Province or of Shansi, it could scarcely compete with the corre- sponding commodities from India, Europe, or the United States in the markets of Shanghai. It is true that two railways are planned that will reach Szechwan, and, when built, these lines are assured a very heavy traffic; but in the meantime trade is impractical. In 1919 Chungking and Wanhsien, the two cities in Szechwan that have been opened to foreign trade, absorbed industrial machinery worth 21,732 haikwan taels, out of the total of 14,328,249 for all China. Because of such conditions it seems safe to assume that there are not more than 200,000,000 people in China that can be reached by American or European commerce without undue ex- pense, and this number will not be increased very much until the construction of new railways and highways opens up additional districts. This is the task of the next few decades. RAPID EXPANSION OF CHINA MARKET— NECESSITY FOR CAUTION. At the same time it should be strongly emphasized that the market in China is growing very rapidly, as is shown by the pre- ceding figures and others published elsewhere in this report. The traffic on the railways is growing in a similar satisfactory way, and the mileage is being extended when the complicated conditions make this possible. In fact, there are distinct indications that impor- tant industrial expansion is at hand, as shown, for example, by the experience in the textile industry, to be referred to later; but it is also true that one should exercise caution in embarking upon ven- tures in China because conditions there differ radically from those in any other market of equal importance. The uninitiated will probably be inclined to assume that conditions in China resemble those in Japan and that the position of American machinery would be much the same in both cases. On the other hand, it will have been noted from figures given earlier in this report that in 1918 th^ United States supplied 80 per cent of the machinery absorbed in Japan but only 30.4 per cent of that taken by China. In other years similar discrepancies appear. It will be noted that this does not represent any difference in the engineering merit of the American equipment offered but is largely attributable to the influence of for- eign loans and concessions in China. It will be remembered that nearly all enterprise in Japan is most definitely under Japanese control. In China a corresponding condition does not obtain. This subject will be considered more fully later. RELATIVE DISTANCES AND ACCESSIBILITY. The general size, shape, and proportions of the parts of China open to occideijital commerce are apparent from the map published at the beginning of this section, and there has been superimposed upon it a map of the United States carefully drawn to the same scale in an effort to convey an idea of the areas and distances involved. If Peking were placed over the spot occupied by Chicago, it would be seen that the distance from Peking to Shanghai in miles is roughtly that from 2 O H H O o < X o < I o o IT I I- o CHiwA. 243 Chicago to Charleston, S. C. ; if measured by the time required to make the trip, it is somewhat farther. The distance from Chicago to New York is represented somewhat by that from Peking to Seoul in mileage, but the latter trip is circuitous and would require pos- sibly double the time. The distance from Peking to Canton, it will be noted, is like that from Chicago to points well out in the Gulf of Mexico, nearly as far as the peninsula of Yucatan. Even the distance to Hankow corresponds to points south of the southern Ten- nessee boundary, and the Province of Szechwan (218,633 square miles) , that one so often hears mentioned, is not much smaller than Texas (265,896 square miles). Possibly it would illustrate the situa- tion to say that Szechwan resembles the condition that would exist in Texas if the population there were multiplied some 5 to 15 times and could only be reached by ascending the Rio Grande. Under these conditions what would it cost to deliver machinery by mule back to points in the "Panhandle"? At the same time the future prospects of Szechwan may be compared to those that might apply to Texas if under the above conditions surveys were being made for two different railways to reach Austin (Chengtu). Kansu (125,483 square miles) may be likened to Nevada (110,690 square miles), and is almost as inaccessible as Nevada would be if railways were no nearer than Kansas City. Yimnan, Kweichow, Shensi, and Shansi are also relatively inaccessible. China from the seacoast as far west as to include the area reached by the railways — say as far as a line passing a little west of Kalgan and Hankow and so south to Canton — is comparatively accessible by rail or water. A further study of this map affords a number of other interesting comparisons that give one an opportunity to estimate the distances involved. EFFECT OF FOREIGN LOANS ON AMERICAN MACHINERY SALES. In one way or another China has granted a great many conces- sions to foreigners, and these cover a great variety of interests. The earliest of these concessions included trading privileges and certain property rights in particular cities that came to be known as " treaty ports." In more recent years concessions have been granted covering the construction and operation of railways and the development of mines, and in some instances have included "leased territories," in which foreigners have exercised a considerable political control. The terms of these agreements have also shown great variety. In some instances the agreements have been what might be described as a simple treaty for trade and commerce. In other instances the ar- rangement involved the transfer of political control. The effect of these agreements upon American exports of machinery has been pro- found, because very few of these concessions have been in the hands of Americans, and the agreements secured by Europeans frequently included a clause to the effect that the materials required should be purchased in the country securing the concession or making the loan. An example of this kind has been mentioned on page 37 of this report. Other examples might be offered. One gathers the impres- sion that the spirit of nationalism has been very strong and that in the selection of engineers, experts, and managers, as well as in the purchase of materials and equipment, merit, quality, and price have 244 ASIATIC MARKETS FOK INDUSTRIAL MACHINERY. often been subordinated to other considerations. A startling example of this is shown in the following quotation : Another source of profit to the banks as well as to English industries was the provision which made the syndicate the purchasing agents of materials and rolling stock. Outside of the (act that the corporation was to receive on the average 5 per cent commission of the entire cost of all materials purchased, the materials were naturally almost exclusively purchased in England. Although all materials were nominally to be purchased in the open market, the usual clause that " at equal rates and qualities goods of British manufacture shall be given preference over other goods of foreign origin " provided an oppor- tunity for almost exclusive purchase in England.* The effect of such arrangements on American exports is obvious. But it should also be noted that this is not an isolated case and the method is not peculiarly British, for reference has been made to the fact that only German-made materials were to be used in Shantung. Correspondingly, other nationalities have arranged for the exclusive use of their products in other instances, and it is probable that no one of these nationals would claim to have a more extensive experience or a more perfect railway than is to be found in the United States. These clauses spring from other causes than mere technical superiority. The importance of this situation is further increased by the fact that no one knows how many of these agreements are in existence. This situation was developed somewhat at the Washington Arma- ment CJonference in 1922. If one secures a concession for a railway, canal, or other project in China, there is a strong probability that, although issued in good faith by the Chinese authorities, it will be found to conflict with earlier unrecorded agreements, as shown by the following quotation: It is practically impossible to make a complete statement of the engagements whicli have been entered into by China with foroigo pov.ers or with their nationals. In the first place, there is the difficulty that presents itself when dealing with the diplomacy and international relations of any country, that none of the Foreign Offices of the world have been wiUing to publish in full the correspondence between themselves and their diplomatic representatives stationed abroad, and that even the portions of such correspondence finally made public often appear only years after the dates they bear. And, even af? to the treaties themselves, as is well known, many agreements exist that are known only to the parties signatory to them or to their allies. * * * p.^t in the case of China's international relations the peculiar difficulty confronts the student that there are many instances in which China has committed her- self, in writings or even conversations of a most informal character, which have not been recorded or made public, and which are only presented when the party claiming under them a beneficial interest deems the time opportune for doing so ; still further, that in many, if not .in most, of these eases, the State of China has been held bound by promises which have been made, or are alleged to have been made, by individual Chinese officials upon their own personal responsibility. As an illustration of this, we may take the following extract from a news- paper statement by Mr. W. F. Carey, head of the American Siems-Carey Co., In which he describes some of the difficulties vrtth which he had to contend in the attempt to locate the railways for the construction of which his company had obtained concessions from the Government of China. After speaking of having overcome obstacles Imposed by the " spheres of interest " of the dif- ferent nations, he found that he had still another bridge to cross. He says: " Shortly after we secured the concession for this line and commenced our active surveys thereon, the British protested to the Chinese Government on the ground that in 1910 a certain Gov. John, of the Provinces of Hona^ and Hupeh, had written to a British consul stating that, in appreciation of » " Foreign Financial Control in China," by Overlaeh, pp. 59 and 60. See also the Huliuang Railway Loan agreement signed May 20, 1911. CHINA. 245 assistajice rendered by the latter in securing a loan, the governor thereby granted to certain British interests the privilege of furnishing any funds that DMght be required in the future for raUway construction throughout G»e aioresaid Provinces. While I have no personal knowledge of the details cul- minating m this transaction, I am satisfied that the alleged concession con- stituted the basis of the assistance rendered by the British interest in the premises." "In order to become valid," Mr. Carey continues, "according to Chinese law, this document should have had the sanction of the throne for at that time China was an empire." • Because of these and other circumstances it is necessary to make certain mental reservations in considering the extent to which Ameri- cans have participated in the machinery trade of China in the past and may be expected to participate in the future, particularly as compared with participation in other markets, and corresponding al- lowances should be made by those preparing plans for additional sales effort there. The concessions referred to above include not only railways, but also mines, cables, wireless, and other utilities, etc., and there are many directions in which such influences can make it difficult to sell American machinery. The concessionaire spirit indicated above tends to develop in two distinct directions which are antagonistic. One of these may be called the imperialistic direction, and its spirit is shown in the fol- lowing quotation from W. W. Eockhill : " It seems clear to me that so long as we shut our eyes to the undoubted fact that, in the East at least, from Stamboul to Tokyo, politics, finance, and trade go hand in hand, and that neither the profits of trade can be fully reaped nor our influence and prestige be adequately upheld without incurring the responsibilities incident to political and financial activity, we must be content to play a modest, effaced role in the Far East, un- worthy, in my opinion, of our great country and its vast interests in the Pacific." * The position advocated in this statement has always been repugnant to the American people. The other direc- tion in which this concessionaire spirit sometimes appears to drift is toward the so-called " cosmopolitan finance " whereby the bank- ers of the several nations join financial interests. This neutralizes the nationalistic spirit of the " political finance " and " peaceful penetration by railway and bank " of individual nations and is sometimes felt to reflect upon the patriotism of the financiers who, in this way, conduct their operations independently of the imperial- istic ambitions of certain of their associates. Events are moving rapidly in China, and it is idle to drift into prophecy. But Ameri- cans who are interested in foreign trade should give careful consid- eration to the ambitions of other nations and their inclination to employ finance — sometimes American capital — as a " weapon of offense and defense," as a " national source of strength " to extend the political as well as the material interests of such countries to the disadvantage of American trade and industries in the world's markets. CURRENCY PROBLEMS. Other conditions in China interfere with industry and trade, making ordinary business transactions difficult and expensive. One • " Foreign Elfhts and Interests in China," by W. W. WiUoughby, pp. 344. Other Instances are also dted there. An interesting article on the loan situation in Cbipa appeared in London " Bngineering," Sept. 5, 1919, p. 314. • Far Eastern Review, Vol. II, p. 229. 110291°— 22 17 246 ASIATIC MARKETS FOE INDUSTRIAL MACHINERY. of these is the present condition of the Chinese currency. Until recent years there have been many different monetary units in com- mon us0^ va-rious taels and dollars being given a certain amount of recognition, but practically all being based on the bullion value of the silver contained. One author has pointed out how in one town at least 60 currencies are possible.* But this applies only to what might be considered the domestic problem. In addition there is a constant fluctuation in the rate of exchange between the different cities. " Bank notes issued by a British bank in the colony of Hong- kong have been, at different times during the past six or seven years, both at about 10 per cent discount and at 15 per cent premium in Shanghai at the branch office of the same bank." " These fluctua- tions are a very severe business handicap. It is true that a very definite effort has been made toward cur- rency reform by issuing the Yuan dollar, and where this is used it facilitates trade very much, but the reform has not yet been made complete and half a dozen or more different dollars are commonly in circulation in any one of the leading cities of China. Further- more, the subsidiary coinage, silver and copper, circulates on a bullion basis, having entirely lost its token value. For example, one com- monly receives 13 coppers for a dime and 11 dimes for a dollar or, again, 143 coppers for a dollar. Finally, as a truly oriental contra- diction, there is a paper currency which has a series of values peculiar to itself. Added to all of .this is the difficulty of converting large sums from an occidental currency into Chinese units, involving the transfer from gold to silver and into the necessary form of dollar or tael at the particular city involved. These conditions encourage speculation in exchange, which, again, tends to make trade hazardous and expensive. Heavy losses or profits on exchange are a regular feature of trade in China, and many serious business failures have been the result during recent years. PROSPECTS OF THE MARKET. Figures have already been presented that demonstrate that in the three years 1918, 1919, and 1920 China absorbed more than $37,000,- 000 worth of American industrial machinery. They also show that the demand for such equipment is developing consistently and rap- idly. American machinery is more than introduced into China; it has an established position* there. Also, there is a feeling that this trade will develop enormously : A director of one of the great Japanese steamship companies recently said, " The Chinese are great buyers, but what they are buying to-day is but a baga- telle of what they will buy to-morrow." The industrial era is just commencing in China. All over China the natives are demanding electric light. Lamps and accessories are coming from Japan and Britain. The Chinese are demand- ing railways; they have in a few years enormously extended the postal and telegraph systems. The vast plains of Manchuria have trembled beneath the steel of the steam plow ; the rivers re-echo to the noise of steamers and motor boats. Mining machinery has been already imported into China, but the pos- sibilities of this market are beyond description. Modern mining work inevita- bly means electric power." * " Trade anfl Administration in China," by I-I. B. Morse, p. 145. ' " The British In China," by C. A. Middleton Smith, p. 64. • " The British In China," by C. A. Middleton Smith, p. 74, CHINA. 247 There is something in this situation that appeals most strongly to the imagination— the vast area, the abundant population, the splen- did natural resources, both mineral and agricultural, the potential water power, all in the hands of a people who are intelligent, clever, hard working, dependable, and likable, most of whom are forced to a low standard of living but will demand more as soon as it can be obtained. And it is so easy to enlarge upon the consuming capacity of 400,000,000 people. Almost every foreigner feels this same situa- tion on visiting China. There is something almost hypnotic about it. But because of just this situation the business man should be espe- cially careful in making plans for the expansion of his trade there. The fascination of present prospects can easily result in exag- gerating the value of the market. " Every traveler in every part of China is astonished at the quantity and variety of the merchandise which is constantly on the move. It is this that inspires confidence in the boundless potentialities of Chinese commerce, which only seems waiting for the link of connection between the resources of the Empire and the enterprise of the western world." ^ These words were written by an Englishman before 1900 but express the feelings of all Europeans since the beginning. Marco Polo saw the same thing, and his reports were so glowing as to inspire the voyages of Columbus, but the world still awaits this awakening. Because of this feeling that possibly next year something will magically establish the contact between East and West and expand this trade, it is most necessary to be conservative about establishing a large business or- ganization in China, for there are forces at work that still postpone the day so long anticipated. There is a very great danger, in busi- ness in China, of looking forward too far. Often we are reminded of the enormous Volume of the trade that will develop during the next few decades, and undoubtedly it is true that such development will occur, but because of the uncertain aspects of the situation it is most desirable that attention be confined to the immediate future. The statistics presented herein show most clearly what has been done and thereby suggest what is to be expected in the immediate future. If a project will not develop during the next five years, it will be well not to rely on the ensuing decades. The market is very important, and the future is very promising and well deserves businesslike at- tention. SUBDIVISIONS OF THE TERRITORY. , From the point of view of the machinery business China divides itself into three great markets. The most northerly section is Man- churia, made up of three Provinces. For this region Dairen is the principal distributing center, although some equipment enters through Antung, where the railway crosses the river from Korea; also some equipment is taken in through Suifenho, where the rail- way from Vladivostok crosses into Manchuria. The central section, sometimes called North China, comprises the whole vast area sup- plied through Tientsin and Shanghai and includes all of the treaty ports from Chinwangtao to Santuab. The third large section is usually called South China and is supplied very largely through Canton (Hongkong), but includes that section of the country from Foochow south. f " The Englishman in China," by Alexander Mitchie, vol. 1, p. 209. 