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Author: 
 
 Preciado, A, A. 
 
 Title: 
 
 Exporting to the world 
 
 Place: 
 
 New York 
 
 Date: 
 
 1920 
 
V 
 
 . 1 
 
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 Preciado, A JL 
 
 Ea^rtin g to tiiie world: a manual of practical export 
 |MMHppio are interested or engaged in foreign trade, 
 IqVBL Preciado ... New York, The James A. McCann 
 company, 1920. 
 
 xvii, A3Q p. front, jfklbtB, fold, nap, fold lomia. 23**. 
 
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BLANK PAGE(S) 
 
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) 
 
 EXPORTING 
 
 TO THE WORLD 
 
 A Manual of Practical Export 
 for All Who Are Interested 
 ixr Engaged in Foreign Trade 
 
 BY 
 
 A.A.PREGIADO 
 
 Farmer Dkeetor of the UnSUd States Government Committee 
 4n the BepMic of ChUe, Author of **Ameriea'9 Monopoly in 
 Latin^meriem Trade," -Foreign Trade « Necmify, " "Bow 
 MmpeH S Mpmmte Are Fimnm^" ete. 
 
 NEW YORK 
 
 THE JAMES A. McGANN COMPANY 
 
 1920 
 
INTENTIONAL SECOND EXPOSURE 
 
 E:?^ PORTING 
 
 TO THE WORLD 
 
 A Manual of Practical Export 
 for All Who Are Interested 
 or Engaged in Foreign Trade 
 
 BT 
 
 A. A. PRECIADO 
 
 Former Director of the United States Government Committee 
 in the Republic of Chile, Author of "America's Monopoly in 
 Latin-American Trade" "Foreign Trade a Necessity^ ** "Haw 
 Export Shipments Are Fkmneed^" eU. 
 
 NEW YORK 
 
 THE JAMES A. McGANN COMPANY 
 
 1920 
 
In the preparation of tiiis volume the author is indebted 
 to a niimbcr of organizations and individuals whose aid and 
 co-operation have been of inestimable value. I refer to 
 
 The National City Bank, New York City. 
 
 The Irving National Bank, New York City. 
 
 The Guaranty* Trust Co., New York Cit>. 
 
 The National foreign Trade Council. 
 
 The Business Training Corporation. 
 
 The American Manufacturers* Export Association. 
 
 The Pan-American Union, Washington, D. C 
 
 The Department of Commerce. 
 
 Frank B. Hall & Co. 
 
 Dr. E. E. Pratt 
 
 Mr. D. E. Delgado. 
 
 Mr. Maximilian Aviles. 
 
 Mr. J. W. Sanger. 
 
 Mr. John Walsh. 
 
 Mr. Gilbert H. Montague. 
 
 Mr. Archftald J. Wolfe. 
 
 Mr. O. K. Davis. 
 
 Mr. W. J. Rilw. 
 
 Mr. John £. Gardine 
 
 Mr. James H. Carter. 
 
 Mr.AB>ert E. Parker. 
 
TABLE OF CONTENTS 
 
 INTRODUCTION 
 
 Page 
 
 • • • 
 
 •xiu 
 
 Chapter I 
 
 PRINCIPLES OF EXPpRT TRADE 
 
 Exporting not as difficult as many suppose it 
 to be. Same business principles govern world 
 over. Unfamiliar conditions in exporting must 
 be met. Success in exporting is measured by 
 seriousness. ' ^ 
 
 ~ Chapter II | 
 
 PROBLEMS CONFRONTING THE EXPORTER . . 
 
 Problems confrontiiig the Exporter. Study of 
 maiicet G<^nditions an essentifil requirement 
 Some factors governing export t^de. Manufac- 
 turer's aiiii should be to pleasel the customer. 
 QuaHty, not price i, det^ nrfiTIf ft t"^**^ Other 
 factors that govern export tra^ 
 
 I 
 
 'hapter III 
 
 METHODS OFj EXPORTING .... 
 
 Selling methods involved in e 
 Using travelling nien to develop 
 ing trade by corresf>ondence. A 
 
 means of | developing busines s. 
 
 Commission house as zp. exporter. 
 
 )rting direct, 
 ide. Develop- 
 
 vei 
 
 merchant. 
 
 le Export 
 The export 
 
 Chapter IV 
 
 ORGANIZATION OF EXPORT DEPARTMENT 
 
 Export department need not be an expensive 
 affair. Selecting an export manager for the 
 business. Some one in authority as executive 
 head. Where is export department to be estab- 
 lished? Essential units in txj^rt department. 
 
 17 
 
 \ 
 
 24 I 
 
 Vll 
 
CONTENTS 
 
 Chapter V 
 
 THE TRAVELUNG SALESMAN OVERSEAS M 
 
 Manufacturer judged by man in the field. 
 Necessary qualifications of travelling salesman 
 abroad. Preparations necessary for trip abroad. 
 ) Expenses of travelling salesman. Licenses re- 
 / quired in foreign countries. The combination 
 - travelling salesman. 
 
 Chapter VI 
 
 CORRESPONDENCE IN EXPORT TRADE 58 
 
 Essentials in export correspondence. Careful 
 translators necessary. Same language differs in 
 various countries. Parcel post as means of de- 
 veloping business through oorrespoiidence. 
 
 Chapter VII 
 
 ADVERTISING IN EXPORT TRADE 74 
 
 Necessity of American advertising in foreign 
 fields. Advertising media at home and abroad. 
 Copy for foreign countries. How the export cata- 
 logues should be prepared and distributed. 
 Duties on catalogues. 
 
 ; Chapter VIII 
 
 EXPORT HOUSES 90 
 
 The export merchant. The export commission 
 house. How export houses operate in foreign 
 fields. Advantages and disadvantages of export 
 houses. Future gi export commission houses. 
 
 Chapter IX 
 
 FOREIGN SALES ORGANIZATIONS .107 
 
 Advantages of local foreign sales agent. Differ- 
 ent functions of local foreign sales agents- Man- 
 ufacturer's arrangfements with local foreign sales 
 agents, goreign branches^.as scUiQ^fi» agencies. 
 
 Chapter X 
 
 COMBINATIONS IN FOREIGN TRADE 114 
 
 The Webb-Pomerene Law. Criticism and de- 
 fense of Webb-Pomerene law. Provisions of the 
 measure. How combinations are made under 
 the Webb-Pomerene law. 
 
 1 
 
 CONTENTS ix 
 
 Chapter XI p^^^ 
 
 HOW TO; QUOTE PRICES .-.142 
 
 "One price to all" poor policy. System of dia* 
 counts shovUd be flexible. Quoting prices in 
 Ame^can currency. Quotation symbols must 
 not he oofifused. Meaning of different s3mibols« 
 Metfabds b£ computing C. I. F. prices. Terms 
 upon whidi goods are sold. 
 
 Chapter XII 
 
 FOREIGN CREDITS 160 
 
 Human nature same the world over. Why 
 manufacturers refuse to extend credit overseas. 
 History of credit in foreign business. Credit in- 
 formation not difficult to obtain. What is neces- 
 sary in credit information. Long credits not 
 necessary in export trade. How to collect over - 
 due accounts in foreign field.'" " ' 
 
 Chapta: XUI 
 
 HANDLING AN ORDER 201 
 
 Method of handling orders determines manu- 
 facturer's success. Customer's instructions must 
 be closely followed. Confidence of foreign 
 customer must be won. Executive ability in 
 handling orders. 
 
 Chapter XIV 
 
 PACKING FOR EXPORT 211 
 
 Inexperienced exporters are to Uame for poor 
 packing. Merchandise must be securely padced. 
 Poor picking means loss of orders. Factors to 
 be consider^ in packing for export. Kind of 
 packing required for shipments for export. H ow 
 miftrbi^^ pr is packed for ^ ^hipment . Foreign 
 requirements must t>e met" in packing. Effect 
 of weight on customs duties. Regulations in 
 countries that may affect packing. How cases 
 for export should be marked. 
 
 Chapter XV 
 
 HOW SHIPMENTS ARE MADE 229 
 
 Method of shipping goods from interior. 
 Routine involved in shipment. Documents 
 required. How bills of lading are made out. 
 Shipowner's liability to the shipper. Consular 
 invoices. Special regulations in various countries. 
 
X 
 
 CONTENTS 
 
 Chapter XVI 
 
 THE FOREIGN FREIGHT FORWARDER 843 
 
 Foreign freight forwarder must be well in- 
 formed. Forwmrder ^uld have his own ware- 
 houses. How foreign freight forwarder operates. 
 Methods differ on the Atlantic side. Large con- 
 cerns use freight forwarders. What forwarder 
 charges for his service. Advantages of freight 
 forwarders. Criticism against forwarding busi- 
 ness. 
 
 Chapter XVII 
 
 MARINE INSURANCE 262 
 
 History of •^inderwritcrs.'* Principles of 
 Marine Insurance. What is written in Marine 
 Insurance policy. Explanation of clauses in 
 Marine Insurance policy. How Marine Insur- 
 ance is to be taken out. General and particular . 
 average in Marine Insurance. 
 
 Chapter XVIII 
 
 HOW ORDERS ARE FINANCED 274 
 
 American Exporters have always enjoyed 
 good hanking facilities. Methods of financing 
 shipments for export. Selling goods on open 
 credit bi^ais. How commercial credits are opened. 
 Acceptance credits. Bills of exchange or draits. 
 
 Chapter XIX 
 
 AMERICAN BANKS IN FOREIGN TRADE AND 
 
 FOREIGN INVESTMENTS m 
 
 Foreign branches of American banks. There ?s 
 limit to bank's co-operation. Federal' Reserve law 
 permits foreign branches. Credit information 
 available to client. How bank advances money 
 against shipments. The foreign trade department 
 of a bank. How banks extend credit The Edge 
 Act to extend long credits. How corporations 
 may be formed tt^er Edge Act Making in- 
 vestments in foreign countries. Foreign invest- 
 ments create permanent market 
 
 CONTENTS xi 
 
 Chapter XX p^g^ 
 
 OUR MERCHANT MARINE 333 
 
 Europe's advantage in ship tonnage. Spectac- 
 ular growth of Merchant Marine. How other 
 countries suffered during war. Ocean routes that 
 vessels follow. History of American Merchant 
 Marine. Government activities in shipping in- 
 dustry* Future of American Merchant Marine. 
 
 Chapter XXI 
 
 HOW GOVERNMENT HELPS EXPORTER 349 
 
 Reports of specified products valuable. Reg- 
 ular publications of the Bureau. Special bulle- 
 tins of the Bureau. Bureau serves as informa- 
 tion depot. How district offices may help ex- 
 porter. How to use trade opportunity service. 
 American consuls as trade representatives. How 
 to make use of consular service. Other sources 
 of export information. Trade journals must not 
 be overlooked. A list of books exporters should 
 have on hand. 
 
 Chapter XXII 
 
 THE WORLD'S MARKETS 362 
 
 Latin America, Mexico, West Indies, Central 
 America. South America as a field for American 
 merchandise. The Near East. The Far^^st. The 
 Commonwealth of Australia. Africa as a market 
 for American goods. Europe. Canada. 
 
 Chapter XXIII 
 
 FOREIGN TRADE MARK REQUIREMENTS 387 
 
 Caution. Dangers resulting from neglect. 
 Trademark regulations vary in all countries. Re- 
 quirements in Code-law countries. How the 
 trademark pirate operates. Marks capable of 
 registration. Importance of registration^ 
 
 Chi^ter XXIV 
 
 PUBLICITY IN FOREIGN COUNTRIES 398 
 
 American Press associations now active in 
 foreign field. Publicity machine should be or- 
 ganized. 
 
 , APPENDIX 
 INDEX ... 
 
 .'03 
 423 
 
INTRODUCTION 
 
 America is beginning to think internatiooally. 
 We have asstuned a new mental attitude towards oar neigh- 
 bors of other lands and climes. We are learning to deal with 
 
 them, talk with them, think with them, and act with 
 them in affairs of international importance. Broadly speaking, 
 their affairs are our affairs, for the interests of all are becoming 
 so dosdy allied in world matters that s t ates m e n , with rare fore- 
 sight, have seen the necessity of the creation of a concrete 
 organization such as The League of Nations, where all matters 
 of dispute may be sifted lest from some irresponsible source an 
 attempt be made to ag^in compromise the peace of the world. 
 
 Naturally, the United States of America is sharing m this 
 intelligent advance toward international peace and good wilL 
 The Great War has given us the proper inspiration to participate 
 more fully in world matters than we have done in the past. We 
 have come to realize that such participation — be it commercial, 
 political or spiritual — \s not only of lasting benefit to the Ameri- 
 can people as a whole, but to the world in generaL Moreover, it 
 b a necessary duty, because of our industrial and economic stabil- 
 ity, that we owe to other nations whose development has beca 
 retarded as the result of conditions peculiar to individual politi- 
 cal units. 
 
 We have become a great commercial and industrial power as 
 well as a nation of tremendous political influence in world mat- 
 ters. We no longer think or act in terms of counties or states or 
 sections, but in terms of nations and continents. We arc no 
 longer satisfied in confining our activities and thoughts within 
 the boundaries of the geographical position we occupy on this 
 hemisphere. We want to spread out. We want to widen our 
 activities. We want to kngdien our viuon. We want to become 
 acquainted with our neighbors on tins earth. 
 
 Before the war Europe furnished great quantities of supplies 
 to the rest of the world. The wares of Germany, England, 
 France, Belgium and Italy vied with one another on the shelves 
 of foreign buyers. Europe was a great market place. It is none 
 the less true, liowever, that we, also, shared a large amount of 
 
 • • • 
 XUl 
 
INTRODUCTION 
 
 this business with our competitors overseas ; .imt the magnitude 
 
 of our commcrciaf activities at home, of which we were thor- 
 oughly proud, produced an atmosphere of self-satisfaction so 
 dense that few of us really knew, much less cared, how large our 
 foreign business had really grown. 
 
 General ignorance of our export trade vdume has Inspired 
 mmy to say that "the United States is not an exporting nation," 
 and that "we can never compete with the pioneer exporting 
 nations of the world." We are not a great exporting nation in 
 the sense that Great Britain is because we do not depend for 
 our existence on what we sell to the world Eng^d must sell 
 to the world in order to live. Her home market is insufficient 
 to devour the greater portion of the things she produces. The 
 same was true of Germany before the war, of France and Italy 
 and Belgium. It was necessary for these nations to market their 
 articles in foreign countries because their own consuming popula- 
 tions were insufficient. 
 
 The reader's doubts as to America's strength in export trade 
 will be removed by the following comparison which is made 
 from the statistics of the United States Department of Com- 
 merce, July, 1918, referring to the foreign trade of belligerent 
 and neutral countries in 1913, a year before the war, which most 
 be o(»isidered as a normal one: 
 
 Export trade of During 1913 
 
 United States .$2,484,018,000 
 
 United Kingdom 3,089,353,000 
 
 France 1,327,882,000 
 
 Germany 2,592,239,000 
 
 Italy 484,746,000 
 
 Japan 314,965,000 
 
 Now let us go back a few years to ascertain America's activi- 
 ties in export trade. The following figures, while including the 
 exportation of raw material as well as manufactured articles, 
 nevertheless serve as a striking illustration of the volume of oar 
 foreign business for the past fifty years : 
 
 Fiscal Year. Exports. 
 
 1850 $144,875,726 
 
 1875 513,442,711 
 
 1890 857,828,684 
 
 1900 1,394,483,082 
 
 1905 1,518,561,666 
 
 1910 1.744,984,720 
 
 1911 2,049,320,199 
 
 1912 2,204,322,409 
 
 xiv 
 
 INTRODUCTION 
 
 These figures, dry as they may seem, tell the story of a brilliant 
 devek^nnent of foreign markets for American products. They 
 refute the argument that this country is not an exporting nation. 
 As a matter of fact, ever since 1874 we have been selling to the 
 outside world more than we have been buying. 
 
 It is also contended by those who have not made an analysis 
 of our export trade that the larger part of this gigantic volume 
 is made up of foodstuffs, and other crude materials — that very 
 little of it represents manufactured articles. We need only to 
 quote the figures of the United States Department of Commerce 
 for a. period prior to the war, as the abnormal conditions during 
 the European conflagration should not be referred to in making 
 comparisons. 
 
 Taken from a Department of Coouneree report published in 
 1913 we quote the following: 
 "The success of the American manufacturer and the American 
 
 workman in competition in foreign markets is sharply illustrated 
 by the fact that the exportation of machinery from the United 
 States in the year which ends with June, 1913, will exceed 200 
 millio«i dollars, against less than 75 million a decade earlier, an 
 increase of nearly 200 per cent, while the total exports mean- 
 time were increasing about 72 per cent. 
 
 "One striking feature of this growth is the fact that large 
 gains have been made in exports of machinery to the other great 
 manufacturing section of the world, Europe. Of metal-working 
 machinery, the exports to Europe amounted to 2 3-4 miflion 
 dollars in 1902, and in 1912, 91-3 million; of automobiles, 3-4 
 of a million in 1902, and 7 1-2 million in 1912 ; agricultural im- 
 plements, 9 million dollars in 1902, 16 million in 1912 ; sewing 
 machines, 21-4 million dollars in 1902, nearly 41-2 in 1912; and 
 typewriters, 2 1-2 million dollars in 1902, compared with practi- 
 cally 8 millioii in 1912." 
 
 The foregmng figures represent only one division of manu- 
 factured articles. Of all our exports in 18*80 only 14.78 per cent, 
 represented our total manufactured goods, not counting food- 
 stuffs. In i913, however, the increase was phenomenal In that 
 year our manufactured goods represented 48.8 per cent of our 
 total export business. Crude foodstuffs represented 32 per cent 
 of our exports in 1880, but in 1912 a marked decline to 4.6 per 
 cent, was shown. Foodstuffs partly or wholly manufactured 
 also took a tremendous drop. It is in the export of manufac- 
 
 XV 
 
INTRODUCTION 
 
 tured articles, therefore, that the United States has shown the 
 greatest gain in recent years, even eclipsing the record of such 
 mamtfacttinQg nations as the United Kingdom^ Germany and 
 France. 
 
 However, not until the war clouds settled in Europe, and in- 
 dnstry was iofced to dose down in that continent did we reaiize 
 tiie vast possibiltties of devdoping the foreign maiioets to such 
 an extent that we may always maintain a co mm er ci al and finan- 
 cial supremacy over all competitors. Peoples from other coun- 
 tries who had gone to Europe for their supplies .in peace time 
 now shopped in the United States. Our goods were introduced 
 for the first time in many lands where the European hrand prac- 
 tically had had the right of way. Our commercial travelers for 
 the first time set foot in strange countries and intliienced strange 
 customers to test our lines. Our industrial plants made engines 
 of destruction by night, and engines of peace by day. Our wares 
 locmd caigo ^Mice in ships that sailed the seven seas. Purchasers 
 for American-made goods were now to be found in the commer- 
 cial centers of every continent. Our business men began to 
 gather at the behest of our government and foreign trade organ- 
 izations for the purpose of discussing further plans for intensive 
 development of the foreign markets. The government's co- 
 operatioo was assured in the gathering of commercial informa- 
 tion, and other necessary data for the use and disposal of Ameri- 
 can industry. The study of export trade techniciiie was encour- 
 aged in every section of the country. Schools took up the study 
 of modem languages. Universities introduced courses in For- 
 eign Trade. Newspapers, magazines, trade journals— all joined 
 m the popokr cry of the day, "Let* s go after foreign business.** 
 
 The old days are gone. Pre-war conditions — economical, in- 
 dustrial, and political — have given away to an awakened inter- 
 national conscience. The tremendous shuffle that the terrible 
 war caused wreaked havoc with the old order of things. The 
 commercial coiter of gravity that had rested in the United King, 
 dom for centuries has now shifted to America. The American 
 dollar is becoming as well known the world over as the British 
 pound sterling. 
 
 It has been contended that with the establishment of peace in 
 Easogt the United States will slowly hut surdy lose her hold on 
 those customers who had been aocnstomed to buying goods in 
 fht CM World before the war. As these lines are written 
 
 xvi 
 
 INTRODUCTION 
 
 Europe is still in a chaotic stage. In view of Ihe wanton destruc- 
 tion that the war wrought it seems doubtful that a rapid return 
 to normal conditions is possible — and in this readjustment the 
 assistance of the United States is necessary. 
 
 Regardless of the loss of a certain volume of business which 
 American manufacturers may experience as Europe returns to 
 its peaceful labors, the preservation of a tremendous e3qK>rt trade 
 is practically assured for this country. The remarkable growth 
 of our exports during the war period has served a double pur- 
 pose. It has advertised American-made goods to new customers, 
 and it has afforded foreign buyers the oppcntunity of comparing 
 the merits of the brands that come from America with tlu>se of 
 
 ■ 
 
 our competitors. The success which we shall attain in holding 
 
 our share of the world business will depend, not so much upon 
 our ability to produce in tremendous quantities, but upon our 
 ability to make the superior quality of an American-made article 
 the distinguishing characteristic 
 
 The American "Renaissance'* of exporting has drawn thou- 
 sands of men from their former labors to new opportunities. 
 Manufacturers and merchants are daily looking about for men 
 competent to conduct their export trade or to visit foreign terri- 
 tories to open op new business. Needless to say, there is a 
 scarcity of experienced men in comparison to the great demand 
 that exists. To thousands exporting is a new trade that requires 
 training and study. This volume is intended to offer practical 
 suggestions to manufacturer and merchant as well as to the 
 young man who is endeavoring to grasp the esqtort trade "slant" 
 so tiiat he may become better equipped to engage ^ some phase 
 of exporting. 
 
 These chapters are based on extensive travel in foreign coun- 
 tries as well as on personal investigations that have sent the 
 author into the offices of many successful export manufacturers 
 who have been extremely generous in offering thdr experiences 
 that Aey may be of some service to others. 
 
 xvu 
 
Chapter I 
 
 PRINCIPLES OF EXPORT TRADE 
 
 EXPOBTING NOT AS DIFFICULT AS MANY SUPPOSE IT TO BB — SaME 
 BUSINESS PRINCTPLES GOVERN THE WORLD OVER — ^UNFAMILIAR 
 CONDITIONS IN EXPORTING MUST BE MET — SUCCESS IN EXPORT- 
 ING IS MEASURED BY SERIOUSNESS. 
 
 American business men who have not ventured into the 
 field of exporting are imbued with the false idea that export 
 
 trade involves a business practice distinctly different from 
 that at home, that the ordinary rules of conduct peculiar to 
 the American business organization must be placed aside 
 when a plunge into foreign fields is decided upon, and that 
 in order to master export trade technique all customary prin- 
 ciples must be dropped so as to begin all over with a clean 
 slate. This is not so. The theory that "you cannot teach an 
 old dog new tricks" does not apply here. The business man 
 who has successfully grasped the principles of doing business 
 at home will learn that the mastering of the technique of 
 exporting is accompanied with very little difficulty. 
 
 ^'offir Busmess Principki 
 Gavim Uu IVaHd Offer 
 
 Political boundaries, or different forms of government, or 
 distinct climatic ocfuditions do not determine the principles 
 that govern commercial practice. The merchant in Canada 
 
 or Java buys goods in order to sell at a profit just like the 
 American merchant who is pursuing the same object. A mer- 
 chant in Argentina is under a moral and legal obligation to 
 pay for a bill of goods purchased in the United States or in 
 another country, even though he is subject to the laws of his 
 own country only. His obligation to pay is just as binding 
 as if he were doing business across the street from the foreign 
 merchant who supplied him with the merchandise. The prin- 
 ciple that governs a sale in the United States is the same as 
 the principle that governs a sale the world over. The heart 
 
 1 
 
EXPORTING TO THE WORLD 
 
 throb of commerce Is the "turn over," whether it be in Singa- 
 pore or in Quito. The stimulant that influences the "turn- 
 over" is quality, utility and price. The merchant depends on 
 either of these essentials ordinarily for the success of his busi- 
 ness. To sell his goods he must pmvt quality, and that they 
 are of some service to the purchaser. The price must be 
 agreeable. The Chinese merchant will not buy an article 
 unless that article can be sold to a customer to whom it may 
 be of service, or to whom it may have a strong personal ap- 
 peaL Neither will be buy unless he is quoted a price that 
 win enable him to sell at a profit. These conditions of a pur- 
 chase or sale are not subject to the vagaries of boundary tines, 
 different languages or distinct customs. 
 
 Exporting Not as Difficult 
 as Many Suppose It To Be 
 
 Export trade is not difficult to handle. Neither is it 
 charged with such grave mysteries as those who fear to risk 
 it may lead one to bdieve. ''How can I do business with a maa 
 whom I have never seen, and whose methods of doing business 
 I do not understand?" inquires a merchant who receives an 
 order from a man in Buenos Aires for machinery. He forgets 
 that he is daily selling goods to hundreds of customers he has 
 never seen in his own country. He turns down the order, yet the 
 very same day he instructs his staff to fill an order for a stranger 
 in California who is known to him only through correspondence. 
 
 What fri^tens the merchant in refusing the order from far- 
 away Argentina? 
 
 It is ignorance of the mechanics that would be involved in the 
 transaction. It is the risk that he fears he may have to take in 
 accepting the order. He knows nothing about Argentina. To 
 him it is a strange land. The language is not his own. Shipment 
 of goods to a customer thousands of miles away does not appeal 
 to hun, and the qnestioii of payment is disturbing. 
 
 In doing business with a maa in Calif omia, however, the mer- 
 diant corresponds in the English language. He is in close touch 
 vrith his customer, although he may not know him personally. He 
 may be able to converse with him over the long distance tele- 
 phone or send him a telegram and receive an answer in a com- 
 paratively short time. He has an adequate idea of the maricet 
 in tiiat state. He knows how to obtam his mon^ in payment 
 for his goods. Ahho^gh his cnstomer is many miles away he 
 
 PRINCIPLES OF EXPORT TRADE 8 
 
 feds a sense of security from loss because his shipment is subject 
 to the same conmiercial laws with which he is entirdy familiar. 
 
 Moreover, he has no customs regulations to worry about. He 
 knows only one money standard — and that is the gold standard! 
 of the United States. As a rule the American business man is 
 conservative when it comes to making radical departures from 
 a set policy. Anything that involves the incorporation of new 
 details into the routine of the business, and that b not in accord 
 with the established procedure, may im^te antagonism at first 
 Going in for exporting is not a revolutionary act that decrees 
 the death sentence upon the set principles of business at home. 
 It is merely the determination to go after new business — ^to 
 broaden the business vision and scope of the American merchant 
 or manufacttuv by acquiring a krowledge of foreign countries 
 and an idea of the possibilities of those countries for tibe develop- 
 ment of American commerce. 
 
 With little study and education on essential details regarding 
 foreign trade the merchant who receives an order for machinery 
 from Argentina may turn it into cash. He need not worry about 
 the diflficulty of communicating with his customer. A cable to 
 Buenos Aires will reach its destination almost as soon as a tde- 
 gram to California. If he wishes to communicate with his 
 customer by mail there are any number of competent translators 
 at all the principal ports who can handle his correspondence in 
 the language required. The collection of money has been re- 
 duced to a very simple undertaking within recent years. The 
 principal American banks in all our large cities are fully equipped 
 to take charge of collections in countries where 'the merchant 
 may have bills outstanding.^ It will be seen, therefore, that the 
 merchant will experience little or no difficulty in doing business 
 with a customer in Argentina in ^te of sudi apparent barriers 
 as difference in language, customs and laws. 
 
 Unfamiliar CandiHons im 
 Exporting Must Be Met 
 
 In venturing into foreign cocmtries in the search of new cus- 
 
 1 — Mr. J. McCurrah, vice-president of the Continental and Commercial Bank, in 
 ■B tddrew More tfie Sfactfi Natimiftl Fordgn Trade Conventkm in Chkago, April 
 24lh, 1919, said: **A careful analysis of the world's international business wiU 
 show that the perce n ta g e of losses on foreign sales has been very much less than 
 the percentage of losaea fai dooaeatie transaetioiia. While it is generallj understood 
 that the American manufacturer must of necessity be prepared to grant longer 
 time credits than we have granted in the past, these credits will be readily financed 
 bj the American bank% if the exporter will give the bank an opportunity to inves- 
 tiftte the flMmU m4 SmumM atvidiiv of tlM tmim hum*" 
 
4 
 
 EXPORTING TO THE WORLD 
 
 tomers, however, the merchant will learn that before he can make 
 any strenuous efforts to develop a given market he must familiar- 
 ize himself with a series of details such as have been foreign to 
 his business routine in the domestic fidd. His foreign corre- 
 qioiMknce methods may disturb htm at die b^finning. His busi- 
 ness may require correspondence in several different languages. 
 This may mean the addition of competent translators to his 
 organization. The difficulty of communicating promptly by mail 
 with his overseas customer may tempt him to abandon his even 
 ttmper at tunes. It takes a letter much longer to readi its desti- 
 natkm in a foreign country than it does at home. 
 
 Each individual country has its own problems. Climatic con- 
 ditions may limit the merchant's development of the market if 
 he is engaged in selling seasonable goods. He may be forced to 
 alter his packing methods in order to meet Ac requirements of 
 his foreign customer. He must determme a price policy. Is he 
 to charge more for his commodities in foreign countries or is 
 he to make the same charges that he asks his domestic customers 
 to meet, or is he to sell at a lower figure than he does at home? 
 He must also decide whether he is to give reasonable credit to 
 his foreign purchaser— a veiy inqportam phase of aqxMtii^ that 
 requires eariy settlement* The mMiod of obtaining payment for 
 his goods may confuse him to some extent, but as has already 
 been stated, investigation and study of existing ways and means 
 will convince the merchant that it is not as difficult as it may 
 seem. He will learn, also, of new money values, and that the 
 American dollar does not always maintain its par value in foreign 
 countries. He win also become familiar with shipping details 
 such as are peculiar to maritime commerce only. These are only a 
 
 2— "To ascribe the reluctance of many /merican aamifactarers to grant to 
 foreign customers credit terms, regarded by Iftie latter as reasonable, to 'ignorance' 
 it nnfair in many cases. It has, indeed, happened that a manufacturer has refused 
 to affc am awda te in tiM auttter of eradk a hooaa of aboolnteiy assured standing 
 iiaiply bccanae *cash agaiaat documents 1m Ncir Yock* it Ida rait, bat moot Aacri- 
 can manufacturers declining to do business abroad on a credit basis do so beeaaao 
 they feel that in some way or other they are not equipped for this class of busineaa. 
 The difficulty of obuining reliable credit information regarding the financial stand- 
 iat of ievdgB enMooun, ^ danger of aoC reeeiTtof a sufficiently timely warning 
 of any cbange in Mr ftttadal coaditioa, flit fear of wfoondod oomplaints, un- 
 warranted deductions and onraaaoaable delays in payawat, At innintribiBlj of 
 obtaining justice in commercial litigation in cerUin undeveloped countries, aad tiM 
 lUgh costs of such Utigation in other countries, and, finally, the consideration that 
 a manufacturer who bas ioTettcd bis caj>ital in his plant and natc^its depends 
 naturally npon a reasonable speedy rtlara oa bit iavatlBMBt aad caaaol vndertako 
 to finance a large number of importers in foreign countries — all these are wei^y 
 arguments for prudence." — Archibald J. Wolfe, "Foreign Credits," publication at 
 Special Agents Series of tihe Bureau of Foreign and Domestic Commerce, 1913. 
 
 PRINCIPLES OF EXPORT TRADE 5 
 
 few of the new conditiofis.tfaat will ariac in the development of 
 the merchant's export business. 
 
 Success in Exporting Is 
 Measured by Seriousness 
 
 The seriousness witli which the merchant is disposed to enter 
 the foreign field, and his willingness to take such risks as he has 
 been imfamiHar with at home should be carefully tested before a 
 decision to go in for exporting is made. If the merchant's 
 seriousness is measured by a desire to "dump" a surplus lot of 
 worthless merchandise on an unsuspecting foreign public without 
 considering the future consequences, then he had better devote 
 his efforts to the home market, where such practices will find 
 encouragement m certwn sections only. While such "dumping" 
 tactics may prove successful the first time in a iomga country, 
 disaster will surely follow a second attempt. This docs not mean, 
 of course, that there are no markets for cheap goods in foreign 
 countries. There are several of them. Reference is here made 
 to articles of a hi^ con^tive character where quaUty and 
 utility are the prime factors that detemune their success. The 
 workmanship of these should not be sacrificed in order to make 
 the price extremely attractive to the foreign purchaser. The 
 world should not be a dumping ground for worthless stocks. 
 What is not good for the American people should not be good 
 for the foreign buyers. To be successful the American manu- 
 facturer or merchant must lay down his foundaticm securely. 
 Surely he cannot attain this object by using flimsy material in the 
 effort Competition in foreign markets is keen. The efficiency of 
 the American workman is matched against the efficiency of the 
 world's greatest artisans. The American workman has proven 
 his efficiency. He has proven his ability to make articles of a 
 quality that has created a world demand. In order to m ai nt a in 
 this demand we must continue to produce with the same skill 
 that has marked our successes in the past 
 
Chapter II 
 
 PROBLEMS CONFRONTING THE EXPORTER 
 
 Study of market conditions an essential requibembnt-* 
 Some factors governing extokt tkadb— Manufacturer'^ aim 
 
 SHOULD BB 10 PLBASB TBB CUSTOMTO QuALTTY, NOT PRICES, DE- 
 TERMINES success—Other factc»s that govern export trade 
 
 Before deciding to engage in export trade the manufacturer 
 must settle in his own mind a number of matters that may affect 
 a final decision. He must decide, first of all, whether he really 
 desires to do exporting on a pertnaneiit basis. "Shall I stay in 
 permanently or shall I stay out permanently?^ is a question he 
 must be able to answer before taking the first step forward. The 
 cumulatiye value of exporting is the element that must survive 
 the acid test. Isolated effort is worse than none at all. Unless 
 a manufacturer is in a position to continue exporting on a per- 
 manent basis he had better confine himself to the dotnesttc 
 market, as spasmodic attempts to awaken interest in fordgn 
 fields are not only painfully expensive but wastef ully tiouble- 
 some in the conduct of business at home, 
 
 IVhat Deciding to Go in 
 for Export Trade Means 
 
 When the manufacturer decides to sell his goods abroad it is 
 taken for granted that he has a sufficient amount of capital to 
 lay aside for preliminary devebpment, although it is not neces- 
 saiy to use a large fund for sudi purpoaes. As the monetary 
 requirements of each mdivkhial manufacturer depend on his own 
 peculiar wgani^tion, and the scope of his activities in foreign 
 fields, it is absolutely impossible to name an arbitrary figure as 
 representing the initial capital outlay that would be required 
 The amount of capital for foreign trade development d^pmdB, 
 just as it does at home, on the extent of the activities oontem- 
 plaled, and the condition of the mvestor's surj^us. No sane 
 business man will recklessly devote a large amount of his acces- 
 sible capital in testing new markets. A well defined itlea of the 
 
 6 
 
 PROBLEMS CONFRONTING THE EXPORTER 7 
 
 capabilities and requirements of those markets is the first essen- 
 tial of the practical business man. Therefore, in deciding to go 
 
 in for export trade the manufacturer— it is taken for granted— 
 has made a preliminary survey of the entire situation. First of 
 an he has carefully analyzed his own situation. He has learned 
 that he can increase his factory output by efficient management 
 without extravagantly increasing his overhead expenses. He has 
 learned that his product can be sold in other countries where 
 the degree of civilization is advanced. He has carefully looked 
 over the field for competent men to take charge of his exporting, 
 and is satisfied that he can find fairly competent employes to 
 entrust with such a ddicate undertaking as eaq^ trade. He 
 has made a close study of laws, regulations, ratiesi custotns 
 requirements, consular documents and hundreds of other details 
 peculiar to the exporting business. Deciding to do exporting 
 means the mastering of all these details, along with many others 
 whidi will be taken up m subsequent chapters. 
 