248 ASIATIC MARKETS FOR INDUSTRIAL MACHINEBT. SOUTH CHINA. TOPOGBAPHT AND COMMUNICATIONS. This South China district is almost as completely separated from the general machinery markets of the rest of China as if it were a separate country, for there is a range of mountains that cuts it off from the Yangtze Valley almost completely. From the Province of Yunnan these mountains turn eastward under the names of Man- ling, Meiling, Wuling, Fengling, and other local designations, and passing through the JProvinces of Kweichow, Hunan, and along the boundary^etween Kwangtung and Kiangsi, and also between Fukien and Kiangsi, reach the sea a little north of Santuao at about 27° north latitude. This mountain barrier is so real that practically no pommerce crosses it, and to reach Canton from Shang- hai involves about a four-day sea voyage, or much the same as reach- ing New Orleans from New York (without using railways, which are not available for the particular journey in China that has just been mentioned) . The district south of these mountains includes the Provinces of Yunnan, Kwangsi, Kwangtung, and parts of Kweichow, Hunan, Kiangsi, and Fukien — altogether an area of perhaps half a million square miles, a grouping that might compare with the States of Florida, Georgia, Alabama, Mississippi, Louisiana, and Texas. The population of South China has been estimated to be about four or five times as great as that of the States just mentioned. In all this vast district there are only 681 miles of railway in operation, and this mileage is largely made up of short, discon- nected lines. From Amoy is a line 18 miles in length. From Swatow is a line 26^ miles long. The most important stretches are near Can- ton, especially a line of 140 miles that is started toward Peking. The northern part of this Peking-Canton system is complete and carries a heavy traffic, but there is a section from Shiuchow to Chu- chow, about 306 miles, still incomplete, and as this is the part that must cross the Wuling Mountains it will be a difficult and expensive section to build. It has been estimated that in the 69 miles still to be built in Kwangtung Province there will be 60 tunnels, totaling 10.000 feet, and the cost of these 69 miles will be about $9,000,000. Also from Canton there is a line of 112 miles to Kowloon, opposite Hong- kong, and a line of 32 miles to Samshui. Near by is a disconnected section of 63^ miles from Kongmoon to Samkaphoi. The only remaining railway is far away in Yunnan, a mountainous region reported to be rich in minerals, and consists of a 289-mile stretch of meter-gauge line which was built under French auspices and reaches the sea at Haiphong, through the French railways in Tong- king (part of Indo-China). It should be remembered that French goods passing through Indo-China to Yunnan on this railway are exempt from Indo-China import duties, whilie other goods passing through are taxed 20 per cent of the regular import tariff. French and Indo-China goods pay about 20 per cent less for freight than does merchandise from other countries. These provisions have a decided influence on the foreign trade of Yunnan. From the above it is clear that in South China we have an area as large as that part of the United States that can be reached from the Gulf of Mexico, with abundant population, comprising a district of wonderful agricultural resources and reputed, with the ezGe|>tion of 5 o < I o I I o < 5 < 2 < O < I o 2 < I n. < h Z z q: UJ > O (5 0HI17A. 249 the Province of FuMen, to be peculiarly rich in a great variety of minerals ; it has, however, a most inadequate railway equipment, for not only are «^e lines in operation less than a total of TOO miles, but there is very little additional line projected. Industrial development in South China will apparently be delayed until the railways and mines have been opened up and can supply the transportation, fuel, and raw materials needed, but when this is done it will be a won- derful blessing for the people. POSITION OF CANTON. Canton occupies a position in South China that may be compared with that of New Orleans in that part of the United States mentioned above, except that m China river traffic is relatively of far greater importance, for there are no highways leading out of the city and the limited railway facilities handle only a small amount of traffic. It was at Canton that Europeans first developed trade with China, and much of the history of China's foreign relations centers there. Ajnong the early visitors the Portuguese established a foothold at Macao, but as this harbor is shallow, modern commerce passes it by and Macao does not seem to promise well for the future. Similarly, Canton Harbor is not suitable for most ocean-going vessels, and trade has established itself at Hongkong, which is one of the most impor- tant harbors in the world, the tonnage entered and cleared ranking far above any other port in Asia or any other port in the British Empire and being exceeded, in the whole world, only by New York and Hamburg. Because of this vast amount of shipping one is fre- quently led to believe that the trade of Hongkong is heavy, but this is a misapprehension, for the harbor forms an outer terminal for many transportation lines, and many vessels discharge very little cargo. MACHINEBT IMPOSTS OF SOTTTH CHINA. The volume and nature of the net industrial-machinery imports through the 15 treaty ports of South China, as given by the returns of the Chinese Maritime Customs, are shown below : Items. 1915 1916 1917 1918 1919 1920 Hachine tods .haikwan taels. . FropdUng machinery., .do Textile machinery do Timing TnachiTl*^ry.., do 12 31,136 2,786 1,206 22,304 10,224 1,482 9,049 18,848 3,695 8,952 4,938 ' 568 5,249 4,774 27,383 629,101 10,705 2,895 2,098 26 340 0th» machinery. I do 322,787 148,559 206,192 261,800 1,846J235 Total for Sooth China bailcwan taeHs. . 356,721 182,293 235,571 279,385 667,075 1,888,273 to. 62 to. 79 tl.03 $1.26 $1.39 $1.24 Total for South China in United States cur- 1221,167 tl44,011 $242,638 $352,025 ' $9'//, 234 $2,341,459 Total for an China in United $2,805,773 $4,933,230 $5,713,460 $9,616,249 $19,673,491 $27,517,821 South China's pereentage of total for all Cfama 7.9 2.8 4.2 3.7 4.7 8,5 > Value of haikwan tael expressed in tJnited States currency. Note.— It win be observed that tbe totals in this table do not check with those on page 238, which an the gross imports and from wliidi certain reexports (sometimes more than 10 per cent) mlgnt be subtracted. Also, the returns on tliis page and similar tables hereafter include a certam amount of duplication, as inter-port domestic shipments are induded. The returns are pubUshed in such a way as to n^e it impog- sible to arrive at the net imparts from the several countries into the diSerent districts. 250 ASIATIC MARKETS FOll INDUSTEIAL MACHISfEKY. OUTLOOK FOB FUTUKE. Having had some previous experience of the East and having heard a good deal about the importance of this section, the writer was somewhat surprised to learn that it absorbed less than 6 per cent of the industrial machinery imported into China. Eeferring to future prospects in South China a recent writer says : The great demand, however, will be for electric light and mining machinery. The tin output from Yunnan has gone up enormously. Hongkong shows what has been happening, for nearly all of the tin that is sold in South China is analyzed at the local government laboratory. In 1916 the export of tin from Hongkong was worth about 1,000,000 gold dollars; in 1917 it was worth about .3,000,000 gold dollars; in the first nine months of 1918 the value of the tin exported from Hongkong was 13,000,000 gold dollars. But there are other metals in Yunnan, and once modern machinery is at work we may expect almost anything.' Unquestionably this part of China will develop wonderfully, but past experience is shown by the above figures and the immediate future will probably compare with it. EXISTING INDUSTBIE8. So far as could be learned, the industries now in South China are as shown in the lists below, but in this connection one should re- member that it is exceedingly difficult to secure complete and accu- rate information in present-day China, and South China is probably more difficult than the other sections. Foochpw has a foreign population of 1,824, of whom 296 are American and about an equal number British. In this city there are six American firms and 18 British firms. In the neighborhood there are : Foochow Electric Co., with two 1,000-kilowatt steam turbines. Some of the plant is British and some American. Chinese Government Dockyard, with dock 340 feet long and three building slips, for vessels up to 5,000 tons. Foochow Ice & Aerated Water Co. ; British. Foochow Ice Co. ; Japanese. Yung Kee; Chinese. Ho Sheng Kee; Chinese. These last four companies produce about 900 tons of artificial ice per year, most of which is used for cooling fish. Standard Oil Co. Asiatic Petroleum Co. Both of these concerns have plants for making oil cans. Five sawmills of fair capacity, possibly 100 to 500 logs per day each; ma- chinery of American, British, and German origin, much of it of old pattern. Fukien Telephone Co., with about 600 subscribers. Kwok Kwang Match Factory. There are also an important number of native industries producing furniture, glassware, paper, rope, salt, and tea in primitive ways, em- ploying no machinery of consequence. Also, there is some mining » " The British in China," by C. A. Middleton Smith, p. 228. The tin exports from Hongkong for the entire year 1918 exceeded £4.570,000 and In 1919 fell to £1,827,838. In 1920 the value was £3,921,791, while in 1921 it was £1,387,800. It should be noted tliat probably less than 40 per cent of this tin is from Yunnan. When statistics are used as above they exaggerate the true prospects of the markets of China. CHINA. 251 and rice cleaning which may use a little machinery, but this is of types that are too elementary to be known on the American market: In the neighborhood of Amoy, where there are no Americian firms) the following concerns may be listed : :; ■ Amoy Tintilng Co. China Canning Co. Tliese are two Chinese corporations operating canning factories preserving foods for Chinese consumption. American machinery is used. Amoy Shipbuilding Yard ; dock, 370 feet long; a repair yard. Amoy Electric Light & Power Co. ; has two 100-kilowatt and one 300-kilowatt steam turbines, of American make. John Pickards & Co. (Ltd.) ; operate an electric plant of 150-kilowatt ca- pacity, suction-gas drive. Changma Electric Light & Power Co. ; operates an electric plant of 80-kilowatt capacity, gas-engine drive. Chioh-be Electric Light Co. ; operates a plant of 74-kilowatt capacity, gas- engine drive. Chuanchow Electric Light Co. ; plant of 751-kilowatt capacity, gas-engine drive. Amoy Pharmacy ; operates an ice plant of 3 tons capacity. Amoy Ice Manufacturing Co. ; plant of 4 tons capacity. Standai-d Oil Co. Asiatic Petroleum Co. These last two firms have filling and can-making plants. Changchow-Amoy Railway shops ; plant to care for a railway 18 miles long. Primitive industries somewhat similar to those in the Foochow district. In the neighborhood of Canton the following concerns may be listed : Chinese Government Dockyard. Kwang Nam Dock Co., can build vessels up to 3,000 tons and make the en- gines and boilers ; uses British equipment. Hip Tung Wo Motor Engine Works. Quam Wo On. The above and several other shops produce semi-Diesel crude-oil engines and suction-gas engines and producers, which are used in large numbers in the small factories and on the river boats, which are very numerous. Mien Yuan Paper Factory ; 4 tons per day. Kongmoon Paper Manufacturing Co. ; 3 tons per day. Hao Ming Match Factory. Canton Ice Factory. Canton waterworks. Canton Government Mint. Government Cement Plant ; beehive-type kilns ; 500 barrels per day ; German machinery. Yu Yick Brick Factory. Canton Electric Light Co. ; steam plant with two 2,500-kilowatt turbines, but designed for 35,000 kilowatts ultimate capacity ; American design. Twenty-nine sinaall electric plants in the other cities of the territory — most of them very small. Li Ming Mirror Factory. Primitive industries similar to those mentioned above. RaUway workshops. As estimating (the possibilities, perhaps it should be added that there are a number of ventures that have been failures : At Foochow — An albumen plant; a brick plant using modern machinery. At Amoy — Sugar refining. At Yunnanfu— Flour mills. At Canton — A tannery. While it can not be claimed that the above lists are complete, they are probably reasonably so, and it is believed that they do full justice to the present development. 252 ASIATIC MARKETS FOR INDUSTRIAL MACHINERY. Practically all the machinery imported into South China is shipped through Hongkong, and the merchants who cultivate this territory are nearly all established there. ^ Some of these merchants also have offices in Central and North China. Some firms are in Canton as well as Hongkong, while others are only in Canton. But generally speaking Hongkong is the ma- chinery market for South China. ' UACHINEBY TBOII HONOKONa. The total value of the factory machinery imported into China from Hongkong and its relation to the entire machinery trade of the coun- try is as follows: Years. Value in taels. Exchange rate. Value in United States dollars. Percent- age of total machin- ery importB of China. 1911 682,908 372,326 348,214 665,852 409,590 163,664 222,728 400,295 683,375- 1,558,503 tO.65 .74 .73 .67 .62 .79 1.03 1.26 1.39 1.24 443,890 276,521 254,196 446,126 253,946 129,275 229,410 504,372 949,891 1,932,544 10.3 1912... 7.9 1913 4.9 1914 8.2 1915 , 9.2 1916 . :. .. 2 6 1917 3.7 1918 5.1 1919 i-S 1920., 6.9 It will be noted that some of these Hongkong shipments go to points north of South China, but in a general way these returns check up with the trade for South China. Also, on the average for a dec- ade Hongkong has supplied only about 6 per cent of the industrial machinery absorbed in China, this percentage amounting to less than half a million doUars per year. HONGKONG. But on the other hand it must not be assumed that South China is the limit of the Hongkong market, for it supplies a much wider field, making shipments to Indo-China, Siam,* Federated Malay States, and Borneo, and less regularly to the Philippines, the Dutch East Indies, and British India. Furthermore, the colony of Hongkong itself seems to absorb a considerable volume of machinery. As the authorities did not publish returns of this trade previous to 1915 it is not possible to determine its nature and volume in what were considered normal times. The following table presents the figures • The writer did not personally loTestieate conditions in Slam or Indo-China, CHINA. 253 that are available, from which it will be noted that the total is several times as much as is needed to meet the demands of South China : Items. U19 (exchange @|4). 1920 (exchange @$4). 1921 (exchange @J4). Pounds sterling. Dollars. Pounds sterling. Dollars. Pounds sterling. Dollars. 580,427 2,321,708 717,523 2,870,092 1,120,691 4,482,764 127,209 48,329 460 508,836 193,316 1,840 134,360 53,740 16,671 537,440 214,960 66,684 230,127 84,897 7,433 920 508 Otfier exports to Asia ., 139 588 29|732 175,998 70,399 204,771 819,084 272,457 1,089,828 404,429 1,617,716 512,752 2,051,008 848,234 3,392,936 Imports from United States Per cent. 47 Per cent. 30.6 Percent. 23.6 Imports btmiTTmted Kingdom 39 14 56.8 12.6 67.8 &6 As regards the large amount of machinery remaining in the col- ony it is very difficult to determine how much is absorbed locally and how much is held in warehouse stocks of the local dealers for dis- tribution later, but probably both items represent large amounts. The industries in the colony of Hongkong are : Green Island Cement Co. ; two plants ; capacity, 75,000 casks per month. A. S. Watson & Co. (Ltd.) ; aerated water. Royal Aerated Water Manufacturing Co. Hongkong & Whampoa Dock Co. (Ltd.) ; operates eight building bertha, three docks, and two slips; repairs all classes of ships and builds them up to 5,0(X) tons or larger. Taikoo Dockyard & Engineering Co. (Ltd.); dock 787 feet long; shipway for 3,000-tou vessels, two shipways for 2,000-ton vessels; five building berths for vessels up to 10,000 tons. W. S. Bailey & Co. (Ltd.) ; engineers and shipbuilders. Kowloon Engineering Works; engineers and ship repairers. China Light & Power Co. (Ltd.) ; capacity 1,500 kilowatts. Hongkong Electric Co. (Ltd.) ; capa9ity 2,800 kilowatts. A. Long & Co.; furniture factory. Lane Crawford & Co.; furniture factory. Wm. PoweU (Ltd.) ; furniture factory. Cheong Lee; furniture factory. Hongkong & China Gas Go. (Ltd.) ; capacity 300,000,000 cubic feet. Hongkong Ice Co. (Ltd.); ice capacity, 135 tons per day; cold storage, 150,000 cubic feet. Six smaU leather tanneries. Tai Shing Paper Manufacturing Co. ; capacity 2,400 tons per year. Kowloon-Canton Bailway shops. Hongkong Rope Manufacturing Co.; capacity 5,000,000 pounds per year. Hongkong Saw MUls. China Mining & Smelting Co. Hongkong Soap & Soda Manufacturing Co. Star Manufacturing Co. (Ltd.) ; soap. China Sugar Refinery Co. ; capacity 75,000 tons per annunt Taikoo Sugar Refinery Co. , ^ . ^ ,., ^^ . China & Japan Telephone & Electric Co. (Ltd.). Nanyang Bros. Tobacco Co.; cigarette factory. Hongkong Tramway Co. (Ltd.). Peak Tramway Co. (Ltd.). TTon^kone Water Works. . . . Wei SanKnitting Co. (Ltd.) ; capacity 50,000 dozen singlets per year. 254 ASIATIC MARKETS FOR INDUSTRIAL MACHINERY. The above lists exclude the electric plant and a few other indus- tries in the Portuguese territory of Macao, but, in generaL they will mdicate the nature of the industries supplied through Hongkong. This development has been restricted by a number of causes, among which is the fuel problem. As a port Hongkong imports all its coal, the volume and sources of supply being shown in the following tabic : Regions. 1019 1920 1921 Tons. ■ Value. Tons. Value. Tons. Value. North China 128,355 668,572 120,806 12,374 £464,776 2,351,611 258,144 45,378 208,587 645,348 161,390 2,945 £736,102 2,442,532 350,347 11,526 266,531 672,106 228,755 8,479 £552,362 1,461,848 285,302 30,886 Japan, Korea, and Formosa. . . Indo-China other :;:: Total imports 920,107 3,119,909 1,018,270 3,540,507 1,175,871 2,320,398 Total exports 214,968 611,045 260,322 728,656 295,709 510,800 Consumed in the colony 705,139 2,508,864 757,948 2,811,861 880,162 1,809,598 Exported to South China. ..,. 209,609 584,372 254,487 707,218 288,476 492,195 Possibly it is indicative of the difficulty of accomplishing things in China that Hongkong and even Canton find it necessary to impoi't practically all of their coal, mostly from Japan, at high prices, while the Kwangtung coal field lies only perhaps a hundred miles away, is already reached by railway and, although reported to be a good prospective field, is estimated to produce only 50,000 tons per year. Even the Kowloon-Canton Railway is reported to use imported coal. At different times foreign syndicates of one nationality or an- other have succeeded in negotiating preliminary contracts looking to the exploitation of some or all of the coal measures of Kwangtung, but complications have arisen to prevent active mining. Under favorable conditions coal could be laid down in Canton or Hongkong for less than $5 a ton, while now it costs several times as much. Because of this situation the electric plants at Canton and Macao have Diesel-engine drive. The former plant developed to a point where it had a capacity of nearly 3,000 kilowatts, using a great variety of engines from most of the leading countries, when it was decided to chaijge to steam drive. This new plant is typically an American design and, excepting the boilers, has American-made machinery. From what could be seen in a hurried visit^ it seems to be a very high-class installation. At first the plaint will have two turbines of 2,500 kilowatts each ; later extensions are to include two 5,000-ldlowatt and two 10,000-kilowatt turbines. This is one of the few plants in Asia that have been properly designed from the start by competent American consulting engineers, and it shows clearly the resulting advantages. At the end of ,th,is section will be found detailed customs returns showing the kinds of machinery imported at Hongkong, from which it is apparent that war conditions have strongly influenced the trade and it is difficult to estimate' what the normal demand might be. It will be noted that there is a heavy demand for internal-combustion engines, and the record of American and British exports is also shown o z o o z o I o o D o o Special Agents Series No. 215. FIG. 35.— CANTON SAFETY VALVE. FIG. 36.— AMERICAN AIR COMPRESSOR MOUNTED ON AN ENGLISH BOILER, AT W/ORK IN MADRAS, INDIA. CHINA. 255 on other pages. In the Chinese shops at Canton, semi-Diesel engines are produced that are copied from a Swedish design, the largest shop building a total of about 2,000 horsepower annually in 20, 40 60, and 80 horsepower sizes (also sometimes larger) which are offered at prices of about $90 to $100 per horsepower. These engines are noted more for cheapness than for quality, and they suffer a good many hot-bulb failures. Hongkong has ample facilities for handling a large machinerj- business, even much larger than is shown by the accompanying re- turns. In all respects its shipping, cable, postal, and port facilities seem to be more than a,dequate. Strictly speaking, Hongkong is an island (area, 29 square miles), but the name has been extended to include two other small islands and a small district, Kowloon, on the mainland — the whole colony thus ccvering 390 square miles. The population of the colony is about 547,3.50, of whom 14,000 or 15,000 are Europeans (excluding the army and navy) and about 250 Ameri- cans. The name of the city is Victoria — an expression that is seldom used. In the city there are about a dozen merchant firms that are well equipped to sell machinery in this market. As stated, some of these firms are represented elsewhere in China and some are not. Most of these firms are British, but some are American and the market shows a very active interest in American machinery. SIAM AND INDO-CfflNA. Siam has an area of 220,000 square miles (Ohio has 41,040 square miles) and a population of 8,150,000 (Ohio has 5,759,868). The length of the railways in Siam is 1,333 miles (Ohio 9,012 miles). The capital, Bangkok, is also the principal business center and was the port of entry for 93.7 per cent of the machinery imported into Siam in 1921. Practically all of the remainder entered from British Malaysia. The volume of the machinery imports into Bangkok have been : [Conversions made at the rate of 1 tical=33} cents.] Articles. 1918-19 1919-20 Electrical goods and apparatus . liOcttmotiyes Marine engines Other prime movers Bicfrmilling machinery Textile maoiinery. . .•. , Dredging machinery Machine tools Other machinery $281,998 76,931 13,570 2,612 4 (') 21,154 314,882 $276,911 8,944 33,696 53,979 174 5 m 31,022 99,834 $376,104 7,703 51,607 17,584 339 188 153,054 64,062 121,444 $457,932 141,194 80,506 352,627 3,158 485 60,204 43,570 143,562 $360,006 4.59,096 103,035 339,897 72,240 1,406 4,842 51,889 345,578 Total. 708,151 504,565 781,085 1,283,138 1,737,9 1 Included in " Other machinery" prior to 1918-19. Siam is noted as a producer of rice, teak, and tin, but it will be noted that machinery imported for rice milling seldom reaches an important total and sawmill equipinent is not even given separate mention. During the years listed, 34 ra,ilway locomotives were im- ported ; four were from the United States and there is reason to be- lieve that the remainder were from the United Kingdom. In marine engines the participation was: 256 ASIATIC MARKETS FOB INDTJSTEIAL, MACHINERY. Countries. 1916-17 1917-18 1918-19 1919-20 1920-21 Total. ^.. . 221 161 38 159 143 10 76 69 6 HI 88 23 72 United States 29 United Kingdom , 36 In the " Other prime movers " the participation was : Countries. 1916-17 1917-18 1918-19 1919-20 1920-21 14 10 2 5 18 3 2 ,. . 100 ': 54 168 UnitedStates 41 9 86 .»•(&= Presumably this classification and also the " Marine ^__ elude a great many internal-combustion units. In the naachine tools the American participation has been 11, 35, 32^ 56j and 3 per cent for the respective years, and the British participation 50, 43, 5, 38, and 92 per cent. These figures are not entirely satisfactory, because important shipments are credited to Hongkong, Singapore, Burma, etc., but even with these allowances their significance seems obvious. The area of Indo-China is estimated to be 260,000 square miles, and the population is variously estimated to be between 10,000,000 and I7j000j000. The European population, mainly French, was 23,700, including the military, in 1914. The most important city is Saigon, capital of Cochin-China, with a population of about 100,000, near which is the native city of Cholon with a population, mainly Chinese, of 170,000. These two cities have a large commerce and are the center of a very important rice-producing district. Further north Hanoi (150,000) and Haiphong (25,000) also form a notable combination, with important commerce ; coal is produced in quantity in this district. There is a very active road-building campaign in Indo-China, the total mileage exceeding 11,000, of which more than 3,100 miles have been paved for widths varying from 6^ to 23 feet. The railway mileage is 1,282, with plans for a great deal more. In 1915 Indo-t)hina produced about 750,000 tons of anthracite coal, much of which was exported. In 1918 more than 90 per cent of the imports came from countries other than France and ite colonies, and of these outside imports nearly 80 per cent were from Hongkong and Singapore. The machinery imports into Indo-China in 1918 were as follows: [Values in United States currency.] Articles. From France. Prom United States. From other coontrieSv Stationary and marine engines; steam pumps. Traction engines Locomotives, rail and road Fnmps, blowers, eto Mflcjnne tools Electrical machinery »2,127 Total. 2,794 2,404 4,264 9,039 20,628 %5i 3,240 276 340 1,636 6,547 tl,S9» 6,317 10,728 9, 061 iS,W 2,745 43,891 CHINA. 257 The returns of the Hongkong customs showing exports of indus- trial machinery to Siam and Indo-China are as follows: Years. Siam. Indo- Cbina. 1918 : £4,643 1,163 1,900 £31,416 1919 13,916 1920 21,742 In Siam the trade per capita is greater than in Indo-China, but it is anticipated that the latter country will develop rapidly. De- tails of American machinery exports direct to Indo-China and Siam are shown on pages 280 and 281. MANCHURIA. GEOGKAPHY AND COMMUNICATIONS. Just as the machinery markets of South China are separated and distinct from those of the central part of China, there is a similar independent section in the north^ although the line of demarcation is not so clear and there is a considerable traffic back and forth, both by rail and by sea. Generally speaking, this territory coincides with the boundaries of Manchuria, which includes the three Provinces — Fengtisen, Kirin, and Heilungkiang. But it is probably more accu- rate to include in this region all territory north and east of the Great Wall from the point where it touches the sea at Shanhaikwan; this delimitation would then take in a part of Chihli and would include any matthinery absorbed in Mongolia. Manchuria proper is the important part of this territory and has an area of about 263,700 square miles (a little larger than the 13 original American States), and the population is estimated at be- tween 15,000,000 and 17,000,000. For all of this section the prin- cipal port is Dairen (also sometimes called Tairen or Dalny), which is about four days by sea from Shanghai. The journey can be made by rail in a somewhat shorter time. The corresponding journeys to Kobe, Japan, are somewhat shorter. Manchuria can also be en- tered by rail from Korea at Antung, from Vladivostok at Suifenho, from western Siberia at Manchouli, or from the south at Chin- wangtao. All these places are treaty ports, Manchuria having 11 such ports altogether, but no very important amounts of machinery are imported except at Dairen, wnich possibly absorbs more factory machinery than any other port in China except Shanghai and conse- quently is very important, ranking ahead of Hongkong up to 1920. Machinery shipments for Dairen are usually transshipped at Shanghai or at Japan ports. Probably more of this is done at Kobe than elsewhere, as the freight rates are understood to be a little more favorable. MACHINERY IMPORTS OF MANCHURIA. " The value of the industrial machinery imported through the 11 treaty ports of Manchuria, as given by the Chinese Maritime Cus- tomsj is as follows: 258 ASIATIC MARKETS FOR INDUSTRIAL MACHINERY, Items. 1915 1916 1917 1918 1919 1920 Maehtoe tools .haikwaii ta«ls. . Propelling machinery... do. . Textile mabhftirt-y... do Brewing and distilling maoh In- ery haikwan taels.. Otner machinery do 15,099 169,748 6,232 18,865 669,019 18,683 6 926 6,230 446 987,414 138,194 49,108 5,831 85,376 1,415,661 233,260 103,546 34,938 16,187 2,361,108 207,182 279,772 303,606 1,078 2,892,304 201,986 246,372 112,785 10,499 1,769,985 Totalfor Manchuria, do. . . 878,963 1,018,699 1,694,170 2,749,038 3,683,942 2,331,626 Exchange rate 1 SO. 62 10.79 $1.03 $1.20 $1.39 $1.24 Total for Manchuria In United States cur- rency $544,957 $804,772 $1,744,995 $3,463,788 $5,120,679 $2, 891, 216 Total for aU China in United States currency 12,806,773 $4,933,230 $5,713,460 $9,616,249 $19,673,491 $27,617,821 Manchuria's percentage of totaUoraU China 19.4 16.^ 30.6 36.0 26.9 10.5 ' Value of haikwan tael expressed in United States ctirrency. It will be noted that this portion of China has often absorbed more than a quarter of all of the machinery imported into the entire country, although including less than 5 per cent of the total popula- tion. The value (in United States currency) had been multiplied nearly ten times in five years up to 1919, but suffered a severe setback in 1920. Details as to the nature of these imports as shown by the export returns of Japan and the United States are given in the section beginning on page 277. The- British returns combine the figures for exports to Manchuria with those for Japan, so that a separate state- ment for the United Kingdom is not available (see p. 332). Eeference has been made above to the comparative importance of the various cities as machinery markets. This situation is shown more fully in the table below., giving the value of machinery imports. Conditions are changing rapidly in this part of the world and it is not at all safe to prophesy, but it appears that Dairen absorbs as much machinery as Hongkong, Tientsin, or Hankow. IN HAIKWAN TAELS. Ports. 1916 1917 1918 1920 Shanghai. Dairen Tientsin.. Hankow.. 2,077,226 493, 853 388, 591 369,953 1, 944, 832 1,542,205 332,076 666,283 2,619,316 2,537,824 640,663 628,097 5,484,248 2,941,746 1,870,175 1,161,341 11,683,808 1,921,146 2,472,421 1,417,694 IN UNITED STATES CURRENCY. Shanghii.. Dainn Tientsin... HanKow... Hongkong. $1,286,880 308,189 240,926 229,371 $2,003,177 1,588,471 342,038 685,241 $3,300,338 3,197,668 807,235 791,402 8,133,927 $7,623,106 4,089,027 2,599,543 1,614,264 2,321,708 $14,432,122 2,382,221 3,065,802 1,757,941 2,870,092 NATIONALITY OF PUKCHASEES. The Manchurian demand Bepresented by the above returns is partly Eussian, partly Chinese, and very largely Japanese ; in fact, in cer- tain senses this territory may be considered as tributary to Siberia, to Shanghai and Tientsin, or to Tokyo, according to the nature of the business under consideration, and this is carried so far that certain CHINA. 259 properly informed and well-organized American manufacturers maintain at least two distinct selling organizations in the same terri- tory, one to solicit the Chinese trade and another to solicit Japanese business (with further subdivision in some cases for other sections of the population). At the moment the disturbed conditions in Siberia discourage hope of large business in selling machinery to the Rus- sian community, and obviously it is impossible to determine what the future has in store, but there are interests that anticipate an early and most remarkable development in this section which will probably be reached through Harbin. The Chinese community also seems to be suffering from disturbed conditions, but it may be that they too have a promising future. The Japanese interests are the most active. SOUTH MANCHinOA RAILWAY AND BELATED ENTEKPKISBS. The most important Japanese enterprise is the South Manchuria Railway, which operates about 982 miles of standard-gauge railway, of which 238 miles is double-tracked. This company has also taken over the administration of the Korean Railways, involving nearly 1,000 miles of additional .railway, and the equipment for these lines is very largely of American manufacture. It is true that in recent years some equipment has been made in the railway shops at Ryusan, Shakako, etc., but, in turn, the machinery and materials for these shops has to a large extent been purchased in the United States. The China Yearbook for 1919 says : Besides the railway the company manages many other important enterprises in Manchuria. It maintains regular steamship communication between Dairen and Shanghai in connection with the trans-Siberian mail service, manages Dairen Harbor, operates the Fushun collieries, supplies Dairen and several other towns with gas and electricity, has established hotels at its principal railway centers, manages and controls territory in the railway area (Including the laying out of new towns and the development of the agricultural, industrial, and commer- cial resources), and directs many other less important enterprises. The company's capital expenses up to March 31, 1916, were: Railway $36, 984, 817 Steamships, etc '- 2,517,281 Tramway and electrical equipment 2, 505, 321 Mines 8. 719, 638 Harbors and docks 6,910,745 Gas plants 712, 919 Shops 3, 198, 363 Hotels 1. 033, 474 Land 5, 405, 347 Land improvements 2, 260, 793 Sundry buildings 5, 845, 612 Total 76, 074, 310 The rate of development may be observed from the fact that three years earlier this total was $63,526,742, the progress being, therefore, at the rate of about $4,180,000j)er year. As the Imperial Japanese Government holds about 50 per cent of the shares of the company, it represents a combination of Japanese transportation, industry, finance, and Government for the develop- ment of the territory. ^, , t^ , The electrical plants include those at Antung, Changchun, Fushun, Mukden, and Yentai, as well as some smaller plants; most of these 260 ASIATIC MARKETS FOR INDUSTRIAL MACHINBKY. plants have capacity in excess of 500 kilowatts. There are also the tramways at Dairen and Fushun. The mine interests include the Fushun mine, which is a remark- able property, employing about 18,000 men and extracting about 7,000 tons per day. The railway interests also have the mine at Anshanchan, where a considerable plant is being installed to be used in connection with neighboring iron ore, blast fiimaces being put in for the production of pig iron and huge sums being invested m the undertaking. There are also some smaller projects. The largest item in the matter of harbors and docks represents the railway conipany's very extensive facilities at Dairen — so much so as to make that harbor one of the best equipped in the Far East. The principal shops are at Shakako, near Dairen (and the corre- sponding shop for the Korean section is at Eyuzan) , while there are district shops near the docks in Dairen, at Antung, at Kungchuling, and at Liaoyang. OTHEB JAPANESE ENTIXPSISES. In addition to the railway there are a number of other Japanese enterprises in Manchuria, and the nimiber is increasing rapidly. The following incomplete list may indicate roughly the nature of this development: Chonslintze Brick Works, Dairen. Electro-Chemical Industry Co., Fushun. Cotton Weaving Mill, Liaoyang. Kawasaki Dockyard Co., Dairen. Ikebata Glass Works, Harbin. Fujitani Sawmill, Antung. Okura Sawmills (Ltd.), Antung. Kuhara (Zinc) Refinery, Fushun. Japanese Government cigarette factory, Newchwang. Manchurian Explosives Co., Antung. Onoda Cement Co., Chonshutzn. There are a number of electric plants, vegetable-oil mills, furni- ture factories, printing offices, etc., for which it was not possible to secure particulars. KUSSIAN INTERESTS. The Russian interests are also very important, but most of them are north of Mukden. The most important single interest in this region is that of the Chinese Eastern Eailway, which also manages the Southern Ussuri Railway — a total of about 1,100 miles of track built on a 5-foot gauge. It also has a small flotilla of towboats and barges on the rivers of this region. Because of war conditions, there is nothing to say about the equipment of this line. In addition, there are 8 vodka distilleries and 12 breweries in this section. All through northern Manchuria are small flour mills that are gradually being replaced by modem mills with a daily capacity of 40,000 to 50,000 bags. The China Yearbook for 1920 gives 19 mills at Harbin and 4 at Ninguta. A great deal of Manchurian wheat is miUed in Japan. There are also: Vodlansky Glass Works, Harbin. KouznetzofE Ice Plant, Harbin. Vodlansky Leather Factory, Harbin. Ten sawmUls. CHINA. 