 Study of Market Conditions 
 
 an Essential Requirement 
 
 Good business judgment should dictate a careful survey of 
 market conditions in the countries where the manufacturer is 
 contemplating the development of a demand for his articles. The 
 success of an article at home should not serve as a barometer that 
 will determine its salability overseas. The American people spend 
 minions in chewing gum every year, yet this is not^ indication 
 that the article would "go big" in foreign countries. The chewing 
 gum habit has not at this writing been acquired universally. 
 Breakfast foods, while enjoying a big sale in the United States 
 and in Europe, are not very pq;>ular in Latin America, where 
 the people by habit confine themselves to coffee and rolls as the 
 first meal of the day. Again, climate may have a direct bearing 
 on the success of a manufacturer's article abroad. The merchant 
 who endeavors to market electric fans in Punta Arenas, Chile, 
 or woolen underwear in the Panama Republic is doomed to lose 
 some money. He should not fail to study the climatic condi- 
 tk>ns in foreign countries. With little effort he could have 
 learned that the citizens of Punta Arenas are already blessed 
 with a cool breeze that is practically perpetual, thereby dispense 
 ing with the necessity of artificial "air," while the people of 
 Panama find plenQr of comfort in a certain style of underwear 
 
6 
 
 EXPORTING TO THE WORLD 
 
 whose material and weight are m keeping with the climatic con- 
 ditions peculiar to that coontry. Ignorance of weather conditions 
 in Rio de Janeiro caused a merchant the loas of coottderahle 
 
 money a few years ago. He had endeavored to unload a con- 
 signment of snow plows on an innocent public. The study of an 
 atlas for a few moments would have saved this merchant con- 
 stderahle trouble. 
 
 Some Factors Governing 
 Export Trade 
 
 Needless to say, the manufacturer must know what changes 
 must be made in his article in order to meet the requirements of 
 his foreign customer. In order to do this he must know more 
 than dunatic conditiims or habits of the people. He must beomie 
 familiar with special requirements and peculiarities of the particu- 
 lar markets he wishes to exploit. Failure to take this precaution 
 will find him attempting to dispose of articles, the manufacture 
 of which did not take into consideration certain factors govern- 
 ing their sale. For instance, in many countries of the world the 
 Hi^tric system of weights and measures is prescribed by law. 
 The American manufacturer who ships a consignment of instru- 
 ments to a country where distance is read in terms of meters 
 and kilometers, and weights in terms of grams and kilograms, 
 without rha«gi"g the reading thereon so as to harmonize with 
 the prevailing system, would be oommittii^ a grievous blunder. 
 Neither should he attempt to ship typewriters to countries idiere 
 the prevailing language is Spanish without first equipping them 
 with characters peculiar to that tongue. This, of course, involves 
 the problem of changing the manufacture of these articles in a 
 slight degree to meet foreign requirements. It is an eacperience 
 that has been successfully met by Amerkan flttnufactumi who 
 have ahered their domestic plans to comply with the requirements 
 of the foreign markets. It is one of the essential factors that 
 must be considered in venturing into foreign trade. Probably 
 too much unjustifiable criticism has been directed at American 
 mannfacturers who have refused to make a change in the mami> 
 factnre of thdr product in order to comf^y with certain require- 
 ments in forrign markets. There are certain automobile mami- 
 faclurers in this country who refuse to change the position of 
 the drive from the left to the right in order to comply with the 
 wquiiements of some Latin-American countries where the chauf - 
 
 PROBLEMS CONFRONTING THE EXPORTER 9 
 
 f eur turns to the lett instead of to the right This may possibly 
 be due to stubbornness or, perhaps, to the impossibility of mak- 
 mg the change without incurring considerable loss. It is possible, 
 alsot that the buyers of automoMes asking for these changes 
 ate unwimng to pay the extra costs that may be involved. It 
 must be remembered that the basis of our industrial wealth rests 
 on our policy of quantity production. While it is possible to turn 
 out a tremendous amount of work from a factory that is geared 
 up to produce m enormous quantities at a very low cost, yet a 
 sHgfat deviatkm frmn the methods of that production is Ukely 
 to mcrease the price beyond all proportion. Hundreds of manu- 
 facturers in this country have turned down big orders from for- 
 eign buyers simply because they were unable to make the neces- 
 sary changes in a product and at the same time secure themselves 
 against h)6S. It is doubtful, however, if any manufacturer would 
 turn down an order regardless of the minor changes required if 
 he were assured of reasonable profits. 
 
 There is not an article produced by an American manufacturer 
 that may not be sold in foreign countries. It is not so much the 
 problem of finding something that will sell overseas as much as 
 aiCfrt y"*"g under what conditions an article may be sold and 
 where it may be sold to the best advantage. Take ^ maker of 
 straw hats, for instance. Straw hats have a wide fordgn market, 
 but it is absolutely essential for the manufacturer to study cli- 
 matic conditions in the various countries before he can intelli- 
 gently dispose of his goods. By taking advantage of the dif- 
 ferent seasoDi he will find a sale for his hats for pcactically the 
 entire year. In countries south of the equator wmter is on its 
 way when the people of the United States are basking in the sun- 
 shine of an early spring. When the straw hat selling season is 
 over in this country it is about to start in Argentine, Chile and 
 Uruguay. The antomdlHle trade and clothing business enjoy a 
 somlar advantage. 
 
 ManufacHtrer's Aim ShoM 
 
 Be to Please the Customer 
 
 We sell in order to make a profit. The customer is interested 
 in an article which he has accepted because it has an element of 
 Utility to him. It has a degree of quality that is satisfactory, and 
 the price is reasonable. Generally speiddng, it makes no differ- 
 ence to the purdiaaer where the artide conies from as kiag as 
 
10 
 
 RTING TO THE WORLD 
 
 it meets liis leqairements. The maiitifacturer cannot impose an 
 article upon an .unwilling customor and expect to build up his 
 
 trade on that basis. We must remcnibcr that the development of 
 a successful export business does not depend so much upon our 
 facilities to supply the world with our commodities as it does upon 
 our abiH^ and willingness to please our customers. This, as 
 has been txphaatd already in this chapter, may invohre a read j ust- 
 ment of factory processes, and this question will require disposal 
 by the proper executive only. But a definite policy must be 
 established at the outset "Shall I change my methods to meet 
 fm^gn requirements or shall I endeavor to sell what I have 
 already manufactured?** This is the question that the manufac- 
 turer must settle definitely. Under date of December 7, 1915, 
 at the convention of the National Association of Manufacturers 
 in New York City, Dr. E. E. Pratt, former chief of the Biureau 
 of Foreign and Domestic Commerce, made this statement: "I 
 wonder if most of the manufacturers who intend to embark in 
 an export trade realize that a definite policy must be adopted at 
 home as well as in the foreign field. As a matter of fact, some 
 of the most important decisions which the manufacturer can 
 make with reference to foreign trade are to be made at home 
 with reference to his home organization, with reference to his 
 methods m the United States, with reference to production in his 
 plant, and with reference to niatters whidh are seemingly not 
 directly in the foreign department 
 
 factors Determining 
 Success of Mmmfacturers 
 
 "Are you, as a manufacturer, g<(Hng to manufacture for export, 
 
 or are you going to export what you have manufactured? The 
 difference between these apparent similar statements is the dif- 
 ference between success and failure. I have already referred to 
 die plow manufacturer,^ and I would like to cany that illus- 
 tration a Uttie farther. I know of one plow manufacturer who 
 
 1. "Plows vaty not so much with the taste of the plowman as with the char- 
 acter of the soil in w4iich the plow will be used and the species of animal that will 
 draw the plow. Plowi oC differeent type* an med hn tfM 4ifte«Bt MelioM of ^hm 
 Uakdl States. Simfluly, ylm of dMnont types ors used in diffsreat oonatries. 
 
 Ths MiMofirtiirrr there f cwne, must find out the soil conditions and mtist export to 
 a certain market the type of plow which the soil conditions there require." — Dr. 
 E. E. Pratt, former chief of the Bureau of Foreign and Domestic Commerce, in 
 • Statement before the International Trade Conference in New York City in 1915.. 
 
 PROBLEMS CONFRONTING THE EXPORTER 11 
 
 sent a man to Aiigentina. It was his business to get the facts 
 about conditions there. He actually worked in the helds. He 
 found out exactiy the land of plow that was suited to that par- 
 ticular trade and to those peculiar soil conditions. He sent a 
 cablegram, at a cost of many hundred dollars, instructing the 
 manufacturer in detail as to changes which must be made in 
 order to meet the conditions in Argentina. The factory superin- 
 tendent objected. 'We can't make those changes/ he said to the 
 manufacturer; *it would involve the changing of all om: manu- 
 facturing methods/ But the manufacturer knew his business 
 and he knew his man, and so he said to the superintendent: *1 
 have confidence in the man I sent to Argentina, and the plows 
 for that market are to be made in: the way which he desires. 
 You f dk>w his instructions.' The result was that a large, prc^t- 
 able business was built up in Argentina. That is what I mean 
 when I refer to a home export policy, and this illustration also 
 shows the need of executive direction." 
 
 Altering of Product 
 May Be Required 
 
 It is of prime importance, the foregmng experience diows, 
 that the manufacturer should realize from the start that export 
 
 trade may involve radical changes in the making of his product, 
 and that he must either be prepared to make them and cater to 
 the markets he desires to expk>it or refuse to aUer his domestic 
 poliqr and therefore keep away from ioraga trade. This prob- 
 lem has been overcome by large plants whose quantity produc* 
 tion has enabled them to sell to the world at a very low price. 
 Henry Ford's automobiles are known in practically every section 
 of the globe where automobiles are in use. However, Ford has 
 had to alter the drive of his automobile from the left to the right 
 in order to meet the requirements in certain Latin-American 
 cotmtries. In Chile, for instance, the driver must turn to the 
 left. Therefore, he must have his drive on the right. 
 
 A striking illustration of a manufacturer's desire to please is 
 related in "Export Trade," a New York export joumaL It tells 
 llie ttoiy of a German saksgman who was able to discover a weak, 
 ness in a customer for a pocket knife with an illustrated handle. 
 The story /was told by an American salesman. It says : "On one 
 occasion while traveling through Mexico I purchased a pocket 
 knife which had attracted my attention because of the pretty 
 
n EXPORTING TO THE WOiO-D 
 
 medallion in the handle, displaying the face of a dark-e]red 
 senorita. I thought I had captured a sample of Mexican cutlery, 
 but my delight did not last long. A few days later I happened 
 to meet a Gennan drummer, and on showing him the knife as 
 a specimen of Mexican skill he laughed heartily. 'Why, I sold 
 those knives myself,' he said. They were made in Germany/ " 
 
 What has been said does not necessarily mean that the manu- 
 facturer must keep on continually changing or altering his article 
 to meet foreign requirements. Such practice, it will be found, 
 is rather an exception, and not the usual rule. However, the 
 ai'erage American manufacturer will listen to reason, and once 
 cmivinced that he can profitably change his product in order to 
 cater to the specific requirements of a certain market he will be 
 the last person to turn down the proposal. 
 
 The habits of hundreds of years may not be changed over- 
 night by an enterprising American traveling salesman, or anyone 
 else for that matter. It has been tried without much success. 
 But when the people of a foreign coontry have been accus- 
 tomed to an article of an inferior type it should be within the 
 bounds of discretion to endeavor to introduce one of superiority 
 and not a poor imitation that merely conforms to the customs 
 of the people. For instance, the author has seen some ponderous 
 keys in South America, so large that they require a joint in the 
 center to permit doubling up in the pocket They were made in 
 England. The practical American lock and key are far superior 
 to the British make, and the wise manufacturer will not only 
 refuse to follow the British style but will insist on showing the 
 purchaser the advantages of his own manufactured ware. 
 
 Quaiiiy Not Prices 
 Determmes Success 
 
 Nothing does more to harm our nation's good name than the 
 disposing of worthless articles bearing the American trademark 
 in foreign countries. A cheap article made in America reflects 
 not so much upon the maker of that article as upon the country 
 as a whole. During the war complaints from new customers 
 in foreign countries against the poor quality of merchandise 
 that American exporters had shipped to them were quite numer- 
 ous. This is true particularly of South America, which was the 
 objective of ine3q)erienced salesmen in foreign countries during 
 the war. These men, bdieving that the South Americans woola 
 
 PROBLEMS CONFRONTING THE EXPORTER 13 
 
 ''fall for*' lines that had had considerable difficulty in the United 
 States, carried along with them trunk loads of samples, hoping 
 to reap a rich harvest, but to their amazement they discovered 
 that their intended Latin- American victims were just as exacting 
 in their selection of merchandise as some of the shrewdest 
 American buyers. 
 
 Witness the reputation of a certain nation in the Far East. 
 This country has become extremely diligent in exploiting new 
 markets. With its cheap labor and the use of cheap materials 
 it has been able to produce low priced goods and for a time suc- 
 ceeded in disposing of tremendous quantities of goods to un- 
 suspecting customers. It is yet a dangerous contender in the 
 world markets, but its cheap priced articles failing to bear up, an 
 unenviaUe reputation has been the result among some of its 
 former buyers. The matter has become so serious that legisla- 
 tion is contemplated to prevent the exportation of articles from 
 that country which fail to pass the test of quali^ before ^ board 
 of competent oommerdal authorities. 
 
 The foreign buyer sedcs quality in an article as a general rule. 
 The price is a secondary consideration. American-made goods 
 are noted the world over for the skill that has been devoted to 
 their making. Of course, there are articles such as raw 
 materials wliose sale depends on the price at which they 
 are offered in competitive markets. In this- classification 
 such staple products as wheat, coal, corn and cotton are 
 included. But the great percentage of articles mantifactuted! 
 in this country are not subject to competition on a price 
 basis. To further illustrate the point, we have in this 
 country several different makes of automobiles, and watches, 
 and fountain pens and typewriters. Some of these articles do 
 not depend on the reasonableness of the price for their pc^ular- 
 ity. The arrival of a popular priced car in the market did not 
 cause the factories producing the more expensive cars to close 
 down. There is a typewriter so cheap in price as to be tempting 
 to anyone having a use for such an article, yet it has not forced 
 its more expensive competitors from die market. The Japanese 
 government flooded certain markets witli an imitation of a well 
 known American fountain pen. The price was much lower than 
 the American make, but the latter kq>t on selling. It was qual- 
 ity that brou^ remits. 
 
EXPORTING TO THE WORLD 
 
 Americafp-tnade Goods 
 Compete in Europe 
 
 Before the war our manufacturers invaded some of the most 
 highly developed countries in Europe from the point of industry. 
 
 Germany had been a great competitor of the American producer 
 of typewriters, farm implements, electrical machinery, automo- 
 Uks, sewing machines and wearing apparel, yet our merchants 
 sent their wares to the heart of Germany and successfully com- 
 peted against artides of Teutonic origin, and this in spite of the 
 fact that increased overhead resulting from ocean freights and 
 customs duties had to be met. Also, our furniture and shoes 
 are being sold successfully in Chile, where local products of a 
 similar character have won favor. The American shoe manu- 
 facturers' development of the market in Chile and other South 
 American countries was made rather difficult hy the necessity 
 of changing the style of the product. The people in those coun- 
 tries have been accustomed to a short vamp with the round tip, 
 a style hrought over from France. The American makers of 
 flioes now provide those countries with either round tips» or 
 pomted tips, which is peculiarly an American fashion. 
 
 The abundance of CaUfomia's grapes does not prevent Spain 
 from shipping this delicious fruit to this country. After all, 
 there is a certain attraction for ''imported" goods whose char- 
 acteristics of having been made abroad assure it a ready sale 
 among a certain element of the native population regardless of 
 the merits or price of a locally made product 
 
 ''Made in America** is a labd that has woa prestige in foreign 
 countries. Foreign buyers — and they are most exacting — have 
 learned to place implicit confidence in commodities bearing the 
 American trademark. They know that we do not produce 
 trash here. We have made it possible to put quality into our 
 products through our hig^ devdoped industrial Sjrstem. We 
 have been able to effect quantity production without impairing 
 quality. We have mobilized an army of the most competent work- 
 men in the world, to whom we have paid the highest wages of 
 any workmen in any country. Their standard of living has 
 been high and yet we have been able to compete in foreign 
 markets mfk countries that have had the iqiparent advantage 
 of lower labor costs. What is the answer? It is the quality of 
 our material that has won us markets. We should have no 
 faith with those who insist that the reduction of wages is essen- 
 
 PROBLEMS CONFRONTING THE EXPORTER 15 
 
 tial to successful competition against the cheap labor of other 
 countries. The contrary has practically been proved. 
 
 Other Factors thai 
 Govern Export Trade 
 
 A superficial study of conditions in any ghren market is not 
 
 enough. The manufacturer who is preparing to extend his 
 business overseas should know as much about the territory he 
 aims to cover as far as essential information is concerned as he 
 does about the various markets at home. He should not only 
 study the history of the country — ^which serves as a basis for 
 intelligent observation — but also the d^jrce of civilization to 
 which the inhabitants of the country are accustomed. A manu- 
 facturer of pianos may not find a very extensive market for his 
 wares in Haiti, but a careful study of the civilization of Aus^ 
 tralia will assure him of success in that line in certain sections 
 of that country.^ Needless to say, the difference in the degree 
 of civilization between one country and another is the difference 
 between success and failure in the sale of luxuries to which the 
 people of highly civilized countries have been accustomed. 
 
 The prosperity of a country depends upon the stability of the 
 government as well as upon its natural wealth. No matter how 
 rich in minerals or agriculture a country may be, it can never 
 enjoy the fruits of its wealth while those in power govern un- 
 wisely and inefficiently. The government must be stable. Wit- 
 ness the case of Russia rquresenting an inefficient and unwise 
 government, and Btexico impoverished by almost perpetual revo- 
 lution. The study of political conditions should be just as im- 
 portant to the manufacturer as the study of commercial and 
 industrial conditions. 
 
 In normal times steamers follow their schedules almost as 
 precisely as railroad tnuns of highly developed transportation 
 . systems. The world's greatest ports are well equipped with 
 modem facilities for the quick loading and unloading of cargoes. 
 
 3. "Than k pnhMf no co imUy in Um vorld whui. pinot are more tued, 
 itt proportion to population, and are considered nore necessary as features of home 
 life than in Australia, The local piano trade seems to follow closely the local mar- 
 riage statistics, a piano being considered almost ifiie first essential of domestic life, 
 so that it becomes the usual circumstance for a newly married couple to buy a 
 piano, Uw «nr tfaao pojnenti p r e y ontin g wnj Snandil horUiip in so doinff. No 
 natter horn Iramble the boni^ nor how remote it may be from large cities, a piano 
 it usuallr • Mtaf fmtmm «f il;''-<Mlr Cwiiitor tad TMde Bf^orti^ Febrmry 
 1^ 1911. 
 
le EXPORTING TO THE WORLD 
 
 These ports are readied by the kading ocean hi^^ways and 
 commerce is conducted with very little delay. Such ideal con- 
 ditions do not prevail all over the world, however, and the 
 
 manufacturer must take into consideration the location of ports 
 that he wishes to ship goods to with respect to their proximity 
 to the principal ocean trade routes. 
 
 Kmd of PofuleHm 
 DeUrtrnmng Factor 
 
 The manufacturer should not be misled into the belief that 
 the success of his foreign trade depends on population figures — 
 that greater the population, greater the volume of his business. 
 The tevd^waded business man wants to know more than the 
 total population of a given country or continent The fact that 
 China has a population of over 336,000,000 means nothing to 
 him unless these figures are accompanied by data giving an idea 
 of the class of people that make up this population. Neither 
 will the statement that British India has a population of over 
 300,000,000 peoi^e give the manufacturer an idea of the pur- 
 chash^ power of the inhabitants. According to the Statesman's 
 Yearbook for 1912 the population of Bolivia was 2,521,000, 
 while its purchasing population was 214,000. The population 
 of Cuba in the same year was 2,474,000, while its purchasing 
 population was 1,026,000. This indicates that total population 
 must not always be f<died on as an essential factor that deter- 
 mines the potential baying power of a maricet 
 
 Chapter III 
 
 METHODS OF EXPORTING 
 Sblung methods invcmlved in: exporting DiREcr— Using 
 
 TRAVBUNG MEN TO DEVELOP tSADE— DEVELOPING TRADE BY OOR- 
 
 RBSPQNDENCB — ^ADVERTISING AS A MEANS OF MIVELOPING BUSI-- 
 
 NESS— The export commission house as an exporter — The 
 
 EXPORT MERCHANT 
 
 There are two essential methods of exporting. They are as 
 follows : 
 
 Direct exporting, or indirect exporting. 
 The manufacturer must choose between these two methods 
 before beginning business. Then, after settling this phase of 
 the problem, he must again attadc it from a new angle If he 
 decides to do exporting direct he must dedde on a definite policy 
 in connection with this plan. If he decides to do exporting by 
 the indirect method, then his worries will be practically over. 
 Ordmarily, the difference between direct exporting and indirect 
 exporting is the difference between being an exporter or not 
 being an exporter. 
 
 Selling Methods Involved 
 in Exporting Dvrett 
 
 The manufacturer choosing to sell direct to foreign customers 
 becomes a full-fledged exporter in the real sense of the word. 
 He has decided to exploit his own markets, to choose his own 
 
 methods of developing business, and to shoulder the entire respon- 
 sibility. He has a hundred and one problems to solve, the most 
 important one being the method of developing tbe fordgn 
 market Each method may dqpend on the character of his 
 products, the amount of capital he has at his disposal, or the 
 specific maricet he desires to exploit. The essential methods of 
 selling direct are as follows: 
 
 Through traveling salesmen. 
 
 Through correspondence. 
 
 Through advertising. 
 
 17 
 
18 EXPORTING TO THE WORLD 
 
 Through foreign branches. 
 Through foreign agencies. 
 
 Using Traveling Men to 
 Develop Export Trade 
 
 The manufacturer who can afford to send a traveling salesman 
 to lucrative markets after he has carefully investigated their pos- 
 sibilities for development is certainly selecting the ideal way of 
 ^i^\Mng business. The personal element is [ust as important * 
 a factor in the foreign fidd as it is at home. The travduig sales- 
 man supplies that element. Experience will dictate to what 
 countries the traveling salesman should be sent. It is possible that 
 the salesman will be confined to a limited market where the 
 results obtainable will justify the expenditure of money on per- 
 sonal representation. No manufacturer or txporttr has been 
 known to send travehi^ salesmen to every portion of the globe. 
 In the first place it is needless, and in the second place, it is too 
 expensive. The most careful manufacturers and exporters first 
 study their field, and then decide what markets shall be exploited 
 by traveling salesmen and what markets shall be exploited by 
 other methods. 
 
 Developing Export Trade 
 by Correspondence 
 
 Export business can be developed through correspondence. 
 This is, indeed, an economical way of launching into foreign 
 trade, but at the same time it requires a technique in the handling 
 of foreign correspondence that very few American manufac- 
 turers can boast of. It requires tact It requires diplomacy in 
 letter writing. It is much more difficult to write a letter to a 
 person one does not know than to a personal friend. The manu- 
 facturer must imderstand the preparation of correspondence 
 material that will not only interest the foreign purchaser who 
 may be thousand of mileff away, but will draw an inquiry as wdL 
 and later, perhaps, turn that inquiry into an order. Considerable 
 export business has been developed in this country by the corre- 
 spondence method, but only through the intelligent and skillful 
 way in which the successful manufacturer employed it 
 
 Advertising as a Means 
 of Developing Business 
 
 Advertising is an important dement in the development of an 
 
 METHODS OF EXPORTING 19 
 
 export business in whatever direct method the manufacturer has 
 decided to follow. If the manufacturer decides to send a sales- 
 man to foreign countries he must do a certain amount of adver- 
 tising. If he decides to obtain foreign customers through corre- 
 spondence only, advertising must be empl<^ed. If he decides 
 to develop his export trade by using foreign agents, he must 
 consider advertising. If he feels that he can afford the estab- 
 lishment of a foreign branch, he must do advertising to exploit 
 the held. Advertising involves the study of foreign media, of 
 local media ^t circulates in foreign countries, the psychology 
 of the people in the country where he wishes to sell his mer- 
 chandise, their habits, customs and the degree of their civilization. 
 It also involves the study of American foreign trade journals that 
 circulate in foreign countries. 
 
 Foreign Branches or 
 Means of Developing Trade 
 
 Provided the volume of business warrants it, the establishment 
 of a foreign branch is a splendid effort toward developing a 
 foreign trade. Some of our successful export manufacturers 
 are enjoying a lucrative business as the result of business fore- 
 sight in the establishment of foreign branches. The fordgn 
 branch affords the manufacturer the advantage of keeping in 
 close touch with the market. Warehouses may be conducted in 
 connection with the foreign branch. In these warehouses may be 
 kept large quantities of goods in order that prompt deliveries to 
 customers may be effected. The branches may also include show 
 and sample rooms where customers may visit them to inspect the 
 merchandise they wish to have sent to their business houses. 
 This relieves them of the necessity of making long journeys to 
 the United States for this purpose. Again, the manufacturer 
 with a foreign branch is independent of selling agents and mer- 
 chant houses alike. His credit problems are reduced to a mini- 
 mum as he is on the ground to investigate the customer's capa- 
 bilities of meeting his obligations. 
 
 The Foreign Agent as 
 Export Trade Developer 
 
 Hundreds of oomnusnon agents liidng in overseas ports de- 
 pend for their bread and butter oa their sale of foreign-made 
 
EXPORTING TO THE WORLD 
 
 articles to which they have been entrusted by manufacturers. 
 American coounissiofi houses liave for many years recognized the 
 importance of tiiese foraga agents in the handling of their busi- 
 ness abroad. American manufacturers, qnidc to grasp the ad- 
 vantages offered, are now making suitable connections with 
 these representatives. Often these commission agents are mem- 
 bers of dd establidied instittttions that not only command a large 
 business in their own districts but the business of rich sections 
 of the country by means of distributing centers as well. The 
 manufacturer, however, must be careful of the foreign agency 
 with whom he establishes connections. Sometimes these houses 
 are not what their letterheads indicate. Their credit standing 
 may be shaky. In this day of qiecialized e£Fort however, it is 
 not difficult to obtain rdiadUe credit information on merchants 
 in foreign countries. The manufacturer must also know the 
 lines his agent handles. If the market is highly developed the 
 foreign agent may confine himself to allied lines, such as office 
 equipment or typewriters, while in the lesser developed 
 marfeets ht may deal in articles ranging from needles to pianos. 
 It is, therefore, essential that the manufacturer inform himself 
 on the extent to which the market has been developed, as well 
 as on the character of the goods his foreign agent has for sale. 
 In making proper connections with a foreign agent the manu- 
 facturer will enjoy the advantage of being represented in the 
 local fidd by a well established organization whose standing in 
 ^e community may be a distinct asset The manufacturer must 
 also take into consideration the element of person^ influence on 
 actual buyers, which, after all is said, is the most powerful forci 
 to be considered in selling effort. There are also the advantages 
 of carrying only one foreign account in the domestic books, o| 
 worrying over <»ily one credit risk» and of the assurance, per- 
 haps, of a certain volume of busmess. 
 
 Selling Methods Involved 
 in Indirect Exporting 
 
 The direct method of exporting involves the establishment of 
 an export department as well as the creation of some sort of 
 selling policy. It involves the handling of all the details peculiar 
 to the shipment of goods overseas as well as the assuming of 
 the risks in connection widi the granting of credit to foreign 
 purchasers. Perhaps the manufacturer is not in a position to 
 
 METHODS OF EXPORTING 
 
 21 
 
 assume all these duties and yet desires to sell his merchandise 
 in foreign countries. Perhaps he is not capable of financing his 
 overseas sales. In such a case what can he do? He may turn 
 over his business to a middle man. There are many kinds of 
 
 middle men. The following constitute the essential agencies 
 through which a manufacturer may do business in foreign 
 countries: 
 
 The export commission house. 
 
 The export merchant. 
 
 The manufacturer's export agent 
 
 The export forwarder. 
 
 The Export Commission 
 
 House as an Exporter 
 
 The export cpmmission house is a very old institution in for- 
 eign commerce. In England the operator of an export commis- 
 sion house is called an indent merchant The indent represents 
 the order the commission house receives from a foreign client. 
 The export commission house may be found in all the principal 
 American ports. The functions of an export commission house, 
 theoretically, are ^ to sell American merchanctise in foreign 
 countries, but rather to act purely as a purchaser of American 
 commodities for foreign buyers. The early history of these ex- 
 port commission houses shows that it was not their practice to 
 charge the manufacturer a commission for the work it was en- 
 gaged in performing for the foreign buyer. In late years, how- 
 ever, the commissicipi houses have been known to be making 
 charges to the manufacturers as well as obtaining a commission 
 from their foreign clients. It is argued by the commission houses 
 that the small commission charged to their foreign clientele — fixed 
 by custom— is so small that it is impossible to obtain reasonable 
 returns in this present day of the high cost of doing business. 
 Neither is it the function of the export commission house to 
 cxi^t the foreign fieW for the manufacturer. It represents the 
 buyer, not the seller. It will buy goods only on the best terms 
 obtainable, and only when it has actual orders irom the foreign 
 buyer to execute. On the other hand, the manufacturer is en- 
 tirely relieved from such details as the shipment of goods and 
 the collection of his miHiey. The commission house finances its 
 own shipments. Ordinarily, the manufacturer is paid for his 
 
%2 
 
 EXPORTING TO THE WORLD 
 
 mctchandisc <m the usual domestic trade terms. Within recent 
 years, however, the export commisaon house has heen extcndiiig 
 its activities to such an extent that its origiiial functioil has been 
 practically lost sight of. 
 
 The Expori Merchant oi 
 Seller of American Wares 
 
 Another intermediary is the export merchant. His functions of 
 late have become so closely intenmngled with those of the export 
 commission house that it is difficult to make a distinction- The 
 export merchant m theory does not buy or sell on oommissioil. 
 He purchases outright and sells outright for profit or loss. He 
 has estaWished branches in certain markets. Sometimes he 
 operates retail stores in coonectiQii with these branches. The 
 manufacturer, as in the case of the export commission house, 
 originally could expect any special selling effort or service from 
 the export merchant. 
 
 The Manufacturer's Export 
 Ageni as an InUrmedimy 
 
 As a comparatiYety recent product in the United States the 
 manufacturer's export agent may appeal to the manufacturer. 
 It is the manufacturer's export agent's duty to exf^t the for- 
 eign market for his client's goods. That is his busmcss. He 
 also relieves the manufacturer of all details pertaining to ship- 
 jMng for export or financing the shipment of goods abroad. As 
 the functions of these manufacturer's export agents differ it is 
 necessary that the manufacturer make a dose study of the advan- 
 tages offered Ijy the various representatives before making a 
 permanent connection. Some of them charge commissions for 
 their work, while others demand regular monthly payments. Still 
 others have a fixed saku^ and an expense account which is pro- 
 vided for by the various manufacturers interested on a pro rata 
 basis. Some confine themsdves to allied lines, while others en- 
 gage in obtaining representatkm for any line that is of ment, 
 regardless of its character. 
 
 The Export Forwarder 
 as a Middle Man 
 
 The tsq^Tt freight forwarder is not a sdling agent His 
 
 METHODS OF EXPORTING 
 
 28 
 
 functions are to ship goods to their destination, thereby relieving 
 the client of all the details peculiar to such activity. He ships 
 goods to any part of the world in any quantity. He attends to 
 all shipping documents, places the goods on board the steamer, 
 and delivers to the foreign purchaser. Sometimes he executes 
 orders in foreign countries, but this is not a part of his regular 
 functions. 
 
 Other Indirect Selling 
 Methods Open to Exporter 
 
 The allied company and the selling company serve as t3rpes of 
 other organizations that the manufacturer may find profitable to 
 join. The allied company takes over the firm's name for a def- 
 inite territory. It may involve patent rights in foreign countries. 
 The allied company may be under the management of men finan- 
 dally interested in the export manufacturer's business or under 
 the management of outsiders. The allied company's methods 
 may involve financial responsibility to a certain extent in the in- 
 dustries of those manufacturers whose products are represented. 
 The allied company may even manufacture abroad. 
 
 The selling company differs from the allied company in that 
 it confines its activities purely to selling. The •chief service that 
 the selling company renders is the more rapid development of 
 foreign markets. 
 
 As the export trade of the United States is rapidly growing, 
 hundreds of new organizati^ms are being fcmned to partidpate 
 in this wave of prosperity. As these new companies spring up 
 they offer the manufacturer new inducements of one kind or 
 another. Some are good and some are bad. The manufacturer 
 is cautioned to watch his step in conferring with these budding 
 organizations before making any permanent agreement to enter 
 foreign trade. 
 
Chaphk IV 
 
 ORGANIZATION OF EXPORT DEPARTMENT 
 
 £jCP<XtT DBPAKTMENT NEED NOT BE AN BxnSNSIVE AFFAIR— 
 
 Selecting an export if ANA<m fi» the business— Someone 
 
 IN AUTHORITY AS EXECUTIVE HEAI>— WhERE IS EXPORT DEPART- 
 ment to be estabushed? — essential units in export 
 
 Department 
 
 When the manufacturer resohres to enter export trade it is 
 taken for granted that he is prefwired to assume all the iHirdens 
 
 peculiar to shipping and selling to foreign customers. The mat- 
 ter of establishing an export department rests now on his own 
 filioulders^ He must e3q>loit his own market, m a in t ain his own 
 sales force, conduct his own advertising proi»ganda, make hb 
 own market surveys, investigate the credit standing of his pros- 
 pective customers, make his own collections, and assume a mul- 
 titude of other small burdens in connection with the export busi- 
 ness. However, as a direct exporter he has the advantage of 
 handling his own goods, and of cutting out the nuddle man's 
 profit. He comes in contact with the market personally. He 
 builds up his own business. The middle man does not do this 
 for as a rule. As a direct exporter he has that personal 
 interest and enthnnasm in the success of his pel products that 
 no commission man or export manager may have. This is the 
 element that is inspiring many manufacturers to organize thdr 
 own export departments and sell direct to foreign customers. 
 
 Export Deparimeni Need 
 
 Not Be Expensive A§m 
 
 The organization of an export department need not involve 
 liie expenditure of a considerable sum of money in the beginning, 
 unless, of cot irse, a manufacturer's business is so extensive that 
 additional capital is accesmble f or ^ estal)]i8hment of a Aor- 
 oughly equipped division whose chief functions shall comust of 
 
 8i 
 
 ORGANIZATION OF EXPORT DEPARTMENT 25 
 
 the management of the foreign business of the company in all 
 of its details. But for the small manufacturer — the man of 
 moderate means — who desires to adopt a sound pay-as-you-go 
 policy of develoimig the foreign markets, the logical course to 
 follow would be to absorb the additknial duties required in 
 exporting in his existing organization, with an export manager 
 in charge who shall devote his entire time to the details. Even 
 then there should be close supervision by someone interested in 
 the business or by some trustworthy employe so that all prob- 
 lems arising from time to time may be settled with some degree 
 of intelligence. Export trade is, indeed, interesting. The person 
 in charge deals with all manner of people, who follow different 
 methods of livings and of thinking and of speech. Today he may 
 be communicating witii a customer in Egypt and tomorrow with 
 a customer in Siberia. His desk is the hub of a wheel whose 
 spokes reach out in all directions. The export head of the busi- 
 ness is truty a man of the world. He becomes broadened and 
 he can look at tilings from the other feUow's viewpoint The 
 establishment of an export department need not involve extra 
 buildings, or special departments. It can fit right into the routine 
 of the domestic business — and succeed. 
 
 Selecting an Export 
 Manager for the Business 
 
 Although the fiekl is quite full of applicants for the positicm 
 of export manager, the manufacturer will find not a little diffi- 
 culty in obtaining a competent person to fill the bill. In New 
 York City alone there are hundreds of young men whose only 
 daim to consideration rests in their alMlity to speak and wr^ 
 in a foreign language. This is not enough. A successful export 
 manager should be more than a linguist. He should be a student 
 of countries, market ccmditions, political developments in foreign 
 countries, and, above all, a coomiercial dipkmiat Mmover, he 
 should be a gentleman in every respect, as he will come in con- 
 tact with buyers from foreign lands whose degree of culture and 
 learning may be surprising to the provincial American business 
 man* As an export manager is expected to transact a large 
 volume of business through comspoodeace with customers he 
 does not know it b of prime inqiortanoe tiiat he be particdariy 
 
26 
 
 EXPORTING TO THE WORLD 
 
 skinful in dictating letters and in avoiding certain expressions 
 iti his correspondence so aMmnon to the American buwness 
 man of average intelligence. For the young man who is sedong 
 a career which may grow with America's export trade here is 
 an opportunity that should exercise his initiative and enterprise 
 to the fullest extent, and consequently bring adequate financial 
 returns. 
 
 Who Is Capable of FUling 
 
 Export Managers Shoes f 
 
 Perhaps the manufacturer's first thought in looking around for 
 an export manager will be to advertise in the newspapers. His 
 mormng mail will probably consist of applications from export 
 managers already connected with other firms, or from persons 
 claiming to know foreign countries and one or two foreign lan- 
 guages. Perhaps the mail may bring in the applications of young 
 men who have just completed a course m Foreign Trade m some 
 school or college. The colleges and universities of the country are 
 now paying particular attention to the teaching of subjects aimed 
 to fit young men for foreign trade service. These institutions are 
 doing a worthy work and place at the disposal of the student 
 valuaUe hif ormation that is essential m fordgn trade. A domesUc 
 sales manager, also, may present his ^plication along witfi a 
 record of his sales efforts at home. His own sales manager may 
 be a contender for the position. 
 
 Of all these candidates the most promising is the export man- 
 ager from another firm. The manufacturer who is able to obtain 
 the services of an export jnanager who is thoroughly experienced 
 m the business is, indeed, fortunate, as their number is hmited. 
 The export manager not only introduces an export syston into 
 the manufacturer's organization, who may bring along with him 
 an invaluaWe experience which years of hard labor has accu- 
 mulated. 
 
 The sales manager is a Ukdiy candidate. The man who is 
 ahie to sell goods m the domestic fidd, and who has had txpcnr 
 
 cnce in directing salesmen and selling campaigns !^iould make 
 an efficient export manager. Possessing this knowledge of do- 
 ing busmess at home, it is only a question of time when he can 
 master the "shmt" of export trade. If the manufacturer can 
 afford to take his own sales manager from his domestic bath 
 by all means he should give htm the opportunity of c<mdiicthig 
 
 ORGANIZATION OF EXPORT DEPARTMENT 27 
 
 his export department. By followmg this course he need not 
 
 go out of his own organization in search of an export manager. 
 Instead, he will be throwing the responsibilities on the shoulders 
 of one who is ahready acquainted with his products and organiza- 
 tion* 
 
 There may he in the organization a young man who displays 
 considerable alulity for organization and the h andling of detaik, 
 
 and who has indicated a willingness to grasp the principles and 
 technique of export trade. Under careful direction and training 
 a young man possessing these qualifications should soon be able 
 to take complete control of the ejqK>rt business of the concern. 
 
 Someone tfi Authority 
 
 as Executive Head 
 
 No matter who the manufacturer selects to conduct his export 
 department there should always be someone in authority — ^some- 
 one financially interested in the concern — who should serve in 
 the capacity of court of last resort in matters demanding execu- 
 tive decision. From time to time the export manager will submit 
 propositions and suggestions concerning the development of the 
 business overseas. The export manager should not decide these 
 things alone. He should merely submit hi^ recommendations. The 
 executive in charge should also be responsible for the amount of 
 experimentation in a foreign market He should determine whether 
 a change in the product is justified by the returns promised. He 
 should serve as the fimal judge in matters involving credit prob- 
 lems. The determining of a market policy which involves the 
 use of salesmen exclusively or ccMrrespondence and advertising 
 exdosively, the establishment of branches or the appointment of 
 foreign agents arc other matters that demand executive atten- 
 tion should rest with the executive in charge. Is the manufac- 
 turer going to sell direct to wholesalers or to retailers or to con- 
 sumers? This is a question that the executive must answer. 
 
 Where Is Export Departmeni 
 to Be EstablishedP 
 
 Let us suppose the manufacturer has selected his export man- 
 ager. The next question is, "Where shall I establish my export 
 department ?" He must decide between the factory and the prin- 
 cipal port If he e s t abl ishe s his eaqxMt dqiartment at the factoty 
 
IB EXPORTING TO THE WORLD 
 
 he will be giving his expcnt manager the advantage of dose 
 contact with the business, and an opportunity of not only direct- 
 ing the invoicing of the goods and their proper packing, but of 
 offering practical suggestions in the method of productioa that 
 the peculiarities of the different markets demand. When certain 
 ditficulties relative to shipping instructions arise the export man- 
 ager is on the ground to clear them away. 
 
 On the fyther hand, if the manufacturer wishes to establish a 
 separate export department at the principal port he will be gii^ng 
 his export manager the advantage of being in close touch with 
 the buyers who are constantly visiting this country, and with 
 shipping conditicms, so that he may be able to direct his own 
 shipments without employing a foreign freight forwarder or 
 some other intermediary. Established at the principal port, the 
 export manager also has the advantage of keeping his fingers on 
 the pulse of export trade. He meets with other members of his 
 fraternity of business with whom he may be able to exchange 
 views. The buyers of hundreds of commissacm houses are sta- 
 tioned at the principal port. It is to the advantage of the export 
 manager to keep in close touch with these representatives. It 
 is possible, also» that he may be able to finance drafts on foreign 
 buyers much more economically than it is possible at some inte- 
 rior point where the facilities of financing foreign trade sh^ 
 ments are inadequate. 
 
 Export Department Should 
 B€ WeU Equipped 
 
 Wherever the export dq[)artment is established it should be 
 the aim of the manufacturer to equip it with a library that 
 
 should contain all available literature on the subject of exporting, 
 together with accurate atlases and official data. This will add 
 to the efficiency of the export manager. The manufacturer 
 should subscribe to all the leading export magazines, as wdl 
 as to the pablicatioiis of the United States Bureau of Foreign 
 and Domestic Conunerce which deal exclusively in foreign trade 
 matters. The reports of the conventions of the National Foreign 
 'Trade Council and of the American Manufacturers* Export 
 Association are also valuable. The Philadelphia Commercial 
 Museum is splendidly equipped to offer valuable information on 
 all matters pertaining to export trad^ as are also a large nmnber 
 
 ORGANIZATION OF EXPORT DEPARTMENT 29 
 
 of Chambers of Commerce in other cities. The Pan-American 
 Union is not used enough by American manufacturers seeking 
 information in connection with trade problems with Latin-Amer- 
 ica. The Pan-American Union, located in Washington, D. C, 
 
 is supported by twenty-one republics of the western hemisphere, 
 and its functions are to bring about closer political and commer- 
 cial relations between the countries involved in the organization. 
 
 Essential Units in 
 
 Export Departtnent 
 
 We know now that there must be an executive in charge of 
 the export department aside from the export manager. We 
 know that the export manager is in charge of the details peculiar 
 
 10 exporting and is responsible for his acts to the executive, who 
 may be the manufacturer himself or someone financially inter- 
 ested in the concern. But the export manager must have assist- 
 ants. If the business does not justify a distinct perstnmel from 
 that akeady employed in the dbmestic fidd then it is simply a 
 matter of adjusting the new duties to the employes who conduct 
 the domestic business. 
 
 However, if the manufacturer is determined to equip his export 
 department with an entirely new force be will learn he has quite 
 a job on his hands. In the language of Mr. D. £. Delgado, 
 export manager of the Eastman Kodak G>mpany, who gave 
 an address on "Export Teclfnique" before the Sixth National 
 Foreign Trade Convention in Chicago, "the greatest trouble 
 manufacturers have in developing foreign tra de is lack of conv^ 
 petent and plentiful help with export knowledge of languages 
 and details, and time and again business has been lost because 
 of continued petty annoyances caused by inexperience or badly 
 informed correspondents." 
 
 Mr. Delgado continues: "After long experience in the ex- 
 port business with an organization which is supplied with 
 means sufficient to obtain that which is most desirable, it is 
 my opinion that a party going into the export trade should 
 b^n by selecting a man to look after the development of 
 business ; one who has traveled, is thoroughly posted on export 
 dealings and, if possible, one who has a knowledge of foreign 
 languag-es. He should receive all incoming mail and read all 
 outgoing mail signed by the correspondents and, in turn, he 
 should divide the detail work and correspondence by terri- 
 
30 
 
 EXPORTING TO THE WORLD 
 
 tories between the other men who would be niade responsible 
 to him for the success of the sales and connections in their 
 territories. The export manager must arrange the detail work 
 in such manner that he may be able to make various trips, 
 say, one every year, until he has visited all the countries with 
 which he is doing business, and do the missionary work 
 necessary in new territories so he may know where to send 
 his salesmen and what to expect from them under the condi- 
 tions. It frequently happens that a class of merchandise will 
 find ready sale with comparatively easy work for a salesman 
 in one territory, while a man working a great deal harder may 
 not obtain as many orders in a territory dose by, and the ex- 
 port manager should be sufficiently posted to properly judge 
 the ability of his men, which he cannot do unless he visits the 
 territory and becomes <aware of conditions, such as competi- 
 tion, purchasing power of the inhabitants, etc. These men 
 should be sent out yearly to cover all or part of the territory 
 and return to the office to handle correspondence, etc., and 
 keep in touch with it. Of such men would be required, first, 
 experience in the shif^nng business; second, knowledge of 
 some of the lai^^uages of the territory which he is to direct; 
 third, traveling experience; fourth, a man who can code a 
 cable efficiently and economically and who will not hesitate to 
 use cables when necessary; competent to correspond in the 
 customers' lai^^uages, or at least capable of writing, in addition 
 to English, French and Spanish; the advantage of the man 
 who controls French and Spanish being that he could write 
 French and English to the Mediterranean and European coun- 
 tries and French and Spanish to Asiatic and Latin-American 
 countries. Further, such man should, as soon as he is ac- 
 quainted in a general way with the line of goods of the manu- 
 facturer, be sent to sell goods in the territory, for the purpose, 
 not merely to sell merchandise, but to get acquainted with the 
 customers and conditions in the various countries with which 
 he will do business. When this man returns to the office, he 
 will be able to produce far better results, far in excess of what 
 could be accomplished by many years of continued corre- 
 i|K>ndence without personal acquaintance, and will be fitted 
 to maintain friendly business intmoorse. The first two men- 
 tioned conditions would be sufficient if the man is citable. 
 
 ORGANIZATION OF EXPORT DEPARTMENT 81 
 
 Export Manager Should 
 Control Export Credits 
 
 "The manager of the export department should also have 
 
 control of export credits, or the credit manager should comply 
 with the arrangements made by the export man, for the reason 
 that it frequently occurs that perfectly responsible foreign 
 firms ask for extension of time on drafts, not due to their in- 
 ability to pay, but the exchange market may have changed 
 violently for various reasons and by waiting a few days or 
 weeks the drafts could be met with considerable saving to the 
 foreign buyer. The export man, not being busy with the 
 details, can.keep in constant touch with the fluctuation of for- 
 eign exchange, political and mercantile conditions of the ter- 
 ritories, and can better judge the necessity for the request, 
 much better than the domestic credit man, who, of necessity, 
 is guided by set rules and justified by very different condi- 
 tions. Liberalty in handling credits is one of the best means 
 of creating better feeling for the firm and greater assurance 
 of pleasant business relations, which, in the last analysis, is 
 the best business developer. 
 
 Duties of Correspondent ^ 
 Salesmam 
 
 '*We will dissect one correspondent salesman's territory. 
 This man, first, should correspond in the languages of his 
 territory and the export manager should hand him the corre- 
 spondence of that territory. He, in turn, after looking over 
 the orders, will see the credit man to find out, first, whether 
 the party has any credit on the books ; second, whether he has 
 a letter of credit ; third, whether there is a record that all of 
 the drafts which have been drawn against him have been 
 accepted, unless the credit has been issued without "recourse"; 
 make sure that if the date of maturity has arrived the drafts 
 have been paid, and if this information is not available, calcu- 
 late the time for same, and if such time has expired ; hold the 
 order for further information, which may be obtained by com- 
 municating with the bank through which the drafts were 
 sent, or by telegraphing direct to the connecting bank at the 
 point where the customer is located. He will then, if every- 
 thing is in order, pass the order to the order derk who orders 
 
n EXPORTING TO THE WORLD 
 
 the goods from the factory (an entirely different process ixom 
 the export commission merchant, who would in such case 
 hand the order to the purchasing agent to buy the goods). 
 When this letter reaches the order department, sufficient 
 copies of the shipping department ticket should be made so 
 that the copy may go to each of the various plants or factories 
 where the goods called for on the order may be jmpared; the 
 object being that each plant sends the part of the goods which 
 they are aUe to supply out of the order. Eadi ticket should 
 have tiic same order number, and when they reach the stock 
 room they would be specifically marked for that one order 
 and in this way get the goods together much sooner than if 
 the stock room clerk had to combine different order numbeiB. 
 
 Correspondent Shonld 
 
 Follow Up His Orders 
 
 "Having passed the order department and reached the ship- 
 ping department^ the correspondent above referred to should 
 see to it by regular visits to the shipping room that his orders 
 move regularly to prevent packers from dispatching the 
 smaller and easier orders in preference to heavy and more 
 complicated orders ; to see that stencils, binding and weights, 
 gross, net and legal, conform to the requirements of the tariff 
 of tbe country of destination, and also to be able to get an idea 
 as to the size and weight of the shipments in order to write to 
 his freight broker to engage space and secure shipping permit 
 for the transportation of the merchandise to destination. 
 
 How Order Proceeds 
 Through Deparime§ii 
 
 •"When the goods are dispatched and billed, the invoices, 
 which should be made in Spanish for Latin- American coun- 
 tries and show the net, l^;al and gross weights, as well as 
 the measurement <^ each case, and, in addition, the net weight 
 of each dass of item packed in such case, should then be 
 handed froiq the billing department to the credit department 
 clerk in the export department, and the railroad freight or 
 express receipt is also to be handed to the credit clerk, who 
 will proceed, first, to insure in the open market or in the policy 
 of the customer, or in shipper's own open policy, covering ^ 
 
 I 
 
 ORGANIZATION OF EXPORT DEPARTMENT 33 
 
 various risks for breakage, pilferage, and general damage, as 
 required by the customer or as the class of goods necessitates, 
 bearing in mind that insurance should cover, not only the 
 amount of invoice, but local and ocean freights, as well as all 
 shipping charges; an addition of 10 per cent generally would 
 cover; then follow instructions and forward the necessary 
 papers and invoices to the freight forwarder, accompanied by 
 the declaration which the customer supplies for the purpose 
 of consular invoice at the seaport and a certain number of 
 copies to the customer abroad, keeping the required number 
 to supply the bank when drawing for the value. This clerk 
 should be the custodian of the letters of credit, as he will in 
 some cases have to attach these to the invoices and drafts to 
 be sent to the bank at the seaport to negotiate when the freight 
 broker delivers the endorsed steamship bill of lading to the 
 bank. This is a matter which the manufacturers in the interior^ 
 points of the United States have to be very partictilar about 
 as the consulates of the various foreign countries require that 
 the man who signs the consular invoices be duly authorized 
 by the manufacturer, and the freight broker, to whom such 
 authority should be extended, requires thatJie should be given 
 the exact phraseology that the customer requires used in the 
 consular invoice for his goods. The clerk doing this work 
 must be trained to use great care as this matter demands very 
 careful attention because in most foreign countries, particu- 
 larly the Latin-American countries, a customer in any one 
 town is apt to wish his goods classified under a certain para-^ 
 graph of the tariff and a customer in another town may re- 
 quire the same goods classified under a separate paragraph of . 
 the same tariff, and any deviation would be apt to cause heavy 
 fines at the Customs and the manufacturer would face a heavy 
 payment in addition to disturbing pleasant relations, and inas- 
 much as the manufacturer in this country has no safe guide 
 as to the interpretation of the tariff of each foreign country, 
 he must of necessity comply with the wishes of his customers 
 or else not accept the business. 
 
 '•The order clerk must have a good schooling and at least a 
 course in a business college ; be familiar with the metric sys- 
 tem so that carelessly written orders, as are not infrequently 
 received, will be interpreted correctly ; a man with good judg- 
 ment to interpret an order and who would know when not to 
 make any substitution ; who should be able to decode a cable 
 
84 EXPORTING TO THE WORLD 
 
 message, and who should be somewhat familiar with foreign 
 
 languages in order to save the necessity of having each and 
 every order translated before handing it to the order clerk. 
 
 Duties of the 
 Pockmg Defwriwmii 
 
 **The packing department should be provided with scales 
 that show automatically both pounds and kilograms ; the ordi- 
 nary scales showing pounds only, which require the packer to 
 coni^ pounds into kilos, are the cause of very frequent 
 takes, which means excessive payment of duties, if over, and 
 heavy fines, if under the true weights. The best man in the 
 domestic packing room ,and by this I mean the most careful 
 and not the man who turns out the most work, should be the 
 one selected to do foreign packing, as very frequently eaeh 
 item, before being placed in the packing case, must be weighed 
 for legal and net weights and he must make a careful record 
 of the contents ol each case, as when the invoice is made by 
 individual cases, each numbered in rotation in series with 
 previous shipments to a certain party, it saves the need of the 
 cases being opened by the customs inspectors at the point of 
 entry in the country of destination, for when the goods pass 
 tiie customs they are frequently shipped to interior points by 
 crude means and the well packed case which has not been dis- 
 turbed will stand the extra travel and arrive in better condition 
 with less chance of pilferage than if it had been repacked care- 
 lessly by laborers at the custom warehouse. 
 
 Mamtfaeimnr Should Be 
 Mmttter of Associaikm 
 
 "The firm doing export business should become a member 
 of at least one of the associations which are in such a worthy 
 manner assisting the manufacturers in this country to devek^ 
 expcMTt busmess, for the reason that in an emergency when 
 export manager in a small town wishes to compare not^s he 
 can write to the association for information and also because 
 of the fact that such associations generally have periodicals 
 in which they publish inquiries from foreign buyers and keep 
 die caport manager in touch with the l^;i^tion, changes In 
 
 ORGANIZATION OF EXPORT DEPARTMENT 35 
 
 shipping and tariffs, political disturbances in foreign countries, 
 etc., which will enable him to better handle his position. 
 
 "We note that of late governmental departments are making 
 eliorts to teach foreign trade as well as foreign languages in 
 urban universities as well as in business colleges and it is to 
 be hoped that to enable our youth better to ht themselves to 
 assist in the devek>pment of foreign trade, after they have 
 graduated from high school, they should learn export tech- 
 nique, as follows: 
 
 To correspond in Spanish and French. 
 To study the history of Latin and Oriental countries. 
 To practice patience in dealing with people of other 
 races or other tendencies, without presuming to teach 
 them our ways. 
 
 To be accurate and careful, considering that small mis- 
 takes, which could be rectified at home by the following 
 mail, would cause the expense of cabling or heavy fines 
 abroad. 
 
 To obtain a very good knowledge of world geography 
 and habits of the people of other countries. 
 To study the technique of marine insurance. 
 
 To study the details of foreign exchange and foreign 
 
 moneys. 
 
 "With such experience we should in a few years create a 
 body of capable export merchants, placing our nation on a par 
 with European merchants 'Who have been developing their 
 youth in such manner for many years." 
 
I 
 
 Chafhk V 
 
 THE TRAVELING SALESMAN OVERSEAS 
 Manufactuber judged by man in the field— Necbssaky 
 
 QUALIFICATIONS OF TRAVELING SALESMAN ABBOAD>-— PREPARATIONS 
 
 NECESSARY FOR TRIP ABROAD — EXPENSES OF TRAVELING SALES- 
 MAN — ^Licenses required in foreign countries — The combi- 
 nation TRAVELING SALESMAN 
 
 } The success or failure of a tnantifacturer in developing him- 
 
 ness in a given foreign market by means of a personal represen- 
 I tative on the field will depend just ius much upon the qualifica- 
 • tions of the person he may send overseas as his minister 
 plenipotentiary as on the quality or utility or price of his wares. 
 Doubtless the manufacturer who decides on the policy of selling 
 abroad by using co inmercial travelers^has on his_jaiad thie plan, 
 of deyclopingja_p^manent business. It is the fiiie8se» therefore, 
 with which he mak^his miroddctloir that is going to determiiie 
 ill a measure the success he may expect to receive in futute 
 dealings with foreign customers. It can readily be seen that 
 the traveling salesman who starts on his journey that will take 
 him to di£Ferent countries, different climes, and hring him in 
 contact with peoples of different races, customs, hahits and ways 
 •of thinking is charged with a responsible function. His job is 
 *o blaze a trail, to gain an entree and to inspire confidence in 
 the strange manufacturer thousands of miles away who desires 
 to sell articles to a skeptical buying puUic Most likely it will ' 
 be the £rst unpression made that will decide for iSbe native^ 
 buyers. The impression the traveling salesman creates is the' 
 impression the manufacturer at home creates. 
 
 Manufacturer Judged by 
 Refreuntalwe m FiM 
 
 The manufacturer is judged by the man he sends overseas to 
 develop his business. The house stands to win or lose in the 
 
 86 
 
 THE TRAVELING SALESMAN OVERSEAS 8T 
 
 ratio of the ability or inability of the travdii^f salesman. If he 
 is stupid or incompetent he puts the house in a bad light. The 
 nation as a whole is included in the general criticism. He fur- 
 nishes our fordgn competitors with additional material for en- 
 gaging in verbal essays on the "incompetency of the Yankees." 
 
 An ignorant, ill-mannered, narrow-minded, dishonest or in- 
 competent commercial traveler in the foreign field is worse than 
 no salesman at alL With such disqualifications, he is not 
 only incapable of selling goods, but capable of ^ling tho 
 market for the finest typewriter ever made or the finest auto- 
 mobile or piano ever turned out from an American factory. The 
 author recalls the eaq)ertence in Buenos Aires of an electrical 
 appliance salesman who fdt that his time was more valuable 
 than that of some of his "prospects." In his efforts to prove 
 the accuracy of this theory he attempted to rush matters with a 
 certain Argentine gentleman who was in the market for a con- 
 siderable quantity of ctectrical parts for a business block of 
 which he was proprietor- The order involved a big sum of 
 money and was worth going after. The salesman failed to take 
 into account, however, the fact that the temperament as possessed 
 by a native merchant in Argentina is very much different from 
 that accredited to a business man in Lincoln, Nebraska, or Cadil- 
 lac, Michigan. The fonner likes to take his time ; the latter has 
 placards on the walls around his desk reading, "Don't ^ P^t off 
 until tomorrow 'what you can do today,** or **Do it now," etc 
 
 As the salesman soon learned, the native refused to be rubied 
 into the transaction, and later refused to have further dealings 
 with him on the matter. A few weeks later another salesman 
 carrying a similar line arrived from "The States." Through 
 friends ami business connectious he learned of the native mer- 
 chant s necessities. In toe he was property introduced. In con- 
 versations with the prospect he seemed to show that he knew 
 quite a little about the country, about its laws, business condi- 
 tions, future and other matters. This pleased the native. By 
 appointment they met often for hmcheon. Later the American 
 was invited to the home, where he met aU the members of the 
 family. While on the occasion of these meetings business was 
 discussed, yet it did not have the right of way over other topics 
 of common interest to buyer and seller. A few days before 
 sailing for the United States— a month after his arrival in the 
 dty— the satesman meived a vis t at the hotel from the merchant* 
 
38 EXPORTING TO THE WORLD 
 
 who asloed to see his catalogue. Before he kit the room he had 
 sigfned an order lor several thousand dollars' worth ol electrical 
 
 fixtures. 
 
 Traveling Representative 
 Must Have Broad Vidan 
 
 The American manufacturer who contemplates sending a rep- 
 resentative out on the foreign road on an initial tour of investi- 
 gation should have a ckar conception of the obligations which 
 he imposes upon him. He is not only a seller ol goods, hut a 
 judge of human nature. He is not only a carrier of samples, but 
 the interpreter of the house's mission in the foreign field. He 
 must be capable ol taking the initiative. He must exercise his 
 own ingenuity. He must be enterprising. Obviously such tre- 
 mendous responsibilities assumed thousands of miles from "the 
 base of supplies'* cannot be imposed upon irresponsible and 
 incompetent agents. In making his selection the manufacturer 
 must watch Ms step. N^ligence in the judicious coosideraftion 
 of the "personality dement" may lead to disaster. The shoals 
 of American foreign trade are strewn with the wreckage of 
 ventures where too much attention was paid to promises and 
 dreams and too little to proper qualifications and personality. 
 'Tht salesman must have a broad vision. He must have the 
 international viewpoint. He must be capable of meeting people 
 ol different races, civilizations, traditions and manners. He must 
 maintain a sympathetic attitude. He must be capable ol judging 
 conditions in loreign countries as they are and not as they should 
 be. He must not be tempted to criticise things because they do 
 not measiure up to the standards he is accustomed to at home. 
 He must rememi)er that the duel lunction ol his personal mission 
 is to sell goods where thqr may help to raise the standard. He 
 must know how to obtain essential information, such as credits, 
 and to judge the trustworthiness of a customer without causing 
 embarrassment. He must be able to analyze conditions as to 
 transportation and distribution. He must judge of the buying 
 power of the community in which his firm desires to do business. 
 He must fcimiliarite himself witii the prevailing methods ol 
 financing shipments so that he may be able to quote prices to 
 his customers with a certain de^ee of intelligence. 
 
 THE TRAVELING SALESMAN OVERSEAS 29 
 
 Knowledge of Language 
 
 Is Not the Final Test 
 
 The nationwide movement for the study of foreign languages 
 deserves commendation. The American people should not only 
 be able to read, write, think and speak in their own language, 
 but they should also have a general knowledge of some impor- 
 tant foreign language like French, Spanish, Italian or German. 
 To know how to express one's self in a foreign tongue, especially 
 in view of the desire of Americans to extend their summer trips 
 to lands across the seas, is quite an advantage. This desire to 
 master a foreign tongue should be encouraged. But never lor a 
 moment should the impression be permitted to run wild that for 
 strictly business reasons the knowledge of one or two foreign 
 languages is absolutely necessary. It is not. For over fifty years 
 the American nation has been engaged in a lucrative loreign 
 trade which has been growing and growing into large dimensions. 
 Yet no one can justly daim tiiat the American business men 
 are experts in foreign languages. As a matter of fact it is neg- 
 lect of this detail in connection with fofeign trade expansion 
 that has loosed a number of critics upon an innocent flock ol 
 embryo exporters, charging them with expresnoos ol warning 
 that they must be able to speak the tongue ol the loreigner hi 
 order to get his business. 
 
 Salesman's Ability to 
 Sell Goods Comes First 
 
 II the manufacturer relies solely on the salesman's ability to 
 converse in any language from Russian to Chinese and not on 
 his competency as a salesman of wares he is going to suffer by 
 it Selling ability, couf^ed, ol course, with honesty, comes first 
 The case ol a manulacturer who was induced to lumish a sub- 
 stantial expense account and an adequate salary to a young 
 Chilean who was to represent him in the country of his birth 
 is recalled here. The young man, who knew nothing about busi- 
 ness practice, but very much about his own country and people, 
 ''sold himsell" to a manulacturer on the strength ol this experi- 
 ence at home. Alter several months ol watchlul waiting the 
 manufacturer learned to his sorrow that his employe might have 
 better served him in the capacity of a translator— lor he waa a 
 
40 EXPORTING TO THE WORLD 
 
 graduate of a college of Liberal Arts, and not of a college of 
 business experience. 
 
 "Can you sell goods?" This is the first question that should 
 he fired at the applicant "I am, of course, deeply interested in 
 your ability to speak Spanish or French, but my chief concern 
 lies in your ability to convince the foreign buyer that he should 
 give my article a trial." This should represent the manufac- 
 turer's second step in considering the application. Then, having 
 convinced himself by actual proof or record that the man before 
 him is capable of selling his merchandise, the manufacturer must 
 feel satisfied in his own mind after proper inspection that there 
 is an mr of good breeding and culture in the applicant that 
 cannot be overloc^ed. Needless to say, neatness in perscMul 
 appearance is a vital detail that very few successful salesmen, 
 whether at home or abroad; seldom overlook. 
 
 Sig^seemg Salesmen 
 Shmdd Be Avoided 
 
 t 
 
 A curiosity to see the world often inspires young men to enter 
 the manufacturer's office looking for a traveling salesman's posi- 
 tion in foreign countries. The manufacturer who is looking for 
 permanent cmmections abroad should be on his guard against 
 such applicants. A tour of the world should not be made at tiie 
 expense of the manufacturer unless that tour is capable of coat' 
 iiianding adequate results. Salesmanship cannot be combined 
 with pleasure. To make a tour of certain countries profitable for 
 employer and employe alike the salesman should make it his 
 vocation and not his avocation. The story is told of a manufac- 
 turer who once permitted a young man to book orders for him 
 in Australia. Ignorant of the methods of quoting prices to over- 
 seas customers, the salesman was taking orders that were im- 
 possible of fulfillment. The manufacturer at home was forced 
 to cancel them by cable in order to avoid financial loss. It took 
 much correspondence and many days in which proper explana- 
 tions were foially made. 
 
 Other Qualifications, 
 Honesty, Responsibility 
 
 That the manufacturer should carefully eiamtne the ^>plt- 
 
 THE TRAVELING SALESMAN OVERSEAS 41 
 
 cant's qualifications as to honesty and responsibility goes without 
 saying. Honesty i s f^^ Hasifi ^f t^iicin^Qc rp\^^\nn^. A dishonest 
 and irresponsible salesman can easily destroy a manufacturer's 
 business in a given market. There is no need of emphasizing 
 the necessity of guarding against such representatives. The ex- 
 perienced manufacturer can protect himself. It is the manu- 
 facturer who is jtist branching into the foreign field and who is 
 almost daily coming in contact with hundreds of men with hun- 
 dreds of ideas of developing the fordgn field who must be 
 careful in the choosing. 
 
 Courage and s elf-confidence foUow honesty. The salesman 
 should have the ability to hold his ground even in the face of 
 adversity. In spite of discouraging results at the start he should 
 have the abiUty to "stick to it.'* Of necessity he must put up 
 with many inconveniences while on the road, and quite often his 
 patience will be tried, but if he can survive these trials, in the 
 end the harvest should be big. 
 
 Salesman Shonld Prepare 
 
 Himself Well for Trip 
 
 There is consideraWe preliminary work ahead for the traveling 
 
 salesman who is planning his first trip to foreign countries where 
 the language and customs are different, where he will find him- 
 self involved with different laws and regulations, and where prob- 
 lems of marketing and transportation must be successfully solved 
 before any measure of success in a selling campaign may be 
 attained. He should begin at the factory. Here he should study 
 the various products made, of what they are made and how 
 they are made. A foreign customer's rapid fire questions involv- 
 ing answers of a technical character may prove embarrassing to 
 tlie salesman who is not well posted on his goods. While he is 
 cqttipping himself with a knowledge of the production end of 
 the business he should also be giving some time to the study of 
 the countries through which he is to travel. He should know 
 something about market conditions; he should know something 
 about the climate, geography, language, customs, history, trans- 
 portation facilities and regulations of each country. He should 
 be well read. 
 