261 Seven soap and candle factories. Asiho Sugar Co., Harbin. Two tobacco factories, Harbin. CHINESE AND SINO-JAPANESE INDTJSTEIES. The Chinese industries in Manchuria include the Ai Kon Weav- ing Mill, at Newchwang, and a large number of vegetable-oil mills, about 20 of which are in Dairen and 18 in Antung, with capacities ranging from 500 to 2,500 tons of oil per annum, operating almost exclusively on soya beans. There are a few Sino- Japanese enterprises in this territory, chiefly electric power plants which perhaps should be classed with the industries of the Japanese, as control usually is exercised by them. Altogether, in Manchuria there are 16 power plants (4 Chinese at Mukden, Changchun, Chinchow, and Kirin, totaling 1,660 kilowatts, and 12 Japanese), the total capacity of which is about 20,000 kilo- watts; 7 of these, with a capacity of 4,360 kilowatts, are equipped with American machinery. PLACES WHEBE TRADE IS CULTIVATED. In soliciting business in Manchuria it will be found necessary to cultivate the Chinese trade wherever it exists, while the Russian trade centers in Harbin and Vladivostok and the Japanese trade in Dairen, though it is ordinarily customary for Japanese buyers to return to Tokyo to take advantage of the facilities of that market when making important purchases. From what has been suggested above it is obvious that this part of China north of the Great Wall is of very great importance. It is very prominent as producing wheat, vegetable-oil seeds, lumber, and minerals. Great efforts are being made to develop the industries of the district, especially the production of coal, iron, and other simi- lar resources. As compared with the other parts of China, railway development is well advanced. Manchurian winters are severe, clos- ing up certain of the harbors with ice even as far south as Tientsin and otherwise introducing conditions that discourage industry. Ob- viously, as railway development advances this situation will be im- proved. It seems probable that in the near future Manchurian in- dustries will be developed very rapidly. The district is receiving a great deal of attention from certain Japanese interests, and it seems safe to conclude that the future of industry in Manchuria can be estimated from what we know of the development of industry in Japan in recent yearfe — a growth that has been marvelously rapid. Also, in so far as the development of industry in Manchuria depends upon Japanese interests, just so far will this territory be an element of the Japanese market, more especially the Tokyo market." CENTRAL CmNA. In previous paragraphs it has been possible to give separate con- sideration to (a) the markets of South China — ^that is, the area south of Santuao and the Fengling mountain barrier — and correspondingly '« Conditiona in 1921 did not Justify a pergonal visit to Siberia. In the table begin- ning on p. 282 will be found a statement indicating the value of American exports of machinerr to that country during recent years. The war has had a very strong infln- -ence on this trade. The future Is very obscure, but there are those who claim to se* wonderful possibilities In Siberia. 110291°— 22 18 262 .ASIATIC MARKETS FOR INDUSTRIAL MACHINERY. to (h) Manchuria or, more accurately, Kwantung,^^ beyond Chin- wangtao and the Great Wall. EXTENT OF TEREITOEY. The great central part of China includes the valleys of the Yangtze and Yellow Rivers and extends far back to the mountains that form the western boundaries of China. It includes 11 of the most important Provinces of China and parts of four others and has 22 treaty ports, of which Shanghai, Tientsin, and Hankow are the most important. The area of this district approximates a million square miles, while the population has been estimated to be about 250,000,000 and may be 50,000,000 more or less than that great total. Large sections of this population are beyond the reach of occidental trade, as has been demonstrated many times, as for instance in connection with the operations for relief during the recent famine. The vast- ness of this territory may be estimated from the map at the beginning of this section. Its resources are tremendous and will have a very great influence on international trade when properly developed. MACHINEBT IMP0ET8 OF CENTEAL CHINA. Generally speaking, the above district is the one that is known as the heart of China and is the one that is usually meant when one refers to China. The volume of the industrial-machinery imports into this section, as reported by the Chinese maritime customs, is shown in the table below, which covers the imports at the 22 treaty ports between Chinwangtao and Santuao, including Shanghai, Tien- tsin, and Hankow : Items. 1915 1916 1917 1918 1919 1920 Macbine tools. .Iiaikwan taels.. Propdling machinery... do Textile macMnery do. . . . Brewing machinery do other machinery do 43,182 509,139 1,340,170 6,557 1,390,708 32,693 571,442 1,913,469 10,923 2,515,077 68,811 280,825 1,199,064 884 2,067,724 96,151 472,560 1,653,662 3,165 2,377,983 279,083 1,161,562 3,416,423 2,193 4,943,313 525,355 1,880,343 6,824,166 17 105 8,724,923 Total for Central China haikwan taels. . 3,289,758 5,043,604 3,617,308 4,603,621 9,802,674 17,971,892 ^Exchange rate ^ 10.62 $0.79 $1.03 $1.26 $1.39 $1.21 Total tor Central China in United States cur- (2,039,649 $3,984,447 $3,725,827 $5,800,436 $13,625,578 $22,285,146 Total for aU China in United States currencv $2,805,773 $4,933,230 $5,713,460 $9,616,249 $19,673,491 $27,517,821 Central China's percentage of total for all China 72.7 80.9 66.3 60.3 69.3 81.0 1 Value of hailcwan tael expressed in United States currency. The returns of the Chinese customs do not classify these shipments in greater detail, but much additional information can be deduced " The expresalon " Kwantung " is somewhat confusing. By derivation It comes from " Kwan " (wall) and " tung " (east) and refers to the district north and east of the Great Wall, Including parts of China and Mongolia, as well as the three ProTlnces of Manchuria. As used by the Japanese In the expression " Kwantung Leased Territory " It refers to the. Japanese leasehold of about 1,300 square miles at the tip of the Llaotung Peninsula, Incmdlng Dalren and Port Arthur. Kwantung should not De confused with Swangtung, the Province In South China, and the above dliference in spelling can not be relied npon, as different writers use different forms. Usually the northern district Is mentioned in connection with Japanese affairs, and the southern is most often referred to by British writera. cmNA. 263 from the Britishj JapanesCj and American returns, which are to be found in the section beginning on page 277. It is apparent that the machinery business for this section represents from 60 to 80 per cent of the business for all China, and has increased from $2,000,000 to $22,000,000 in six years. In view of the large portion of the machin- ery imports of China that go into this section, figure 29, published on page 240, may be taken as applying especially to central China, and as that chart is plotted on a percentage basis it should also be remem- bered that the value of this business is expanding very rapidly. It is interesting to compare this with the chart published in the section of this report dealing with Japan, which shows the growth of the exports of American machinery to these countries since 1910 (p. 286). It will be noted from the table on page 268 that about two-thirds of the machinery imports shown in the above table enter at Shanghai ; but in fact this is an inadequate measure of the importance of Shang- hai as a market, because the orders for a great deal of the equipment imported at Tientsin, Hankow, and other cities are placed with the dealers and importers at Shanghai. Most of the firms that have offices in Tientsin, Peking, Hankow, etc., have their head China office in Shanghai. To this extent also the data in the table on page 6 of the introductory section of this report are deceptive. SHANGHAI. Shanghai originally was a walled Chinese city with narrow streets and the usual insanitary conditions. It was opened to foreign trade in 1843, and foreign concessions were established outside of the old city; these include the international settlement and the French set- tlement. It is 850 miles from Hongkong and is located on one of the tributaries of the Yangtze River weU up from the sea. It has grown to be a remarkably fine city, including, in the whole district, about 1,500,000 inhabitants, of whom about 700,000 are in the international settlement and 170,000 are in the French settlement. Altogether, the 1919 census showed that there were 26,869 foreigners in the two settlements, the principal nationalities being as follows: Japanese and Koreans 10, 521 British 6, 385 Americans 2, 813 Russians 1> 476 Portuguese 1. 382 In all, 35 nationalities are represented. The most important, nu- merically, are the elements from India and Indo-China, which in- clude the municipal police. In many respects Shanghai is the most attractive city in Asia. HANKOW AND TIENTSIN. Hankow and Tientsin are to a certain extent subsidiary to Shang- hai. The former is about 600 miles up the Yangtze River and occupies a position with regard to Shanghai that corresponds roughly to that which St. Louis would have with regard to New Orleans if our Mississippi VaUey were poorly equipped with railways and depended upon river transportation. Practically all of the ma- chinery sales offices in Hankow are branches of Shanghai firms. The foreign population of Hankow is not large. French 846 Germans 289 Danes 248 Italians 226 264 ASIATIC MARKETS FOE INDUSTRIAL, MACHINERY. Tientsin is the port for Peking and adjacent Provinces, but as it has only about 13 feet of water over the bar at the harbor entrance, and as the harbor is closed by ice in winter, the business of the port suffers certain handicaps. The firms handling machinery at Tien- tsin are usually branches of Shanghai companies. The competent engineering staff of most of these companies usually lives in Shanghai and visits these other districts when necessary. Peking has never been formally opened for foreign trade, and technicallj merchant firms are not recognized as being in business there. It is true that there are a few modest establishments in the city, but these also are usually branches of Shanghai companies. In this sense it can be said that Shanghai is the machinery market for the vast area and population of this entire district, and the volume of its business is the total for the district, including that credited to the other treaty ports. DEALEES AND INDUSTRIES. In Shanghai there are a sufficient number of machinery dealers to care properly for the existing or prospective business. Many of these represent the various European nationalities, but there are also a number of important American firms that have long been estab- lished there and are adequately equipped for the business. The industries of central China are of great variety and are scat- tered widely over extensive areas. Shanghai itself has a very consid- erable industrial development, having many cotton mills, shipyards, sawmills, cigarette factories, and a large electric power stetion. Hankow is sometimes called "the Chicago of China," for it is favorably located oh the transportation routes of the interior coun- try, or, again,- it is called " the Pittsburgh of China," for it seems destined to develop an important iron and steel industry. Other areas show promise of industrial development, but the circumstances make it seem desirable to report specially upon certain particular classes of machinery. TEXTILE MACHINERY. The classification "textile machinery" includes a great variety of equipment. It is not such a long time since modern textile ma- chinery was first introduced into Asia, and there is still a consider- able demand for the types of equipment that are operated by hand. Although Japan exports a great deal of "textile machinery" to China it is not ordinarily of a type that could be used in a modern mill and does not compete with European or American equipment. There is a considerable trade in knitting machinery of the types used in the production of hosiery, singlets, etc. This and certain other lines are very special and will not be given further space here. Not many decades ago the teeming millions of China were clothed, if in cotton, in homespun and home-woven clothes which were often coarse and poor in quality largely because the native cotton from which they were made has very short staple. But it has been demon- strated that factory-spun yarn is attractive in the market, and this is now available there from many countries. The bulk of the demand is for the coarsest yams, and price is emphasized very much. Euro- f)ean and American mills can usually offer rather fine yams from ong-staple cotton, but the pric« is relatively high. India has offered CHINA. 265 yarn from its growth of cotton. Japan seems to have been able to accomplish a great deal by offering an intermediate quality at an intermediate price, for the Japanese mills import cotton from America as well as India and carefuUjr cater to the tastes of the Chi- "6se. Of course, the same general situation applies to the cloths made from these yarns, and a very interesting situation has developed m China, as is shown by the following tables of cotton imports into China, which are copied from "America's Aims and Asia's Aspira- tions," by Patrick Gallagher : COTTON YAKN. [000 oniltted; ploul=133J pounds.] 1902 1913 1917 Sources. Plculs. Tads. Per- cent- age, by value. Piculs. Tads. Per- cent- age, by value. Plculs. Tads. Per- cent- age by value. Hongkong 991 90S 517 25 34 21,554 19,943 11,962 , 823 602 39.3 36.3 21.8 1.5 1.1 689 667 1,273 5 76 18,478 18,437 32,128 199 2,227 25.8 25.8 45.0 .3 3.1 512 553 1,014 18,243 16,150 27,807 28.9 25.6 44.1 iii^..v!: ;.:::.:::; Japan „ . . Great Britain All others. 25 855 1.4 Total 2,475 54,884 100.0 2,700 71,469 100.0 2,104 63,055 100.0 N OTE.— In 1919 India supplied 74 per cent and Japan 22 per cent of the cotton yam imported into Hons- kong, suggesting that Japan and India divide the China market about equally. GHAY SHEETING. [000 omitted.] 1902 1913 1917 Sources. Pieces. Tads. Per- cent- age, by value. Pieces. Taels. Per- cent- age by value. Pieces. Tads. Per- cent- age, by value. Wongkong 18 5 172 862 3,833 657 57 19 497 2,897 12,197 2,002 0.3 .1 2.8 16.4 69.0 U.4 4 1 2,610 68 65 67 1 4 9,487 303 249 246 0.01 .04 92.20 3.00 2.40 2.35 India ~. 3,356 128 1,559 176 9,331 532 5,722 623 57.6 3.3 35.3 3.8 Great Britain United States All others Total 5,547 17,669 100.0 5,219 16,208 100.0 2, SUA 10,290 100.00 DBILLS. [000 omitted. 1902 1913 1917 Sources. Pieces. Tads. Per- cent- age by value. Pieces. Taels. Per- cent age by value. Pieces. Taels. Per- cent- value. 41 3 43 204 1,506 173 153 8 177 696 5,147 574 2.30 .01 2.60 10.30 76.20 8.59 41 6 1,667 45 507 34 204 31 6,261 183 2,033 152 2.3 .4 70.6 2.0 23.0 1.7 21 1 1,438 6 2 4 114 6 5,499 36 9 14 2.0 S^ .:::;::::::::;::::: .1 Jftpan i..-^- 97.0 .6 United States .1 .2 Total 1,970 . 6,755 100.00 2,300 8,864 fr 100.0 1,472 6,678 100.0 266 ASIATIC MARKETS FOR INDUSTRIAL MACHINEBY. ALL PIECK GOODS. [000 omitteij 1902 1913 1917 Sources. Taels. Perrent- age. Tael3. Percent^ age. Taels. Percent- age. Hongkong 6,112 129 2,057 41,453 20,111 4,098 8.3 .2 2.8 56.0 27.2 5.5 11,363 460 22,592 69,592 8,933 11,454 9.0 40 19.0 62.0 7.0 9.0 10,862 277 53,505 31,384 430 3,676 10.0 indii....: :. 2 Japan QreatBritain 31 United States 4 All others Total 73,963 100.0 114,394 lOO.O 100,124 100.0 The above figures demonstrate that European and American cotton goods do not appeal to the Chinese market when the Indian and Japanese qualities are available at considerably lower prices. In the section of this report covering India this textile situation is discussed at some length. When it is remembered that even India imports yarns and cloths from Japan in important volumes, it is scarcely to be expected that Indian manufacturers would be disposed to expand much effort in China, but, for the reasons given, this seems to indicate that India is still short of mill capacity rather than that Japan is peculiarly well fitted to conduct such business. In fact, every economic advantage seems to be with India. The mills in India, CMna, and J apan have been paying most hand- some dividends, and in all of these countries the desire to expand spinning and weaving capacity has been very great. Very large numbers of ^indies have been ordered from the machinery manu- facturers of Europe and America, and the period required to make delivery has been progressively extended until in 1920-21 machinery manufacturers asked more than two years after order before delivery. Up to 1916 American manufacturers of textile machinery had not made much effort to secure orders in China, but the subsequent ex- perience is startling evidence of the possibilities of foreign trade. The following tables, showing imports of textile machinery into China, apply to the entire country and illustrate what has happened since 1911 : Years. United States and Canada. United Kingdom. Japan. All other countries. Total. 1911 1912 1913 1914 1915 1916 1917 1918 1919 1920 Haikwan UtAt. 7,161 9,885 2,616 2,830 15, 446 115,431 218,928 379,867 1,944,350 3,897,204 Baikwan taels. 241,234 307,283 672, 160 1,540,100 1,076,229 1,257,961 669,649 669,402 813,254 1,926,696 Bailiwan taeU. 60,159 60,229 112,500 187,661 253,490 631,437 300,607 642,948 897,760 1,071,201 Haikwan taela. 23,028 91,219 52,459 308,169 74,346 29,312 24,616 22,777 112,042 33,627 Haikwan taels. 331,632 458,616 8.39,724 2, OSS, 460 1,419,611 1,934,141 1,235,800 1,714,994 3,767,406 6,927,728 NOTE.— Shipments orodlted to Canada may reasonably be supposed to have come from the United States, as it is probable that this macblnery was originally manufactured In New England and shipp«d via Vancouver. CHINA. 267 It therefore seems clear that American textile machinery has at- tained a position of preeminence in the China markets, as the su- periority of American equipment and plant designs is reported to be fully recognized there. This fact encourages the hope that other Asiatic countries will come to a like conclusion in due course. Con- verted to a percentage basis, the data in the above table are plotted in figure 30. American manufacturers have sold more than $25,000,000 worth of textile machinery in China since 1916 and are certainly to be congratulated upon their showing in the following diagram. PirCwt ofTc3tai.Vaujeof imports arJixyni MACHintur Imo CHrNA ORlGWATmG 111 COUHTRIIS iHMCATfli 19«-1920 too 90 80 70 60 50 r- '^ /^i %^. •- >^^y \^ dS/fCAH m 1912 1915 '"'JAPAM mo.cc Fig. 3T. Under the circumstances described above, the competition in the China yarn market has not reached such a point as to force down prices to close margins, but one speculates with interest upon the ultimate result. It is not yet possible to determine which country will be found best able to supply this trade. The cost of machinery and plant seem to be about equal in Japan, China, and India, ex- cept for the Japanese import tariff. If labor is cheap in Japan, it seems to be cheaper in China and of still lower cost in India. All these countries can import American cotton where needed at sub- stantially equal costs. The Indian mills have raw cotton at hand, but it is expensive to deliver the yarn to China. The Japanese mills find it necessary to import all cotton and deliver the yarn similarly. Many Indian mills use water power. Most Japanese and Chinese mills use steam. The Chinese mills seem to have advantages with regard to transportation costs, particularly when they can use Chi- nese cotton. The subject becomes exceedingly complicated, but it 268 ASIATIC MABKETS FOR INDUSTRIAL, MACHINERY. seems significant that Japanese capitalists are now erecting mills in. China. This would seem to indicate that the spinning industry in China has a most promising future. Prom wha,t could be learned (in the absence of Government in- dustrial statistics and with no mill owners' organization) there are in China 68 Chinese-owned mills, having about 1,000,000 spindles in operation, and about 900,000 more in course of erection or under order; there are also 29 Japanese-owned mills, with about 800,000 spindles, and 5 British mills, with possibly 250,000 spindles— or a grand total of nearly 3,000,000 spindles in 102 mills when spindles now ordered are put into operation. Correspondingly, there are about 3j200 looms m the country and under order." It seems obvious that this is an industry of first rank, and, regardless of what may have been said about a lack of progressiveness in China, will promptly develop to considerable magnitude. Similarly, it will stimulate the development of other industries.. The great importance of the textile-machinery business in China and the absence of American participation in that trade up to about 1916 explains in part why the United States has not supplied a larger proportion of the industrial machinery absorbed in that mar- ket. But it is now understood that there are more than 600,000 American spindles installed or under order for China, and the above condition is believed to be definitdy removed. Out of the 102 cotton mills in China, 48 are in or near Shanghai, 8 are in Tientsin, 4 are in Tsingtau, and several mills are being erected near Hankow. MACHINE TOOLS. The United States, has long been noted for the excellence of its machine tools, and even before the war very important shipments of these tools were sent to Europe year after year. But in Siam, China, and certain other countries the railway and other concessions were in the hands of Europeans, as were also the dockyards, tram- ways, and water and other power plants. Even when some of these enterprises were nominally under the control of Chinese individuals or interests, foreign influences prevailed. The situation is illus- trated by the following clauses taken from the agreement under which the German-controlled Shantung Eailway was built : " German ma- terial shall be used, as far as possible, in the construction of the rail- ways. " " The railway is to be equipped in due time with rolling stock according to the requirements of traffic^ The material shall be, as far as possible, of German origin. " ^^ "It will be observed that tbese figures differ somewliat from the nnmber of spindles credited to China In the usual publications and In the section of this report referring t« India (because the latter data were from the ordinary formal sources). But the writer believes that the figures in the above paragraph are more nearly correct and that there. fore China will soon have as many spindles as Japan and that India will have about as many as the other two countries taken together. In Japan at the end of 1918 there were 8,835,084 spindles, in 177 mills, and also 42,400 looms, and in that year about 57 per cent ' Shoe machinery Toxtile machinery Sawmill macliinory Other wooil working machinery All (^er machinery and parts of Total.. 