I 
 
 48 EXPORTING TO THE WORLD 
 
 Study of Method of 
 Travel Is Essential 
 
 In planning his trip the salesman should prepare an itinerary 
 so that he may have an approximate idea of the time his journey 
 will require and the season in which he is to arrive in a certain 
 country. His itinerary should not be inmdad, however, as tlie 
 change in the date of a steamer sailing at one point may throw 
 his schedule completely out of gear. The steamship companies 
 are the proper sources for information as to routes, sailing dates 
 and distances between ports. In in-eparing his tour the salesman 
 most remember that the entire world does not enjoy the same 
 seasons at tiie same time. When it is summer in the United 
 States it is winter south of the Equator. The salesman who is 
 planning to reach a certain market at the best buying season of 
 the year should be very careful that his schedule does not take 
 him to the market when his prot^ecttve customers are enjoying 
 tliemselves at the seashore. 
 
 Documents Salesman 
 Slwidd Carry Along 
 
 The salesman shotdd not leave the OQHtaST without proper 
 credentials indicating his authority. This is very important, as 
 
 i> is necessary to show some proof of power to transact business 
 in certain countries. In Denmark, for instance, the agent must 
 produce either an attest from his home government c^&dals giv- 
 ii^ his name and that of the firm which he represents, or a power 
 of attorney issued by his firm and certified to by some notary public 
 as well as by the Danish consul. If such document is not pro- 
 duced within a certain time the salesman will be subject to a fine. 
 The Danish authorities demand the following form: 
 
 I, , one of the directors of the Joint Stock Com- 
 pany or partner of the firm 
 
 (New Yofk), declare hereby that Mr. is the 
 
 company's traveling representative in Denmark. 
 
 Countersigned . New York, , 1919. 
 
 Date 
 
 Police Superintendent 
 
 While this document is not absolutely necessary in every coun' 
 
 THE TRAVEUNG SALESMAN OVERSEAS 43 
 
 try visited, nevertheless good business judgment dictates that it 
 or something similar shouTJTeln the possession of every sales- 
 i^SH w^o lsl ^oI^mto foreign countries. A certificate fro m^the 
 Fresid ent_of Jh<> Ch^nber of Commc ;rrft, f"«» 
 large organization is valuable to carry along. Letters from con- 
 sular agents or other government officials will help where proper 
 introductions to municipal or state authorities in foreign coun- 
 tries are necessary before they are approached on business mat- 
 ters. L etters of introdiKti gn are not necessary unless they are 
 writteiTto intimate friends or to persons with whom the writers 
 of these letters have been in close relations through correspond- 
 ence. The manufacturer's banker wiU provide the representative 
 with letters of introduction to the managers of the branches in 
 the different countries or to c orresponden ts where thw are no 
 branches. These letters should not be neglected. They may 
 help the salesman in obtaining ^valuable information. In some 
 countries bankers refuse to give travelers any information unless 
 they produce the necessary lett ers of jiUXLQducM"' This is usually 
 the rule in certa ^Bntish colonies. Passpo'rts should be carried 
 along. They are very handy instrumoits when the unes^ected 
 happens in a foreign country. Properly viseed, they should form 
 one of the list of valuable documents in the salesman's belong- 
 ings. The passport bureau of the State Department should be 
 consulted in connection with information regarding passports. 
 
 Hon- Salesman Obtains 
 His Futuis on the Road 
 
 The banker's letter of credit is, perhaps, the most satisfactory 
 instrument in the salesman's possession for obtaining funds alqng 
 the various points on his journey. The banker's letter of credit 
 has some advantages over other instruments aimed to achieve the 
 same end. In the first place, it enables the manufacturer to 
 finance the salesman's trip without actually drawing the entire 
 amount from the bank at once. If the face value of the letter 
 of credit represents $5,000 and the salesman draws $1,000 at 
 some point in Europe the bank merely charges the manufacturer 
 an equivalent amount against his balance. Banks and express 
 companies are accustomed, also, to issue "traveler's checks" for 
 the convenience of travelers. These ''checks" command a higher 
 rale of interest than the letter of credit, however, and must 
 
41 EXPORTING TO THE WORLD 
 
 be purchased outright, thus compelhng the manufacturer to draw 
 out a lump sum equivalent to the entire expense involved in the 
 trip. In connection with this topic it is proper at this time to 
 call to the attention of the salesman the necessity of knowing 
 something about foreign exchange. Total ignorance of this may 
 cause him considerable financial loss as well as to render him 
 incapable of discussing problems of international finance with 
 his customers^ 
 
 Approximate Expenses 
 of Traveling Salesnum 
 
 Tne expenses ot a traveling salesman depend on the nature of 
 
 his mission. If he is to visit the regular trade and confine himself 
 to very little entertaining it is possible that his expenses will be 
 from $10 to $20 a day, including steamer* and railroad fares and 
 hotel expenses. If, however, he has been ei^;aged to interview 
 some of the business men occupying hig^ positions in foreign 
 countries it will mean social life and entertaining. This comes 
 high. If he carries many samples his expenses will be much 
 higher than if he should carry only a few. 
 
 License Fees and 
 
 Payment of Duty on Samples 
 
 In many countries of the world license fees are required from 
 traveling salesmen. Also a duty is imposed on the samples car- 
 ried. While it is impossible to make a definite statement regard- 
 ing the fee and duty requirements in some European countries, 
 it may be said for the information of the traveling salesman that 
 in most Latin-American countries he will be compelled to ^y 
 a nmninal license fee, sometunes a very high one, as well as a 
 duty on the samples he carries akmg with him. As a general rule, 
 howev^, samples without commercial value are usually admitted 
 free of duty without special formalities, while other samples are 
 admitted under bond or upon the deposit of an amount sufiicient 
 to pay the duty in case of failure to re-eacport them within a 
 certain time hiait. 
 
 License Fees and DuHes an 
 San^s m VoHous Connhies 
 
 Owing to changing conditions in various countries it is difficult 
 
 THE TRAVELING SALESMAN OVERSEAS 45 
 
 to obtain definite data on license fees and duties on samples. 
 However, a short digest of tlie requirements in some countries 
 as collected by the Government Bureau of Foreign and Domestic 
 Commerce wiU serve as a basis from which a start may be made 
 to gather the latest possible information on these matters prior 
 to starting out to foreign fiields. In the countries listed here the 
 following regulations prevail : 
 
 Belgium— Commercial travelers exempt from payment of 
 license. Samples deprived of their commetdal value admitted 
 free, otherwise subject to same customs treatment as goods they 
 represent. 
 
 Denmark— Commercial travelers must have power of attorney 
 in order to obtain license, which is valid for one year. Samples 
 subject to duty, but if re-exported within four months and proof 
 furnished as to their identity, duty b returned. 
 
 Iceland— Foreign commercial travelers must take out license 
 in their own names. License fee is about $53.60 if traveler repre- 
 sents but firm and about $13.40 for each additional firm. 
 License good for one year from date* 
 
 France— Commcrdal travders may operate free. It is advisa- 
 ble, however, that they produce documents showing that they 
 are commercial travelers and not brokers. Brokers are subject 
 to tax. Samples admitted free on condition of being re-exported 
 within one year or placed within bonded warehouse. 
 
 Greece— N o Hcense fees imposed on commercial travelers. 
 Samples without commercial value admitted free, others charged 
 regular duties under Greek customs tariff. 
 
 Italy — No license restrictions. Samples of no commercial value 
 admitted free, while those subject to duty admitted temporarily 
 under dq[K>sit or bond to be refunded on re-exportation within 
 one year. 
 
 Netherlands — Only direct tax imposed on commercial travelers 
 is on professional income, provided they are not domiciled in the 
 country. Samples of no value admitted without duty. Samples 
 of value granted temporary exemption. 
 
 Norway — ^Trading license required for commercial travelers, 
 which are good for thirty days. Samples not objects of trade 
 admitted free of duty. 
 
 Portugal — ^Any foreigner remaining in Portugal over period of 
 seven days must obtain from his consulate ''residence certificate," 
 whidi must be endorsed 1^ police authorities. Samples, excqvt 
 
40 
 
 EXPORTING TO THE WORLD 
 
 mamilactttred tobacco, free of duty provided duty leviable does 
 not exceed 30 cents. 
 
 Spain — Commercial travelers showing proof of employment in 
 that capacity not subject to license fees. Samples without com- 
 mercial value admitted free of duty. 
 
 Swcdeii--Cofnniercial travelers most obtain license* which is 
 good for thirty days. Additional fee charged for every fifteen 
 days after first thirty days. Samples of no commercial value not 
 subject to duty, others subject to duty which is recoverable on re- 
 esqKMtatiofi. 
 
 Switzerland — ^No license fee required. All oommercial travel- 
 ers must have certificate of authority from proper authorities of 
 
 their country showing that the house they represent is entitled 
 to do business in the state in which it is situated. All commercial 
 travelers must obtain permit Samples of no market value ad- 
 mitted free. 
 
 United Kingdom— No permit or ficense required to enable 
 commercial travelers to do business in the United Kingdom. 
 
 Articles liable to duty on importation into United Kingdom serv- 
 ing as samples introduced by commercial travelers from the 
 United States and other countries having special treaties with 
 Great Britain admitted free of duty subject to security or bond. 
 
 Argentina— Commercial travelers required to obtain license in 
 city of Buenos Aires when they carry samples; and separate 
 license for every province and territory in which traveler desires 
 to operate. In Federal District he is not required to take out 
 ficense if he sells from catalogue and without samples. Fees 
 payable for tiiis license in iht various provinces differ in amount 
 
 There is a way of avoiding payment of these licenses, how- 
 ever. American firms, as well as European houses, usually assign 
 their travelers to some large importing house established in 
 Buenos Aires, under whose auspices they work, thereby avoiding 
 payment of any license fee. Even when the traveler goes into 
 die provinces he need not pay additional licenses, because these 
 importing houses usually maintain agencies or branches in the 
 principal cities to which the traveling salesman is assiq-ned. Pay- 
 ment of license fees in each of these provinces would involve a 
 large sum of money. Samples having no commercial value are 
 admitted free. Others may be broi^t under bond. 
 
 Bolivia — ^Each city imposes local tax, which is compulsory. 
 Collection of taxes on commercial travelers rests with conces- 
 
 THE TRAVEUNG SALESMAN OVERSEAS 47 
 
 ^onaires, from whom travelers may obtain a reduction from the 
 rate fixed by municipal ordinance. Samples having no commer- 
 cial value may be imported duty free, while others may be im- 
 ported under bond. 
 
 Brazil— No license for commercial travelers required by the 
 Federal Government, although there is a tax in some States. 
 Samples admitted free under bond only when goods are accom- 
 panied by consular invoice from the country of origin and a 
 memorandum setting forth in detail the articles contained in the 
 various packages. 
 
 Chile— No licenses are required. Salable samples may be im- 
 ported for period of six months upon security furnished by local 
 business house to cover full amount of duty to which samples 
 would be subject as merchandise or upon cash deposit of equal 
 amount by importer. 
 
 Colombia — No license required for commercial travelers. Some 
 dties have mtmicipal tax and traveler must secure Ucense before 
 exhibiting samples. Constdar invoice in Spanish covering sam- 
 ples and certified by G>lombian consul at port of embarication 
 necessary. Samples may be imported temporarily upon payment 
 of full duty, with refund of 75 per cent, of duty upon re-exporta- 
 tion. Samples of no commercial value admitted free. 
 
 Costa Rica— Commercial traveler is required to obtain from 
 municipal treasurer permit to do buriness in the district, which 
 is only valid within the municipal limits. License fees vary in 
 each district. Samples without commercial value dutiable at 
 $1.05 per hundred pounds. Samples of value intended to be re- 
 exported subject to duty, which will be returnable upon certain 
 conditicms. 
 
 Cuba — ^No license required for commercial travelers. All sam- 
 ples of dutiable merchandise pay full duty upon entry, but if re- 
 exportation is effected within ninety days and value is not over 
 $500, 75 per cent, of the duty will be refunded. 
 
 Dominican Rq;mblic — Commercial travelers must take out an- 
 nual license, which costs $10. Unsalable samples admitted free. 
 Samples not exceeding $2,000 in value may be admitted free 
 under bond. 
 
 Ecuador — Commercial travelers require license from inspector 
 of customs before baggage and samples will be permitted to enter 
 country. Samites of value admitted under bond. 
 
 Guatemala — ^No Hcenses are required for commercial traveler. 
 
48 EXPORTING TO THE WORLD 
 
 All samples, except those withont commerdal yalue on mbkh 
 
 duty does not exceed 1 peso, subject to regular duties unless 
 rendered unsalable. If samples are to be re-exported no duty is 
 charged upon providing bond. 
 
 Haiti---G»ttniercial traveleni require permit from the Deport- 
 ment of the Interior, to be obtained before the travdcr kaves Urn 
 city for another part of the country. Samples of no commercia] 
 value admitted free of duty. 
 
 Honduras — Commercial travelers are subject to municipal 
 license fees onfy. Samples destined to be re-ea^rted admitted 
 on deposit equal to amount of duty kviahk. 
 
 ^Mexico— Law s governing commercial travelers unobtunaUe 
 owing to abnormal political conditions. Samples of commercial 
 value dutiable, but admitted under bond subject to re-exportation. 
 
 Nicaragua— Commercial travders not subject to license fees. 
 Bond required on samples brous^t in and subject to fe-expQrt»- 
 tkm. 
 
 Panama — All commercial travelers must take out municipal 
 license in district in which they are to transact business. Samples 
 of commercial value subject to re-exportation admitted under 
 
 a 
 
 INJUU* 
 
 Paraguay — Commercial travders must take out municipal 
 license. Samples of commercial value admitted upon payment 
 of duty, which is refunded upon re-exportation. 
 
 Peru — Commercial travelers not required to take out govern* 
 ment license, but are subject to nnmicipal taxes in interior towns. 
 Samples of any kind not prohibited by customs kws may be 
 imported free for limited time under certain conditions. 
 
 Salvador — The only official license required of a commercial 
 traveler is issued by the local municipalities. All samples im- 
 ported free under bond, which is canceled upon re-exportation. 
 
 Uruguay--Comnierdal travelers required to take out a license 
 which is valid for one year. Samples of any kind may be tem- 
 porarily imported free of duty by giving bond to guarantee re- 
 exportation. 
 
 Venezuela — ^No licenses are required from commercial travd- 
 ers. Sami^ of commercial value admitted free aubject to bond 
 to guarantee their re-cxpottation. 
 
 Australia — There are no laws or regulations affecting com- 
 mercial travelers. Dutiable samples admitted upon depositing 
 duty with customs, which will be refunded upon re-exportation. 
 
 THE TRAVELOG SALESMAN OVERSEAS 49 
 
 New Zealand— Warrant free of charge is issued to commer- 
 cial travelers, but those who seek to avoid it are subject to fine. 
 Samples dutiable, but when re-exported, refund is made. 
 
 It will be aeen from this resume that the commercial traveler 
 is subjected to different license fees in aU parts of the world. In 
 
 some places these fees are rather high and it is possible, as has 
 been already suggested in connection with the Argentine require- 
 ments, to avoid them in some countries by making connections 
 with establishd importers. It is an easy matter to do this when 
 the salesman is emi^yed by an American concern having 
 branches or agencies in foreign countries ; but where the sales- 
 man or the house may be unknown a proper letter of introduc- 
 tion may effect some sort of connection in which the high license 
 fee may ethically be avoided. 
 
 IThc salesman will also save himself considerable trouble by 
 havmg with hhn several coj^es of an invmce of his samples so 
 that the customs officials may expedite the examinatkm of his 
 baggage. The invoice should include the full description of the 
 articles, gross and net weights in pounds and kilos, and the 
 values at which they would be sold to the trade. These invoices 
 should be viseed by the consuls of the countries to be visited. 
 
 The Combination Traveling 
 SaUman in Export Trade 
 
 As die United States is extendmg its trade moire and more 
 every day new problems are being constantly presented to the 
 
 manufacturer who has joined the growing list of exporters. One 
 of these problems involves economy in developing the field by 
 personal representation. The manufacturer who foots the entire 
 bill in sending a salesman to certain foreign countries will kam 
 that it is ratiier expensive. There is a way to avdd this heavy 
 expense, however, and at the same time obtain proper representa- 
 tion in the foreign field. This is by using the services of a sales- 
 man who undertakes to carry one or several lines on a business 
 tour of several countries. This kind of commercial traveler is 
 commonly known as a combination traveling salesman. 
 
 The combination travding salesman operates along the follow- 
 ing lines: He decides on a certain territory to be covered; he 
 studies the possibilities of that territory for the sale of certain 
 articles the representation of which he will endeavor to obtain 
 
80 
 
 EXPORTING TO THE WORLD 
 
 after he is satisfied that there is a market for them. He then 
 places his proposition before the manufacturers of these articles, 
 offering to solicit the foreign trade upon the payment of a def- 
 inite proportion of his entire expenses on the trip. Each manu- 
 facturer in the combinati<m must contribute his proportion of 
 the expense. In some cases the combination salesman obtains a 
 commission and in others a definite sakry. It is generaUy on a 
 commission basis plus expenses, however, that the arrangem«t 
 between manufacturers and combination salesmen is completed. 
 
 Combination SalesniM 
 Must Be Qualified 
 
 Economy should not be the bait upon which the manufacturer 
 is to be drawn into a combination salesmanship proposition. The 
 combmation salesman must be as fully quahfied for foreign work 
 as the salesman who is the sole representative of a single house 
 in the United States. Unless he possesses the necessary attrib- 
 utes the saving to be gained by the combination may result in 
 loss in some other way. There b no denying the fact, however, 
 that an intelligent and competent representative should be capable 
 of splendid service to the manufacturer to whom the combma- 
 tion idea may appeal. It has been tried before and satisfactory 
 results have been obtained. In order that the manufacturer may 
 seriously amsider his proposition, however, the combination 
 salesman must prove that he not <mly has had experience as a 
 salesman, but that he has had experience in the field to be cov- 
 ered that he knows prospects and busmess conditions m the pro- 
 posed territory, and, finally, that he has a general knowledge of 
 the ku^uage in that territory. In addition to this, good judg- 
 ment as to credits and market conditions are valuable. 
 
 How Manufacturer May Be 
 
 Approached by Salesman 
 
 Personal soUdtation is the most effective method of reaching- 
 tile car of the manufacturer on a proposition such as the combi- 
 nation salesman is propoang. Letter writing is madequate. A. 
 personal talk wHh the salesman will give the manufacturer 8 
 better idea of the capabilities of the man than perhaps a hundred 
 kttm The combination salesman who resides in a large port 
 
 f THE TRAVELING SALESMAN OVERSEAS 51 
 
 like New York City has a fine opportunity of interviewing a 
 select number of manufacturers who may be interested. Even 
 then the matter of getting tc^ther a number of manufacturers 
 will not be so easy. The combination salesman's plan should be 
 something like this: (a) Select goods with which he is best 
 acquainted; (b) devetop a sales plan consistent with the territory 
 he is to cover; (c) approach most desirable manufacturers of 
 articles he has listed for his combination. The salesman shoukt 
 be careful that his combination involves only allied lines if pos- 
 sible. It will make his work much easier. 
 
 It is possible that the manufacturer himself, with a number of 
 others, may desire to form a combination on their own initiative. 
 In this case a successful comtnnation may be worked up by having 
 each manufacturer contribute his best line to the comlnnation, 
 agree on a fixed amount to be spent, and on one executive to select 
 a salesman and direct his efforts in the foreign field. The virtue 
 of such arrangement lies in centralized authority, and the ship- 
 ment of goods on one bill of lading, and, possibly, the financing on 
 one draft. The advantages of this method, however, may be lost if 
 the combination docs not work in harmony. Petty jealousies may 
 destroy its efficiency, and finally the c(Hnbination itself. 
 
 Advantages of the 
 CombmaHon Salesnum 
 
 A single house may spend $6,000 on a trip by a personal repre- 
 sentative to South America or to the Far East. Six houses 
 joining in a combination where one salesman has agreed to carry 
 the various lines of each house to either of these foreign fields 
 would contribute their proportkm of the total— say, $1,000 each. 
 
 The advantage of a combination salesman, it will be seen, lies 
 in the economy of the plan. Again, the manufacturer may have 
 a "short line" that may not justify intensive selling methods 
 abroad. The combination salesman may find it to his advantage 
 to carry this "short line/' partkularly if it is alUed to the other 
 products he already represents. An assorted line of kindred 
 products will attract more buyers than one line alone. Any one 
 of the manufacturers represented in the combination, therefore, 
 will have a better chance of obtaining a trial order than if they 
 were alone in the field. The "short line" manufacturer has as 
 good a chance as the others. 
 
8S EXPORTING TO THE WORLD 
 
 Objections to a 
 Combination Salesman 
 
 The combination salesman who cames many lines must of 
 necessity ''scatter his shot" He cannot pay too much attention to 
 one line at the expense of the others. This is more often tiie 
 case where the combmatioii salesnum represents several Imes 
 that have no rektioa to each other. A salesman handling lines 
 ranging from needles to pianos may not be as successful as one 
 who handles allied lines. The failure of many combination sales- 
 men in the foreign field has been due to the neglect of this im- 
 portant phase of the plan. In the smaller cities it is possihle to 
 sell tiie dealers almost anythii^, hot when the larger cities are 
 approached it will be necessary for the combination salesman 
 who handles unrelated wares to cover a wide buying field at the 
 expense of valuable time which could be devoted exclusively to 
 certain classes of dealers if he were handling a combinatioo of 
 kindred lines. The reason for the sdecticm of these diversifi^ 
 Mnes is because it is the salesman's own "idea.** Miaps, if left 
 to the initiative of a comlnnation of manufacturers a better selec- 
 tion may be made, and better results obtained in the foreign field. 
 
 I DISTANCES TRAVELERS SHOULD KNOW | 
 
 A Table ^awmg the disioHees from New York, NemOrleans, San 
 
 Francisco and Port Townsend to worlds principal ports and cities 
 that may ^ve a salesman atv idea of distances to be covered in* 
 
 traveling in foreign countries. 
 
 (Routes by water in nautical miles ; land routes in statute miles) 
 
 FonuGif Crm 
 
 row AND SOUm '^ew New San Fort 
 
 York. Orleans. Franciaco. Townaend. 
 
 Aden— Suez Canal 6,532 7,870 
 
 Cape of Good Hope 10,986 11^08 
 
 Suez Canal and New York 9,7^3 9^81 
 
 C of Good Hope & N. Y. 14,176 14,18i 
 
 Sues and Telniantq)ec * 9,500 10,300 
 
 Suez and Panama 10,800 11,600 
 
 Suez and Magellan Strait 15,900 16,700 
 
 Singapore U,aOO 
 
 Singi^mre & P. Towatend 14,499 Ujm, 
 
 ••••• ••••• 
 
 THE TRAVEUNG SALESMAN OVERSEAS 63 
 
 Fow AMD soum rS^ ^ 
 
 York. Orieans. Fmnciaooi. Townaend. 
 
 ^t^^^P 3,326 4^3 
 
 New York 9^069 9,067 
 
 Panama 8.264 9,039 
 
 Magellan Strait 13^671 14,446 
 
 Batavia (Java) 7,300 7,600 
 
 Panama 13,16/ 13,6e6 
 
 Suez Canal 10.182 11 59» 
 
 • • J-*-*^^ •••••• •••••• 
 
 Cape of Good Hope 11,855 12,278 
 
 Bombay— Suez Canal 8,120 9,636 
 
 Cape of Good Hope 11,250 11,848 
 
 Suez and New York 11,311 11 319 
 
 C. of Good Hope & N. Y 14^441 14^449 
 
 Suez and Panama 13^13 jg^ggy 
 
 C of G. Hope & Panama 14,500 15,270 
 
 Stfait 15^064 15,839 
 
 Singapore g,^^^ 
 
 Singapore & P. Townsend 12,771 
 
 ^ * |fw^^«r •••••• 
 
 Singapore & San Frandaco 12,971 19,262 
 
 Singapore and Panama. . . 14,837 14.236 
 Buenos Aires 5^68 6,318 
 
 Magellan Strait 
 
 New York , ,,59 
 
 BmaOm. j 648 
 
 New York.. g^g^ ---^ 
 
 Calcutta— Suez CanaL 9.830 11.230 
 
 Cape of Good Hope 12,180 12^88 
 
 Sues and New York 
 
 C. of Good Hope & N. Y. 
 
 Singapore 
 
 Direct 
 
 
 
 13,021 
 
 13,029 
 
 •••••• 
 
 •••••• 
 
 16,371 
 
 16^79 
 
 
 
 8,990 
 
 8,896 
 
 12481 
 
 11.462 
 
 14,230 
 
 13,694 
 
 
 
 3,392 
 9,603 
 
 2,764 
 10,142 
 
 
 
 •••••• 
 
 •••••• 
 
 •••••• 
 
 • 
 
 4,012 
 
 •••••• 
 
 4,769 
 
 •••••• 
 
 6^18 
 
 7,374 
 
 JilL^ ^^fi^^ 10,014 
 
 9,898- 10,676 
 
 Magellan Strait ia.ik.i <^ 
 
 10,464 11,229 
 
PORTING TO THE WORLD 
 
 PORT AND ROUTE. ^'"^ ^ 
 
 • • • • • 
 
 • ••••• 
 
 •••••• 
 
 •••••• 
 
 (eastern end of Pana- 
 ma Canal) 1,981 1,380 
 
 Canal and Panama. 4^090 
 
 Copenhagen—Direct 3,852 5,448 
 
 New Yoric 7,043 7,061 
 
 Panama 7,642 8,41/ 
 
 Magellan Strait 12,734 13,509 
 
 Guam 5/)64 ^jm 
 
 San Francisco 8,846 7»636 
 
 Fort Towniend 8,107 7^87 
 
 Hamburg 3,652 5,243 
 
 New York 6,843 6,861 
 
 Pemambuco, BrazU 3,896 3,969 
 
 New Yofk 8,887 8,895 
 
 New Orleans.; 6,451 6,948^ 
 
 PtaMwna 6,530 7,305 
 
 Magellan Strait 9,439 10,214 
 
 Port Said, Egypt 5422 6^ 
 
 New York 8^1 8,887 
 
 Ptoama 9,562 10,337 
 
 Punta Arenas (Magellan S.) 6,890 7,340 6,199 6,968 
 
 Rio de Janeiro 4,778 6,218 
 
 New York 7^ 7^ 
 
 New Orkaiis 7,700 8497 
 
 Buuuna 7,678 8,458 
 
 Magellan Strait 8,339 9,114 
 
 San Francisco 3,191 2,482 
 
 Panama 5,306 4,704 
 
 Petiognd— Difect 4,638 BJM 
 
 New Yofk 7,823 7^29 
 
 San Juan, P. R 1,428 1,539 
 
 New York 4,619 4,627 
 
 New Orleans 4,021 4,618 
 
 Panama 4,845 5,180 
 
 Magelkn Strait 12,199 18,974 
 
 Shanghai 5,550 6,290 
 
 San Francisco 8,741 8,032 
 
 Port Townsend 8,489 8,269 
 
 P^mana 10,856 lOJ^ 
 
 •••••• 
 
 • • • • • 
 
 • • • • • 
 
 THE TRAVELING SALESMAN OVERSEAS 65 
 
 fOlT Am EOUTB. oSS-. F^S^. xJ^SLd 
 
 Suez 12,360 13,760 
 
 Cape of Good Hope 14,593 14^ 
 
 Singapora 7,502 7,206 
 
 San Francisco 10,693 9,964 
 
 Port Townsend 10,405 10,185 
 
 Suez 10,170 11,560 
 
 Cape of Good Hope 12,914 12,355 
 
 HabMia 1,227 597 
 
 New Orleans 3^079 4,006 
 
 Panama 4,337 5^12 
 
 Havre 3,169 4,760 
 
 New York 6,880 6,368 
 
 Hongkong 6,086 5,886 
 
 Port Townsend 9,085 8,865 
 
 San Francisco 9,277 8,668 
 
 Ptoama 11,431 10^30 
 
 Soei 11,810 12,892 
 
 Cape of Good Hope 13,590 13,863 
 
 Magellan Strait 16,86S' 17,318 
 
 Honolulu.... 2,097 2,870 
 
 San Francisco 5,288 4,579 
 
 Port Townsend 5,569 5,849 
 
 ^•oma 6,686 6,085 
 
 MageMan Strait 13,269 13,719 
 
 Kingston, Jamaica 1,473 1,166 
 
 Kongo River, mouth of 5,688 8,580 
 
 New Orleans 9,062 9,559 
 
 New York 8,853 8,859 
 
 Liverpool 3,053 4,663 
 
 ^^^^ York 
 
 ^^"^"^a 8,088 8313 
 
 Strait 13,503 14,276 
 
 3,233 4,507 
 
 ^ York 6 424 5 433 
 
 5;"^";^ 8,218 8,993 
 
 Magellan Strait 13^688 14,458 
 
 Manikin — ^Honolulu and San 
 
 Bmiaidkio Strait g 943 ^ ^13 
 
 YolKAama g ^^^3 
 
m EXPORTING TO THE WORLD 
 
 . New New _ 8m _ lf9tt 
 
 POST AMD Yoik. 
 
 •••••• •••• 
 
 • • • • • • • 
 
 •••••• •••• 
 
 • • • 
 
 Yokohama & S. Francisco 9,480 8,771 
 Yokohama & P. Townsend 9,192 8,972 
 
 Panama • • • 11,546 10,993 
 
 Snef Ilg656 l%jm 
 
 Cape of Good Hope 13,536 18,966 
 
 Suez and New York 14,74; 14,755 
 
 C. of Good Hope & N. Y. 16.727 16.735 
 
 Magellan Strait 16,786 17^46 
 
 Marseilles 3^76 5,866 
 
 New York 7,067 7,073 
 
 Panama 8,332 9,107 
 
 Magdlaa Stiait 18,884 14,099 
 
 Melbonme 7ft^ 7*^11 
 
 San Francisco 10,231 9,522 
 
 Panama 10,028 9,427 
 
 Magdhn Stiait 18^ 13,143 
 
 Suez Canal 18,981 14,808 
 
 Cape of Good Hope 12,670 12,988 
 
 Mexico City, land and water 2,399 1,172 2,142 2,917 
 
 Mexico City, land and water 2,398 1,526 2,512 3,349 
 
 Naples 4^78 8,868 
 
 New York 7,868 7,869 
 
 Panama 4,704 5,479 
 
 Nome, Alaska 2,705 2,356 
 
 San Francisco 5,896 5,187 
 
 Port Townsend. 5,555 5,335 
 
 Fraama 8,010 7,410 
 
 MageUan Strait 15^40 16,849 
 
 Odessa, via Gibraltar 5,370 6,760 
 
 Panama (western end of 
 
 Panama Canal) 8,277 4,052 
 
 FUiama Canal and Cokin. . 8,088 1,487 
 
 Yokohama and Puuuna. . . 18,104 18,508 
 
 Yokxyhanm ft Tehauntepec 12,209 10,961 
 Tehuantepec — western end 
 
 of railroad 2^89 2,964 
 
 Eastern end of railroad. . • 2,036 818 
 
 Va4»iaiso 5,140 5,908 
 
 San Fnadaoo 8,881 7,i 
 
 ..... 
 
 ..... . . 
 
 .... . 
 
 •••••• ••• 
 
 ...... ...... 
 
 ...... ...... 
 
 ...... ...... 
 
 THE TRAVELING SALESMAN OVERSEAS 
 
 67 
 
 PORT AND £OUT£. 
 
 Panama 
 
 Magellan Strait 
 
 Vladivostok 
 
 San Fraocisoo 
 
 Port Townwsend 
 
 San Francisco and Panama 
 
 Magellan Strait 
 
 Wellington, New Zealand. . . 
 
 San Francisco 
 
 Puiama 
 
 Macidlan Strait 
 
 New 
 
 Neir 
 
 Port 
 
 4,687 
 
 8,460 
 
 Cape of Good Hope 
 
 Yokohama 
 
 Hoooltilo 
 
 San Francisco 
 
 Port Townsend 
 
 Honolulu and Panama 
 
 San Francisco and Panama 
 
 Magellan Strait 
 
 Sii^li^KMre and Suet 
 
 Cape of Good Hope 
 
 7,897 
 7,556 
 10,001 
 17,036 
 
 9,100 
 8,540 
 11,500 
 14,230 
 
 13,710 
 
 7,727 
 7,439 
 
 10,093 
 9,869 
 16,205 
 13,040 
 
 4,035 
 8,733 
 
 7,18'8 
 7^ 
 9,410 
 17,445 
 
 • ••••• 
 
 8,391 
 7,939 
 11,778 
 
 15,620 
 
 14,058 
 
 7,018 
 7,219 
 
 9,492 
 9,268 
 16,614 
 14,471 
 15^ 
 
 4,706 
 
 5,909 
 
 4,357 
 
 6,415 
 
 4,536 4,240 
 5,500 5,770 
 
CBApm VI 
 
 CORRESPONDENCE IN EXPORT TRADE 
 Essentials in expoblt correspono&ncei— Careful translators 
 
 NBCBSSARY— Same language differs in various COUNTRIEa— 
 
 Parcel post as means of developing busihess through 
 
 CORRESPONDEN CE 
 
 It has been said quite often that it is impossible to build up an 
 fOBpott trade purely on correspondence— that the logical formula 
 involves the dispatching of a persona! representative to the 
 objective market as well as the probable establishment of branch 
 cAxs or the appointment of resident foreign agents. This is 
 partfy true only. Successes by American manufacturers have 
 been made in foreign fidds through the exclusive use of tfie 
 mails. Other attempts have ended in sad failures. The skillfnl 
 and competent handling of correspondence in a manner con- 
 sistent with the temperament and psychology of the person who 
 is to receive it in a foreign country usually determines the suc- 
 cess that a manufacturer will achieve in foreign trade regardless 
 whetfier he uses the mails exclusively to build up his trade or 
 whether he sends personal representatives to the chosen markets. 
 
 Correspondence plays a major part in export trade. It serves 
 as the line of communication between the source of supply and 
 thte market. Sometimes it serves as the only line of Gonununica- 
 tion throu^ which buyer and sdler may get together for the 
 purpose of transacting bunness. For nearly forty years a 
 marine engine manufacturer in Western New York has been 
 engaged in shipping his products to customers he has never 
 known or seen personally. During this long period of pioneer 
 work there has never been a r e pr ese nta tive of this corporation 
 m tins foreign sml. It was unnecessary. It was too txpeaavft. 
 Correspondence during all these years has been sufHcient. 
 
 A Pennsylvania representative of a pumping machinery manu- 
 facturer, a pioneer in the export field, for nearly half a century 
 has enjoyed a large volume of business from foreign custxMncts. 
 
 08 
 
 CORRESPONDENCE IN EXPORT TItADE 59 
 
 These customers have never seen a personal representative from 
 this house, yet they are satisfied. 
 