102,755 11,881 300 14,091 171 6,339 6,759 4,21S 426,114 641,732 682 233 11,577 1,014 129,075 802 8,532 29,572 1,194 3,192 10,t:27 73.1 100 2,904 786 867 51,939 260,431 545 1,416 9,882 944 8,280 2,718 148,897 2,810 1,908 4,662 12,058 43,788 13 25,321 2,586 21,715 26,854 450 1,618 19,980 76,601 414,046 » 1910, 1913, and 1915 are fiscal years ended June 30 ; the others are calendar years. 110291°— 22 19 278 ASIATIC MARKETS POR INDUSTRIAL MACHINERY. EXPORTS FROM UNITED STATES TO CHINA— Continued. Classes. 1919 Number. Dollars. Number. Dollars. Number. Dollars. Air-compressing machinery Brewers* machinery Concrete mixers Cotton gins Elevators and elevator machinery. Electric locomotives Stationary gas engines Gasoline engines: Automobile , Marine Stationary , Traction , kerosene engines Steam engines: Locomotives Marine .^, Stationary Traction All other engines Boilers All other parts of engines Exbavating machinery Hour and grist mill machinery Power laundryt machinery iJathes 'Other machine tools Sharpening and grinding machines. . All other metal- working machinery . . Oil-well machinery Other mimng machinery Paper and pmp mill machinery Pumjps and pumping machinery Refrigerating, including ice-makijig, machinery Road-making machinery Shoe machinery Sugar-mill machinery 35,343 10 50 S 117 71 7 81 48 12 83 2 70 3,010 90 46,960 500,000 44,131 1,470 79,597 45,705 13,091 44,529 2,406,692 71,559 90,417 3,576 110, 160 686,487 585,058 177 673,101 14,920 171,115 43,832 17,953 1,127,533 , 13,500 132,985 4,163 334,968 70,294 17,804 Textile machinery. Sawmill machinery Other woodworJdng machinery.. All other machinery and parts of. 3,073,571 9,936 33,068 1,642,242 Total.. 12,149,039 85 5 76 270 14 122 86 10 34 112 53,230 19,050 42,111 20,445 28,102 90,160 20,594 1,675 60,867 135.674 29,814 40,829 3,370,510 56,636 364,731 158,837 345,950 1,106,001 539,032 18,644 241,433 413,039 55,317 222,562 32,503 40,966 48,418 445,026 93,421 15, 135 2,679 28,079 3,798,673 27,663 71,388 3,163,728 15,202,914 44 106 104 3 26 13 127,098 9,765 1,299 62,387 10,800 18,447 50,867 27,668 10,068 5,119,837 48,579 106,425 50,996 148,897 311,177 1,991 557,645 4,139 121,253 38,054 23,766 188,111 26,743 131,325 120,640 341,510 106,424 3,414 13,012 7,978,751 19,164 122,761 2,272,965 18,184,978 'EXPORTS FROM UNITED STATES TO HONGKONG. Classes. 1910 1913 1915 Number. Dollars. Number. Dollars. Number. Dollars. Air-compressing machinery 161 Elevators and elevator machinery . . . 2,155 1,750 568 1,378 507 52,398 11 3 6 2 13 4 1 l|328 853 1,792 Gasoline engines: Marine Steam engines, stationary 26 6,639 8,693 All other parts of engines 3 412 Flour and grist mill machinery I'lOO Power laundry machinery 137 2,040 3,705 400 59 9,635 629 3,665 l'731 Metal- working machinery .... 4,228 6 380 Refrigerating, Including ice-making, machinery 1,927 '450 Sugar-mill machinery Textile machinery 16,441 334 2,916 20,532 18,375 Sawmill machinery Other woodworking machinery 198 • 65,544 500 All other machinery and parts of 29 882 Total 88,883 113,367 74 264 CHINA. 279 EXPORTS FROM UNITED STATES TO HONGKONG— Continued. Classes. Air-compressing machinery Concrete mixers Elevators and elevator machinery. . Stationary gas engines Gasoline engines; Automobile Marine Stationary Traction Kerosene engines Steam engines: Locomotives Marine Stationary All other engines Boilers All other parts ot engines Excavating machinery Flour and grist mill machinery Power laundry machinerv I»thes Otiher machine tools „ Sharpening and grinding machin es. . All.other metal-worUng machinery . ■ Oil-well machinery Other mining maeninery. Paper and piup ni'll machinery Pumps and pumping machinery B^igerating, including ice-making, maraiinery Boad-making machinery Shoe machinery Sugar-mill maeninery Textile machinery Sawmill machinery Other woodworking machinery All other machinery and parts ot — 1919 1920 Number. Dollars. Number. Dollars Total.. 4,007 17,332 10,293 1,868 54,466 27,454 2,761 7,464 161,600 2,044 27,412 7,799 74,870 430 601 467 26,866 9,951 1,447 19,393 941 1,421 16,004 7,602 5,900 83 1,034 65,503 4,284 1,237 168,340 720,774 577 5,917 732 3,526 66,323 40,812 3,303 4,646 10,370 90,146 18,104 83,125 20,040 204 19,362 61,011 2,485 114,480 1,260 3,653 2,022 16,518 65,709 11,700 152 4,806 135,350 96,945 5,320 334,860 1921 Number. Dollars 1,224,457 23,061 "i,'549 487 9,414 6,523 3,750 89,312 1,667 17,950 19,562 21,386 10,380 100 335 6,943 57,556 866 46,081 23,871 405 100 39,906 37,236 4,260 7,492 62,877 5,343 22, 510 219,722 739,639 EXPORTS FROM UNITED STATES TO KWANTUNG (JAPANESE) LEASED TERRITORY. 1910 1913 1915 Classes. Number. Dollars. Number. Dollars. Number. Dollars. 14,530 187 Gasoline engines: 2 1 1 83 Steam engines: 3,310 5 700 1 5,110 450 1,076 560 120 6,463 2,263 30 12,912 ' 6,559 11,508 4,034 16 Be&igerating, including ice-making, 54 All other machinery and parts of 9,480 11,167 59,545 25,722 36,846 87,589 280 ASIATIC MARKETS FOE INDUSTRIAL MACHISTEEY. EXPORTS FROM UNITED STATES TO KWANTUNG— Continued. Classes. 1919 1920 1921 Number. Dollars. Number. Dollars. Number. Dollars. Air-compressing machinery 60,754 12,983 Concrete mixers Elevators and elevator machinery 820 1 55,006 14 1 S 201,900 513 1,102 Stationary gas engines Gasoline engines: ■ ■ Marine 6 3 2,725 1,068 1 2,670 2 1 11 1 2,600 300 478,435 22,318 10,900 66,297 98,756 Kerosene engines. Steam engines: 57 3,056,840 All other engines 2 160 Boilers 8,447 251,845 1,288 3 305 All other parts of engines 110'906 301 42 698 1,255 8,626 13,290 8,935 6,663 7,200 143,034 Lathes 10,092 5,425 168 16,016 Other machine tools 868 5, IK 1,3S2 568 All other metal-working machinery . . Oil-well machinery 2,043 2,185 17,090 26,220 5,877 1,100 Pumps and pumping machinery Re&igerating, including ice-making Road-maldng machinery 5,5.55 Shoe machinery 100 38,925 899 4,990 277,708 504 '502 145,710 144,361 Total 3,601,550 1,302,507 760,451 EXPORTS FROM UNITED STATES TO FRENCH INDO-CHINA. Classes. 1910 1913 1915 Number. Dollars. Number. Dollars. Number. Dollars. Gasoline engines: Stationary 1 82 1,645 1,277 Metal-workmg machinery Total 3,004 495 Classes. 1919 1920 1921 Number. Dollars. Number. Dollars. Number. Dollars. Air-compressing machinery 7,446 195 470 410 Elevators and elevator machinery. . . 608 CfflSoUno engines: Automobile I 5 73 225 4,903 1,859 58,024 13 3 2 1 1 7 2 ,4 2, .588 2,531 1,552 400 5,438 6,847 2,870 10,803 20,150 13,499 753 Traction Steam engines: Stationarv 4 7,114 1 7,974 All other enginos 1,725 854 Lathes CHINA. 281 EXPORTS FROM UNITED STATES TO ^RE^•C^ INDO-CHINA— Continued 1919 1920 1921 Number. Dollars. Number, Dollars. Number. Dollars. Other macTiine tools 70 1.266 3,696 9,830 1.783 2,066 150 108 944 205 12,331 276 Sharpening and grinding machines. . All other metal-working machinery . . Oil-well TtlJV^hinpfy Other mining madiinery Pumps and pumping machinery 3,841 Kelrigeratlng, including lce-ma£ing, machinery Road-making ma(diinery 1,200 70 33,927 275 114 1,239 26,337 TeVtile machinery. . ' Sawmill mftchinwry 546 224 90,589 Other woodworking machinery 19,382 Total 189,775 158,915 30,296 EXPORTS FROM UNITED STATES TO SIAM. Classes. 1910 1913 1915 Number. Dollars. Number. Dollars. Number. Dollars. 376 13 25 5 1 2 2 2 1,798 2,296 GasoUne engines: 2 2 1 240 277 3,560 4,286 3,823 Steam engines: 334 2 350 11 615 8,854 390 87 • 36 870 133 3,019 293 47 502 20 3.54 212 1,090 1 923 Belri^rating, incluamg ice-making 1,988 1, .549 ■ 142 7,136 433 1 975 8,808 9,761 41,439 1919 1920 1921 Number. Dollars. Number. Dollars. Number. Dollars. 100 3,208 3 3,437 2 946 1 175 Gasoline engines: 1,067 82 14 3 5 71,365 4,010 8,047 4,460 20 14 12 5 19,246 4,046 19,588 8,721 6 4 2 2,336 Stfttionarv 580 7,562 steam engines: 1 3 2,202 11,660 22 21,331 1 1,080 Ttnllnrs 1,629 11,168 6,8U 10,204 9,961 Excavating machinery 7.628 282 ASIATIC MARKETS FOR INDUSTRIAL MACHINERY. EXPORTS FROM UNITED STATES TO SI AM— Continued. Classes. 1919 ■ 1920 1921 Number. Dollars. Number. Dollars. Number. Dollars. 3,764 441 1,695 1,941 2,062 2,748 455 705 422 644 729 14,385 Lathes- 336 1,781 Sharpening and grinding machines, . . 1,772 3,301 1,280 36,274 6,874 7.55 1,160 5,670 30,425 5,352 Kefvigerating, including Ice-malking, 5,353 Road-making machinery 7,693 Shoe machinerv- 40 Suga^-mill machinery 30 Sawmill machinery 1,981 7,281 4,364 Other woodworkiag inachiaery 7,167 All other machmery and parts of .57, 953 17,722 70,88/ Total 214,129 155,091 180,794 EXPORTS FROM UNITED STATES TO RUSSIA IN ASIA. Classes. 1910 1913 1915 Number. Dollars. Number. Dollars. Number. Dollars. Air-compressing machinery 625 10 4,308 Elevators and elevator machinery Electric locomotives ; 1 24 4 2! 130 197 373 Stationarv sas enetnes 2 4 1 650 362 881 Gasoline engines: Marine 274 Steam engines: Locomotives 20 310,000 74 27,774 Traction 1 1 1 125 All other engines 1 s'o'o 161 All other parts of engines 4,124 2 576 Flour ano^grist-mill machinery 141 25 1,600 33,252 962 46,069 242 726 1,497 305 389 Other TTliping mBcbinpry 122,378 7,425 346 Sawmill machinery .". .' Other woodworking machinery 46 11,502 13 032 26,632 227' 436 Total 60,995 49,920 • 1,303,625 Classes. 1919 1920 1921 Number. Dollars. Number. Dollars. Number. Dollars. Air-compressing machinery 7,134 2,640 500 38,946 4,674 Stationary gas engines 1 17 11 Oasollne engines: 15 90,393 14 Traction 2 3 79 1 13 9 1 7, .500 4,983 3,416,893 700 2,490 6,616 1,643 49,990 Steam engines; Locomotives Marine i 1,600 Stationary Traction All other engines 22 7,791 21,591 Boilers CHINA. 283 EXPORTS FROM UNITED STATES To RUSSIA IN ASIA-Con1inued. Classes. 1919 1920 1921 Number. . Dollars. Number. Dollars. Number. Dollars. Allotherpartsof eneines 4,759,547 37,483 55 3,966 114,612 Power laxindry macluQery 19,082 100,678 995 37,0S.i 68,78.-, 78,121 201,283 '38,500 640 2,730 All other metal- workingmachinery . . i Ot,herTniTiiTiE"lji/^hinftry 1 22,861 623 92 PiiTTips HTT^ prnnpiT^I' TTi'fV^WT^rv 144 Eefrigerating, inelucftng ice-making, ■m^hmpry 350 Textile machinery i2,666 29 40,373 270,585 f^n^irTnill TTiiv^hiTi^^ry 366 12,327 236,268 Other woodworking machinery 450 3,287 Total 9,215,389 395,310 123,743 The tables below show the exports of machinery (according to British statistics) from the United Kingdom to China proper and to Hongkong, excluding agricultural machinery, typewriters, sew- ing machines, etc. The figures are in pounds sterling ; the equivalent of the pound in United States currency can be taken as about $4.86 up to 1915 and as about $4.70 from that time to 1918, after which it underwent a severe decline and fluctuated widely. EXPORTS OF MACHINERY FROM UNITED KINGDOM TO CHINA." Classes. Locomotives Pumping machinery Unenumerated prime movers. . Electric motors and generators Other electrical machinery Boilers Spinning machinery ' Weaving machinery Other textile machinery Mining machinery Unenumerated Total £20,531 11,946 22,507 ■ 19,439 24,985 1,9.58 58,669 221,905 £62,904 35,369 37,499 35,867 20,299 140,785 3,054 96,412 432,189 1911 £49,766 6,170 21,762 25,592 16,226 29,599 4,941 75,659 229,715 £5, 7, 23, 212,315 1913 £10,270 2,344 37, 105 28,704 42,113 134,561 1,087 82,736 338,920 £31,872 9,662 55,700 39,179 42,741 191,877 27,310 9,576 76,624 484,541 Classes. Locomotives Pumping machinery Unenumerated prime movers. Electric motorsand generators Other electrical madnlnery BoQers Spinning machinery Weaving madiinery Other textile machinery Unenmnwated Total £11,700 1,223 9,182 13,443 5,724 32,450 89,023 18,189 3,632 38, 122 222,688 1916 £6,619 6,178 5,652 29,«41 6,726 27, 478 177,386 11, 151 1,015 49,014 321,060 1917 £4,225 7,825 1,241 12,999 4,770 49,398 130,632 10,210 1,738 47,407 270,445 256,419 £4,205 £7,847 8,159 21,773 3,149 37,396 16,251 28,930 8,617 12,992 18,419 74,879 154,635 188,497 13,480 33,851 1,296 2,207 28,208 150,360 558,732 •1920 £100,113 33,994 111,456 66,306 45,327 118,032 246,582 43,999 10,178 786,308 1,562,295 1 This excludes shipments to Hongkong, Macao, and the leased territories and thus corresponds asclosely a«maybetothatpartofChinabetweenChinwangtaoandSantuao. SeeChlnadataonp.262. « A change in classification introduced in 1919 makes comparison with the earher years very ^cult, and it maybe that the above statement is not strictly accurate in view of the classification adopted. 284 ASIATIC MARKETS FOB INDUSTRIAL MACHIISrEEY. EXPORTS OF MACHINEBY FKOM UNITED KINGDOM TO HONGKONG. Classes. 1909 1910 1911 1912 1913 1914 |£ 13,501 } 19,379 31,643 £14,185 16,270 31,366 £10,336 7,846 27,366 £14,689 10,743 17,740 £36,978 12,582 26,546 TTnfimimftrat.p^ primp Tnnvors , , £20,443 TJnenumerated electrical machinery 17,349 25,360 Total 64,423 61, 821 45,548 43,172 76,106 63,152 Classes. 1915 1916 1917 1918 1919 1920 £3,826 3,237 6,609 21,773 21,928 £5,182 11,968 8,611 1,663 25,604 £4,462 7,766 4,427 4,096 17,781 £215,596 19,922 10,178 1,338 38,190 £9,463 .19, 155 11,288 5,280 77,847 £30,921 1,143 TTnAnnmftrfttp^ primp movPfs Unenumerated electrical machinery 8,881 133 7S3 Total 57,373 53,028 38,532 285,224 123,033 174,731 Japanese machinery exports are shown below (the yen may be taken as equal to 50 cents) : EXPOBTS FROM JAPAN TO CHINA.i Years. Electrical machinery. Cotton gins. Textile machinery. Lathes. Other machinery. 1910 1911 1912 1913 1914 1915 1916 1917 1918 1919 1920 Ten. 52,205 161,349 170, 765 248,840 268,278 254,541 350, 054 698,331 1,005,068 1, 409, 000 1,326,000 Ten. yen. 179,915 130,212 405,024 120,535 80,646 101,288 121,560 225,302 35,416 303,764 55,848 322,382 P' 469,321 ?' ■466,354 I' 1,397,480 Iv 1,579,000 (« 2,542,000 Ten. m m 100,354 161, 406 209,000 373,000 Ten. 132, 199 , 159,837 616,159 384,306 285,120 396,115 554,063 1,845,236 1,913,665 3,235,000 2,817,000 1 This excludes Hongkong and Kwantung. Although these figures may include some small items shipped into the treaty ports of South China and Manchuria (excepting Dairen), the territory corresponds as closely as may be to that part ol China between Chiuwangtao and Santuao. See China data on page 262. 2 Figures not available. EXPORTS FROM JAPAN TO KWANTUNG LEASED TERRITORY. Classes. 1916 1917 1918 1920 Electrical machinery. Textile machinery Lathes Printing machinery. Other machinery and parts. . Ten. 276, 340 10,053 26,291 537,491 Ten. 756, 890 125,965 131,847 28,908 1,188,613 Ten. 1,512,619 13, 742 234,111 60,819 2,728,771 Ten. 1,687,000 297,000 107,000 105,000 3,478,000 Total.. 860, 175 2,232,223 4,550,062 5,674,000 Ten. 1,468,000 153,000 109,000 163.000 2,227^000 4,120,000 Note.— It Is understood that the above are shipments only to Dairen and Port Arthur. Consignments to Antung, Suiteuho, Harbin, Mukden, Chinwangtao, etc., are included in the exports to China. CHINA. EXPORTS FROM JAPAN TO HONGKONG. 285 Classes. Electric machinery and parts. . Textile machinery and parts. . Lathes. Printing machinery. Other machinery and parts. . . . 1916 Yen. 41,225 8,024 4,776 51,471 1917 Yen. 42,293 3,^5 16,037 64,762 1918' Yen. 61,941 3,076 11, 107 294,706 1919 Yen. 66,000 7,000 3,000 9,000 64,000 Yen. 67,000 16,000 23,000 94,000 ™™ilJ?ll 'l*Pu" siiPPUfl^lntemal.combustlon engines valued at £7,S48 e. i. f. Honelcong. It was by tteAmS i™l" J?'2S''^" 1913 172,446 21,315,962 576,772 21,892,734 14,924,4.37 203.8 3, 870, 600 '18,795,037 1914 182, 637 22,293,419 957,709 23,251,128 16,219,537 22?. 3,683,806 }2'?2S'^2 1916 193, 142 20,490,747 614,677 21, 105, 424 16,269,978 228.6 2,924,092 19,184,070 1916 197,907 22,901,580 666,110 23,457,690 18,679,126 261.2 3,016,947 21,586,073 1917 250, 144 26,361,420 713,080 27,074,500 20,707,452 291.1 2,813,462 23,520,914 19xS 287,159 28,029,425 767,792 28,797,217 23,025,803 323.7 2,197,037 25,222,840 1919 348,240 31,271,093 699,646 31,970,739 24,800,968 348.6 2,000,697 26,801,665 1 Consumption, as given above. Includes only shipping, railway, and industrial demand. Domestic and incidental consumption is excluded. The above index number is based on the consumption of 1905, when the corresponding total was 7,113,900 metric tons, so in 14 years the consumption has been multiplied 3.486 times. In the United States the production in 1905 was 350,645,210 and in 1919 it was 487,638,572, so the increase in this country during the same period was proportionately much less, but in quantity was more than we can expect Japan to achieve, as the Japanese reserves can not support such development. The increase in the demand for coal for shipping does not keep pace with the other forms. Corrosponding to the above index number, the following shows in greater detail the nature of the expanding demand : Use. 1905 Tons. Index number. 1919 Tons. Index number. Shipping Railways Factories Salt production Total 1, 997, 069 841, 591 3, 776, 378 498,862 100 100 100 100 5, 844, 037 3, 273, 192 14, 819, 281 864,468 292.6 392.4 173.3 7,113,900 100 24, 800, 968 348.6 JAPAN. 303 It will also be noted that while in the bituminous coal fields of the United States the coal mined per man per day is about 3.75 tons and per man per year about 850, in Japan the production per man per day is a scant half ton and per man per year between 80 and 125 tons, with a distinct tendency toward the lower figures in the more recent years. These conditions would all lead one to expect an increase in prices, and this has been most pronounced in recent years. Definite data of a satisfactory nature are hard to obtain because of differences in quality, grade, and location. The official price of coal as pub- lished by the Japanese Department of Agriculture and Commerce* is as follows: 1900- 1905_ 1906- 1907_ 1908- 1912- Yen per metric ton. 6.35 8.00 8.43 7.70 7. 95 7. 62 1913 Yen per metric ton. 8.01 1914 8.35 1915 - 7.83 191G__ 9.04 1917 _ 16. 08 1919 _ '32.78 The above increases do not indicate the situation as it was found in Japan in 1920, and it may be that these official figures are con- servative. The following unofficial figures were secured while the writer was in Japan and represent the variations in the average price of bunker coal at Moji: 1915: Yen. First half 5. 50 to 6.00 Second half 6. 50 to 7.00 1916: First half 8. 00 to 8.50 Second half 8. 50 to 10. 00 1917: First half 10. 00 to 12. 00 Second half 12. 00 to 18. 00 1918 : Ten. First half 18. 00 to 19. 00 Second half 19. 00 to 24. 00 1919: First half 24. 00 to 26. 00 Second half 26. 00 to 27. 00 In a report dated March 18, 1920, H. T. Goodier, vice consul at Yokohama, reported that the average 1913 price for first lump coal per long ton at dealers was 7.50 yen, in 1916 it was 10 yen, in 1918 22 yen, and in March, 1920, 35 yen. It will be noted that this was 16 months after the armistice. The effect of a situation of this kind on points like Hongkong and Manila that formerly imported much Japanese coal is obviously most serious and is enough to make most boiler-room equipment obsolete. Until such time as other coal fields are developed or fuel prices reduced, industries in Japan or elsewhere that rely upon Japan for fuel will be handicapped to this extent. It would be difficult to find territory where fuel economy is more important. It is estimated that about 75 per cent of the coal reserves of Japan are in Kyushiu, the most southerly of the larger islands, and 10 per cent in Hokkaido, the most northerly of these islands. In spite of this relation there is a tendency toward decrease in production in Kyushiu. This does not represent exhaustion or unprofitableness, but there are labor complications in this district which seem to grow more involved from year to year. It is not so much a4)roblem ' Wiom p. 193, 34th Statistical Report. « Average in Tokyo, as from Japan Year Book. 304 ASIATIC MARKETS FOB INDUSTRIAL, MACHINERY. of wages or organization of labor as one of obtaining workmen for an unattractive employment. In connection with some of the other countries reported in this monograph, the consumption of coal has been suggested as a measure of the demand for boiler-room equipment and indirectly as a meas- ure of the demand for other kinds of machinery. _In the present instance the same suggestion is useful, and, in addition, by use of the figures on page 302, one can revise somewhat these other esti- mates, as this information makes it possible to separate the in- dustrial fuel consumption from that of the railways and other types of demand. ' Petroleum is produced in Japan, but the quantity is insufficient and imports are heavy. WATER POWER. With fuel conditions as described, in a country with such great need for industrial development, interest in water power is obvious. Add to this the mountainous nature of practically all the islands and the abundant rainfall, and it is obvious that development is to be expected. Over the whole country the rainfall averages about 62 inches, or double that of Chicago. There are some districts with double this average rainfall. Water has been used for power pur- poses in Japan for a very long time — probably centuries. The first plant on modern lines was installed in Kyoto before 1900. By 1907 there were 38,622 kilowatts of hydroelectric equipment in operation. In 1917 this had become 511,090, and the rate of increase was ex- tremely rapid. The detailed statements of the customs returns pre- sented on page 323 will give further particulars regarding the ma- chinery imported for this purpose. Accurate statistics for more recent years are not yet available, but in 1920 it was estimated that Japan could economically develop a total of 7,000,000 horsepower at its various water power sites, and of this more than 1,000,000 were in operation. In the interval between January 1, 1920, and June. 30, 1921, it was reported that 260,000 horsepower of hydro- electric equipment had been ordered from abroad and 150,000 horse- power more ordered from builders in Japan. It was further an- ticipated that an additional 250,000 horsepower of such equipment . was to be ordered in 1921. It is realized that these are very big figures. THE ELECTRICAL SITUATION. At the turn of the century in 1900 Japan had not installed very much electrical machinery. The first water-power plant mentioned above impressed the writer very much, because governors were not used. Eegulation was manual, the operator being guided by a volt- meter. Evidently the engineer on this design computed that the depreciation and interest on a governor would exceed the wages of a man. Consequently an irksome task was started and indifferent regulation secured. About 1908, in a certain steam plant in Kyushiu, the high-pressure cylinder of a high-speed tandem com- pound engine was held in place with a jackscrew. But those days are gone forever. Japan has some very good power plants. A full report on the market for electrical goo^ in Japan was published JAPAN. 305 in 1918," and the subject wUl not be earned into detail here. The general progress of the industry is shown in the following table : Number of plants. Capacity In kilowatts. Years. Water power. Steam or gas power. Total. Water power. Steam or gas power. Total. 1903 79 88 98 105 132 162 195 255 341 391 510 695 943 1,195 377 385 413 454 470 528 574 661 812 979 1,099 1,245 1,297 1,423 456 473 511 559 602 690 769 916 1,153 1,370 1,609 1,940 2,240 2,617 2,891 '3,140 13,124 16,409 18,547 25,195 38,622 60,121 73,507 112,932 143,831 233,339 321,596 416,586 449,220 489,634 511,090 31,128 42,563 55,827 66,101 75,288 94,611 108,709 144,605 177,733 228,864 275,260 299,383 322,364 335,655 364,473 44,252 58,972 H374 91,296 114,910 154,732 182,216 257,537 321,564 462,203 596,856 715,969 771,584 805 289 1904...; 1905 1906 1907 1908 1909 1910. 1911 1912 1913 1914 1915 1916 1917 8751563 1 9g3 g3g 1918 > The plants under construction in 1918 totaled 310, with a capacity of 837,968 kilowatts. This development of electric central-station business is also shown by the following table, which indicates the growth of the power and lighting load (excluding isolated plants) during the same period and provides an index of the demand for motors, lamps, and acces- sories ; the figures are from the Statistical Eeport of Electric Under- takings in Japan, issued by the Department of Communications : Years. Number of lamps. Corre- sponding generator capacity. NumbM of motors. Total rated horse- power. 1903 ... . 365,090 423,120 510,341 651,284 859,143 1,230,876 1,611,604 2, 141, 810 3,096,516 4,499,627 6,148,420 7,706,962 8,420,357 9,975,554 16,008 17,118 19,955 25,452 33,265 46,265 56,551 75,578 99,897 131,340 160, 865 177,940 190,396 200,400 563 634 966 1,484 2,385 3,975 5,820 7,970 11,248 18,092 27, 376 35,309 42,789 54,064 4,107 1904 5,404 5,446 8,278 1905 1906 1907 11,249 17,093 23,111 1908 1909 1910 32,089 1911 44,055 1912 68,519 1913 107,273 1914 . 148, 702 1915 « 182,704 1916 , I 235, 470 ' The total horsepower of electric motors suppUed from isolated plants at this time was 389,816, for 15,141 motors. Just as the United States has developed a " Superpower scheme " for linking up all the electric-power circuits between Washington and Boston and another to cover the territory between Pittsburgh and Chicago, and as England and France and Italy have similar plans, so Japan shows a drift toward the linking up of power lines in cer- tain districts. This has manifested itself in many ways. In 1920 and 1921 there were a number of cases in which various electric com- ^ Electrical Goods in China, .Tapan, and Vladivostok. Special Agents Series No. 1 72 ; sold by Superintendent of Documents, Government Printing Office, Wnshing-ton, D. C. ; price 30 cents. 306 ASIATIC MARKETS FOR INDUSTRIAL MACHINERY. panics amalgamated. In addition it has been said that certain offi- cials favor bringing all the power stations of Japan under one man- agement. Between these extremes is a movement for a 100,000,000 yen concern to absorb the three leading companies in central Japan, another to cover important sections of Hokkaido, a similar project for Kyushiu, and in Formosa one or more water-power projects that would apparently electrify the whole island (about the area of Maryland) from a large lake in the south-central part of the island. One of the Formosan projects is expected to develop 190,000 horse- power; the second project is reported to be of corresponding though probably somewhat smaller magnitude. One is tempted to conclude that Formosa can not now employ so much power. It may be that these superpower schemes in all the above-men- tioned countries will develop slowly. It may be that these proposals are premature, but when Japan places actual orders for 410,000 horsepower of water-power equipment in 18 months, as indicated^ one seems justified in thinking that these ventures are more real than fantastic. The point has been reached where, out of about 10,000 cities, villages, and towns in Japan proper, about 70 per cent are supplied with electricity and the per capita consumption is 47 kilo- watts per year. MANUFACTURE OF ELECTRICAL MACHINERY. Conditions as described have encouraged the production of elec- trical apparatus and machinery in Japan, as indicated on pre- vious pages, where the emphasis was placed upon iron and steel, but the subject is of suiScient importance to justify additional comment in connection with the subject of copper. This metal is found very commonly in Japan and has been produced since very ancient times. Among the mineral products of the country it ranks next to coal in importance. The value and volume of the production has been as follows : Years. Weight. Value. Price per pound. 1908 Pounds. 80,339,848 101, 869, 525 109,608,544 118,670,320 138, 716, 665 147,780,544 156,585,441 167,590,309 223,634,492 240, 085, 000 200, 758, 428 174,318,481 150,649,000 Yen. 22, 409, 424 24,536,150 25,819,259 27, 133, 448 40,252,061 42,012,126 39,067,387 53,731,798 109,812,610 118, 692, 244 90,390,232 67, 581, 475 Sen. 28 1909. . 24 1910. ... 24 T911 23 1912 !9 I9I3 ...... 28 1914 25 1915 S 19I8 W 1917 m 191S 45 1919 39 1920 Under the conditions existing up to 1919 Japan exported copper heavily, as follows : Yeu. 1911 20, 002, 000 1912 24, 284, 000 1913 28, 183, 000 1918 37, 749, 000 1919 ^ 10, 647, 000 JAPAN. 307 But when the price fell, as it did in 1919, Japan became an im- porter and absorbed about 40 per cent of the American exports of that year, the record now being : Years. Ingots and slabs. From Japan to United States.i From United States to Japan.' 1914 PouJids. 10,615,577 17,686,945 6,693,349 160,429,600 71,252,933 43,208,400 Pounds. 1915 • ■■ ■- ■ 1916 1917 » 16,778 33 075 1918 1919 65, 595; 603 82,913,730 59 170 325 1920 1921 ' From Japanese returns. ' From United States returns. • Fiscal years. Evidently the cost of labor and supplies has been rising in re- cent years to a point where the copper mines of Japan feel the pinch of American competition. Increasing imports with decreas- ing production can scarcely be interpreted otherwise. For a good many years Japan has been producing wire, switches, and more elaborate apparatus and has exported a certain amount of such equipment to the other countries of Asia. Under the protection of its tariff it is probable that Japan can continue to manufacture for its own market, but with copper cheaper in America than in Japan it would seem that the Japanese export trade in this line would be in danger if the buyers gave proper consideration to the quality of their purchases. In considering tbe question as to the price at which Japan starts to import copper, reliance should not be placed on the figures on page 306. These are merely the statistical returns of the Japanese Government. This critical value will vary from day to day, and with falling freight rates it will be increas- ingly easy to export copper to Japan. When this export move- ment started in 1919 the American price was approximately 16 to 18 cents per pound. The growth of the electrical industry of Japan wiU create a great demand for such materials. COTTON-SPINNING INDUSTRY. In the section of this report that refers to India, comparative figures relating to Japan have been presented (p. 101), and it will not be necessary to repeat here what has previously been recorded. This industry was first started in Japan in 1862 and is probably the oldest of the modern industries there. By 1889 Osaka and neighborhood had 115,000 spindles. In December, 1920, the spindles in Japan were reported at 3,813,580 (excluding 466,460 doublers). The industry has been very successful in both the domestic and the export business, and, as has been shown elsewhere in this report, the Japanese now have an overwhelming participation in the textile trade of China. 308 ASIATIC MARKETS FOE INDUSTRIAL MACHINEEY. Under a protective tariff Japan will obviously arrange to supply its own demands, and if the efforts to grow cotton in Korea are successful, it may even escape the need of importing the raw ma- terial. The export business and the influence of the Japanese on the trade in China depends in part at least upon the hours the em- ployees work in the mills. Until recently the mills in Japan ordi- narily ran 22 hours per day, using two shifts of 11 hours each. The mills in India have not operated in this way, and it has been re- ported that this difference in time has forced the mills of India out of the China market, but this statement can probably be challenged by use of the Hongkong statistics. But, regardless of the merits of this controversy, the matter of hours of employment was up at the Washington conference and the laws of several of the Asiatic countries have been modified to comply with those findings. If it is txue that India has suffered in the China trade because of the hours of labor in Japan, it is probable that the situation will soon be righted by these changes, and under these circumstances there would be a tendency to discourage further mill extensions in Japan and correspondingly to increase the plant capacity in China. No such tendency has been noted. In India, China, and Japan there seems to be a desire to install additional mill capacity as rapidly as the necessary machinery can be secured, and it is anticipated that Japan will continue to add to its spindle and loom equipment. There will also be a tendency toward the pro- duction of finer yarns and cloths and some effort toward better dye- ing and finishing. It is probably safe to say that many Japanese buyers have not purchased American textile-mill equipment because they did not appreciate its excellence. Salesmanship is needed to meet this situation. American designers have an opportunity to show the superiority of their designs in offering their equipment in Japan. In studying the opportunities of the Japan market, ma- chinery manufacturers should also remember that Japanese inter- ests own about 500,000 spindles in China. At times efforts have been made to produce textile machinery in Japan, and it has been claimed that this has been managed success- fully in one of the arsenals. At any rate it is known that the arsenal has not felt that it could continue such production, so the problem of producing such machinery still lies before the Japanese machine shop. This will not prove to be an easy problem, for the mill owner usually wants to place orders for 30,000 to 50,000 spindles at a time and this makeg it all but impossible to undertake the neces- sary development work. The problem is that of starting production on a fairly large scale for prompt delivery without opportunity for experiment. SHIPBUILDING. In shipbuilding the Japanese have a most creditable record, and probabW this industry illustrates as clearly as any the possibilities of the Japanese in industrial lines. The Japanese are good seamen, and there is much. to be said in favor of the junk as a cargo or fishing vessel. Also, there is a great deal of splendid carpentry in these boats, which have evidently been built m their present form for centuries, and the type has held its own throughout the 60 years since the country was opened. JAPAN. 309 w J^oi^^u" ^^^^ ?°°^ *o^ 1^1* States that at the end of 1912 there v+f? t shipyards m Japan proper. This total includes all of the little boat shops m the main archipelago. At the end of 1918 there were 6 shipyards capable of building the modern type of steamship and having 26,139 employees and lY building berths. War stimulated building tremendously, and in March, 1918, the industry had expanded to 57 yards with 97,355 employees and 157 building berths; in De- cember, 1919, this had fallen to 28 yards with 90 berths and 86,000 employees Similarly, prices advanced sharply from about $55 per dead-weight ton m 1914 to $120 late in 1916, to $370 late in 1917 and to $405 early m 1918. Instances have been recorded where the price reached $500. Since the armistice prices have collapsed, but the above experience stimulated production remarkably, with the result that some astonishing speed records were secured. It was stated verbally to the writer that the entire Asano yard, between Yokohama and Tokyo, was built and a 5,000-ton vessel launched m six months. To start a yard on an unimproved beach, put in foundations, buildings, machinery, acquire the materials, and launch such a vessel in half a year would tax any first-class organi- zation operating under favorable circumstances, but add to this the obstacles involved by bringing practically all the machinery and a large part of the materials 10,000 mile^ and the achievement demon- strates splendid organizing ability. On October 7, 1918, the Kawasaki Docltyard at Kobe laid the keel for the Raifuku Maru, 9,000 tons, dead weight, length 385 feet, beam 51 feet, molded depth 28 feet, speed on trial trip 17.39 knots. The vessel was launched October 30, being built in 23 days. This is claimed to be a world's record and is a most remarkable achieve- ment. The United States Shipping Board contracted in Japan for 45 steel cargo carriers as a war measure. The first group of contracts covered 15 vessels, ranging in size from 6,800 to 11,000 dead-weight tons and averaging 8,522 tons. The second series covered 30 ves- sels, totaling 246,300 tons. These two contracts involved about $37,500,000 and are among the largest shipbuilding contracts ever placed. In 1896 a law was passed for the encouragement of shipbuilding. This was a form of subsidy that was effective. The E&tacM Maru, of 6,000 tons, built at the Mitsubishi yard at Nagasaki, was the first large steamer built in Japan. The aoo've-mentioned law was modi- fied in 1910. Up to March, 1913, the number of vessels built under these laws was 119, with a tonnage of 352,891. During the years 1915-1918, inclusive, Japan built 324 steel vessels that were larger than 1,000 tons and totaled 1,107,338 tons. The launchings in Japanese yards have been: Years. Number of vessels. Tonnage. 1918 377 133 145 626,000 1919 .• 613,849 1920. 