 The history of American foreign trade is replete with chapters 
 of successful careers in exporting throiigh correspondence. 
 With the betterment of the means of communication between 
 the principal centers of the world, the addition of mail steamers 
 that ply between ports on regular schedules, and the improve- 
 ment of communication m sparsely settled r^ions, the hanHHng 
 of busmess with foreign customers throui^ correspcmdence is 
 becoming less difficult 
 
 EssetUkds in Exfori 
 Correspondence 
 
 There are some things that may be incorporated in a letter to 
 a domestic customer that would be entirely ' out of order" in a 
 letter to a foreigner in a strange country. It is possible and 
 often permissible to use a '*breeiy" style when writing to a 
 customer in Seattle. It may be good business to pat him on the 
 back, so to speak, and to call him by his first name, and to say 
 tiiat he has certainly "delivered the goods," and won't he please 
 try to deliver another "knockout" the commg month, etc But 
 this will never do in f<mign correspondence. 
 
 The tone of correspondence intended for foreign consump- 
 tion must be regulated to fit the peculiarities of each indi- 
 vidual country. If it has lacked dignity in the domestic field 
 it must have it in the foreign field. If it has been slangy at 
 home the blue pencil must delete these literary characteristics 
 peculiar to the American vocabulary. If the sense of courtesy 
 has been pigeonholed it must be brought out and carefully ap- 
 plied to foreign correspondence. Courtesy is an essential in 
 letter writing to foreign coimtries. Although courtesy is inex- 
 pensive it is invaluable. The letter may be the only means by 
 which a manufacturer can be introduced to a customer he has 
 never seen. If the letter is written in a courteous, dignified and 
 business-like tone it will impress the customer. If an opposite, 
 style is adopted it will be consigned to the waste basket 
 
 A7>oid Impertinences in 
 Foreign Correspondence 
 
 Foreign bnsiaess men are not accustomed to giving mfcnmft- 
 
eo EXPORTING TO THE WORLD 
 
 tkm about thdr business as in the United States. They regard 
 
 forms and other blanks in which questions are asked regarding" 
 business standing, credit rating and other details as reaching the 
 Ntii power of impertiaence. The story af how an American 
 house "got its foot into it'* several years ago in Ptaama is told 
 by Mr. Gerrard Harris, a special agent of the United States 
 Government Department of Commerce, in one of the dq;>art- 
 menfs export trade pn b lica t i o os. - 
 
 ''Mort l4itbi-Ame«H||| do iiol at all 
 and searching questions asked by some hosuiess hooie m an 
 endeavor to obtain credit information,** says Mr. Harris in tfie 
 article. "The tropical dealers are not accustomed to these ques- 
 tions and resent them. The English and Germans get their data 
 on business houses m a less direct manner. An incident of how 
 tiie 'credit Uank* Is usually received was idated to me by a busi- 
 ness man in Panama. There caOed upon him a likable young 
 salesman representing a concern in the United States. The 
 Panamanian did not really need anything in his line, but the sales- 
 man made a very good impression; a friendship sprang up, and 
 the Panamanians purely out of personal regard, gave him an 
 order lor $1S0 worth of goods^ intending to pay cash lor tiien^ 
 witiiin thirty da3rs. He promised to save a big order for the 
 salesman on the next trip. The latter sent the order in and 
 went on his way rejoicing. Now, that firm was well known in 
 business in P^uiama for many years. Dun or Bradstreet could 
 Instant^ have given its ratmg, and it la a good one. Any bank 
 In P^mtona would have said ikat firm was good lor $25,000, ta 
 say nothing of the $150. Next thing, the merchant received a 
 long, imposing question blank asking questions concerning his 
 wealth, whether he had been in bankruptcy, the amount of his 
 debts and to whom, the volume of his business, his profits, reler* 
 ences, and sio lorth, at length. He wrathlulfy wrote on tiie blank 
 that he considered the questions impertinent, offensive, unneces- 
 sary, and a reflection upon him. Adding a fervent request that 
 the firm keep the goods, he mailed the blank. Upon its receipt 
 tlie house did some hasty investigating and shipped the goods. 
 The Panamanian sent New Y<m4c exdiange lor them belore he 
 had even taken them out ol the custom house, and said nodiing. 
 In the course of time Ac young salesman came back, joyfully 
 expecting the big order. The merchant greeted him cordially 
 and invited him into a big $^000 touring car. Aa th^ rode 
 
 CORRESPONDENCE IN EXPORT TRADE «1 
 
 about, tfie native pointed out some buildings. 'See that three- 
 story block ? It is mine. And that apartment house? Mine also. 
 The next one is my brother's; he is my partner. Yonder is 
 another bkxrk we own jomtly. I am director in that bank. I 
 own a great deal ol stock in that bank yonder/ The auto trip 
 finished, the salesman was driven to his hotel. *I just wanted 
 you to see things for yourself,' said the merchant, and then with 
 rising indignation told how the house represented by the young 
 man had doubted hun on a small order ol $150. 'I like you per- 
 aonallly/ he cootmued, Iwt there wiU be no big order for you 
 or any other order as long as you are with a house that has that 
 style of business. Always come and see me — ^personally — and 
 if you get a better house I will give you business; but this one, 
 nothing for them.' " 
 
 A striking examf^ ol how not to handle loreign correspond* 
 enoe is given in the foregoing story. 
 
 Tell the Whole Story 
 
 in Foreign Correspondgnce 
 
 It talm a letter about forty days to travel from New York to 
 Siam, and about twenty-two days from New York to Valparaiso. 
 Some of these far-away countries have as yet inadequate steamer 
 connections with other parts of the world. Mail does not arrive 
 every day. Consequently, the arrival ol a steamer with poudies 
 full of nuul is the occasion of an unportant event in many foreign 
 ports. Several weeks usually pass before the foreign merchant 
 receives his business correspondence. When he does get it, 
 he expects full information, if it is a letter in answer to an 
 inquiry. If a strange American manufacturer is submitting 
 a proposition his interest in it vriU depend on the care with 
 which the correspondent prqiared the communication. Has the 
 letter es^ilamed everythmg accurately? Has it been thorough 
 m Its descriptk»? If the foreign customer is interested must he 
 write for further information, which will mean another month 
 or two of delay? Has it the air of courtesy? 
 
 These are some ol the questkms tiie correi^KMidence depart- 
 nsfiiit ol the American firm must answer before dropping the 
 fetter m the mail box. In writing a letter to a foreign customer 
 the manufacturer should endeavor to see things from the other 
 fellow's viewpoint He should assume that the customer knows 
 
EXPORTING TO THE WORLD 
 
 nothing of his product, nothh^ of the way In which it is made, 
 nothing of the business practices of the house, nothing of his usual 
 of sale, and nothing of the manufacturer himself. Once 
 acquirfaif this mental attitude he is then prepared to write a 
 letter couched in pkin words, in a dignified and courteous tone, 
 and giving full information so as to enable the foreigner to 
 understand the proposition thoroughly without the necessity of 
 furdier cofftts p o pde noc, 
 
 Letter Should Be in 
 Umguage of Customer 
 
 Out of pore courtesy, if nothing else, the language of the 
 person whTsends an inquiry from a foreign counuy to an 
 American firm should be employed in the answer. There are 
 times, however, when the use of any one of the fmnapd c^«^ 
 dal languages of the world, such as English, Spanish, German 
 or Frendi, may be made. In all the principal commercial centers 
 tiim may be found big business men engaged in the importing 
 business. These men, thfough years of travel in foreign coun- 
 tries have acquired a knowledge of one or two foreign tongues. 
 In writing to some of these big houses the letters may be wntttti 
 in English. When the correspondence involves a large chentele 
 and territory, however, good business practice commands that 
 tiie ietlert should be written in the language of the country for 
 idudi they are bound. 
 
 Pmnptness in Answering 
 ImqmkM Necessary 
 
 It should be Oie rule of every American manufacturer to 
 answer all communica^ons in which hiquiries are made by fw- 
 cign writers. Sometimes their seeming unimportance causes the 
 manufacturer to huri them into the waste basket. It is difficult 
 to measure the importance of a communication by the character 
 of the letterhead. A coanannication from the interior of Peru, 
 although written on dio^ slatioiiery, may be from a fanner who 
 wants to buy machinery or from a priest who needs material 
 for a new church. There should be no delay in answering these 
 letters. There has been considerable complaint in late years 
 against Ametican houses that have failed to respond to letters 
 
 CORRESPONDENCE IN EXPORT TRADE 63 
 
 of tiM|uify. Com pl ain t s also arise from the failure of American 
 manufacttirers to promptly confirm transactions which have been 
 closed by cable. This may leave the customer or agent at the 
 
 other end in doubt as to whether the transaction is clearly under- 
 stood. American manufacturers should confirm by letter all 
 cables sent or received on the date on whidi they are sent or 
 received in order that any misunderstanding arising from the 
 use of a code may be corrected without delay. Too often manu- 
 facturers neglect to comply with requests from foreign corre- 
 ^ndents for information accompanied with specific instructions 
 as to how that information is to be given. An American consul 
 in Italy writes that Italian merchants are very much disappointed 
 at the failure of American firms to follow instructions, and have 
 refused to make connections. The consul writes: "In nearly 
 every case where the inquirer has been approached for his 
 reasons in not making direct comiecti<ms with American houses 
 from which he has received quotations the blame has been placed 
 on the American correspondents who have not complied with the 
 requirements as to the use of the Italian language and of the 
 metric system. ... It should be explained that local inquirers 
 have excellent reasons for requesting correqxmdents to comply 
 with these indispeittable features. In most cases the business is 
 conducted by one man who maintains an extremely small stafT, 
 and consequently he has neither tfie time nor the inclination to 
 have letters translated and the terms and measures converted into 
 the system with which he is familiar." 
 
 Value of Signature im 
 Foreign Correspondence 
 
 A typewritten signature attached to a circular letter is bad 
 form. It is bad form anywhere. Sometimes even a rubber 
 stamp signature is resented. The American consul at Hankow, 
 China^ writes as follows: "The Hankow consulate would like 
 to draw the attention of American firms attempting to enter the 
 foreign trade to the practice on the part of some of them in 
 communicating with foreign concerns of sending out tiade lettm 
 with no written signature, but with only a typewritten signature 
 usuaUy the name of the firm akme. This is almost invariably 
 construed by fordgn merchants as an indication that the Ameri- 
 can house which does it lacks any real interest in the possible sale 
 
U EXPORTING TO THE WORLD 
 
 of its goods abroad. The result of this policy is well illustrated 
 by a remark made to the writer by the local manager of a foreign 
 6mL His sutement was to the effect that whea he receives a 
 
 
 
 
 
 
 
 ciently interested in the marketing of his goods to sign his letter, 
 he always gives such communication the courtesy of a reply, 
 while if he notices that no signattire is affixed to the letter it is 
 proaafiUty coosifned to the waste basket" 
 
 American firms should bear in mind the attitude of this foreign 
 merchant, as his attitude reflects the frame of mind of business 
 men in c»ther lands as wdl, ieq)ecting a typewritten signature. 
 
 a^fgmty of Knowledge of 
 
 Language of Foreign Customers 
 
 Before communicating with a customer in a foreign countr>' 
 the manufacturer should be sure that he is employing the proper 
 language. The merchants of Braal resent letters received in 
 Spainish, even though the co untry is in what is commonly known 
 as "La tin- America." Brazil was once a Portuguese colony and 
 the country was inhabited by people of Portuguese origin. One 
 may suspect that Jamaica is a Spanish-speaking island because 
 of its geogn^^iical position. Jamaica is a British ookMBj, and 
 tile inhafaitu^ speak Eogfish. The three Guianas— British, 
 French and Dutch— contain populations speaking the language 
 of the countries that control them. A young American, a few 
 years ago, started to study Spanish in anticipating a trip he was 
 prq»ring to take to Haiti. However, before he arrived there he 
 learned that his awkward ^MUiish woold be needless in a country 
 wkut the native population had been brou|^t up on French. 
 Firms should lirst learn what language is used in the foreign 
 country to which their letters are to be sent It may save them 
 considerable embarrassment. 
 
 Tramdetikms SkaM 
 Be CeirifnUy Mods 
 
 There is more difficulty among American manufacturers in 
 obtaining proper translations of letters than any other service in 
 connection with their export problems. Empk^yers eacperience 
 Side (fifficol^ in ohtainwy any number of co mp et ent oOee daks 
 
 CORRESPONDENCE IN EXPORT TRADE 66 
 
 to handle the routine of the business, but when it . comes to finding 
 competent translators who should correctly interpret English com- 
 munications so that diey may be intelligently transkted into die 
 required foreign language, these employers are hard pressed. 
 The following classes of translators usually apply for positions : 
 
 (a) Americans who have learned a foreign language in the 
 schools of dus country, or duough some popularly advertised 
 method. 
 
 (b) Americans who have learned a foreign language in a for- 
 dgn country, and who are able to read, speak or write it. 
 
 (c) Foreigners ndio have a good knowledge ol Engli^ as well 
 as a thorough knowledge of thor own language. 
 
 (d) Foreigners whose knowledge of English is limited, al- 
 though having a thorough knowledge of their own language. 
 
 (e) Americans of foreign descent who have r^^ained a good 
 knowledge of die language of thdr parents. 
 
 Of these five classes perhaps the best qualified are those faffing 
 in classes b, c and e. Those coming in class a should never be 
 considered* "Canned" translations only would result from the 
 efforts of this dass. It is possible that the best results may be 
 obtained from class c. Having a practical knowledge of English 
 the translator falling under class c is well equipped to "get the 
 idea" behind a letter, and with his skill in the foreign language 
 necessary he can use his own words and i^omatic eaqpresdons 
 and yet retain the original meaning of the communication. A 
 professional translator has this to say about the technique of 
 interpieting Kpg^iffl* into a foreign tongue: ''In order to be a 
 competent translator of American bunness literature a translatior 
 must not only be perfectly familiar widi English and equally 
 familiar with the language into which he is to translate, but he 
 must also be able to grasp the full meaning of the original 
 matter, no matter how technical it may be. In most instances 
 sttcii work is eitremdy difficult and requires a high degree of 
 education and intdligence as well as linguistic ability/' 
 
 The same writer goes on to say : "In the course of my experi- 
 ence, in translating and in observing the work of other trans- 
 lators, I have fotmd that the production of a translation which 
 reads escacdy like the original copy, and yet conveys the fmdse 
 meaning to a foreigner, is a feat seldom achieved. The most 
 successful translations^ in fact, convey the spirit rather than the 
 
66 EXPORTING TO THE WORLD 
 
 language of the original^ while the literal translation it generally 
 a complete failure." 
 
 Smme Language Difers 
 m Many Cotmiries 
 
 The greatest care should be taken in translating a letter into a 
 language that is used in several different countries. We know 
 tiiat the English as spoken in London and the English as wpckea 
 
 in New York is quite distinct. The same is true of Pof^ 
 tuguese as spoken in Portugal and that spoken in Brazil. The 
 Spanish of Mexico differs from the Spanish of Chile and Argp^i- 
 tina, and the Spanish of Peru and Paraguay dflhli from tiie 
 Spanish of Ecuador and Cuba. These countries have their 
 own idiomatic expressions and colloquialisms, and only a very 
 skillful translator is able to prepare Spanish copy that is com-> 
 pietdy understood in all of those countries where Spanish is the 
 native tongue. Certain American publications have attempted 
 to solve this problem by having their articles translated into pure 
 Castilian. While this plan seems to have the approval of many 
 authorities on the subject, yet it is admitted that considerable 
 difficulty is often e3q>erienced in translating certain technical 
 eaqnesnons into Castilian so that tiiqr can be readily understood 
 in Latin-American countries. 
 
 The difficulty of translating technical matter into a foreign 
 language is ably explained by Mr. Maximilian Aviles, export 
 manager of the American Sawmill Machinery Company, in a 
 brodiure entitled 'Translating as a Factor in Export Trade.'' 
 "I r res p e c tive of the nature of tiie matter to be translated/' says 
 Mr. Aviks, "whether it be medumical, legal, literary or simf^ 
 commercial correspondence, the purpose of a translation is (1) 
 fully and clearly convey the ideas expressed in the original, 
 
 (2) to find the exact equivalent of words and phrases, and 
 
 (3) to render the whole into idiomatic language as pure and 
 spontaneous as the original composidon. Any translatioa thai 
 fails to meet these requirements is defective. If it conveys an 
 opposite idea, an erroneous or different impression, it is obvious 
 what the consequences will be. If the proper equivalents in 
 current use are not found for technical words, or exact defioi- 
 tioot of the same are not given, tiie translation will not be under- 
 stood hf the reader or will carry no force. And, assummg that 
 
 CORRESPONDENCE IN EXPORT TRADE 67 
 
 these two requirements have been faithfully complied with, if 
 
 the third should be ignored and the translation be made in a style 
 entirely foreign to the character of the language, it will then be 
 ineffective* perhaps ridiculous; sentences and paragraphs wiU 
 stiggest die hidicrous instead of explaining or oonvindng." 
 
 Useful Suggestions in 
 Foreign Correspondence 
 
 The export manager should always be given a cc^ of all com- 
 munications having to do with export trade. If it is the system 
 
 of the firm to have all original letters go direct to the executive's 
 office the export manager should be suppUed with a memorandum 
 of the contents. 
 
 Sometimes mail bags are lost in shipwrecks or other unavoid- 
 able disasters, and important letters never reach their destination. 
 In order to avoid loss, copies of the original letters should follow 
 on the next steamer. By following this plan many American 
 firms saved themselves and overseas customers considerable trou- 
 ble during the height of the German submarine attacks in the 
 (keat War. 
 
 The envelope in which a letter arrives from a foreign country 
 should not be thrown away until the location of the city from 
 •whence it came is fully ascertained. This is necessary because 
 there are so many cities in different countries of the same name, 
 and mi s t akes are likely to occur. The writer sddom specifies 
 the country from which the letter originated. 
 
 American consuls often complain that American business men 
 fail to place proper postage on outgoing mail. This not only 
 causes delay but also expense to foreign customers whose heavy 
 mail from this country may make the bill for underpaid postage 
 quite large at the end of the mondi. The Offidal Postal Gi^, 
 which contains all necessary information regarding postal rates 
 to foreign countries, should be in the library of every American 
 exporter. 
 
 To insure pronqtt and safe transmission to destination of arti- 
 cles addressed to foreign countries, senders should (1) make tiie 
 address legible and complete, giving the name of the country, 
 
 that of the town or post office, and in cases of cities or towns 
 the street and house number should be indicated. (2) Flimsy 
 paper for envdopes should be avoided as tliqr are liable to be 
 
68 EXPORTING TO THE WORLD 
 
 tom or destroyed in tiie Vmg transits. (3) The use of sesfing 
 
 wax for the covers should be avoided, as letters so sealed often 
 adhere to each other, and the addresses of some of the articles 
 are destxoved bv the tearliiff of the co ye i B in tbe attemot to 
 ffparate tibe articles. 
 
 Selection of Stationery > V:* 
 
 for Export Correspondence 
 
 American business farms are known the world over for the 
 quality of their stationery. Nothing impresses a foreign cus- 
 tomer more than the exercise of good taste in the selection of 
 
 stationery, and in the simple and dignified style in which it is 
 printed. The use of glaring letterheads may prove offensive to 
 the foreign eye. The same letterhead used in domestic corre- 
 qioodence with a line indicating its origin in tiie export d^Mut- 
 mcttt wbm corresponding with foreign cnstomers has loand 
 much favor with many American exporters. 
 
 Export Department Should 
 Heme Good MedUmg Usi 
 
 Every export department should have an up-to-the-minute 
 mailing list of foreign prospects. A world trade directory pub- 
 lished in London is in general use in this country. The United 
 States Department of Commerce has from time to time printed 
 directories listing merdiants and importers of other countries^ 
 tnit tiiese directories hiave not been kept up to date, and havo 
 decreased in value. In many countries reliable concerns have 
 imdertaken the task of compiling directories covering the busi- 
 ness of the entire country. The names of these concerns may 
 be obtained from the consuls rq»resenting foreign coontriet In 
 die United States. The telephone directories issued in many 
 cities may, also, prove of value if renewed r^^larly. Another 
 source of information that has been entirely overlooked by many 
 American manufacturers is the foreign press. In every large 
 dty of consequence^ there may be found a newspaper that prints 
 tfie news of the entire country, inrhiding a cio tiMnerria l sorv^ 
 that shooM prove of value. The a d vert ise me nts in these news^ 
 papers often furnish a clue that may lead to business relations 
 between advertiser and manufacturer. The successful export 
 
 CORRESPONDENCE IN EXPORT TR^B* «9 
 
 manager will keep on file the leading newspapers of the country 
 in wluch his firm is doing business. 
 
 The Pare^ Post os Meemt 
 of Developing Foreign Trade 
 
 The parcel post is one of the most valuable mediums through 
 which international trade may be developed. An instance of the 
 possilMlities of devek)ping foreign trade through the parcel post 
 is suggested in the statistics for 1913, showing that the Rq;mblic 
 of Chile alone imported by this method from the ootnde worid 
 merchandise valued at $1,982,431, the share from the United 
 States being only $49,404. Moreover, by using the parcel post 
 foreign merchants are able to effect deliveries much more 
 prompt than throng the ordinaiy freight channe l s . 
 
 The advantages of shipping articles by parcel post He princi- 
 pally in the economy involved. Packages up to eleven pounds in 
 weight may be shipped to all the principal countries of the world 
 at a nominal charge. The Official Postal Guide should be con- 
 sulted for rates, r^;uhitions and methods of pacldog for pared 
 post deliveries. 
 
 While the principal markets of the world can be reached by 
 parcel post from this country and further extensions are being 
 contemplated, it will be necessary, however, to readjust certain 
 parcel post a gre em ents existing between the United States and 
 Great Britam before a smoodi in tetc our ae tfuoogh tiie mails can 
 be inaugurated. 
 
 United States at 
 
 a Disadvantage ^ 
 
 The late Maynard D. Howells, Export Manager, Montgomery 
 Ward & Co., of Chicago, in a recent parcel post conference at 
 Washington, D. C, submitted the following in the form of a 
 memorandum iHikfa was distributed to the delates present: 
 
 "A study of the British Postal Guide shows Aat Ei^;laiui fists 
 195 countries, colonies, or other overseas nations or groups, as 
 open to her exporters for shipment by parcel post. The United 
 iS ta t tf lists 86 such countries and groups, so that for purposes of 
 conqMrison tiie eqporler of England can ship his wares 1^ pared 
 post to 109 moie countries of the eardi dian can tihe American 
 exporter. 
 
70 EXPORTING TO THE WORLD 
 
 "Nor is this aU. By reason of her parcel post with the United 
 States, withont any further actum, England's eiqwrteni can and 
 may ship to all of our outlying possessions, that is to say, 
 IVHto Rico, Canal Zone, Hawaii, PhiUppine Islands, Alaska, etc., 
 while on the other hand our post office department has only 
 opened to us such British colonies as have entered into specific 
 pared post treaties with tts. H England, by virtue of her treaty 
 with us, is entitled to all rights and privil^res of dealii^ wiA 
 our possessions and colonies, why should we not also, by virtue 
 of our pared post treaty with Great Britain, have access to aU 
 of her colonies as well? 
 
 "But, to my mind, the most inconsistent and indefensible in- 
 equality in the arrangement is the situation hy which those 
 British colonies which have no parcel post wiA this country, 
 and to which our government has provided no way for our send- 
 ing parceb throc^ the mails from America, may yet, on the 
 other hand, send thdr parcels to the United States tiirongh the 
 EngUsh post. Thus a merchant in Nigeria can send his produce, 
 if he so wishes, to New York, by pared post, but a New York 
 merchant may not send parcds to Nigeria by pared post We 
 have a parcel post between this country and England, and Eng- 
 land has a parcel post with Nigeria. She, therefore, takes the 
 conunon-sense mw that so far as the conveyance of parcels from 
 Nigeria to the United States is concerned, she will bring them 
 in her own maib without any special treaty ; but we, because we 
 ham no special treaty with Nigeria, have not even provided a 
 reciprocal arrangement whereby the British mails in London will 
 accept our parcels from our own mails. We must employ an 
 agent in London, pay the postage from America to London and 
 British postage from London to Nigeria.** 
 I Thus, it will be seen that there are still some difficulties in 
 coimection with exportii^ by pared post which the government 
 alone can remove. However, the fact that the postal authorities 
 arc bfndi«g every effort to extend the pared post to different 
 countries is encouragii^. Amngements have already been made 
 with France and England to fadlitate the despatch of packages 
 from the United States to colwiies belonging to those countries. 
 
 CORRESPONDENCE IN EXPORT TRADE 71 
 
 Counirks with which the United States has Pared Post agrees 
 
 ments 
 
 ♦Alsace and Lorraine 
 
 ♦Algeria 
 
 ♦Argentine 
 
 ♦Australia, induding Tasma- 
 nia, Norfolk Island, and 
 Papua (British New Gui- 
 ana) 
 
 Azores 
 
 Bahamas 
 
 ^Barbados 
 
 ♦Basutoland 
 
 Belgium 
 
 ♦Benadir 
 
 Bermuda 
 
 Bolivia 
 
 Brazil 
 
 British Guiana 
 ♦British India 
 ♦Carpathos 
 
 Chile 
 
 China, including Manchuria 
 Imt not the province of 
 
 Mongolia 
 Colombia (a) 
 ♦Cook Islands 
 ♦Corsica 
 Costa Rica (a) 
 ♦Crete 
 
 ♦Curacao (including Aruba, 
 Bonaire, Saba, St Eusta- 
 tius, and Dutch part of St 
 Martins) 
 
 Denmark (including the Fa- 
 roe Islands and Iceland) 
 
 Dominican Republic 
 
 ♦Dutch Guiana 
 
 Ecuador (a) 
 
 ♦Egypt (including the Sudan) 
 
 ♦Erithrea 
 
 Faroe Islands 
 
 ♦France (including Alsace 
 
 and Lorraine, Algeria and 
 
 Corsica, and Tunis) 
 * French Guiana 
 ♦Gibraltar 
 
 Great Britain and Ireland 
 
 ♦Greece 
 Guatemala (a) 
 
 ♦Guadeloupe (including Ma- 
 rie Galante, Deseade, Les 
 
 Saints, St. Bartholomew, 
 and French portion of St 
 Martins) 
 
 Haiti 
 
 Honduras 
 
 Hong-Kong 
 
 Iceland (see also Denmark) 
 ♦Italy (induding R^mhlic of 
 San Marino, the Italian colo- 
 nies of Benadir and Erithrea ; 
 the Italian post offices of 
 Bengazi, Libya, and Tripoli- 
 in-Barbary; and the islands 
 of Carpathos and Rhodes) 
 Jamaica (including the Turks, 
 Caices, and Cayman Isl- 
 ands) 
 
 Japan (including Formosa, 
 Karafuto, Japanese Sagha- 
 lien and Korea) 
 
 Labrador 
 
 Leeward Islands (Antigua 
 with Barbuda and Redon- 
 da, St Kitts, Nevis with 
 
n EXPORTING TO THE WORLD 
 
 ComUrkM wUk which the United States has Parcel Post agreements 
 
 Anguilla, Dominica, Mont- Portugal (including the 
 serrat, and the Virgin Isl- Azores and Madeira Isl- 
 and (British) ands) 
 Liberia *Rhodes 
 Laxemtxniig Salvador (El) 
 Madeira Islanda ♦Samoa (British) 
 
 * Martinique *Siam 
 ♦Mesopotamia *Society Islands 
 Mexico (a) *Swaziland 
 ^Netherlands Sweden 
 
 ♦Netherlands, East Indies Trinidad (including Tobago) 
 
 Newfoundland ♦Union of Sooth Africa (Cape, 
 
 New Zealand (including Cook Natal, Orange, and Thms- 
 
 and Fanning Islands) vaal), Swaziland, and Basu- 
 
 Nicaragua toland) 
 
 ♦Norfolk Island ♦Umguaj 
 
 NorwAjT' Veneniefai 
 
 ♦Palestine VHndward Islands (Grenada* 
 
 Panama St. Vincent, the Grena- 
 ♦Papua (British New Guiana) dines, and St Lucia) 
 ♦Paraguay 
 Pent (a) 
 
 (a) "Specially addressed" parcels are di^tched from San 
 Francisco 
 
 ♦ Parcels cannot be rc^stered 
 
 JHskmce a kUer km fa travel, amd ^ime U takes to reach 
 destinaiian^ from New York City 
 
 Aleacandria, via London 6A50 Ut 
 
 Amsterdam, via London 3,987 8 
 
 Antwerp, via London 4,000 8^ 
 
 Athens, via London 5,655 11 
 
 Bahia, Brazil. 5,870 14 
 
 Bans^, Siam via San Francisco 12,900 43 
 
 Bani^rok, Sedan via London 1342f5 41 
 
 Batavia, Java, via London 18,800 8i 
 
 Berlin 4,885 8 
 
 Bombay, via London 9,765 22 
 
 r 
 
 CORRESPONDENCE IN EXPORT TRADE 73 
 
 Distance a letter has to travel^ and time it takes to reach destines 
 
 tion, from New York City 
 
 {Continued) 
 
 
 Idiles. 
 
 Days. 
 
 
 
 8 
 
 
 
 24 
 
 
 
 24 
 
 
 
 25 
 
 
 5,810 
 
 11 
 
 
 
 9 
 
 
 
 8 
 
 
 
 7 
 
 
 
 11-3 
 
 
 
 9 
 
 Hamburg, via London 
 
 
 9 
 
 
 
 3 
 
 
 
 27 
 
 
 
 12 
 
 
 
 7 
 
 
 
 7 
 
 Madrid, via London 
 
 
 9 
 
 Manila, via San Francisco 
 
 
 81 
 
 Melbourne, via San Frandsoo 
 
 
 27 
 
 
 
 3 
 
 Panama 
 
 
 6 
 
 Paris 
 
 
 8 
 
 
 
 9 
 
 
 
 17 
 
 
 
 8 
 
 
 
 8 
 
 San Juan, Porto Rico. 
 
 
 6 
 
 
 
 25 
 
 Stockholm, via London....... 
 
 
 10 
 
 Sydney, via San Frandsoo 
 
 
 26 
 
 
 
 22 
 
 
 
 8 
 
 Yokoihania, via San Francisco 
 
 
 80 
 
Chapter VII 
 
 ADVERTISING IN EXPORT TRADE 
 
 NECESsnY or American advertising in foreign fields — Ad- 
 vertising MEDIA AT HOME AND ABROAD— COPY FOR FOREIGN COUN- 
 TRI£Sr— ThK export CATALOGUES — ^HOW CATALOGUES SHOULD BB 
 ItlPAlB> AMD DI8TRIBUTED— DumS ON CATALOGUES 
 
 Advertising is largely an American idea. Here in this country 
 we have developed it, enlarged its sphere, sifted the good from 
 the bftd and, finally, reduced it to a science which has taken its 
 pkce in American industry as a vital factor in merchandising 
 progress. It is true that the printed word is in use in other 
 countries for the purposes of advertising, but nowhere on earth 
 lias so nmdi attention and dose study been given to advertisbig 
 as here m the United States. The truth of this statement can 
 readily be grasped by an investigation of foreign advertising 
 methods. It is the consensus of opinion of American authorities 
 on advertising who have returned from foreign countries after 
 attended surveys m various countries that, compared to Ameri- 
 can methods, the science of publicity abroad is yet in a primitive 
 condition. No concentrated thought has ever been given to it 
 It is uncnganised. ' 
 
 The time has now come when American adverting methods 
 must extend to the entire world. We must, in our own original 
 way, with certain necessary readjustments, send the message to 
 the four comers of the globe. Just as we have intensely devel- 
 oped the domestic market by enHstii^ tiie power of the printed 
 word, we must methodically and intelligently bring our knowledge 
 of advertising into play in the foreign field. We must first study 
 our markets. We must investigate all channels through which the 
 message is to be sent We must know where those dumnels lead 
 to; and when they get there, we must know the extent to which 
 they are capable of spreading the story. To obtain this data is 
 more difficult than at home, and of necessi^, therefore, the maau- 
 
 74 
 
 ADVERTISING IN EXPORT TRADE 75 
 
 facturer who desires to advertise in the foreign field must proceed 
 with caution. The fact that he is going out of his own territory 
 to advertise should not tempt hun to thmw aside all the points 
 he has learned at home. This has been the experience of many 
 American merchants who believed that "any kind of advertising 
 would do in overseas trade." 
 
 Advertising Media 
 in Foreign Trade 
 
 Before laying out an advertising policy for foreign countries 
 the manufacturer must first analyze his market Once satisfied 
 that there is a market for his wares in a chosen field, he must 
 then proceed with the development of his selling plan. Regard- 
 less of the kind of selling plan he decides to adopt there is going 
 to be a certain amount of advertisiqg required. In order to 
 properly plan and execute an advertising campaign he must have 
 a knowledge of the toots wiA which he is to work. "What 
 mediums can I use to successfully advertise my goods ?" he in- 
 quires. "Shall I use newspapers? Shall I use magazines? Shall 
 I use billboards or motion pictures?" These are only a few of 
 the questions that may occur to the metdunt 
 
 For the purpose of analysis the essential media will be listed 
 as foOows: (a) The trade journals, or, as commonly known, the 
 American export journals; (b) the foreign local daily press; 
 (c) the foreign local periodical journals; (d) the catalogue;' 
 (e) the billboards; (f) the motion picture; (g) misoellaneous 
 media. 
 
 The Trade Journals 
 
 as Advertising Media 
 
 There are different typta of trade journals avaihd^. There 
 are trvie joomab that are fuinted m a foreign language and cir- 
 cnlate exdusivdy m foreign countries. Then there are those that 
 circulate exclusively in this country and claim as their subscribers 
 and advertisers shipping men, freight brokers, bankers, import- 
 ers and exporters, etc. The oldest type of trade journal, periu^, 
 is the one which ctrculates in foreign countries and numbers 
 among its subscribers importers and merchants engaged in selling 
 unported wares from other countries. Its advertising columns are 
 
76 EXPORTING TO THE WORLD 
 
 ti9iiaUy fflH i^ ifff^ to the business oi manufacturers and exporters 
 seeking maikets in foreign coontrics or agenqr connections with 
 certain subscribers it is Icnown to reach. This type of ea^ort joomal 
 is usually printed in several different languages. A Spanish, 
 French, Portuguese and English edition is ordinarily published. 
 It do9 not dicnlate in the United States. Its ahn is to reach 
 the dealers and importers in foreign coontrics, not the consumers. 
 It is published primarily for the trade. Of course, big consuming 
 concerns such as mines, construction companies, railroads and 
 other large hidostries who make direct purchase may be num- 
 bered among the export trade joomal's subscribers. The artides 
 in these export trade journals arc nsnally aimetf to keep foreign 
 buyers in touch with American industrial and commercial news 
 such as advances in processes, improvements, new inventions, and 
 novelties. 
 