448,000 110291°— 22 310 ASIATIC MARKETS FOR INDUSTRIAL MACHINERY. The above-mentioned laws are reported to have lapsed in June, 1917. Following 1919, conditions became difficult, as shipbuilding all over the world felt the end of war and postwar booms. By 1921 the yards in Japan had practically no private work and were de- pendent upon the Japanese Navy for orders. The Japanese merchant marine in July, 1914, included 408 ships of over 1,000 tons, the total tonnage being 1,270,000. By December, 1920, it had developed to 750 vessels of 2,551,000 tons. Obviously this fleet will provide a good deal of employment for these yards. In the above remarks no reference has been made to the navy yards, of which there are several. In the private and government yards Japan has produced a navy that ranks third among those of the world. Vessels in excess of 30,000 tons have been built both in the Kawasaki yard at Kobe and the Mitsubishi yard at Nagasaki. Provision was made for a class of 40,000-ton battleships^ and a very elaborate program, including capital ships and auxiliary craft, with destroyers and submarines, was developed. As a consequence ship- building in Japan in 1919 and 1920 was probably as active as in any country in the world. The collapse of the demand for merchant types and the restriction of the naval program as a result of the Conference on Limitation of Armament at Washington may be expected to modify the situation. In this connection it should be added that Japan does more than fabricate ships out of imported materials. The authorities claim that they are nearly independent of foreign sources of supply, stating that satisfactory armor is produced at the Imperial Steel Works and also at the Kure Navy Yard, guiis are produced at Muroran, and steam turbines of adequate capacity, as well as electrical and other machinery, are produced at the Kawasaki and Mitsubishi yards as well as elsewhere. The development of the Japanese shipbuilding industry has been a marked achievement. But there are ^rave complications in the situation. Shipbuilding in Japan is subsidized, and vessels built there of imported materials may prove to be inordinately costly. Also, there is reason to believe that steel produced in Japan is not competitive. So long as war prices prevailed, Japanese steel makers and shipbuilders could prob- ably earn profits, but with the coUapge in the prices for steel and tonnage this industry in Japan is faced with grave difficulties. It is quite possible that Japanese builders will find themselves unable to meet world prices under competitive conditions, and since (as has been shown) a substantial amount of the steel required has to be brought 5,000 miles or more to their yards, this is not surprising. In the past this situation was aggravated by the imposition of import duties on shipbuilding materials, but it has been proposed that these be remitted. The circumstances of the case have emphasized the labor cost of Japanese-built ships, and in recent years there have been some severe strikes. CLOCKS AND WATCHES. As the story of shipbuilding in Japan demonstrates the ability of the managers and workmen in certain directions and affords a meas- ure of the capabilities of the people and the development of the country, so the clock and watch making industry illustrates another JAPAIT. 311 class of work. In the early days of trade New England sent large quantities of clocks to the Orient. About 1887 the modern industry was started in Japan, and the production is indicated in the following table : Years. Number of em- ployees. Standing clocks. Number. Value Hanging clocks. Number. Value. Watches. Number. Value. Total value. 1909. 1910. 1911. 1912. 1913. 1914. 1915. 1916. 1917. 1918. 1919. 1,417 1,508 1,717 1,711 2,000 1,999 2,067 2,248 2,849 3,631 260,700 292,171 394, 103 391,810 347,398 324,209 550,814 680,809 741, 191 728,394 654,395 Yen. 408,519 478,933 576,702 574,691 527,771 498,907 639, 128 892,026 1,064,692 1,430,876 1,765,601 344,627 381,514 467, 270 477,583 490,609 398,618 336, 122 195,815 241,002 278,948 386,676 Yen. 702,888 860,635 1,040,482 964,880 1,010,258 771,828 660,053 691,202 821,951 1,444,856 2,540,344 53,769 64,136 50, 055 60, 849 88, 100 101,600 124,500 134, 212 162,955 211,718 262, 173 Yen. 175,235 198,507 216,600 252,261 328,550 678,500 460,650 499,594 612,384 1,074,736 2,621,704 Yen. 1,286,642 1,538,075 1,833,784 1,79L832 1,866,579 1,649,235 1,759,831 1,982,822 2,499,037 3,950,468 6,927,649 In 1917 there was 1 factory in Tokyo, 1 in Osaka, and 17 in the neighborhood of Nagoya. In 1919 there were 27 factories. The above table demonstrates much that is of interest to the ma- chinery manufacturer who wishes to gauge the possibilities of the Orient. This table represents a trade that has grown to nearly $3,500,000 per year. A large proportion of the clocks and watches are exported, the figures being : Years. Number. Value. Years. Number. Value. 1909 . 251,576 283,033 293,516 326,697 473,706 383,877 Yen. 554,263 625,697 621,438 7W,864 993,419 804,068 1915 638,422 709,684 519,797 458,490 514,914 254,892 Yen. 1,034,836 1,186,033 1910 1916 1911 ... 1917 1,311,785 1912 1918 1,827,321 1,831,902 1913 1919 1914 .. 1920 1,359,000 The above exports go to practically all the countries of the world, including even Switzerland. But it will be noted from the table above that the average employee produces about 1,800 yen's worth of merchandise, while before the war the figure was less than 1,000 yen. It will also be noted that the average value of a watch is less than 10 yen, and in some years less than 4 yen. Clocks work down to an average value of less than 2 yen. Even though these be manufac- turers' averagie values as reported by the Japanese Government, they indicate the nature of the competition offered to American products — if " competition " be the word to use. CHEMICALS. Before a country can be considered to have attained a satisfactory stage of industrialization, an adequate chemical industry is neces- sary, and it is very . difficult to establish this because of the inter- dependence of the various units. In the extreme case this is shown by the coal-tar series, which is said to number about 65,000 different products and requires a series of very large plants for adequate production. It would be extremely difficult for Japan to produce this immense series of products even if all conditions were favorable. 312 ASIATIC MARKETS FOE INDTJSTKIAL MACHINEBY. In the simple forms of chemical production Japan has made some substantial progress, but a great deal still remains to be done. The direction first taken was toward the natural products of Japan or articles of common need, as follows : Camphor production. Brewing. Paper making. Sugar refining. Lacquer production and use. Explosives and munitions. Soap and candle making. Salt. Coal gas with by-product recovery. Fertilizer. Later other classes pf production were started and the following articles produced : Acetic acid. Nitric acid. Acetone. Sulphuric acid. Sulphate of alumina and alum. Iodine. Ammonium sulphate. Potassium chlorate. Carbonate of soda. Potassium chloride. Caustic soda. Sodium sulphate. Celluloid. . Wood alcohol. Bleaching powder. Industrial alcohol. Hydrochloric acid. If Japan is to become adequately industrialized this list must be extended very much. It is not claimed that it is complete, but there are many directions in which more development is required. The Japanese Government has given a great deal' of attention to the matter of developing a comprehensive chemical industry in the country, but the problem is still for the future. If means are found this chemical industry should be expanded a great deal in the years to come, and much equipment will be needed for these purposes. The problem involves the development of sources of supply for the raw materials, the development of markets for the products, cost analysis to keep the different enterprises within commercial limitations, a proper development of the key industries before the establishment of the dependent units, and a proper coordination of the whole program. Each of these problems is intricate, and the changes in world conditions in recent years have introduced dis- turbances that endanger the most careful calculations. Japan, like each of the other countries of Asia, needs a chemical industry, but it will probably be a slow if not tedious task, and development of diversified production in commercial quantities will require time. Specific information regarding the different branches of the in- dustry would go too much into detail for present purposes, but a study of the customs returns over a period of years provides some information of interest. For example, it is noted that imports of ammonium sulphate fell from 16,000,000 yen in 1913 to 2,100.000- yen in 1919, which suggests that the plants in Hokkaido and Kyushiu producing calcium cyanamid from atmospheric nitrogen were suc- cessful under war conditions. In bacteriology and medical work certain Japanese scientists have risen to positions of distinction, and it is to be anticipated that in due season Japan will have an important chemical industry. CEMENT. As an industry the production of cement is important. Also, the consumption of cement provides a rough measure of the amount of engineering construction work done and, as this shows definite JAPAN. 313 development during a period of years, provides an index of the progress ot the community in these lines. Cement manufacture was started m Japan in 1880, and, although progress was slow at hrst, production was stimulated by the Japan-China war of 1894-95 and again by the Russo-Japanese war of 1904^5. For many years a certain amount of Japanese-made cement has been exported mostly to near-by countries. The following table shows the production and consumption of cement in Japan : ' Years. Produc- tion. Consump- tion. Years. Produc- Uon. Consump- tion. 1908 Barrels. 1,794,695 2,331,361 2,638,709 3,125,148 3,821,279 4,562,237 Barrels. Barrels. 4,415,476 4,096,456 4,772,679 4,654,543 6,166,566 6,199,000 Barrels. 3,443,000 3,031,000 3,846,000 4,571,000 1909 1915 1910 1916 1911 1917 1912 1913 3,101,000 3,397,000 1918 1919 Up to 1917 the above production was divided among about 20 diflPerent factories owned by about a dozen companies. One addi- tional company was organized in each of the years 1918, 1919, and 1920. Altogether the industry employs probably more than 50,000,- 000 yen. Also, there is a Japanese plant near Dairen in Manchuria, which can produce about 250,000 casks of cement per year. In the earlier years the cement mills of Japan were often equipped with European machinery, and the plant designs left much to be desired. More recently the more important plants have been equipped with rotary kilns, often of American manufacture, and the crushing and grinding equipment is also commonly from the United States. PAPER MILLS. It is necessary to distinguish between handmade and factory-made paper in Japan. The former industry is very old, and some very high qualities are produced in this way; inferior grades are also produced. Despite the fact that this industry appears to be a strange survival of the old regime and destined to extinction in due course of time, it exhibits marked vitality even during a period of advanc- ing labor costs. The situation is illustrated by the following figures for Japanese handmade paper: Years. Number of factories.! Number of employees. Wage index number.' Total value in yen. 1909 55,617 54,917 55,412 63,474 52,319 48,980 47,232 45,621 45,861 45,474 45,025 161,136 162,543 167,897 156,334 153,549 150,668 145,394 145,621 147,448 149,381 154,400 18,218,548 1910 19,781,920 20,330,306 20,387,955 20,935,391 18,663,067 1911 1912 i43.7 150.0 140.6 140.6 150.0 171.9 1913 1914 1915 „ 1916 22,395,698 24,740,672 1917 1918 .36.283,552 53,932,699 1919 79,574,079 1920 1921 • It will be noted that these avera^ less than 4 employees each, will be observed that as a whole the industry is important. > Based on the year 1900 as a par. Such plants seem curious at first, but it 314 ASIATIC MAEKETS FOB INDUSTRIAL MACHINERY. Machine-made paper forms an altogether different industry that should not be confused with the above. The first paper mill of the modern type was established in 1872, and the industry has developed rapidly ever since. This industry is in competition with that in foreign countries and has reached a stage of development where it can meet the domestic demand and have a margin for export in the grades produced. There is also an import of perhaps 10 per cent of the mill production — but this introduces the question of grades. The recent development of this industry is shown below : Years. Number ot mills. Number of em- ployees. Paid-up capital. Production, in poimds. Printing. Strawboard. Ci^rette paper. other. 1909 1910 1911 1912 1913 1914 1916 1916. 1917 1918. 1919. 6,486 6,491 7^841 7^271 7,622 7,906 9,032 10,290 11,424 13, 212 13,627 Yen. 20,811,345 21,091,229 21,117,317 23,271,207 23,748,473 28,791,043 28,471,076 31,397,623 26,364,500 38,804,000 41,208,500 127,113,350 138,634,793 181,650,015 188,029,858 230,323,517 293, 182, 086 292,924,197 311,253,680 305, 717, 535 372,003,823 355,938,876 66,534,516 56,573,737 65,667,676 63,461,720 70,602,001 59,426,117 110, 047; 254 122,126,075 136,206,006 324,441,246 171,257,187 10,003,486 4,738,838 2,091,432 4,311,736 4,812,293 7,696,860 8,869,558 9,616,835 12,163,477 17,746,064 11,655,645 43,943,276 71,687,454 56,699,134 68,269,321 69,017,238 68,699,459 86,667^904 115,691,656 160,170,507 161,557,773 183,698,355 The paper industry has naturally created a demand for pulp ; much of this has been imported, but the need has been felt for pulp production in Japan. Production and importation have been as follows : Years. Production. Impart. 1913, 1916. 1917. 1918. Poundt. 170,000,000 302,000,000 379,000,000 463,000,000 Pounds. 107,000,000 129,000,000 36,000,000 64,000,000 Practically all this pulp is produced in Sakhalin (Karafuto), where it is reported that 15 companies have 24 pulp mills with a capacity of 922,000,000 pounds per year. The point has apparently been reached where Japan can export pulp and a certain amount of paper of the grades that the country produces. It will still be necessary to import a certain quantity of paper of the finer grades and the chemicals, rosin, etc., that are needed. Some years ago an attempt was made to produce pulp from certain kinds of. bamboo in Formosa. A complete plant was installed and operated for some tune, but the project was subse- quently abandoned. The particular difficulty was apparently the cost of transportation, as it was found expensive to deliver t^e bamboo to the mill. This is a matter of considerable interest, as there appear to be sunilar projects under consideration in many different parts of Asia. American machinery is used in a very large number of the paper and pulp mills of Japan. The extent of this participation is indicated in the customs returns published on pages 32'8 and 330. JAPAN. 315 VEGETABLE-OIL INDUSTRY. Like practically all the other Asiatic peoples, the Japanese have extracted vegetable oils for centuries. The waterproof paper used on Japanese umbrellas and lanterns is prepared in part from perilla oil; the elaborate headdress of the Japanese women is in part the result of treating the hair with the oil from camellia seeds; and, as this type of headdress and these lanterns and umbrellas were known centuries ago, this industry is correspondingly old. The hand-power mill of Japan is a primitive type of oil press that operates on the wedge or screw principle and resembles types found elsewhere in Asia. There are thousands of these mills in Japan, the returns of the Department of Agriculture and Commerce being as follows: Years. Number of oil factories. 1908 1909 1910 1911 1912 10,.'i85 7,352 6,972 6,779 5,610 Number of employees. 15,495 13,065 12,590 12,036 10,419 Years . Number of oil factories. 1913 1914 1915 1916 1917 5,092 5,165 9,402 13,084 21,304 Number of , employees. 9,971 9,586 15,179 18,965 28,663 The above returns are somewhat confused because there are in Japan about 40 modern-type mills with hydraulic presses, absorp- tion or similar equipment that are included in the above table. Of these 40 mills, 20 are in the neighborhood of Kobe and Osaka, 9 near Nagoya, and 7 near Yokohama, with some others scattered. The effectiveness of the modern type of mill is indicated by the following figures, from the Japanese Government returns for 1917 : Items. All Japan. Osaka-Kobe district. Percentage in Osalia- Kobe dis- trict. Factories Employees Production of all oils Number. 21,304 28,663 Yen. 138,150,328 Ifrnnber. 143 1,878 Yen. 14,834,522 0.7 6.5 1 Money value is used, as quantities are not available. This table shows that the modern mills in the Osaka-Kobe district, constituting less than 1 per cent of the " factories " and having about 6J per cent of the labor, turned out in 1917 nearly 40 per cent of the product. In other sections of this report it has been pointed out that the world market for vegetable oils has become particularly competitive and presumably wiU be influenced strongly by the fiscal arrange- ments of various European countries ; extraction plants in Asia may find business difficult even Avhen the raw materials are produced near by, as in India, the Philippines, the Netherlands East Indies, or China. Japan produces very small quantities of these products and imports practically all of its copra, soya beans, peanuts, cotton seed, etc. As the soya beans are produced largely in Manchuria and the 316 ASIATIC MARKETS FOR INDUSTRIAL MACHINERY. peanuts in Shantung, and as the trade routes to the Occident from these districts pass through Kobe, it will be observed that there is a certain justification for the extraction of the oils in Kobe, particu- larly so when it is also remembered that the cake is needed to fer- tilize the fields of Japan ; but it does not seem quite natural for the United States to buy coconut oil from Japan, as the trees grow even south of Manila. In 1918 Japan imported 166,000,000 pounds of copra, valued at $7,817,000. The war had a very great influence on the vegetable-oil industry of Japan. Up to 1914 the oils produced were principally those that had long been consumed in Japan, to which there had been added soya beans from Manchuria, cotton seed (somewhat related to the textile industry of Japan), rapeseed, sesame seed, and a little copra. The following table indicates the growth of the industry : Years, Oil produc- tion. Wax produc- tion. Years. Oil produc- tion. Wax produc- tion. 1913 i»7,393,614 8,312,282 10,148,334 $1,728,763 1,654,665 2,129,095 1916 $13,555,430 19,075,164 27,051,220 $2,488,528 2,808,958 4,005,845 1914 1917 1915 1918 > These figures are in United States dollars and, together with much of the other information here pre- sented, are from the report of E. E. Dickover, of the American consulate in Kobe, revised sonwvhat to include more recent figures. Under the Japanese law certain mills are allowed to import oilseeds and export the products without paying duty, adopting a method somewhat like the American practice of holding goods "in bond." This business grew to important size during the war, and, for statistical purposes, since such products are not considereid Japan- ese produce, they are not included in the above figures. To include such "bonded" oils it would be necessary to add about $1,500,000 to the 1918 returns as indicated in the preceding table. The machinery in the nearly 40 modern oil mills of Japan is of American, British, and Japanese manufacture. Japanese shops can produce a hydraulic press of fair quality, but, as is often the case, it will scarcely satisfy the intelligent buyer. So far American equipment seems to be the most satisfactory and represents the best engineering, and, in view of the keen competition now existing in the international market for vegetable oils, the best machinery will be needed in these plants. Of the plants in Japan two have been equipped to extract the oil by a benzine absorption process. Superficially this process seems to be the more promising, as the costs for labor, power, etc., are lower and the by-product is discharged as a meal rather than as a cake, facilitating the preparation for use as a fertilizer. Actual experi- ence indicates that the pressure system is the more satisfactory, as the above advantages are offset by the costliness of replacing the benzine losses, the higher class of labor required, and the fact that oil obtained by the absorption process is not so well received in the market. JAPAN. 317 REESTABLISHMENT OF JAPANESE INDUSTRY UNDER POST-WAR CONDITIONS. The vegetable-oil industry illustrates a very difficult situation now confronting many of the enterprises of Japan, and that is the prob- lem of overcoming the rapidly changing conditions of war and reconstruction. As has been illustrated in the case of the electrical industries, the changes of recent years have apparently left the cost of Japan copper above that of the world market and the Japanese industry must struggle with this new handicap. The vegetable-oil industry developed, very largely, under the abnormal conditions of 1914r-1919 and must now face a buyer's maxket of \ exceptional sever- ity. To a large extent its growth was stimulated by the scarcity of shipping, especially in European waters, but this scarcity exists no more. Similarly, with other industries, whether established be- fore or after 1913, there has been a change in the levels of com- modity values and an increase in the cost of labor and fuel that has disturbed the very fundamentals upon which many of the in- dustries of Japan were established. In each instance the manage- ment is now confronted with the problem of meeting the new situa- tion in order to survive. GENERAL INDUSTRIAL SITUATION. It is well known that Japan has developed its industries very rapidly, but the following figures may prove interesting. Japan opened its doors to the foreigner in 1858. Certain industries, such as paper, cotton spinning, etc., were started very early, as has been stated. By 1886 the report of the Department of Agriculture and Commerce showed that there were 311 steam engines in use in 217 factories having a total horsepower of 4,094. These engines were employed in part as follows : Silk filatures, 82 ; coal mines, 47 ; rice huUing, 44 ; shipbuilding, 16 ; cottoi;! spuming, 13 ; printing, 6. By 1917 Japan employed 5,797 steam engines with more than 250,000 horsepower capacity in something over 14,000 factories. - In addition, it also employed 838 steam turbines of more than 210,000 horsepower, 1,713 gas engines of more than 36,000 horsepower, 528 oil engines of 4,100 horsepower, 247 water turbines of over 370,000 horsepower, and 102 Pelton wheels of 52,000 horsepower. The re- turns also show that 22,847 electric motors of 1,162,000 horsepower were in service. This latter figure may involve some duplication and raises the question of a load factor, but it may be said that the 4,094 horsepower of 1886 had risen to 882,000 horsepower in 1917 and by that time the consumption of coal for industrial purposes had risen to 8,239,117 tons per year. The way in which this power and fuel consumption was distributed in 1917 between the various industries is indicated in the table which follows. 318 ASIATIC MARKETS FOE INDUSTRIAL MACHINERY. CJassiflcation. Number of fac- tories. Horsepower Installed. Steam engines. Steam turbines. Gas engines. Oil engines. Water wheels. Electric motors. Coal con- sumed. Sjnlnning , weaving Madiine msMns Ship and car building. Paper mills Fertilizer Breweries Rice and flour mills. . Woodworking Klectric plants OaswoTKS Hetal refineries 155 2,794 673 165 226 36 564 256 658 87 35 23, S, 12, 16, 2, 4, 4. 17, 29,736 4,331 3,831 10,034 2,362 20 330 554 1.269 147; 398 1,.528 815 835 11,235 1,232 3,066 3,656 837 310 491 1,173 2,281 1,980 1,214 342 714 389 1.618 2,976 8 77 18 248 2 108 20 634 20 41,707 134 54 862 196,600 1,981 48,247 91,666 16,056 52,067 45,840 1,782 3,151 6,254 7,471 33,997 1,917 24, 130 Tom. 861,835 510,423 387,168 296,008 524,071 26,876 163,437 55,160 10,449 761,836 331,569 521,793 Note.— This table illustrates well the dilHculty of working with Japanese statistics because of the point of view from which they are compiled. It will be noted from page 314 that there were in 1917 only 56 paper mills producing machine-made paper and from page 313 that the average bandmade-paper plant has fewer than 4 employees, yet the above figures show 226 mills using power. The original from which the above Is condensed shows 8 electric plants "not worked by motive power." It is difficult to conceive of a hand- power genwating plant. It also shows 173 hand-powef shipyards. Most of the breweries produce sake, a rice wine; there are only 7 or 8 beer breweries, and these would represent a large share of the above power consumption. No matter how much care is exercised it is impossible to avoid creating inaccurate im- Sressions of the industries of Japan. These figures are submitted to show the relative importance of the ifierent industries as measuredTby their power consumption. Examination of an industrial directory of Japan shows 63 firms listed fis machinery manufacturers. In this list are the names of some of the largest shipyards of Japan, that may employ as many as 20,000 men. The list also includes names of negligible conse- quence^ including some who are not really manufacturers. For advertising and other business purposes the list is also unsatis- factory because it does not include the arsenals, dockyards, shops of the Government Railways,, and a number of other shops that are among the most important in tJie country. This illustrates what has been stated elsewhere, namely, that it is impractical to attempt to cover the Japanese business fie'ld directly from the United States. To reach these buyers it is necessary to have representation in the country either directly, through a branch, or through one of the machinery dealers resident there. COST OF MAINTAINING AN OFFICE IN JAPAN. Since, as has been shown, Tokyo has been the most important market for American machinery in Asia and one of the most inter- esting in the world, it seems probable that a manufacturer would enter this market if any. The first problem is to decide whether to open a branch or arrange for an agency. The following figures are the result of inquiries made early in 1921. The manager of an office in Tokyo finds it necessary to maintain a home with at least three servants (if with children, even more), rents and other expenses are very high, and the bare cost of living will be not less than 1,000 yen per month and will probably be more than 1,200 yen. (A man without any social responsibilities, such as the erecting superintendent of a factory, if married, can not live on less than 800 yen per month.) A case was reported where the manager of the Tokyo office of one of the largest American manu- JAPAN. 319 facturera, having a wife and two young children, resigned because he could not live on $10,000 per year. Tokyo is probably the most expensive city in the world for Ajnerican business men of this class. The rent of an office in a modern type of building costs from 10 to 26 yen per tsubo (4 square yards) per month. It is true that there are unheated Japanese-type buildings, having practically no conveniences, that can be secured for possibly 5 to 10 yen per tsubo per month. Storage space in a brick warehouse may be had for 8 yen per tsubo per month. A good Japanese engineering salesman must be paid not less than 300 to 350 yen per month, which is now his bare living wage, to which should be added a conunission on his sales, as is the custom of the country. An engineering student frequently starts his busi- ness career after CTaduation at 150 yen per montJi. A foreign stenographer costs irom 250 to 350 yen per month; a mere typist, Japanese, 100 to 150 yen per month; a girl to carry messages, 30 to 40 yen per month ; and an office boy, 15 yen per month as an absolute mmimum. When this boy is promoted to elementary desk work he is given 25 to 30 yen per month. Men of the caliber of a tally clerk are paid 75 to 100 yen per month. A chauffeur for an automobile is paid about 80 yen per month, but to maintain a car costs about 250 yen per month, and an automobile is far more neces- sary in Tokyo than it is in an American city, as the other facilities for traiisportation are very unsatisfactory. These figures are not presented as a complete estimate of the cost of opening an office in Japan. No such statement is possible in a report of this kind, as no two manufacturers would need just the same sort of an establishment; but these figures will show a few of the high lights, and each person may sketch in the detail^ of the picture to illustrate his own problem. On the domestic side the American resident in Tokyo finds the housing problem decidedly serious. Persons interested should read a special report on this subject (FE-174) issued by the Bureau of Foreign and Domestic Commerce, October 12, 1920. Apart from being expensive, business in Japan is difficult. The language problem is expressed as follows in the British Board of Trade Journal for April 14, 1921 : One can master the most difficult of European tongues In two or three years at the most, but a lifetime is not sufficient for the acquisition of a full and perfect knowledge of Japanese. * * * Japanese, particularly in Its written form, is probably as difficult a language as exists in the world, yet hard work and patience will meet with their reward. It is entirely impractical for a busy business man to acquire this language in addition to regular office duties. Missionaries find it necessary to devote several years exclusively to its study before they are qualified to undertake active work. Business plans for Japan should include ample allowance for assistance. In addition to problems of this sort, it should be remembered that in Japan business must be conducted according to Japanese law, which differs radically from American law. The customs of the country also exert a strong influence even on business contracts, and one should not negotiate contracts'in Japan without competent assist- ance in these matters. 320 ASIATIC MARKETS FOE INDtTSTRIAX, MACHINERY. PATENTS AND TRADE-MARKS. Under the recently amended laws it appears that adequate protec- tion may be obtained for foreign patents and trade-marks in Japan, provided the legal requirements are complied with. It must be re- membered that the Japanese law recognizes the first registrant as the actual owner of the trade-mark, irrespective of its use. More- over, the tendency seems to be to grant relief in case of infringement only when there is a palpable imitation of the registered mark. This emphasizes the necessity not only to secure prompt registration but also to register the mark as actually used, not merely its essential features. Under the Berne Convention of 1883 commercial names are protected without the formality of registration. In view of the numerous instances of artful imitation, usually re- sulting in heavy loss of trade, careful consideration should be given to the matter of obtaining a Japanese patent before entering that market. Promptness in this case is also essential on legal grounds; in view of the fact" that a patent can not be granted if the invention lacks novelty. In Japan an invention is not considered new if it had been used within the Empire before the patent application was filed or if it had received sufficient publicity to make manufacture pos- sible. These regulations are waived only in case application is made under the provisions of the Berne Convention within one year of the filing date in the United States. In that case the date of the Japanese patent application corresponds with the date on which the original application was filed. Because of the absence of definite legislation on the subject of in- dustrial-property protection in China, the effect of the Japanese patent and trade-mark laws extends to China in case protection is sought against the unfair competitive practices of a Japanese sub- ject. The complainant, however, must he able to prove prior regis- tration in Japan in order to obtain legal protection in such cases. This feature of the trade situation in China is discussed on page 276. TARIFF. Japan is frankly protectionist in tariff policy. The duties on machinery vary greatly from one classification to another, and, altogether, fill several pages of the tariff schedule. Most of the duties are specific ; where they are ad valorem, they range from 15 to 30 per cent. Many of the specific rates are less than these figures indicate. American machinery is not discriminated against under the Japa- nese law. The rates on steam engines illustrate the way the Japanese tariff law has been framed, and are as follows (100 Mn equals 1331 pounds) : Each weighing not more than 250 kilos : 16 yen per 100 kin. Each weighing not more than 1,000 kilos ; 9 yen per 100 kin. Each weighing not more than 5,000 kilos: 8 yen per 100 kin. Each weighing not more than 50,000 kilos : 6 yen per 100 kin. Each weighing not more than 100,000 kilos: 4.40 yen per 100 kin. Other : 4 yen per 100 kin. Two dollars per 133 pounds represents a very small ad valorem duty on a really large engine. If we assume such an engine to cost JAPAN. 321 30 cents per pound, c. i. f . Japan, it works out at about 5 per cent, but this applies only to an engine weighing more than 134 tons. In view of the way in which this tariff is framed, it is absolutely necessary to have a good deal of information in order to prepare an accurate estimate of the cost of a given machine delivered, for example, in Kyoto. If the machine has heavy parts, knowledge of the gross wei^ts and measurements of each package is needed in order to compute the ocean and lighterage freights under the lift scales. Similar gross weights are necessary in computing the freights on the American railways, with a different computation to cover the freights on the Japanese railways. Finally, the de- tailed weights are needed for customs purposes. DETAILED STATISTICS OF MACHINERY TRADE. The table beginning on the next page shows the imports of indus- trial machinery to Japan ; the kin equals 1.323 pounds, and the value of the yen approximates 50 cents. 322 ASIATIC MARKETS FOE INDUSTRIAL MACHINBBY. ? ■■s|illl g ^iml lssiii§ ^ ilsllii OH JAPAN. 323 §11 § sgis SgS| O 1^ ^ I— ( CO CO --ir- §§:§ oo coco ggggg : i-iiOOOCOQO • II ■^t-T gg coco ooooco ■-' s cc«o OOO .-i to iota sss oaco mow 00 CO 00 ■vow QOO tO<-HOOC4 rt e«aa 3 00 03 cow zSS" CiCO«3-VO ■^t^iaao eoi-4C4io GOr-IOOO t-lOCO gr--v I— t •— i tor» CO d CO 00 aaC4 CD i-H 00 rS "SfH i i! ill ifiSiaOPmO jlliHilllli I ill"' If :S|l|a i ^ 1 « S33 324 ASIATIC MARKETS FOR IBTDUSTRIAL, MACHINERY. •S -i '^igiliiii- JAPAN. 325 ^^ n t4 bt e 110291°— 22— 22 326 ASIATIC MARKETS FOE INDUSTBIAL MACHINERY. 5|a I sss efoo" spy §5 ''s mil 1.2 5 a" H OS il loops IPJ g|Mo^ mo JAPAN. 327 OS H : fe'S St3 & il-aff if 328 ASIATIC MARKETS FOR INDUSTRIAL MACHINERY. I oo 88 OO (NtN SSI ooc oo im oo oo oo ooo O^O 88 OO USO .s M I SS3g !S^S OaUSGO CQCQO d i-lt«i-t CO CO to 00 lO^ U3C40 0>t-i0 0l-^O«D 00 .9 SommPE '9 Eh al.- fi •3 5P« 8l llllll I llll I fif 03 M 01 P gonp 'Hi ;.2-9 1^ I a (^ . . bo III li JAPAN. 329 iH'g2|«'.-r 50 ^^1 |gSg 5ooo lfill|ll|l s 330 ASIATIC MARKETS FOE INDUSTRIAL MACHINERY. The following tables show the exports of machinery from the United States to Japan and to Chosen (Korea), according to official American statistics: EXPORTS FROM UNITED STATES TO JAPAN Classes. 1910' Number. Dollais. 19131 Number. Dollars. 19161 Number. DoUais. Alr-compresstag machinery Brewers' maohmery Elevators and elevator machinery. . Electric locomotives Stationery gas engines. Oasoline engines: Automobile Marine Stationary Steam engines: " Locomotives Marine Stationary All other en^es..: Parts of engines Flour and grist mill machinery Power laundry machinery Metal-working machinery oil-well machinery other mining machinery Paper and pulp mill machinery Pumps ana pumping machinery . . . Refrigerating, includiug ice-making, machinery Shoe machinery Sugar-mill machinery Textile machinery.'. Sawmill machinery other woodworking machinery All other machinery and parts of. . . Total. 7,626 800 27,423 28,264 5,846 10 29,98S 79 15, 316 6,860 1,302,346 18 9,105 '46,'678 10 103 279 87,160 9,389 47,346 78,069 340,613 2,818 119,558 29,679 "ibi.m 46 11,499 1,426,509 384,229 17, 136 80,113 44,630 35 68,200 39,346 22,215 19,078 675,443 15,989 11,629 16,204 315 3,548 3,962 34,805 2,135 2,900 683 40,860 13,739 900 86,166 43,966 48,444 15,552 37,468 17,476 109 10,218 275 11,980 3,033 239,494 1,741,402 3,314,435 690,114 Number. Dollars. Number. Dollars. Number. Dollars. Air-compressing machinery Brewers' machinery Concretemixers Cotton gins Elevators and elevator machinery. . Electric locomotives Stationary gas engines Gasoline engines: Automobile Marine Stationary Traction Kerosene engines Steam engines: Locomotives Marine Stationary Traction All other engines Boilers All bther parts of engines Excavating machinery Flour and grist mill machinery . Power laundry machinery Lathes other maahlne tools Sharpening and grinding machines. All other metal-working machinerj' Oil-well machinery Other mining maminery . . 354,168 109,684 27,432 195 173,048 76 79 463 184 SO 8 18 11 17 2 76 Paper and pulp mill machinery, . Pumrs and pumping machinery. 23,503 37,194 108,796 76,772 172,036 10,455 124,441 28,982 18,642 11,810 178,174 1,109,063 841,945 92,305 740,927 17,486 967,095 635,874 452,233 3,327,982 71,025 271,931 1,473,277 386,379 2 112 152 699 146 193 68 34 5 558 723,453 51,932 93,198 21, 155 218,584 10,288 19,151 58,815 176, 142 219,925 119,000 45,395 530, 311, 293, 884, 1,273, 194, 413, 11, 503, 956, 494, 2,296, 182, 381, 467, 733 15 207 426 643 11 430 32 9 7 520,906 1,950 140,672 1,670 596,860 69,960 22,910 5,627 96,164 97,175 17,270 42,955 438,485 150,854 78,104 292,762 181, 707 ?78,470 313,952 414,900 53,324 301,028 430,462 198,236 1,706,292 38, 228 409, 499 691, 583 250,219 » 1910, 1913, -wid 1915 are fiscal years ended June 30 ; the others are calendar years. JAPAN. 331 EXPORTS FROM UNITED STATES TO JAPAN-Conannficl. 1919 Number. Dollars. 1920 Number. Dollars. 1921 Number. Dollars. Refrigerating, incIutUng ice-making, madiinery . .* Road-makmg madbiner y Shoe machine Sugar-mill mi Textile machinery . Sawmill machinery Other woodworking machinery. . All other machinery and parts of. 170,076 69,566 28,429 197,150 3,623,674 285,585 232,627 8,571,536 1,428,598 76,047 11,491 874,492 6,332,765 102,723 358,861 8,112,168 391,525 115,640 38,237 34,881 5,898,290 63,081 219,624 5,637,906 Total 25,021,786 29,241,699 20,941,408 EXPORTS FROM UNITED STATES TO CHOSEN (KOREA). Classes, 1910 1913 1915 Number. Dollars. Number. Dollars. Number. Dollars. 4,663 Sllevatofs and elevator znaichinery . . 1 572 258 3,500 Steam engines, locomotives 9 1 144 798 Boilers I'ooo 5,718 12,865 249 27 50 '281 Flour and grist mill machinery Uetatworking machinery., 325 Oil-well machmery ....'....... 470 27,265 1,086 26,624 2,422 6,422 600 239 9,989 35,833 3,388 ■piimps (iTiri pTTmrtipp mftrhipflrv. . . . RawTfniJl mftoW'nf^iy 12,228 3,414 Total 46,622 67,908 190,755 Classes. 1919 1920 1921 Number. Dollars. Number. Dollars. Number. Dollars. Air-compressing machinery 7,641 490 2,498 3 Gasoline eE^nes:" 1 1 2 14 210 285 154 22,271 Marine Stationary . . . .... Kerosene engines . ...... 1 4 163 118,900 Steam engines: Tiflflomotives ■ 17 1 829,004 31,866 12 72,171 14 719,400 StationaTT Boilers " 33,510 5,335 10,093 95 3,180 4,197 346 4,680 11,214 431 2,574 6,300 3 777 84 660 95,694 1,468 14,201 157 Lathes " ' . . 285 127 3,869 All other metal-working machinery. 2,021 44,141 451 22,237 325 1,717 15 331 3,826 ReMgerating, indading ice-making. 1,239 557 23,157 80 24,951 Total 1,027,858 309,364 795,386 332 ASIATIC MARKETS FOE INDUSTRIAL MACHINERY. Exports of machinery from the United Kingdom to Japan (in- cluding Formosa and Japanese leased territories in China) are shown below : Classes. 1913 Tons. Value. 1919 Tons. Value. 1920 Num-' l)er. Ton^. Value. Air compressors Boilers Kconomlzers : Condensers Otber boiler-bouse plant Cranes, boists, etc Electrical macbinery of all kinds. . Grain-milling macbinery Hydraulic machinery Machine tools Mining Hydraulic prime movers Internal-combustion en^es Steam reciprocating engines Steam pumping engines Turbine and other rotary prime movers Other prime movers Paper-making madiinery Pumps Spinning macbinery Weaving machinery Other textile machmery w;oddworkit!g macbinery Machinery not elsewhere specified . Macbinery iparts not elsewhere specified, i 1,901 £45,406 3,204 £168,659 199 155 79 2,910 187,901 414 72,101 578 19,688 ► 5,116 118,060 19,607 79,601 W 332,232 287,867 648 50 m 126 195 57 95 9,403 2,064 80 2,384 112,084 8,681 w 23,932 28,600 9,310 21,187 11,226 ^«( 888,736 136,946 9,946 («) 311,707 599 (') 94 2,153 932 80 209 244 113 20 119 1,564 (>) 43 160 196 165 (») 171 75 6,911 984 100 147 20,790 Total. 36,900 1,873,217 18,803 1,793,169 35,273 £20,513 134,761 46,229 13,862 19,126 19,148 10,883 232,658 5,437 21,214 58,461 64,277 (') 23,784 20,017 751,582 82,465 14,938 63,774 2,550,145 4,179,698 1 Included in " Other prime movers." > Included in " Macbinery not elsewhere specified." > See other classifications. < Included in " Textile machinery."