 The export trade ioomal naqr be general or ^ledfic in char- 
 acter. Some aim to cover the entire fidd of txportB in a general 
 
 way, while others devote their space to certain specialised lines, 
 such as engineering, farming, mining, drugs, and leather, etc. 
 
 The circulation of these trade journals is limited. They are 
 not wM on the newsstands. No attempt is made to obtain wide 
 drcnlatkm among a general dass of readers in foreign countries. 
 It is the chief aim of the publishers to get it hito Ae hands of 
 dealers, importers and big consumers who may be interested in 
 the advertisements of American manufacturers. Some of these 
 publications have paid circulations certifiied by the American 
 Audit Bnrean of Circohitkns, while otiiert are satisfied in having 
 their copies distribnted carefully to sdect mailing lists. 
 
 In speaking about the trade journal's activities in Cuba, which 
 practically answers the purposes for other countries in Latin- 
 ^\merica, J. W. Sanger, Trade Commissioner for the Depart- 
 ment of Coounerce, has tUs to sqr in his report on '^Advertising 
 MeOiods m Cnba": "The exact poiitkm and in qport an ce of tiie 
 many American export journals printed in Spanish and circulat- 
 ing in the Cuban field are exceedingly difficult to determine. 
 With two or three exceptions, they are published primarily for 
 the trade and do not attempt to reach the consumer. All the 
 leading ones are well edited, and wdl printed, and contain nmeh. 
 information for the Cuban importer, merdiant, and planter. 
 However, with few exceptions, even the best of them have com- 
 paratively limited paid circulations, owing, undoubtedly, to the 
 
 ADVERTISING IN EXPORT TRADE 77 
 
 difficulties of obtaining subscriptions in this field. But the buyer 
 of advertising space should not too greatly discount their value 
 on Ais score, as he is inclined to do with puUications of strictly 
 American circulation. Many of them are mailed directly to lists 
 of selected names chosen with great care, and it is undoubtedly 
 ibit degree of care governing this selection of names that largely 
 detemunes their vahie as advertismg media. . . . 
 
 **As one of the important means of supporting his campaigns 
 in Cuba, the advertiser may well give close attention to the claims 
 of at least the leaders among the trade joomals. Unquesdon- 
 ably, if i»operly drcnhUed, they are a means of assistmg hhn in 
 his efforts to readi tiie market" 
 
 In judging the merits of these export trade journals Mr. 
 Sanger suggests the following questions to be put to the pub- 
 lishers: "(a) What is your total circulation each issue? (b) 
 What is yonr total drcnktion in each Spanish-Leaking conntry ? 
 (c) How IS it secnred? (d) What is the ty^ of your readers? 
 (e) Is your drcuktion certified by the Audit Bureau of Circu- 
 lations? (f) Are your papers sent out in bulk, or are they 
 wrapped, stamped, and individually addressed? (g) Are your 
 editorials and news articles merely coo^iled from doubtful 
 sources or written by men who know the country and your type 
 of readers? (h) Do yon permit ^vrite-aps' in your reading 
 pages ?^ 
 
 I^'oretgn Local Daily 
 as AdwrUsi^g MtdUm 
 
 There are good and bad newspapers all over the world. 
 Every large city has its great daily newspapers which exercise 
 a wide influence. In some countries one or two newspapers 
 dominate the entire field In other countries there is a great 
 rivalry between the newspapers of the krger cities. In no coun- 
 try in the world, however, is the daily press so well organized 
 and standardized as here in the United States. The manu- 
 facturer who desires to advertise in a number of newspapers in 
 this country consults his advertising agency. In a minute he 
 has before him all the necessary drcuhokm data. He knows 
 the character of the market to be readied. Accurate informa- 
 tion of the same character from foreign publications as a gen- 
 eral rule is unavailable. Advertising rates often vary with 
 
78 
 
 EXPORTING TO THE WORLD 
 
 the temperament of the publisher, and it is highly impossible 
 to obtain the real facts concerning circulation upon which so 
 mttch stress is laid by skilUiil American advertising escperts. 
 
 With the extension of American business practices in the 
 foreign field, however, the matter of obtaining information 
 r^;arding the foreign daily press is becoming less serious. 
 The big American advertising agencies, consdons of the 
 necessity of consumer advertising in foreign fields, are rapidly 
 taking the proper steps to carefully analyze the foreign press 
 in all its phases. It is a question of time only when exact 
 circulation figures <d every important newspaper in the world 
 win be available. Also, such information as to the character of 
 its readers, methods of distribution, and the character of 
 market it covers will be at the disposal of American adver- 
 tisers. 
 
 The use of foreign mewspapm is essential in the development 
 of the maifcet Consumer advertising is a necessity. It is not 
 enough to interest foreign buyers in American-made products 
 
 through the trade journals. Another step must be taken. Ameri- 
 can merchants must help dealers move the goods off the counters. 
 This can be done— as it is done in America — by the judicious 
 use of the newspq>ers. The author has no faith in the statement 
 that the wcurld lads good newq^spers whidi may be used for 
 advertising American goods. The world is full of good media. 
 If there is a country without its big daily newspaper an investi- 
 gation will show that that country is not sufficiently developed to 
 warrant the interest of an American merchant. Where there are 
 big markets one will generally find big newspapers^ 
 
 The Foreign Local 
 Pifiodkal Journals 
 
 Fc»reign local and periodical journals among which may be 
 numbei^ trade and class publications are not as numerous in 
 foreign countries as in the United States. Even those that 
 
 have gained a commanding influence and a wide circulation 
 cannot compare with our own well known popular magazines. 
 They are not as skillfully made up as in this country. The 
 cardHil editing and printing technique that is put into an 
 Amotam publication is sadly missing in a foreign journal. 
 Hiere are some periodicals, however, that nmk very high in 
 
 r 
 
 ADVERTISING IN EXPORT TRADE 79 
 
 their own fields, and deserve serious attention by American 
 
 advertisers. Although their true circulations are obscure there 
 is no question that some of these publications are widely read. 
 There is a journal published in Spain whose circulation not 
 only spreads throughout that country but in every Spanish- 
 speaking country in the world. Other countries in Europe as 
 well as the English-speaking colonies of the world boast of 
 trade and class pikers. The Germans, French, Belgians, 
 Dutch, Danish and other peoples engaged in foreign trade, 
 also, have their trade publications of varying character and 
 standards. 
 
 MiscelUmeous Media 
 for Export AdverHsmg 
 
 The American manufacturer must be on his guard against 
 advertising schemes of one kind or another that aim to sep- 
 arate his hard-earned gold from his cash drawer. The brisk- 
 ness in export trade at the present time has tempted many of 
 these schemers to lay out plans of a questionable advertising 
 value for the unwary merchant. The same good judgment as 
 applied in the local field should serve as the formula to keep 
 away from these designing individuals who claim to have 
 found the "royal road to success" in foreign advertising. 
 
 **Special Export Editions" are often launched by regularly 
 established newspapers and periodicals. The rate for adver- 
 tising in these editions is usually higher than in the ordinary 
 issues, due to the fact that free write-ups are included. The 
 advantages of "special export editions" or any kind of ''special 
 editions" are questionable. The shrewdest American adver- 
 tisers who have tried all sorts of publicity schemes are more 
 and more beginning to look upon these special editions as 
 wasted effort from an advertising point of view. The fact 
 that some of our more conservative newspapers, and weekly 
 and monthly journals have within recent years frowned upon 
 method of increasing their advertising receipts, preferring 
 to rely on their regular business for their success, justifies the 
 statement that the special edition is fast losing its popularity. 
 The fact that it is a "one time" proposition is, alone, a suffi- 
 cient indictment agilast it 
 
80 EXPORTING TO THE WORLD 
 
 Trode Direcimry 
 
 as Advertising Mtdmm 
 
 Trade directories in many forms are quite common. Those 
 published and circulated in the United States are supposed to 
 contain dasdfied ]ists of tranness men ckigaged in foreign; 
 trade. Others are circulated in foreign countries and contain 
 the names of manufacturers. These directories are aimed to 
 direct the foreign buyer to the proper sources for special lines 
 in wiiich he may be interested. Some of these directories 
 usually find their way into the offices of American consuls 
 abroad, where they may be consulted by foreign merchants. 
 There is no question that these directories are capable of 
 doing some good work for American manufacturers. They 
 are <^en consulted. Before subscribing to this form of adver- 
 tising, however, the manufacturer should find out how and 
 where these directories are to be distributed, and whether the 
 price he must pay is consistent with the service rendered. 
 Of this, the manufacturer, alone, is the judge. 
 
 Export trade journals circulated in this country exclusively 
 and containing editorial matter of interest to manufacturers 
 and exporters and importers alike, are growing in number. 
 In New York city alone there are at least half a dozen of these 
 publications coming under this classification. Articles cover- 
 ing specific problenis in foreign trade add considerable value 
 to these journals. They aim to circulate among American 
 merchants vitally interested in some phase of foreign commerce. 
 These export trade journals should not be confused with 
 house organs which are published by certain American export 
 commission houses, and conducted in connection with their 
 regular merchandising business. 
 
 Outdoor Adtfertismg 
 
 in Foreign Countries 
 
 Street-car and outdoor advertising is not confined solely to 
 the United States. This form of advertising is in evidence 
 in nearly all the important countries dt the worid. In some 
 countries street-car and outdoor advertising is confined purely 
 
 to the large cities. Electric signs, also, will be seen in com- 
 mercial centers. These three forms of advertising, however. 
 
 ADVERTISING IN EXPORT TRADE 81 
 
 are not as well organized and developed as in the United 
 
 States. There is plenty of room for improvement. 
 
 The world is a virgin field for American motion pictures. 
 The American-made "movie" has practically crowded foreign 
 competitors off the field. The foreign world is very much 
 interested in American methods, and there is no better way 
 to visualize American industry and progress than through the 
 motion picture. American manufacturers who have '"filmed" 
 tlieir plants for domestic exhibition shottld turn their eyes 
 toward foreign countries where their pictures will be enthusi- 
 astically received. The titles, of course, should be translated 
 into the language of the country where they are to be exhib- 
 ited. The most successful motion picture for foreign purposes 
 vniX be that one which visualizes the entire process of manu* 
 facture of an article in story form. In other words, the film 
 should be made under the direction of a skillful director who 
 understands the art of telling a story in a motion picture. 
 
 Copy for Adviftismg 
 m Foreign Cotmiries 
 
 Advertising copy as used in the United States will not "go" 
 in foreign countries as a general rule. The foreign newspaper 
 reader is accustomed to conservative methods in advertising. 
 The bombastic page advertisement often seen in the Ameri- 
 can press needs considerable deleting and rewriting before 
 it should be permitted to leave this country. It must be 
 understood that, in preparing copy for the world, the ad- 
 vertising writer must take into consideration different lan- 
 guages, customs, habits, idiosyncracies, peculiarities and what 
 not in the countries where his copy is to be placed. Advertis- 
 ing copy that may be satisfactory in Australia may not be 
 used in London. Also, copy for the different Latin-American 
 countries requires considerable changing. The problems that 
 the copy writer has to face are interestingly told by Mr. J. W. 
 Sanger, Trade Commissioner for the Department of Com- 
 merce, in referring to the Cuban situation. 
 
 ''A well known Cuban who has spent many years in both 
 the United States and Europe said to me,'* Mr. Sanger writes : 
 ** *Wc Cubans do not think constructively in the Anglo-Saxon 
 sense, but enjoy enjoying our emotions. We love color and 
 
88 EXPORTING TO THE WORLD 
 
 life in everything, and wc demonstrate it in the bright colors 
 of our automobiles and in the spots of pink, terra cotta, and 
 blue of our older houses.' His opinion, and it was substan- 
 mlly supported by many others, has a distinct bearing upoii 
 the 'copy appeal' necessary in Cuba. Carried to its logical 
 conclusion, the evidence of these witnesses and the writer's 
 observations both tend to indicate that 'reason why' copy, 
 commofi in the United States, finds little response in Cuba 
 esccept in the advertising of articles of a dbtinctly technical 
 nature." 
 
 Often social conditions and climate determine the character 
 of copy for foreign countries. Again quoting Mr. Sanger: 
 "In Cuba the writer observed one advertiaement of an Ameri- 
 can cleaning fluid or wax, in which the illustration pictured 
 the man of the house and his wife deeply interested in the 
 work of cleaning their car. In Cuba all cleaning, without 
 exception, is done by the chauffeur or in a public garage. 
 Even the cheapest automobiles are driven by chauffeurs, and 
 the owner exerts no appreciable influence as to the kind of 
 cleaniog fluid or polishing wax used. He is the opposite to 
 the American who has a turn for mechanics and who does not 
 object even to cleaning his own car at times. 
 
 "Another advertisement of a well-known American proprie- 
 tary medicine widely advertised as a preventive of colds 
 riiowed the dai^per of cold weather and its attendant sickness 
 by picturing two children in a snowstorm. Cuba is in the 
 tropics and snow has never fallen there." 
 
 These quotations from Mr. Sanger serve as typical illustra- 
 tions of problems that may be encountered in other sections 
 of the globe. It is one thing to prepare copy that should 
 stimulate interest and inquiries in one's articles, but it is an- 
 other thing to prepare it in such a way as to take into con- 
 sideration a hundred and one peculiarities that may be found 
 to exist in one form or other in strange lands. 
 
 Sim^Uiiy EssmHal 
 M AdptrHsmg Cofy 
 
 • Simplicity should be the keynote of advertising copy for 
 foreign purposes. A formal and dignified style yet interest- 
 ing enough to inspire the reader's interest should be the basic 
 
 ADVERTISING IN EXPORT TRADE 83 
 
 mark set by the advertising writer. The development of this 
 rule will be guided by experience in the different markets. 
 There are no hard and fast rules in foreign advertising. 
 Knowledge of the fundamentals is essential. Once acquiring 
 this knowledge, success in preparing copy that will bring 
 results will largely be determined by the seriousness with 
 which the advertiser studies his foreign problem as well as in 
 the selection of reliable advertising mediums. 
 
 The power of advertising lies in its cumulative value. It 
 is not the advertisement that appears tcmiorrow alone that 
 will bring results to ^e man who pays the space bill; it is ^e 
 copy that is keyed to a certain schedule planned by experts 
 that will justify proper expenditures in the final reckoning. 
 It is needless to emphasize the necessity of carefully planned 
 advertising campaigns. They are absolutely essential in the 
 United States. It is a policy that must be adopted in foreign 
 cotmtries. 
 
 Export Catalogues 
 in Foreign Trade 
 
 * 
 
 The export catalogue serves as the medium of direct adver- 
 tising. The export catalogue goes right into the office or 
 home of the prospective purchaser. The same degree of care 
 as exercised in the regular correspondence with foreign cus- 
 tomers should be brought into play in the preparation of the 
 export catalogue. The caUlogue should tell the whole story 
 of the manufacturer's product It should leave nothing for 
 guesswork. It should be well illustrated. Every article 
 should be carefully described. In preparing these descrip- 
 tions and illustrations the manufacturer should take it for 
 granted that the other fellow knows nothing about his mer- 
 chandise. The catalogue should be written in the language 
 of the customer lor whom it is intended. There has been 
 considerable complaint on this score from various foreign 
 sources. An American consul in Italy complains that Ameri- 
 can manufacturers have not broken themselves from the habit 
 cf communicating with Italian merchants in English, and of 
 sending catalogues in a language they not only .do not under- 
 stand, but hurk the ^ciHties for having it made understand- 
 able. A consul in Brazil insists that Portuguese is the Ian- 
 
84 EXPORTING TO THE WORLD 
 
 gttage of Brazil and that, therefore, catalogues should be in 
 the Portuguese and not the ^Muuah tmigue. 
 
 The mobilization of domestic catalogues written in English 
 for foreign service in order to economize is false economy. 
 While there are many foreign customers who may be able to 
 translate and read the text of American catalogues with a 
 great deal of interest, nevertheless there are countless others 
 who will appreciate a catalogue printed in a language they 
 understand. In reaching out for foreign business through 
 the medium of the printed word it is generally agreed that the 
 prospect should be addressed in his own txmgue. The socmer 
 this policy is adopted by the new b^^inner the better it will 
 be for his business. 
 
 In making up foreign catalogues the same care exercised 
 in translations in correspondence should be taken in preparing 
 the text Translations must be perfect They must be under- 
 stood wherever they are sent Translations should not be left 
 to individuals whose bid has been the lowest, but to those 
 who can prove their efficiency. The language of the country 
 where the catalogue is to circulate should be thoroughly 
 understood. The English language should not be misunder- 
 stood. The perfect translator is he who understands both 
 languages. 
 
 A cheap looking catalogue should be avoided. The cata- 
 logue is the show-window of the manufacturer. A neat dis- 
 play attracts the customer. A "shabby" appearance detracts. 
 Care should be exercised against using inferior grades of 
 paper. This precaution is necessary in order to avoid poor 
 reproductions of engravings. The clearest possible pictures 
 are necessary for an export catalogue, and the selection of a 
 satisfactory grade of paper will assure this result 
 
 FM InformaHam If 
 Necessary m CaUdogue 
 
 In the absence of the personal representative me export 
 catalogue is the manufacturer's "right hand man" in the field. 
 Throus^ the medium of the catalogue the manufacturer is 
 endeavoring to create interest in his merchandise. He would 
 
 like to draw an inquiry which later may turn into a huge 
 order. The success with which he will achieve these aims 
 
 ADVERTISING IN EXPORT TRADE 85 
 
 rests with the skill which he has employed in the preparation 
 of his mouthpiece. Has he made a proper introduction ? Has 
 he made a careful presentation o£ his case? Has he Ic^cally 
 driven home his points as to quality, utility, or price? Has 
 he told his story without exaggeration? An affirmative 
 answer to these questions serves as some of the fundamentab 
 required in the making of a good catalogue. 
 
 Half 'tone Cuts Should 
 Not Exaggerate Article 
 
 It 18 an old complaint that some of our half tone cuts 
 pearing in American export catalogues look so attractive that 
 
 the purchaser of an article which has been so temptingly 
 visualized is often doomed to a keen disappointment. The 
 '*real thing" is so much different from the picture. It is not 
 in the least difficult for a skillful artist to picture a gun or 
 watch of nominal value so that it will look like an expulsive 
 article. While the artist's skill is to be commended, neverthe- 
 less, special care should be taken to accurately describe the 
 article in order to avoid any misunderstanding on its sale. It 
 is a much better policy to be absolutely honest in a careful 
 deacr^ktion at the outset than to constantly endeavor to ap- 
 pease the wrath of some disappointed buyer who may feel 
 that he has been imposed upon. When the foreign purchaser 
 buys an article from a catalogue he expects it to be exactly 
 as described. He places a certain amount of confidence in the 
 catalogue. How much that confidence is deserved depends 
 on the good faith the manufacturer exhibits in the preparation 
 cyf his literature. He must remember that the logical policy 
 is that policy that will insure a permanent business. A per- 
 manent business abroad depends on the confidence he can 
 inspire from new customers. Surely he cannot build up a 
 permanoit trade bgr questionable methoda, 
 
 H&w Prices Are to Be 
 
 Quoted in Catalogues 
 
 There are instances where American manu&cturers have 
 sent catalogues without prices accompanying the articles de- 
 scribed therein. An American consul relates an instance 
 
M EXPORTING TO THE WORLD 
 
 where a large American implement manufacturer lost a valu- 
 able order in an Australian field because the buyer was un- 
 able to obtain any mformaliofi about the prkes of some articles 
 he very much desired, and which the manufacturer had for sale. 
 Catalogues should be accompanied with prices. Catalogues meant 
 for distribution among the consumer population should not 
 contain prices unless the suggestion or advice of ag<ents in the 
 territory in which th^r are to be given is first sought But 
 catalogues that are likely to fall into the hands of importers, 
 jobbers, wholesalers and retailers alike should not contain 
 list prices unless accompanied with liberal discount terms in 
 order that the wholesalers and o^ers engaged in the resale 
 of goods may be protected against the betrayal of their profits. 
 Further protection may be gained by inserting two separate 
 lists of discount sheets in the catalogues, one to retailers and 
 the other to those who do business with retailers. 
 
 The export catalague should function something like the 
 export traveling salesman. It should be capable of giving 
 complete information regarding the manufacturer's wares. 
 Moreover, it should enable tbe customer to accurately esti- 
 mate what the goods are likely to cost him. Unless the cata- 
 logue is accompanied with full explanations on this score the 
 customer may lose all interest and seek some other firm that 
 extends better facilitica. 
 
 InformaHam Necessary 
 m Export Catalogue 
 
 The export catalogue should be able to answer the following 
 questions: 
 
 Is shipment to be f. o. b. factory or f. a b. port of shipment? 
 Is it to be f. o. b. steamer? 
 
 Are there any additional expenses such as packing, cartage, 
 etc.? 
 
 If packing charges are not included what m appioxinimte 
 
 costs of other packing peculiar to requirements of goods?" 
 
 This information is necessary as it enables the customer to 
 make an approximate estimate of the cost of the goods when 
 landed at the port of destinaticm. 
 
 Nor does this requirement end here. All vr^ghts and dtmen- 
 
 ADVERTISING IN EXPORT TRADE 87 
 
 sions of each unit of the shipment should be given in the 
 metric system as well as in the English system. The gross 
 and net we^t of the goods as packed and prepared for ship- 
 ment, with tbe metric equivalents included, should not be 
 overlooked, as it enables the buyer to estimate freight costs 
 and the approximate ultimate cost of the goods when he re- 
 cdves them. Full description of how the goods are to be 
 packed should be given, as well as a statement of tl» costs of 
 other methods of packing that the customer may require. It 
 must be remembered that the weight of the packing may 
 prove to be a very important factor in determining the cost of 
 merchandise to the importer. It is advisable to invite st^es- 
 tions from the importer as to the best means of packing goods 
 for shipment to his territory. 
 
 Quoting Prices in 
 Amerkam Cmrency 
 
 The foreign purchaser probably knows more about inter- 
 
 national currency than the average American manufacturer. 
 With very little effort he can find the equivalent of an Ameri- 
 can dollar in a foreign currency. Therefore, in quoting in 
 catalc^es and price lists, it is advisable to name the prices 
 m American cnrren^r* If the manufacturer wishes to include 
 the equivalent in other coins, however, he should confine him- 
 self only to the most important currencies, such as the pound 
 sterling, francs and marks, which are well known all over the 
 world. 
 
 Terms of Payment far 
 Merchandise Bought 
 
 There has been considerable criticism on the part of for- 
 eigners to the effect that American manufacturers demand 
 cash in advance for goods purchased. This is true only in 
 cases where the customer is a total stranger, and where his 
 credit rating is unknown. In making quotations in the cata- 
 logue terms of payment should be included. The best au- 
 thorities on export trade agree that these terms should be either 
 strictly cash or some form of guarantee b^ore goods are 
 shipped. The buyer may find relief from this apparently 
 
88 EXPORTING TO THE WORLD 
 
 difficult method of doing business, however, by placing his 
 orders through commission houses, or sending a draft along 
 with his list of requested articles. Also, his local bankers 
 may be requested to open a credit with American bankers. 
 After mutual confidences have been established, however, it will 
 not be difficult for a foreign purchaser to buy merchandise in the 
 United States on the most agreeable terms possabk. 
 
 How Catalogues Should 
 Be Distributed to Trade 
 
 Catalogues are expensive to produce. They serve as a 
 direct medium through which a foreign business may be de- 
 
 T eloped by an American manufacturer. How extensive this 
 business may become depends largely on the intelligent dis- 
 tribution of this valuable literature. Catalogues in the Por- 
 tuguese language should not be sent to Argentina or Chile» 
 where Spanish is spoken. Neither should catalogues aimed 
 to reach wholesalers fall into the hands of retailers or con- 
 sumers. The best available lists of retailers, wholesalers, or 
 others engaged in reselling should be consulted. Reliable 
 names may be obtained from well known trade directories or 
 from commercial organizations. Export trade journals of the 
 better class are able to furnish competent lists. It is possible 
 that foreign banking institutions may be able to submit good 
 lists of names. The American consuls in different parts of 
 the world as well as commercial attaches often ask for cata- 
 logues of American &rms to distribute among interested im- 
 porters. 
 
 Import Duties on 
 
 American Catalogues 
 
 Catalogues cannot be sent to foreign countries indiscrimr 
 inatdy. The duty mi mdtk material in various countries must 
 be investigated before a plan of distribution is launched. When it 
 is known that in some countries the duty on catalogues is 
 greater than that on the accompanying merchandise the neces- 
 sity of taking due precaution in this matter will be recognized. 
 In order to protect foreign customers from the payment of 
 
 r 
 
 ADVERTISING IN EXPORT TRADE 89 
 
 duty on this sort of material, catalogues should never be in- 
 cluded with the shipment of goods. If advertising matter, 
 such as catalogues, posters, etc, is to be sent, it should be 
 packed in a separate case, and only on the instructions of the 
 customer. In nearly every country in the world the manu- 
 facturer will discover certain duty obligations on export cata- 
 logues. Before planning their distribution he should consult 
 the consul of the country in which he desires to distribute his 
 literatnre for aocturate inf ormatioa. ^ 
 
CBAnm Yin 
 
 EXPORT HOUSES 
 The export merchant— The expokt €Oif xissioh B0II8»-4I6w 
 
 EXK»T HOUSES OPBRATB IK FOKBUSir FISUD8— ADVANTAGES AND 
 
 maAmrANTAGBS or exkut houses— Futurb of k3cpoit commis- 
 sion HOUSES 
 
 American export houses commonly known as the expcnrt 
 commission houses or the tsepott merdiants are the pioneers 
 
 of American foreign trade. They have blazed the trail into 
 strange lands. They have introduced articles made by Amer- 
 ican workmen among peoples of a different language and 
 cnstxmis other than our own. They are the cwiginal propa- 
 gandists of American skill. Wherever there have been found 
 people who commanded a certain purchasing power or who 
 had valuable articles to barter there would be found the pio- 
 ncer American trader ready to make a bargain. The Ameri- 
 can export houses are the ''middlemen'* in our export trade. 
 A half century ago they controlled, perhaps, almost the entire 
 volume of our business with foreign countries. As American 
 manufacturers are b^^inning to recognize the necessity of 
 cxteiMiing theur direct sales activities to foreign countries, 
 however, these commission houses are gradually losing what 
 was once a firm hold of the export trade. But it never will 
 be entirely lost. There will always be middlemen in foreign 
 trade just as there are middlemen in domestic business. The 
 export house in foreign commerce is a valuable institution. 
 It knows the business. It has marshaled together a force of. 
 skillful and competent men who thoroughly understand every 
 branch of business abroad. It understands the routine in- 
 volved in the shipment of goods by sea, that is not encoun- 
 tered at home. It knows the customs and habits of foreign 
 peoples. It knows the laws and regulaticms and other detaib 
 peculiar to tra n sactin g business with aisloincrs in a foreign 
 
 90 
 
 / ■ 
 
 EXPORT HOUSES 
 
 91 
 
 country. In other words, the export house is a specialist in 
 its line of business, and this is an age of specialists. 
 
 The Esport Merchant mtd tim 
 Export Commitskm Houu 
 
 As our foreign commerce began to gradually grow the func- 
 tions of these export houses engaged in foreign trade became 
 more complicated. Originally, there was a sharp distinctkm 
 tictwccn the export commission house and the export mer- 
 chant. The export merchant confined his activities to purely 
 buying and selling on his own account. The export commis- 
 sion house confined its activities to the execution of orders in 
 the United States for foreign customers, never buying mer- 
 chandise on its own account. 
 
 With the development of our foreign commerce, however, 
 and the extension of our means of communication and trans- 
 portation to even the most out-of-the-way places of the globe 
 the functions of these houses have been constantly increasing, 
 and now we find the export merchant not only continuing in 
 his original policy but assuming some of the functions that 
 were once exclusively controlled by the export commission 
 house, and, on the other hand, we find the export commission 
 house in many mstances invading the field of activities that 
 tradition originally assigned to the export merchant. In fact, 
 this confusion of functions has become so pronounced that it 
 is now difficult to determine just where the line should b^ 
 drawn between what has been commonly known as an export 
 merchant and an export commtsskm house. 
 
 FuHctians of the 
 
 Export Merchant 
 
 ^ In theory the export merchant purchases just like the domes- 
 tic jobber or wholesaler. He buys where he can obtain the 
 km^ prices and he sells wherever he can get the best prices 
 for his merchandise. He engages in this business on his own 
 account. Unlike the export commission house, the export 
 merchant need not wait until some foreign customer sends in 
 an order or indent for American goods. If he feeb that he can 
 huj goods at an advantage today or ho6k hdght space for 
 
n EXPORTING TO THE WORLD 
 
 such and such a date he will do H without the necessity of 
 receiving instructions from anyone. He is his own master. 
 
 Operations of an 
 Expwt Merchmt 
 
 The export merchant is usttally to he found at some great 
 
 seaport like New York or San Francisco. From these points 
 he directs operations that may cover the greater part of the 
 world or only a portion. When the held is hroad the merchant 
 divides his business mto departments so that each department 
 may individually conduct the business of a certain territory. 
 For instance, there may be a Far East department, or a South 
 African department, or a Latin-American department. It is 
 necessary to divide the business' mto these various depart- 
 ments because of the special requirements and peculiarities 
 of each geographical group. Only a force of employes that 
 has specialized in the handling of the business in each of these 
 groups for a long period of time can e&ciently handle the 
 great amount of detail work involved. 
 
 Instances are, indeed, rare where an export merchant en- 
 deavors to cover the world in the development of his business. 
 It does not pay. Such an attempt involves the thin spread- 
 ing of his energies over a great amount of territory, and much 
 uncertainty, whereas, if he would conhne himself to one geo- 
 graphical division where conditions are uniform, the efficiency 
 of his staff would not only be increased but undivided atten- 
 tion to the development of that particular market would be 
 assured. There are, of course, certain large exporters of 
 staple articles that must of necessity confine themselves to no 
 individual zone. Among these may be inchided e x porters of 
 wheat or cotton* 
 
 How Export Merehami 
 Transacts Business 
 
 When the foreign importer wants to know the cost of an 
 article or an assortment of articles for the purpose of quoting 
 his local trade he is interested in knowing the approximate 
 
 cost of the merchandise at the port of destination so that he 
 may be able to intelligently figure his price therefrom. As the 
 
 f 
 
 EXPORT HOUSES 
 
 93 
 
 expcnrt merchant receives many of these requests for quota- 
 tions by cable he must of necessity detail the cost of the mer- 
 chandise, the marine insurance and the freight charges. This 
 is the modern c. i. f. term which involves the merchant in the 
 obligation to furnish the goods, provide the transportation to 
 port of destination, and to insure the shipment against ocean 
 risks. This serves as a great advantage to the importer who 
 is in a position to precisely know what his goods will cost 
 when they arrive so that he can make his own price to the 
 customer. Furthermore, the importer is relieved of the trou- 
 ble of booking freight space as well as the risk involved in 
 the changing freight rates. The export merchant, being on 
 the ground, is in a better position to exercise his discretion in 
 the booking of freight than the importer. He is necessarily in 
 close touch with shipping conditions. The merchant, of 
 course, is not confined to quoting c. L f. terms exclusively. 
 The nature of the relations existing between merchant and 
 importer may determine the method of quotation. In a later 
 chapter these c. i. f. terms will be more fully explained. 
 
 Export Merchant's Branches 
 at Home and Abroad 
 
 The bona fide export merchants of today have branch offices 
 in every section where their business has been developed. 
 This means that they may have branches at home as well as 
 abroad. Owing to great distances and the necessity of having 
 personal attention at tiie principal ports of shipment in ^e 
 United States the export merchant whose volume of business 
 justifies it has now a branch office in each of the principal sea- 
 ports of the United States through which the great volume 
 of the American export trade passes to foreign countries. 
 
 A well known export merchant has a string of branches 
 along the west coast of South America. These branches dom- 
 inate the territory in which they are situated. The organiza- 
 tion of the foreign field is even extended to sub-branches 
 which are responsible to the main branch of the country, and 
 in turn the main branch is responsible to the head office in 
 the United States. The branch manager must be not only a 
 competent man, but a man with a vision. He must develop 
 the business as well as keep the home office in touch with 
 
U EXPORTING TO THE WORLD 
 
 dmifiiig local condhioiis. He imist know the financial 
 strength of those with whom he is doing hnsincas. He must 
 
 know at all times what his competitors are doing and con- 
 stantly keep the home office informed by cable or by mail as 
 to the actnai situation. The advantage oi a branch office lies, 
 of conrse^ in the fact that it is on the ground to know first 
 hand what the conditions and possibilities are, as well as to 
 contribute the element of the personal equation in the market, 
 which is a powerful factor nowadays in devebping an export 
 hostness* ^ 
 
 Foreign Agency for 
 Expori Merchant 
 
 The nearest approach to a branch office for an eaqport mer- 
 chant is a foreign agency which is supposed to render prac- 
 tically the same services as a foreign branch office. The 
 foreign agent is expected to do all in his power to develop 
 business for the ^port merchant The foreign agent may 
 have the exclusive representation of more than one line» pro- 
 vided, of course, there is no conflict of interests. An agent 
 must not represent two different makes of a typewriter or an 
 automobile. The kind of agent the American export merchant 
 is always looking for is he who takes the initiative in develop- 
 ing business, such as sending out solicitors to interview the 
 trade, and who constantly keeps his principal informed of 
 market amditbns or other devek>pments that may be of im- 
 portance to the home office. The diligence with which the 
 agent functions determines his continued relations with the 
 export merchant. 
 
 Mom Exp^Mri Mnekmi 
 Works Manufacimmr 
 
 Individual cases, of course, determine the relations between 
 export merchant and manufacturer in the exploiting of the 
 hitter's goods in foreign helds. Authorities on the subject 
 of relations between these principals agree that the contract 
 that has found most favor is that which provides that tiie 
 export merchant shall guarantee to purchase a stated quantity 
 of the manufacturer's article in return for the exclusive agency 
 
 EXPORT HOUSES 
 
 95 
 
 in the country where the merchant is operating. Some of the 
 
 most famous American trademarked articles have found their 
 way into foreign countries by this method. A certain make 
 of typewriter has been introduced into a foreign market by a 
 somewhat similar plan of action. In this sort of an agreement 
 a clause may also be included providing that the manufac- 
 turer and merchant equally share the expenses involved 
 in sending a traveling salesman through the territory on 
 soliciting mission. Whatever sort of an agreement is 
 reached, it must be remembered that the export merchant 
 performs a useful service, and is competent to intelligently 
 develop sales for American goods in foreign markets. The 
 export merchant by virtue of the strength of his organization 
 may be in a pontion to handle the lines of several manufac* 
 turers, which is an ea>nomic saving in itself. On the other 
 hand, the manufacturer may find it more profitable to do busi- 
 ness direct. This he can do, but he must have the export 
 machinery to do it with. Either method has its advantages 
 and disadvantages. The decision to choose one or the other 
 rests with the manufacturer. His course ia determined by his 
 own individual problems. 
 
 Functions of the 
 
 Export Commissiom Houu 
 
 Theoretically, the export commissum house merely executes 
 
 orders in the United States for a foreign importer, receiving 
 its income from commissions it charges to these clients for 
 services rendered. This is the basic principle upon which the 
 commission house <Mriginated. With the growth of our export 
 trade, however, the toBgort commission house ceased to con- 
 fine its functions to executing orders for foreign buyers and 
 assumed additional burdens, such as buying and selling in 
 special instances and acting as agents for American manufac- 
 turers in foreign countries. Of the 2,000 or over export 
 houses in the principal ports of the United States the majority 
 of them may be properly called export commisinon JhcMises. 
 
 The export commission house begins operations by inducing 
 foreign buyers to entrust their purchases in the United States 
 with the firm. In order to gain this confidence the commis- 
 sion house must prove that it has a thorough knowledge of 
 
96 
 
 EXPORTING TO THE WORLD 
 
 the iCNirces of sapply in the American market as well as an 
 expenence in the purchase of merchandiae. Moreover^ the 
 
 commissmn house must be thoroughly equipped to handle all 
 the details peculiar to the export trade. In other words, it 
 must be an export house in every sense oi the word. 
 
 Hm» Export Cmmmssum 
 
 House Executes Orders 
 
 An order comes from an importer in South Africa for an 
 assortment of goods. In the relations existing between the 
 export commission house and the importer it is already under- 
 stood that a certain fixed commission will be due the former 
 for its services in executing the order and in obtaining the 
 lowest prices possible. In this case the commission house will 
 nsnally ship the goods to its cHent on an i o. b. basis» i e.» f ree 
 on board ship. Before this development in the transaction is 
 reached, however, the export commission house will have sent 
 its buyer out to find the goods. It is possible that the im- 
 porter has specified the manufacturers from whom the goods 
 are to be bought. The buyer has nothing to do then but to 
 go to these manufacturers and obtam them. On the other 
 hand, the importer may have left the selection of other items 
 on the order entirely to the judgment of the commission 
 house. In this case the commission house buyer goes to the 
 manufacturers who make these goods. He may get in touch 
 with them by loddng up their names in the trade directories, 
 or advertisements in the export trade journals. The goods 
 are then collected together, shipped on one bill of lading and 
 after the importer makes his payment the transaction is com- 
 plete. The services rendered have been the buying of goods 
 in the American market, the taking care of the details in con- 
 nection with the shipment, the booking of freight qMce, and 
 the obtaining of the marine insurance if the importer requests 
 it. Finally the commission house draws against the importer 
 for the cost of the goods and other charges, as well as the 
 commission for services rendered. ^In this transaction the 
 conmiission house is acting purely as an agent. We shaU now 
 see how it may act as a principal. 
 
 The order comes from the same importer in South Africa. 
 Instead of asking the commission house to makes purchases 
 
 EXPORT HOUSES 
 
 97 
 
 from certain manufacturers or in the open market the im- 
 porter this time requests a price for a certain list of goods, 
 including the cost, insurance, freight and the commission or 
 profit that the commission house is likely to recdve. In this 
 case the export commission house is forced to quote on a 
 c. i. f. basis. Also, it is in competition with other commission 
 houses for the same order. Realizing that it must quote as 
 low as possible in order to obtain the business, in many cases 
 the commission house will eliminate the margin of profit in 
 its price to the importer, and depend for its profit on its 
 ability to buy from the manufacturer at a lower price than 
 that quoted to the customer. Or, if it understands the freight 
 situation, it may obt^ space at a lower rate than that quoted 
 in the original figure. 
 
 Thus it will be seen that the export commission house dif- 
 fers from the export merchant in that it acts merely as an 
 agent for an importer in a foreign country executing all orders 
 that the latter may issue. It ai^iroaches the functions of the 
 export merchant only when it engages in the purchase and 
 sale of merchandise on a c. i. f. basis, as explained in the 
 previous paragraph. On the other hand, the export merchant 
 buys on his own responsibility and sells where he can obtain 
 the best price for his merchandise. No commissions are in- 
 volved in his transactions. He fixes his own margin of profit, 
 and that is included in the price to the customer. 
 
 Sometimes the functions of the manufacturer's agent are 
 confused with those of an export commission house. The 
 manufacturer's agent acts purely in behalf of the principal, as 
 the name implies. Orders coming to the agent must go to 
 the manu^cturer he represents, while the pommission house 
 is not bound to patronize any particular manufacturer unless 
 it is instructed to do so by the foreign client. 
 
 Organization of the 
 EjFfort Commissiou Haust 
 
 The export commission house may be found in aOiy large 
 
 American seaport. From this point a staff consisting of an 
 executive, buyers, correspondents, shipping clerks, bill or 
 auditing clerks, invoice clerks, and bookkeepers direct the 
 business that may be eictended to all sections of the world. 
 
EXPORTING TO THE WORLD 
 
 l^he number of employes and executives on the payroll is 
 detennined by the strength of the house's finances as well as 
 ^le volume of btuiness it conducts. 
 
 In the large organizations, where several countrtei arc in- 
 volved, departments are created to handle the business al each 
 individual country. At the head of each department there 
 may be a buyer whose functions are to understand the needs 
 ol the foreign country for which he is to make purchases, as 
 well as to keep in touch with foreign buyers by frequent visits 
 to their territory, or by correspcmdence. When buyers arrive 
 in Ais country to look over the market it is the duty of the 
 buyer for the commission house to make their acquaintance. 
 In a business where technical knowledge is required the com- 
 mission house may have on its payroll an expert buyer who 
 has a thorough technical knowledge of the articles to be pur- 
 chased. It often happens that a commission house leaves the 
 I>U3ring to the heads of the departments, whose knowledge of 
 the sources of supply may be adequate for intelligent work. 
 
 The buyer's aim is to obtain the lowest quotation, and to 
 make as shrewd a bargain as possible. The intelligent con- 
 duct of his assignment depends on his knowledge of the 
 scmrces of supply and the prices offered by competing manu- 
 facturers. Agents of the latter frequently make the rounds of 
 the commission houses soliciting business. Buyers as well as 
 heads of departments are thus able to keep in close touch with 
 competing prices as well as new articles put on the market 
 lor sale. 
 
 Foreign Branch Office of 
 
 Export Commission House * t 
 
 r 
 
 When the volume of business justifies it the export commis- 
 sion house will establish branches in certm ^commercial cen- 
 ters abroad. They are not to be found everywhere, however. 
 Only those markets that have been developed sufficiently to 
 justify special effort are selected as suitable places for branch 
 offices. Usually these branches are in charge of an executive 
 trained in the home office. Cases are known where natives are 
 in charge. Whoever the branch manager may be, it is obvious that 
 he must be given a free rein in the conduct of his duties. He 
 is the man in the field and knows more about Hm ecMiditkwa 
 
 EXPORT HOUSES 
 
 99 
 
 and requirements than his superiors at home. His employers 
 
 have selected him because of the confidence in his judgment. 
 Therefore, when he assumes his duties of foreign branch man- 
 ager they must rely on his judgment. It would seem that the suc- 
 cessful conduct of a foreign branch office should be left en- 
 tirely to the foreign branch manager, yet the powers-that-be 
 at home often endeavor to dictate certain impossible activities 
 without even consulting the man on the ground. In order to 
 obtain the best that is possible out of a foreign branch office 
 the export commission executive at home should be satisfied 
 merely with the supervision of the general details of the over- 
 seas business, and leave the matter of obtaining restdts to the 
 man upon whom he originally placed his confidence. If he 
 fails to "deliver" then he has the power and authority to send 
 him home. 
 
 The advantages of a foreign branch office are obvious. In 
 the first place it puts the personal touch in the foreign field. 
 This is very important Also, through the branch office ^ home 
 
 people are constantly kept in touch with changing commercial 
 conditions and markets. A better knowledge of the financial 
 standing of the customers is obtained. The development of 
 the market is expedited. When there are new goods to intro- 
 duce the foreign branch office is in a position to do this i»op- 
 erly and efficiently. , 
 
 Foreign agents of the export commission house operate in 
 much the same way as agents for the export merchant. They 
 usually trade under their own name and may have various 
 sorts of arrangements for the representation of American 
 lines. 
 
 Merchandise of the 
 Export Com9tUssion Man 
 
 In theory the export commission house handles all sorts of 
 merchandise. Some commission houses, however, specialize 
 in certain lines* such as drugs, chemicals, machinery, hard- 
 ware, clothing or automobiles. There is no set rule of a^on. 
 Moreover, an export commission house may have ah agency 
 for an automobile in South America, while in Australia its 
 line may be pianos. It often happens that an exclusive agency 
 for a certain article does oot ioUow the export commissioa 
 
100 
 
 EXPORTING TO THE WORLD 
 
 house all over the world. Neither are its lines identically the 
 same in every country it reaches. An American export com- 
 mission house deals in hardware in one section of the world, 
 in cotton piece goods in another^ and in agricultural machinery 
 in still another. 
 
 The d^ee of specialization b generally determined by the 
 volume of business that the export commission house may be 
 able to work up in a certain line in its overseas trade. When 
 the commission house reaches that point where it can give 
 such specialized attention as the sale of a certain commodity 
 may justify it will then be in a positicm to give more efficient 
 service. 
 
 In every market different customs regulations, language, 
 conditions, etc., may be encountered by the export conunission 
 house. If its program is so ambitious as to endeavor to cover 
 tim entire worid it will readily be seen that a laige staff com- 
 posed of experienced men who understand the various 
 methods of handling shipments for individual markets will 
 be necessary. Unless the business is of such volume as to 
 justify a tremendous organization the export commission 
 house will do well to confine itself to certain territories where 
 it will not be so difficult for the smaller staff to keep in touch 
 with conditions as well to thoroughly master die details 
 peculiar to those markets. 
 
 How Commission House 
 DgvHafs Its Saks 
 
 In developing business the export commission house may 
 employ salesmen who are sent either from the home office or 
 from the branches abroad. Or business may be developed 
 by correspondence and advertising. Obviously, the first 
 method is the best, as has already been indicated in a previous 
 cfuipter. 
 
 In his operations the salesman may carry a large number of 
 samples, which he displays at the branch office of the concern. 
 Ordinarily he works out from this branch in the country to 
 which he has been assigned. Some commission houses, how- 
 ever, send their salesmen to different zones. At the end of 
 the tour these salesmen return to the home office to make 
 their reports. 
 
 r 
 
 EXPORT HOUSES 101 
 
 It has been shown in this chapter how the export commis- 
 sion house keeps in close touch with buyers for foreign houses 
 who may arrive in this country to make their purchases. The 
 names of these buyers may be obtained from the newspapers 
 or trade organizations existing in the various so^orts. 
 
 Routine of Commission 
 House m Handlmg Order 
 
 The handling of an order in an export commission house is 
 
 something like this: 
 
 The order is for an assortment of stationery. The importer 
 may have ^[ledfied the names of the manufacturers from whom 
 the goods are to be purchased. In this case, the commission 
 house buyer will have to look up these manufacturers. Or, 
 the order may empower the commission house to use its own 
 judgment. If such is the case the commission house will 
 send out inquiries to the leading manufacturers for the lowest 
 possible quotation on the goods. Before the order is given 
 serious attention, however, the credit standing of the foreign 
 customer is investigated. In old-established commission houses 
 the matter of deciding whether or not the importer shall re- 
 ceive credit is a simple one, as they know the financial status 
 cf their customers through long experience, as well as the 
 methods of obtaining reliable credit information concerning 
 new customers who send their orders to be executed in the 
 United States. 
 
 The matter of credit to the customer determined, the buyer 
 now receives the order for execution. In the meantime in- 
 structicms as to shipment, insuring and financing are given to 
 the proper departments. All information regarding these in- 
 structions may be found in the card index, where it was en- 
 tered when the order was originally received. 
 
 The buyer now proceeds with the purchase of the goods. 
 He may know beforehand ixom what manufocturers he can 
 obtain the lowest prices. Possibly it may be necessary for 
 him to go out in the open market to obtain the most satisfac- 
 tory quotations. Once having received these quotations from 
 the various plants the buyer is now ready to place his orders. 
 
 When the orders are placed the buyer is practically finished 
 wi4i phase of die woric ia oomiectkm wt^ the order. The 
 
103 EXPORTING TO THE WORLD 
 
 shippiiig dark must now kttp m touch with the ah^mient 
 from the factory to see that there is no delay in placing the 
 goods on the ship at the proper time. In the meantime he 
 must engage space. When the steamer prepares to load he 
 must instruct the iactoiy to ship the goods to the port 
 
 The bookkeeping department handles the bills for merchant 
 dise sent by the manufacturers. It must prepare to make pay- 
 ments in accordance with the terms of sale. It also carefully 
 compares the prices and items on the manufacturers' bills 
 with the memorandum of the order placed by the buyer to 
 see that no mistakes have been made. Once satisfied tluit the 
 bills are correct it then prepares to make payment. 
 
 A draft of the bill of lading and the manufacturer's bill are 
 now turned over to the invoicing department so that it can 
 make out the documents peculiar to the shipment. The neces- 
 sary information concerning the method of making out the 
 dntft and the taking out of marine insurance, etc., will be 
 found on the card index which the inToicing department 
 refers to. 
 
 Whed the invoice is completed the finance department is 
 given the draft and other necessary papers which it takes to 
 the bank. Payment is recdved in accordance with the tenna 
 arranged wi^ the foreign buyer. The methods of financing 
 
 a shipment will be more fully explained in a subsequent 
 chapter. 
 
 The shipping derk's duties in connection with this particu- 
 lar diipment end when he checks up on the freight chaigesy 
 and makes payment to the steamship company. 
 
 Advantages of Export 
 Commission Houses 
 
 The export commission house is the intermediary between 
 
 the source of supply and the market. A great percentage of 
 American foreign trade is transacted through the export com- 
 mission house. There is a reason. The export commission 
 house is equipped to handle foreign business for American 
 manufacturers. It has built up a selling machine in various 
 foreign countries. It has gathered to its staff experts in buy- 
 ing and selling; experts in handling export documents; ex- 
 perts in preparing and financing shipments; experts who 
 
 r 
 
 EXPORT HOUSES 
 
 108 
 
 understand the conditions in foreign countries, and who know 
 the requirements and peculiarities of the different fields. Not 
 only one, but any number of manufacturers may benefit from 
 an organization of this sort, and yet avoid all responsibility 
 and risk in shipping the goods to foreign countries. The 
 export commission house is a professional salesman and dis- 
 tributor of American products. It is supposed to know its 
 business. It has developed its business on the basis of its 
 efficiency and success in the past. The manufacturer who is 
 seeking a foreign market and yet hesitates against building 
 an export department in his own organization naturally will 
 look for somebody with a professional knowledge of selling in 
 
 y foreign markets. The export commission house supplies that 
 knowledge. 
 
 Field of Commission 
 Houses Is LimUed 
 
 In the use of export commission houses for the development 
 of foreign trade, however, it is necessary that the manufac- 
 turer proceed with caution. It must be remembered that export 
 commission houses do not "cover the entire world. Some com- 
 mission houses dominate in certain fields, and some in others. 
 No commission house is all powerful in every section in which 
 it is established. Some houses dominato a certain field in the 
 machinery line, others in textiles and still others in office sup- 
 plies, etc. It would not be good business for a manufacturer 
 to turn over an agency to a commission house without first 
 inquiring into the situation in the countries in which he wishes 
 to sell his goods. There is considerable truth in the state- 
 ment that the great flood of criticism that has been directed 
 against commission houses has been provoked from misunder- 
 standings on the part of the manufacturer as to the exact 
 functions that the commission house to which he has been 
 attached can efficiently perform, and the facilities it can offer. 
 
 The co mmi ssion house has its limitations. It cannot be 
 expected to give the same thought and attention in tfie devel- 
 opment of a market for a specific article that the manufac- 
 turer would naturally give owing to the various lines that it 
 undertakes to handle. It must of necessity scatter its shot. 
 Again, as an exclusive agent for an American manufacturer 
 
104 EXPORTING TO THE WOiaj> 
 
 it may not be able to induce certain dealers to buy the manu- 
 facturer's articles when others of a similar character may be 
 purchased from other commission houses with which the 
 dealer has transacted business for many years. Foreign buy- 
 ers ^eler to jj^ace their orders through one house in order to 
 avoid considerable red tape. They do not like to scatter their 
 indents. Therefore, if a manufacturer gives a commission 
 house the exclusive agency in a certain field he merely nar- 
 rows the market for his product 
 
 CommUsUm Homn 
 Ham Campkmi 
 
 There has been considerable criticism on the part of com- 
 mission houses against the demands made upon them by the 
 
 manufacturers. It is claimed that the manufacturers refuse 
 to extend adequate credits to the commission houses, which 
 the latter often charge as being beyond reason. In his ad- 
 dress before the Sixth National Foreign Trade Convention in 
 Chicago^ William H. Douglass, president of Arkdl & Doug- 
 lass of New Yorky had this to say : "The existing relationship 
 between the manufacturer or supplier of goods and the ex- 
 porter should be thoroughly gone into. It cannot be truth- 
 fully stated that it is overcordial today. This is due to the 
 rules formulated by the manufacturers without regard to the 
 interest or necessities of the exporter. Dealing with one 
 alone, the pa3rment system, all exporters will agree it weighs 
 heavily on their shoulders. Manufacturers today have placed 
 the export business entirely on a cash basis. They have a 
 system of small discounts for cash, with payment at sight, 
 five or ten days, and while they know that these discounts 
 must be granted to the buyer abroad, they are indifferent to 
 the position of the exporter, and do not wish to allow the 
 specials if there is the slightest infringement of their pay- 
 ment dates. They sell in their domestic trade on long terms 
 to parties frequently of little or no standing, dating their bills 
 several months ahead and giving sixty to ninety days' time 
 lor payment; and yet they penalize the exporter by rules 
 which require him to pay them generally long before he can 
 ship the goods abroad; and, furthermore, they expect the 
 buyer on his part to give credit abroad when he does not re- 
 ceive it at home*" 
 
 I 
 
 EXPORT HOUSES 105 
 
 Mr. Douglas clearly sums up the advantages of the commis- 
 sion house with the following statement: "As a result of 
 the war, burdensome laws and restrictions will undoubtedly 
 be established, and such laws already exist in South America 
 and elsewhere. Preferential tariffs will be granted, partial or 
 total exclusion of our goods may be adopted as a policy, or 
 again rules may be established of such a restrictive character 
 as to practically prevent the importation of our goods. Our 
 merchants cannot controvert or change such regulations, as 
 they are international questions; and our government must 
 be alive and firm in preventing unjust and unfair discrimina- 
 tion by any nation against our commerce. American goods 
 must have the open door on an equal basis with any other 
 nation's goods to every country in the world. 
 
 'The powerful manufeicturer who has handled export busi- 
 ness for many years is, naturally, by acquired experience, able 
 to take reasonable care of his interests, but to the thousands 
 of smaller manufscturers who are now entering the field, it 
 may be well to say there are many pitfalls, and great care 
 should be used to take the right road. Exclusive agency ar- 
 rangements either with American or foreign firms should be 
 avoided unless the goods are of a character that require this 
 means of exploitation. Hundreds of foreigners are touring 
 the country, offering their services on a salary or a commis- 
 sion basis, claiming they can do wonders if given rights in 
 their home countries; but it is well to avoid them, or at least 
 satisfy yourselves as to their credentials. New companies with 
 new connections abroad are willing to accept liberal retainers 
 to try to do something which the manufacturer can better do 
 himself, or arrange through those who have the proper status. 
 Avoid too large a grant of territory abroad to any one house, 
 as it it not desirable. Direct trade is unwise at first, if not 
 always. Because travelers are sent abroad to introduce goods 
 is not a reason why the business must be done direct, and not 
 through the regular exporter. Cash for goods from the ex- 
 porter is better dian financing on the buyer thousands of miles 
 away at 90 or 120 days. Drafts have an unfortunate way of 
 coming back unpaid quite frequently." 
 
loe EXPORTING TO THE WORLD 
 
 Future of Expert 
 
 Commission Houses 
 
 It is doubtful if the export commission houses can ever be 
 eliminated in foreign trade. As a matter ol fact it is not 
 desirable that such a vital machine to tiie development and 
 extension of our foreign business be scrapped. The commis- 
 sion house will always be found in some region where it is 
 tmprofitable for the manufacturer to reach single handed. 
 The commission house will always handle some products that 
 will be more convenient for it to handle than any other agency. 
 Mr. G. £. Smith, at one time president of the American Manufac- 
 turers' Association, in explaining the future of the export com- 
 mission house before the Sixth National Foreign Trade Conven- 
 tion in Chicago said : "We can thank our export houses, with 
 few exceptions, for whatever prestige America^ goods en- 
 joyed in foreign markets before the war. They were the pio- 
 neers in finding a demand for ottr products and in meeting 
 that demand where they found it. Our foreign trade in staple 
 goods today is largely the result of earnest and effective work 
 by these export houses, and I believe that a large field exists 
 and will exist in which they will continue to handle business 
 efficiently and more intelligently than the producer 
 himself. 
 
 "Outside of raw and semi-raw materials, however, the fu- 
 ture of American foreign trade lies with her manufactured 
 specialties. Machinery, special tools, labor-saving devices, 
 the products of American ingenuity and American Victories 
 are destined, I believe, to fmn the great bulk of the new trade 
 which awaits our exporters. And it seems to me to be a 
 truism that abroad, as well as at home, no one can sell these 
 products as well or as successfully as the man who makes 
 them. * 
 
 ''The successful sale of these articles demands two tUngs, 
 which can only be afforded by the manufacturer himself. The 
 
 first of these is the creation of an intelligent demand for the 
 article. The second is provision for service after the article 
 has been bought and is being used" 
 
 CBApnat IX 
 
 FOREIGN SALES ORGANIZATIONS 
 
 Advantages of local foreign sales agent — ^Different func- 
 tions OF LOCAL POBBIGN SALES AGBNTS—* MANUFACTURER'S AR- 
 KANGKMSNTS WITH LOCAL FOREIGN SALES ACSNT»— FOttQGN 
 
 BRANCHES AS SELUNG AGENCIES 
 
 The sales agent selling American merchandise in foreign 
 countries apparently is an indispensable being. The number 
 of these local foreign sales agents is gradually increasing as 
 American manufacturers are spreading their activities to 
 reach the most important sections of the world. These sales 
 agents are not hard to find. They thrive in great numbers in 
 ^ principal markets of the worid and the records show that 
 a great number of them have performed their functions with 
 satisfaction. 
 
 The local foreign sales agent serves in the same capacity as 
 the f ore^ branch office only he orders and sells on his own 
 account, finances all orders and depends on the volume of the 
 
 business he has worked up for his own profits. The agent's 
 office or store serves as headquarters for stocks or spare parts 
 so that customers may be given service in connection with 
 their purchase ol goods of a technical character. It is not 
 uncommon for the sales agent to co-operate with ^ manu- 
 facturer in the promotion of the latter^s products. 
 
 Advantages of Local 
 Fanigm SaUs Ageni 
 
 The man ufa ct u rer who sallies forth to conquer foreign mar- 
 kets may be able to cut his preliminary troubles in half by 
 connecting with some responsible local foreign sales agent 
 who may already have an adequate and well known organiza- 
 tion in the field. Once the agent is given an exclusive con- 
 tract hia organisation^ which may extend to all parts of the 
 
 m 
 
108 EXPORTING TO THE WORLD 
 
 country in which he is located, starts working for the fnanu* 
 
 facturer at home, and his products. The success in the sale 
 oi his goods will depend very much on the co>operation that 
 he eactends to his representative in the field. A live agent, 
 r^rdless of the nnmber of non-competing lines he handles, 
 may do wonders for his principal if the proper sort of co- 
 operation is extended by the latter. 
 
 Needless to say, the skiUlul attention of a local sales agent 
 h invaluable where personal attention of a scientific and tech* 
 nical character is involved. A manufacturer producing an 
 article requiring mechanical knowledge would find it difficult 
 to market it unless he were fully prepared to render a certain 
 amount of service. No customer would want to wait from 
 six to ten weeks for the shipment of an extra part of an article 
 which he could not obtain in his own cotmtry. An agent well 
 supplied with these i^are parts cao easily eliminate such 
 delaja. 
 
 Local Foreign Sales Agent 
 May Develop Business 
 
 The local foreign sales agent— if he is a live one— can 
 alwajrs be depended upon to take advantage of every oppor- 
 tunity to turn over a deal for his principal. He is in daily 
 touch with conditions, with the launching of new enterprises 
 of an industrial character, and with the activity of his com- 
 petitors. As a salesman and a developer of new business he 
 will never lose an opportunity to sell the goods for which he 
 is the exclusive representative. Co-operating with the manu- 
 facturer he receives and distributes samples and catalogues 
 and other literature that is aimed to advertise the line The 
 manufacturer's confidence in his foreign agent established, 
 no time should be wasted in giving him full support in the 
 development of business. The manufacturer should at all 
 times co-operate to the fullest extent He should consult with 
 him on matters involving sales-promotion work. He should 
 keep his agent well supplied with advertising literature to 
 mail to prospective customers. An occasional visit on the part 
 of the manufacturer or his representative should be made, if 
 possible. 
 
 FOREIGN SALES ORGANIZATIONS lOd 
 
 Sates Agent May 
 
 Obtain Credit Data 
 
 The policy of appointing local foreign sales agents has an ad- 
 vantage also in the matter of obtaining credit information. A 
 good sales agent keeps in dose touch with the bankers of the com- 
 munity as well as with other commission agents, credit agen- 
 cies and collection firms. Such information is occasionally 
 asked the sales agent. In exchange for this information 
 the sales agent obtains a very good idea of the status of a 
 great number of merchants, which is of inestimable value to 
 the manufacturer. 
 
 Trying to settle some misunderstanding by mail involves 
 considerable time and bother. Even if correspondence is 
 resorted to there is the danger that the letter will be mis- 
 understood, and instead of soothing the feelings of the man 
 at the other end it is more than likely to increase the aggra- 
 vation. There is nothing like having a good man on the 
 ground td smooth over these matters and to adjust or com- 
 promise claims whenever they arise, or to obtain settlement 
 from slow pays. A good agent is not only in a position to 
 handle these delicate situations, but his personality may lead 
 to the restoration of complete harmony between manufacturer 
 and customer. This is something that a letter hardly ever 
 does. 
 
 The Meammg of a 
 *'Del Creder^ Agent 
 
 When a local foreign sales agent assumes part or all the 
 risks involved in the selling of goods to local customers he is 
 generally called a ^*dtl credere" agent. A "del credere" agent 
 usually guarantees the payment of goods, but in return he 
 may ask for a much larger commission, which is called a 
 "del credere" commission. 
 
 ''In case of need" is a phrase used by manufacturers to 
 notify bankers of the name and address of an agent at the 
 other end who may be entrusted to take care of the manufac- 
 turer's interests in connection with protested drafts, or with 
 the diq ^os al of the goods to other merchants. 
 
110 EXPORTING TO TH£ WORLD 
 
 Merchant Agents 
 Sole Distributors 
 
 Sometimes a manufacturer may i^^pofnt a merchant as his 
 sole distributor in a certain territory. The goods are actually 
 sold to the merchant and he is ordinarily supposed to guar- 
 antee a certain volume of business in return for the exclusive 
 rights for his territory. The advantages of having a merchant 
 as aoLc distributor are many. The manufacturer will carry 
 onty one account on his books in this instance. He need not 
 bother about credit risks in which many customers are in- 
 volved. His risk is reduced to one account— that of the mer- 
 chant. Again, the merchant may have developed a strong 
 organization in his territory which will be of great value to 
 the manufacturer. As a purchaser of the manufacturer's 
 goods outr^ht the merchant will show considerable interest 
 in their sale. He must depend upon the turnover lor his 
 profits. There is this danger in the appointment of merchant 
 agents as sole distributors, however: In a majority of cases 
 the merchant agent's competitors conduct retail establish- 
 ments, and he knows that he cannot sell his goods to these 
 competitors. His field is narrowed. It is up to him, then, to 
 find customers who are not attached to his wholesale com- 
 petitors. The motives of a merchant agent should also be 
 closely looked into. Often a merchant agent obtains the ex- 
 clusive agency for an article merely to suppress it. This is 
 done in order that other competitive lines for which he is 
 sole agent and which offer larger sales or profits may have a 
 dear field. 
 
 How Local Foreign Sales 
 Agents Are Selected 
 
 It has been remarked quite often that Americans only 
 
 should be in charge of the foreign sales of an American manu- 
 facturer. The basis for this statement lies in the belief that 
 lordgners are untrustworthy, and that they will always give 
 the American article the worst of it when it is competing 
 with an article made in some other favored country. There 
 may be some cases where foreigners have endeavored to give 
 the goods of their cou n tr y eveiy possible advantage over 
 
INTEN TIONAL SEC OND EXPOSURE 
 
 ., , » mjip II ■! II 111 . 1 1 1 I iii K ii m mum 
 
 110 EXPORTING TO THE WORLD 
 
 Merchant Agents 
 
 Sole Distributors 
 
 Sometimes a manufacttirer may appoint a merchant as his 
 sole distributor in a certain territory. The goods are actually 
 sold to the merchant and he is ordinarily supposed to gfuar- 
 
 antee a certain volume of business in return for the exclusive 
 rights for his territory. The advantages of having a merchant 
 as sole distributor are many. The manufacturer will carry 
 only one account on his books in this instance. He need not 
 bother about credit risks in which many customers are in- 
 volved. His risk is reduced to one account — ^that of the mer- 
 chant. Again, the merchant may have developed a strongf 
 organization in his territory which will be of great value to 
 the manufacturer. As a purchaser of the manufacturer's 
 goods outright the merchant will show considerable interest 
 in their sale. He must depend upon the turnover for his 
 profits. There is this danger in the appointment of merchant 
 agents as sole distributors, however: In a majority of cases 
 the merchant agent's competitors conduct retail establish- 
 ments, and he knows that he cannot sell his goods to these 
 competitors. His field is narrowed. It is up to him, then, to 
 find customers who are not attached to his wholesale com- 
 petitors. The motives of a merchant agent should also be 
 closely looked into. Often a merchant agent obtains the ex- 
 clusive agency for an article merely to suppress it. This is 
 done in order that other competitive lines for which he is 
 sole agent and which offer larger sales or profits may have a 
 clear field. 
 
 How Local Foreign Sales 
 Agents Are Selected 
 
 It has been remarked quite often that Americans only 
 should be in charge of the foreign sales of an American manu- 
 facturer. The basis for this statement lies in the belief that 
 foreigners arc untrustworthy, and that they will always give 
 the American article the worst of it when it is competing 
 with an article made in some other favored country. There 
 may be some cases where foreigners have endeavored to give 
 the goods €»f their country every possible advantage over 
 
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FOREIGN SALES ORGANIZATIONS 111 
 
 American-made products, but this is the exception and not 
 the rule. Foreign sales agents are out for the money as a 
 general rule. If they can make more profits from the sale 
 of an American product than they can from an article shipped 
 from their natiTe country they will take the agency of the 
 former in preference to the latter. Too many cases are known 
 where Germans have successfully acted as agents for English 
 goods, and English for American goods, and even Japanese 
 for American goods, to take such statements too seriously. 
 
 The first consideration in the selection of an agent is his 
 character and reputation in the community in which he is 
 doing business. As in the case of the traveling salesman, 
 the customer judges the home office by the character of the 
 representative in the field. 
 
 The fact that the agent has been long established and is a 
 powerful factor in the market should not weigh too heavily 
 in his favor. He may take the exclusive agency and give it 
 mediocre attention, whereas a young institution desirous of 
 growing may want that very article which the manufacturer 
 offers to increase its business. 
 
 Manufacturers often entrust then- traveling salesmen to 
 appoint agents in the countries through which the former 
 travel. These agents should be able to produce letters of 
 recommendation from other manufacturers for whom they 
 have operated, and other data as information for the manu- 
 facturer. The manufacturer must first satisfy himself that 
 he can place implicit confidence in his foreign representative. 
 Once having satisfied himself on this score, he must be pre- 
 pared to extend all the co-operation that that confidence 
 justifies. 
 
 Bmsiness Affmgnmnit 
 IViik Sflfef Ageni 
 
 The contract with the local foreign sales agent should be 
 prepared caref uUy. It should be caref uUy written so that dis- 
 agreeable controversies may be avoided. The following points 
 should be mcluded in a contract with a local foreign sales 
 agent: (a) Duties of agent; (b) authority; (c) terms upon 
 which he is to do business for his principal; (d) to what ex- 
 tent is the principal liable and responsible? (e) the territory 
 
m EXPORTING TO THE WORLD 
 
 over which agent shall exercise the exclusive rights to sdl 
 the manufacturer's article; (f) duration of the contract; (g) 
 the rate of commission and how it shall be applied ; (h) terms 
 of settlement on commissions; (i) the amount of business 
 required to avoid cancellatioii; (j) agreement not to handle 
 competitive lines. 
 
 The foregoing are some of the salient features that should 
 be included in a contract with a local foreign sales agent. In 
 order to make it more forceful the contract should be officially 
 executed and attested. The consul of the country in which 
 the manufacturer as to do business should witness the prin- 
 dpal's signature. On the other hand, the American consul 
 in the foreign country should perform similar service for the 
 agent. 
 
 One clause in the contract should receive careful attention. 
 This clause refers to the assignment of territory. A manu- 
 facturer who does not know geograf^/ may sign away the 
 sales rights to an entire continent. An agoit in Santiago, 
 
 Chile, may obtain the exclusive sales rights for Argentina and 
 Brazil from a manufacturer who is not familiar with the great 
 distances involved in those countries. Territory should al- 
 ways be limited to a certain line. 
 
 The commission given to a sales agent depends on the lin^ 
 as a general rule. Commissions may be as k>w as 1 per cent, 
 or as high as 25 per cent. The commission figure is deter- 
 mined by the manufacturer himself. Time of payment also 
 varies. There are no set rules. The manufacturer should see 
 that the sales agent receives all commissions arising from 
 tiie sale of goods in his territory in accordance with the terms 
 of the contract. It is important, therefore, that the manu- 
 facturer should know where goods purchased by commission 
 houses are bound for in order that he may give proper credit 
 and protection to his sales agent on tiie fidd. 
 
 Foreign Branches 0$ 
 Selling Agencies 
 
 A foreign branch may be merely a selling agency or it may 
 
 be a merchant handling a large stock of goods. The establish- 
 ment of a foreign branch requires delicate handling. Bitter 
 opposition from old merchants is likely tQ be encountered. 
 
 FOREIGN SALES ORGANIZATIONS 113 
 
 and in dfder to reduce this to a minimum it is necessary to 
 
 use tact and diplomacy. Intelligently operated, the branch 
 can be made a success. 
 
 When the selling agency begins to stock up with goods 
 from the home factory it offers a service that its customers 
 are likely to appreciate. An immediate supply of goods re* 
 moves long delays encountered in ordering and awaiting ship- 
 ments from the source of supply. Often an importer prefers 
 to buy an inferior article at home rather than to take the 
 tfouble of sending for it thousands of miles away. The for- 
 agn branch, by handling laige stocks, relieves him of this 
 trouble. 
 
 It must be remembered, however, that the foreign branch 
 is an expensive proposition when it is carrying stocks. Over- 
 head expenses may be high. Interest in the investment must 
 be considered, and doing business in a foreign country is 
 likely to run up miscellaneous costs. It must be remembered, 
 also, that foreign branches are subject to the laws of the 
 country in which they are operating. They must take out 
 licenses, and be prepared to pay the regular taxes, which may 
 come high in some instances. 
 
 Combination branch offices have been tried with consider- 
 able success. Failures have been due to the unintell^;ent 
 selection of the personnel to conduct these combinations as 
 well as to the petty jealousies and desires on the part of the 
 member manufacturers to dictate the policy of the combina- 
 tion. Quite often a manufacturer feels that he is not getting 
 enough out of the combination in proportion to his expenses 
 in the upkeep, so he decides to drop out. It seems obvious, 
 however, that in order to obtain permanent success some 
 genius must evolve a working plan that will satisfy the desires 
 of all those who subscribe to the combination. As far as is 
 known such j^an has not as yet been developed so as to meet 
 all these requiremeotft 
 
Cbaftb X 
 
 COMBINATIONS IN FOREIGN TRADE. 
 
 THI WlBB-POMlWafE LAW— CwTiaSM AND DEFENSE OF WeBB- 
 POMERENB LAW— PROVISIONS 09 THE MEASUIB— HOW C»MWNA- 
 TIONS ARE MADE UNDER THB WlBB-POMEBlNB LAW. 
 
 The Wcbb-Pomcrene Law, approved April 10, 1918, permits 
 cofttbinatioiis in escport trade. In the words of a critic the law 
 permits "our manufacturers to do to a foreign consumer who 
 has no vote in our affairs what cannot be done to the people of 
 the United States, whose constitutional rights enable them ef- 
 fectively to express tiieir approval or dis|to«ttrc.'' Ontheother 
 hand a champion of the measure declares that "the essential 
 object of this law is to give American exporters a fair chance 
 to compete with the exporters of other countries by enabling 
 them to reduce expenses of marketuig, thns permiUing the 
 quotation of such prices in foreign countries as will make 
 American products attractive to the consumer." 
 
 It will be remembered that the law caused considerable con- 
 cern in fordgn countries when it was enacted, and fears were 
 expressed on aU sides that it was probably an '"American de- 
 vice to control the world's markets at theur own prices." 
 While the provisions of the law are aimed to check unfair 
 methods and abuse in foreign markets, it will be necessary, 
 however, to prove that it is simply an instrument to assist 
 American manufacturers in develc^mg foreign business along 
 legitimate lines, and not a tool to destroy l^tunate competi- 
 tion. The burden of proof rests with those manufacturers 
 who operate in foreign countries under the provisions of iSb» 
 Webb-Pomerene Law. 
 
 In this connection it is well to remember that the great bulk 
 of mr American foreign trade has been built by individual 
 effort— by individual export houses and manufacturers. While 
 these merchants have often encountered problems and disad- 
 vantages of one kind or another in the different markets. 
 
 COMBINATIONS IN FOREIGN TRADE 115 
 
 nevertheless, by sheer force of initiative and enterprise, they 
 have been able to overcome these obstacles without the neces- 
 sity of combining along gigantic proporticms. The statistics 
 of our foreign commerce prove this statement. 
 
 The chief advantage of the Webb-Pomerene law, it seems, is 
 to permit small manufacturers who are unable to competently 
 develop the foreign market to cmnbine for such purposes and 
 to be able to sell at such prices that will meet the competition 
 of other foreign merchants. If this is the real purpose of the 
 law then there should be no justihcation in the criticisms 
 against it. 
 
 Two OpposUe Views 
 
 on the Webh'Pomerene Law 
 
 It is interestmg to read two very recent statements in con- 
 nection with the operation of the Webb-Pomerene law that 
 appeared in the New York Journal of Commerce. One is 
 
 from an Australian business man complaining against the law 
 and the other is from an American export man defending its 
 provisions. 
 
 The name of the foreign critic of the law is Mr. William 
 |>wis of Sydney, N. S. W., and he writes as follows: 
 ^The people in this country (Australia) are not disposed to 
 
 view with equanimity the possible effect of the operation of 
 the Webb-Pomerene Act, now operative in America. 
 
 ''Right or wrong, an impression exists in this country that 
 the purpose of this bill is to legalize, for the exploitation of 
 commercial fields outside of the United States, practices and 
 methods which the United States Government has deemed it 
 necessary to suppress within its own borders, as being inimi- 
 cal to the public welfare. 
 
 "Competitive business enterprise is commendable, and to 
 an enlightened country such as Australia, welcome. But when 
 that enterprise, instead of being competitive, merges into a 
 powerful combination with the express purpose of exploiting 
 and capturing the Australian market, welcome quickly changes 
 to resentment. 
 
 'T have before me the letterhead of one of the smaller recent 
 American cmnbinations. After naming the coalesced compa* 
 Hies, it ends with the sentence : XSombined capital twelve mil- 
 
116 
 
 EXPORTING TO THE WORLD 
 
 lion dollars.' This has an unpleasant sound, savoring of a 
 threat. It is not agreeable to be asked to choose between the 
 rattling of the Prussian sabre and the American cash box. 
 
 "Australia, in common with every member of the BritiBli 
 Empire, mmt firmly welded than ever before, holds a powerful 
 weapon in reserve which she may be forced to use without 
 scruple and which she can so use without the slightest breach 
 of international law. 
 
 "Suppose, ior instance, that the American manufeictnrers 
 of cotton piece goods, <»ie of England's most important in- 
 dnstries, taking advantage of the Webb measure, enter into 
 a powerful combination, controlling hundreds of millions of 
 capital. Basing their expectations of business in this country 
 on the fact that the present British preferential tariff in Aus- 
 tralia is practically n^ligible, they estabUsh central offices in 
 Sydney. Instructions to the genml manager from the board 
 of directors in New York arc to the effect that he is to meet 
 and beat competition from whatever source. Such methods, 
 carried to their legitimate conclusion, would mean the com- 
 plete extinction of British trade in cotton piece goods so hr 
 as AttstnOia is concerned. This will never be aUowed to 
 
 "In the event of such a happening the immediate and prac- 
 tical reply will be the possible duty of 50 per cent, from any 
 and all countries outside the British Empire; from all coun- 
 tries constituting the British Empire, either free or a tariff 
 for revenue only. Under these new conditions the Sydney 
 office of the American cotton piece goods combine, if it ever 
 opened, would close within a month. 
 
 **I am, perhaps, to some extent qualified to speak impar- 
 tially, since, though English by birth and parentage, I have 
 for many years represented American manufacturers in Aus- 
 tralia.** 
 
 IV, H. Mahoney 
 Answers Critkiim 
 
 In answering Mr. Lewis's criticisms Mr. W. H. Mahoney, 
 
 manager of the Foreign Trade Bureau of the Merchants' 
 Association of New York, said: 
 "When the Webb-Pomerene bill first became law some such 
 
 COMBINATIONS IN FOREIGN TRADE 117 
 
 opposition was sounded at Buenos Aires as is now voiced in 
 Australia in the protest which was published in the New 
 York Journal of Commerce from Sydney, but when the ques- 
 tion came to be thoroughly understood it died down. 
 
 ''Only the other day I had a business man in from Australia 
 who is interested in the paper industry. He did not appear 
 to be frightened by the Webb law and he said he was going 
 right ahead with his plans for the sending of paper from this 
 country to Australia. I am inclined to think that there 
 may be some merchants over there who may be unduly 
 alarmed. I can hardly believe that it is the general feeling 
 of business in Australia, but rather that of individual firms. 
 
 "As for the threat of imposing heavy preferential duties to 
 offset the supposed effect of the Webb law, why, that would 
 be nothing new. Preference duties have already been de- 
 cided upon and were agreed to at a conference in London 
 when the Colonial representatives were present. 
 
 "Besides, there is another aspect to the question. If under 
 the combinations effected of small traders whereby they can 
 economize by sharing their advertising, shipping and over- 
 head charges— for that was what is really intended— it puts 
 them in a position to compete for trade by supplying goods 
 at a lower rate than others, it will be the Australian people 
 or consumers who will get the benefit of it. The intention of 
 the competition is not to strangle trade elsewhere but to 
 compete fairly for it. 
 
 '^As I understand it in my talks with ei^rters, it is not 
 Australia that is going to suffer from the Webb law or is 
 going to be affected to any large extent, as the industries 
 under which there is a combination where business is done 
 with the Commonwealth are very few.'^ 
 
 Combinations Must 
 
 Obey Webb-Pomerene Law 
 
 In his remarks on the Webb-Pomerene law before the Sixth 
 National Foreign Trade Council John Walsh, former chief 
 counsel of tiie Federal Trade Commission pointed out the 
 
 necessity of combinations engaged in developing foreign trade 
 to follow the straight and narrow path, in the following 
 sentence : 
 
 ''The ultimate success or failure rests very largely on our 
 
118 EXPORTING TO THE WORLD 
 
 own business men. If the law is to serve as a vehicle for 
 commercial aggrandizement, to benefit the strong at the ex- 
 pense of the weak; or if it is to be used for selfish and un- 
 scrupulous exploitation of foreign markets, or for the purpose 
 of manipulating domestic prices, then the expectations of the 
 high-minded and broad visioned men who were its sponsors 
 would be shamefully thwarted and foiled. 
 
 "I believe that neither the American public nor foreign 
 nations would allow their respective public interest to be in 
 any way detrimentally affected by any unfair and question- 
 able commercial trade practices of an association operating 
 under the Webb act 
 
 "And besides, let us not forget that the Webb act has 
 teeth in it. Under its provisions the remedies in Section 
 Five of the Federal Trade Commission act against unfair 
 methods of competition are made to extend to unfair methods 
 of competition used in export trade against competitors en- 
 II gaged in export trade, even though the acts constttuting such 
 
 unfair methods are done without the jurisdiction of the United 
 States. 
 
 "Under the Webb act the United States Government de- 
 clares itself in unmistakable terms as insisting on fair and 
 honorable business methods in export trade." 
 
 The popularity of this new method of deyeloping foreign 
 business by combinations is indicated in reliable reports to 
 the effect that over 80 concerns are already engaged in oper- 
 ating in foreign countries under the provisions of the Webb 
 act. The law has been in operation hardly over a year. Ex- 
 port associations have been formed in a variety of industries, 
 including silks, chemicals, copper, textiles, hardware, lumber 
 and others. Small as well as large associations have been 
 formed. 
 
 Provisions of 
 
 ike Webb'Pomerene Law 
 
 The entire text of the Webb-Pomerene law is herewith 
 
 ' quoted : 
 
 "An Act to promote export trade, and for other purposes. 
 
 "Be it enacted by the Senate and House of Representatives 
 of the United States of America in Congress assembled, 
 That the words 'export trade' wherever used in this Act mean 
 
 COMBINATIONS IN FOREIGN TRADE 119 
 
 solely trade or commerce in goods, wares, or merchandise 
 exported, or in the course of being exported from the United 
 States or any Territory thereof to any foreign nation; but 
 the words 'export trade' shall not be deemed to include the 
 production, manufacture, or selling for consumption or re- 
 sale, within the United States or any Territory thereof, of 
 such goods, wares, or merchandise, or any act in the course 
 of such production, manufacture, or selling for consumption 
 or resale. 
 
 "That the words Hrade within the United States' wherever 
 used in this Act mean trade or commerce among the several 
 
 States or in any Territory of the United States, or in the Dis- 
 trict of Columbia, or between any such Territory and an- 
 other, or between any such Territory and Territories and any 
 Sute or States or the District of Columbia, or between the 
 District of Columbia and any State or States. 
 
 "That the word "association" wherever used in this Act 
 means any corporation or combination, by contract or other- 
 wise, of two or more persons, partnerships, or corporations. 
 
 "Section 2. That nothing contained in the Act entitled 
 "An Act to protect trade and commerce against unlawful re- 
 straints and monopolies," approved July 2nd, 1890, shall be 
 construed as declaring to be illegal an association entered 
 into for the sole purpose of engaging in export trade and 
 actually engaged solely in such export trade, or an agree- 
 ment made or act done in the course of export trade by such 
 association, provided such association, agreement, or act is 
 not in restraint of trade within the United States, and is not 
 in restraint of the export trade of any domestic competitor 
 of such association ; and provided further, that such associa- 
 tion does not, either in the United States or elsewhere, enter 
 into any agreement, understanding, or conspiracy, or do any 
 act which artificially or intentionally enhances or depresses 
 prices within the United States of commodities of the class 
 exported by such association or which substantially lessens 
 competition within the United States or otherwise restrams 
 trade therein. 
 
 "Section 3. That nothing contained in Section Seven of the 
 Act entitled "An Act to supplement existing laws against 
 unlawful restraints and monopolies, and for other purposes, 
 approved October 15th, 1914^ shall be construed to forbid the 
 
m EXPORTING TO THE WORLD 
 
 acquisition or ownership by any corporation of the whole or 
 any part of the stock or other capital of any corporation or- 
 ganized solely for the purpose of engaging in export trade, 
 and actually engaged solely in snch export trade, unless the 
 effect of such acquisition or ownership may be to restrain 
 trade or substantially lessen competition within the United 
 States. 
 
 "Section 4. That the prohibitioa against "unfair methods of 
 competition'' and the remedies provided for enforcing said 
 prohibition contained in the Act entitled **An Act to create 
 
 a Federal Trade Commission, to define its powers and duties, 
 and for other purposes," approved September 26, 1914, shall 
 be construed as extending to unfair methods of competition 
 used in export trade against competitors engaged in export 
 trade, even though the Acts constituting such unfair methods 
 are done without the territorial jurisdiction of the United 
 States. 
 
 "Section 6. That every association now engaged solely in 
 export trade, within 60 days after the passage of this Act, 
 and every association entered into hereafter which engages 
 solely in export trade, within 30 days after its creation, shall 
 file with the Federal Trade Commission a verified written 
 statement setting forth the location of its offices, or places 
 of business, and the names and addresses of all its officers, and 
 of all its stock holders or members, and if a cor- 
 poration, a copy of its certificate or articles of in- 
 corporation and by-laws, and if unincorporated, a copy 
 of its articles or contract of association, and on 
 the first day of January of each year thereafter, it shall make 
 a like statement of the location of its offices or places of busi- 
 ness and the names and addresses of all its officers and of 
 all its stockholders or members and of all amendments to and 
 changes in its articles or certificate of incorporation or in its 
 articles or contract of association. It shall also furnish to the 
 Commission such information as the Commission may re- 
 quire as to its organization, business, conduct, practices, man- 
 agement and relation to other associations, corporations, part- 
 nerships, and individuals. Any association which shall fail 
 so to do shall not have the benefit of the provisions of section 
 two and section three of this Act, and it shall also forfeit to 
 the United States the sum of $100 for each and every day of 
 
 COMBINATIONS IN FOREIGN TRADE 121 
 
 the continuance of such failure, which forfeiture shall be pay- 
 able into the Treasury of the United States, and shall be re- 
 coverable in a civil suit in the name of the United States 
 brought in the district where the association has its principal 
 office, or in any district in which it shall do business. It shall 
 be the duty of the various district attorneys, under the di- 
 rection of the Attorney-General of the United States, to prose- 
 cute for the recovery of the forfeiture. The costs and ex- 
 penses of such prosecution shall be paid out of the appropria- 
 tion for the expenses of the courts of the United States. 
 
 "Whenever the Federal Trade Commission shall have rea- 
 son to believe that an association or any agreement made or 
 act done by such association is in restraint of trade within 
 the United States or in restraint of the export trade of any 
 domestic competitor of such association, or that an associa- 
 tion either in the United States or elsewhere has entered into 
 any agreement, understanding, or conspiracy, or done any act 
 which artificially enhances or depresses prices within the 
 United States of commodities of the class exported by such 
 association or which substantially lessens competition within 
 the United States or otherwise lessens trade therein, it shall 
 summon such association, its officers, and agents to appear 
 before it, and thereafter conduct an investigation into the al- 
 leged violations of law. Upon investigation, if it shall con- 
 clude that the law has been violated, it may make to such 
 association recommendations for the readjustment of its busi- 
 ness, in order that it may thereafter maintain its oi^nization 
 and management and conduct its business in accordance with 
 law. If such association fails to comply with the recom- 
 mendations of the Federal Trade Commission, said Com- 
 mission shall refer its indings and recommendations to the 
 Attorney-General of the United States for such action thereon 
 as he may deem proper. 
 
 "For the purpose of enforcing these provisions the Federal 
 Trade Commission shall have all the powers, so far as ap- 
 plicable, given it in "An Act to create a Federal Trade Com- 
 mission, to define its powers and duties, and for other pur- 
 poses.** Approved April 10, 1918." 
 
 Summarized, the advantages to be derived from the Webb- 
 Pomerene law are as follows; 
 
122 
 
 EXPORTING TO THE WORLD 
 
 (a) Combination produces economies in production and dis- 
 tribution. 
 
 (b) Standardization of products results in greater econo- 
 mies of production. 
 
 (c) Standftrdization would improve the quality of merchan- 
 dise, and enhance the value of American goods overseas. 
 
 (d) Combination would eliminate waste by an intelligent 
 distribution of orders to factories best fitted to turn them out. 
 
 (e) Combination would mean specialization and thus lower 
 costs. 
 
 (f ) Hie greatest saving of all would be the elimination of 
 dnpHcation of selling organizations, warehouses, branch of- 
 fices, advertising, etc. 
 
 (g) Economies in shipment would be effected. 
 
 (h) Combinations would be able to develop foreign maricett 
 with the highest degree ci efficiency, and the maximum results 
 at minimum costs to partidpants. 
 
 (1) The financing of foreign sales and the obtaining of 
 credit information would be facilitated. 
 
 Combinations as Necessity of 
 Meeting Foreign Competition 
 
 Is it necessary to combine in the United States in order to 
 meet foreign competition abroad? 
 
 In view <^ our successes in the foreign field m the past— 
 and this means our successes with manufactured articles as 
 well as with our raw materials — it would seem that declara- 
 tions of the necessity of combining to meet the cut prices of 
 our most dangerous competitors overaeas are a bit far-fetched. 
 Not long ago a well-known exporter who understands for- 
 eign trade as well, perhaps, as anyone else in America, said 
 that the results promised under the provisions of the Webb- 
 Pomerene Act were being exaggerated. 
 
 "I don't quite understand why there ia so much en^uataam 
 over this measure,** he said. ^It would seem that American 
 manufacturers have never had a show in foreign markets until 
 this law came into effect to show them the way to the prom- 
 ised land. Personally, I believe it will do some good in some 
 quarters — ^in places where basic materials are involved in 
 sales abroad* There is no question that there would be an 
 economic saving In this respect But where vre are hunting 
 
 COMBINATIONS IN FOREIGN TRADE 123 
 
 for markets in foreign countries for our typewriters, our auto- 
 mobiles, our sewing machines, our stationery, and hundreds 
 of other manufactured articles, I am afraid that the combina- 
 tion will serve as a hindrance instead of an advantage. Why? 
 Because these manufactured articles I have just mentioned 
 need specialized selling effort, and that is practically impossi- 
 ble under huge combinations such as the Webb-Pomerene Act 
 permits. It means lost identity of an article." 
 
 Combinations in 
 Foreign Countries 
 
 The combination idea seems to have had its growth in 
 Europe. Before the war export combinations were quite com- 
 mon in the principal countries of Europe, and seemed to have 
 reached the highest point of efficiency in Germany, where the 
 "cartel" system was one of the principal factors that made 
 German foreign trade what it was up to the few months pre- 
 ceding the great war that shattered her commerce. In this 
 country there were 600 important cartels, embracing every im- 
 portant industry in the country. In some instances, however, 
 these cartels were not created primarily to meet competition 
 of other foreign countries in overseas business, but to stifle 
 competition at home, and to control the market An instance 
 of this policy is shown in the great German dye-color industry 
 o|)erated as a unit in foreign trade under an agreement by two 
 powerful concerns working under a fifty year contract not to 
 compete against each other. Other gigantic combinations were 
 to be found in the electrical equipment industry, the coal and 
 coke industry, and the iron and steel industry, the products of 
 which were sold through great centralized selling agencies to 
 all parts of the world. 
 
 Other Nations Have Great 
 
 Combinations for Export 
 
 Nor was Germany alone in this policy of combining to 
 efficiently develop and sell products in foreign countries. We 
 find gigantic syndicates in France, Belgium, Italy, Russia, 
 Austria, Switzerland, Sweden and Greece. In South America 
 in certain countries we find producers united in joint selling 
 agendes to control the market, probably to stifle competition 
 and to efficiently sell goods in foreign countries. 
 
 Japan has a textile organization that is developing and ob- 
 
m EXPORTING TO THE WORLD 
 
 taining the cotton goods trade of North Chiiia. A "tea conndP 
 controls the tea trade of that country. Other industries in 
 
 Japan are rapidly falling in line to combine, and they 
 have not; only the approval of the Government but its actual 
 support 
 
 England has not committed itself to the policy of 
 
 organizing powerful combinations for foreign trade as strongly 
 as other nations. One reason is because the United Kingdom 
 has been able to develop excellent markets for its manu&ic- 
 tttied product in all comera of the earth. Her most excellent 
 selling methods, her great chain of branch banks, combined 
 with the most efficient merchant marine in the v^rorld, have 
 given that country an advantage that relieved her of the 
 necessity of creating "cartels" to obtain new business. 
 
 In spite of this tremendous trade that has been developed 
 by Great Britain in foreign countries we find her, nevertheless, 
 engaged in combining to market certain basic products for 
 overseas sales. England's coal, for instance, is marketed in 
 South America and other parts of the world through central 
 selling agencies in which produdi^ companies, selling com- 
 panies, steamship lines and foreign distributing companies co- 
 ordinate their efforts. This policy is followed in the cement 
 trade as well. Smce the end of the Great War, however. 
 Great Britain has taken rapid strides in the further develop- 
 ment of the combinaticm or "cartel** idea, and is expected to 
 take a prominent part in the regaining of her immense trade, 
 which she temporarily lost during the strife in Europe. 
 
 Combinations' Must 
 CompeU JVM CombmaHoHs 
 
 The outgrowth of this combination idea all over the world 
 will mean that the United States will be forced, whether she 
 likes it or not, to meet the plans of her competitors in the 
 most efficient and intelligent form that legal means will justify. 
 The Webb-Pomerene Act grants the American manu&cturer 
 or ejqfiorter adequate power to cope with our trade rivals. In 
 the language of the Federal Trade Commission : "If Ameri- 
 cans are to enter the markets of the world on more nearly 
 equal terms with their organized competitors and their organ- 
 ized customers, and if small American producers and manu- 
 
 COMBINATIONS IN FOREIGN TRADE 
 
 125 
 
 facturen are to engage in export trade on profitable terms, 
 they must be free to unite their efforts. 
 
 "Without any export organization foodstuffs and raw mate- 
 rials can readily be sold at some price, but to avoid needless 
 expense in distribution, to meet formidable foreign buying 
 agencies, and to insure profitable txpott prices, co-operation 
 among American producera of such commodities is desirable. 
 
 "In the sale of factory products co-operation is even more 
 desirable. Such goods must be advertised, demonstrated, and 
 m market created abroad, often in the face of the keenest com- 
 petition from great combinations of foreign manufocturers. 
 Obviously, only strong organizations can undertake this con- 
 test. If groups of American manufacturers and producers, 
 either of competing or non-competing goods, can combine 
 their efforts they can share the cost of developing new mar- 
 kets, establish themselves firmly, extend credit more readily 
 to foreign customers, and compete more successfully with for- 
 eign syndicates and cartels." 
 
 Haw German Cartel 
 System Was Developed 
 
 It will be necessary to briefly review the German **cartel** 
 system as an illustration of the extent to which this policiy 
 grew. Germany is taken as an illustration merely because 
 combinations were more fully developed there than in any 
 other country. 
 
 A German writer says cartels are "associations, founded by 
 contract for certain periods of time, of independent enterprises 
 belonging to kindred branches of industry or of branches of 
 industry with nearly identical interests, the individual mem- 
 bers of the association retaining their independence but join- 
 ing for the purpose of r^^ulating production and sales accord- 
 ing to common points of view and in the common interest.'' 
 
 This definition practically covers American combinations 
 under the Webb-Pomerene Act. 
 
 A distinction between a trust and a cartel must be drawn, 
 however. Cartels are not permanent. Members can with- 
 draw and recover their complete mdependence if they choose. 
 In a trust, such as it is known in America, there is centralized 
 authority in a single organization, and it is permanent. A 
 
126 EXPORTING TO THE WORLD 
 
 tm% Is not a combinatkm of corporatioii8» but a single €or^ 
 poration in itsdi. 
 The growth of the cartel system in Germany is reflected in 
 
 statistics issued in that country in 1903, showing that there 
 were 385 cartels at that time doing business in Germany, which 
 were distributed among the different industries as follows: 
 
 Cartels Cartels 
 
 Coal 19 Glass 10 
 
 Iron 62 Bricks 132 
 
 Metals (excluding Iron) 11 Stones, earths 27 
 
 Chemicals 46 Clay 4 
 
 Tejqtllet 31 Foodatnfft 17 
 
 Leather, rubber 6 Electrical 2 
 
 Wood J. 5 Otben 7 
 
 Paper 6 
 
 These 386 cartels represented 12,000 plants, and the mining 
 
 •ad chemical industries ranked first 
 
 They grew in number rapidly, and in 1911 they were esti- 
 niated to have reached a total of 600 in Germany. 
 
 How German Banks 
 Helped the Cartels 
 
 The methods employed by the great German banks in aid- 
 ing these cartels is told by the Federal Trade Commission as 
 follows : 
 
 'The large Gennan banks have played a potent part in the 
 development of cartels and combinations, particularly in the 
 
 mining, the iron and steel, the electrical, the potash, and the 
 chemical industries. The four great Berlin banks, viz., the 
 Deutsche Bank, the Dresdener Bank, the Darmstadter Bank, 
 and the Disconto-Gesellschaft, dominated the German bank- 
 ing world. Until recently there was a fifth, the A. Schaaff- 
 hausen*scher Bankverein, now absorbed by the Disconto. The 
 A. Schaaffhausen'scher Bankverein was formerly particularly 
 active in organizing cartels, and maintained a special organiza- 
 tion, the "Syndikatskontor d. A. SchaafEhansen'scher Bank- 
 vereins G. M. B. H. to act as selling agency and clearing 
 house for industrial combines. With their extensive system 
 ot directors among industrials and with their participation in 
 financing such enterprises, the great banks have been able 
 strongly to mfinence German industry, and they have nsed 
 this influence to eliminate competition and to encourage con- 
 centration. 
 
 COMBINATIONS IN FOREIGN TRADE 
 
 "Thus the German electrical industry, a debtor industry, 
 has been dependent at all times upon the co-operation of banks 
 in its development and concentration. The widely ramified 
 organization of investing, operating, and subsidiary companies 
 of all kinds within the two groups that dominate the German 
 electrical industry has been developed and prompted largely 
 by banks interested in the various companies and backing 
 these two great groups. In the metal trades the Metallgesell- 
 schaft, of Frankfort on the Main, in which the Merton inter- 
 ests are centered, has built up and controls its world wide 
 business enterprises through a number of financial institu* 
 tions, banks, or holding companies in different countries. 
 These have been organized for the spedal purpose of obtaining 
 outside and foreign capital. For investment in new mining 
 and similar enterprises and to maintain control over them 
 through majority stock ownership. The potash industry offers 
 another good example of the potent influence of banks and 
 fostering combinations." 
 
 Different Kinds 
 o f Gmrmm CmMi 
 
 German cartels may be divided into the following classes : 
 
 (a) Agreements covering selling terms, so-called "Kondi- 
 tionen'* cartels. 
 
 (b) Price cartels. 
 
 (c) Selling cartels or 83mdicates. 
 
 Cartels in which agreements are made as to sellir^ terms: 
 These cartels represent the lowest form of cartel organiza- 
 tion. Under this form agreements as to payments, conditions 
 of sale, and handling of samples are made. 
 
 Price cartels: 
 
 Cartels of this character are origanized purely to influence 
 prices without centralizing sales or purchases. Price cartels 
 are the most numerous, each having distinct methods of doing 
 business. 
 
 Syndicates or selling cartels: 
 
 These are the most highly developed of the German cartels, 
 having the most rigid and centralized organization. The 
 merchandise of those belcmging to the cartel is disposed 
 through a central selling agency. 
 
 These German cartels extended their activities into foreign 
 
m EXPORTING TO THE WORLD 
 
 countries, usbg aeUing agencies thnmgli wUch to place their 
 wares. Througrh these selling agencies prices were fixed, com- 
 bined advertising campaigns were planned, and development 
 of territory undertaken. Operating with banks, these cartels 
 were enabled to obtain invaluable trade data such as credit 
 information, business conditions— «11 of which activities were 
 principal factors in the building up of Germany's foreign trade 
 
 before the war. 
 
 Instances are known where manufacturers producing non- 
 ccmpeting but kindred articles have combined together for de- 
 veloping of foreign markets. This policy was adopted in the 
 South American and Chinese trade with great results. German 
 cartels representing the electrical industry were very active in 
 I^tin America before the war. Entire power plants were 
 developed, equipped, financed, and even operated by German 
 cartels. In China the same policy is said to have been pur- 
 sued with respect to mines. Competitors of foreign countries 
 who found themselves representing single lines found it diffi- 
 cult to compete with the Germans, who offered to undertake 
 a whole job for the Chinese. The rapid devebpment of trade 
 in China and South America is due to the efforts of German 
 industry under the cartel system. 
 
 Haw Fordgm CombmaHmu 
 A§€€t Am€f%cm C omwmt e 
 
 What effect foreign combinations have on our export trade 
 is told by the Federal Trade CommisMon in strengthening its 
 position that American combinations under the Webb-Pom- 
 erene Act are necessary to combat competition overseas : 
 
 *The greater part of American export trade has been with 
 European nations," says the C4Wimlsm o a "When American 
 manufacturers and producers are exporting to any off these 
 countries they must meet powerful combinations of producers 
 and dealers iWe. Some of these combinations are interna- 
 tional and own or control, among others, American produdof 
 companies. They now have In this country oil wells, coal and 
 metal mines, smelters, refineries, and mills. This makes it 
 more difficult to compete with them in the European markets. 
 In other cases American manulacturert and prodaeeit must 
 
 CX)MBINATIONS IN FOREIGN TRADE 129 
 
 deal with combinations among the European buyers of their 
 products. In a few American industries, such as petroleum, 
 steel* and farm machinery, powerful single organizations are 
 equipped to meet foreign combinations on substantially equal 
 terms. But even in these industries, as well as in those where 
 no single concern towers above its fellows, there are numerous 
 small and moderate-sized producers who act separately in con- 
 ducting thenr export business. It thus results from the con- 
 ditions of the organization of industry abroad and at home 
 that in the great foreign commercial countries American com- 
 panies must often compete separately against combinations 
 of foreign producers and must often sdl separately to combi- 
 nations of foreign buyers. 
 
 "This condition is repeated when American and foreign 
 manufacturers compete in the markets of countries alien to 
 both, as when AmtncMn manufacturers compete with German 
 or English in South America. Here, again, individual Ameri- 
 can exporters must encounter the united opposition of foreign 
 manufacturers in many important lines of trade. In fact, spe- 
 cial cartels and syndicates are often formed in European coun- 
 tries expressly for export trade. The combinations can afford 
 long and costly campaigns to gain foreign markets, and they 
 can gain favorable terms to purchasers. Moreover, the chief 
 foreign trading nations not only have a distinct advantage over 
 the United States in ocean shipping under their own flags, better 
 foreign-trade banking and credit organizations, and greater in- 
 vestments in less devek>ped parts of the world, but also it is their 
 policy to unite these various interests with their industrial com- 
 binations into mose effective organizations for the v^^otons 
 promotion of export business. 
 
 "These are the salient facts concerning the character and 
 prevalence of cooperation and combination among foreign 
 manufacturers, producers, and dealers. Foreign concerns co- 
 operate in both home and export trade to a greater extent 
 than American concerns do. The advantage and necessity of 
 preventing such combinations in the American domestic trade 
 IS fully recognized by the Commission, but the export trade 
 presents, in its opinion, a different problem. 
 
 **lt is apparent from this statement of the chantcter of the 
 
130 
 
 EXPORTING TO THE WORLD 
 
 bnsiness orgmiiizatioii which Americans must compete against 
 in foreign markets that this conntr/s organization for export 
 
 trade must be strengthened if its manufacturers and prodnccrs 
 are to compete on more nearly equal terms in the commerce 
 <^ the world. Obviously, most of the individual American 
 exporters, handicapped by dependence upon foreign shipping 
 and foreign financial institutions, and forced single-handed to 
 oppose united foreign competitors, are at a material disadvan- 
 tage. In international trade the competitive conditions ha\ c 
 been largely in favor of the foreign concerns, particularly 
 when opposed by the smaller American exporters. Co-opera- 
 tion solely for export business will go far to permit the devel- 
 c^ent stronger American organizations, and may be par- 
 tscnlarly advantageous to smaller concerns. The need of such 
 concerted action is clearer when the character of the export 
 trade of the United States is understood. Under normal con- 
 ditions about two-thirds of its exports have been foodstuffs 
 and materials for use in manufactnrii^^—such commodities as 
 grain, flour, meats, cotton, copper, oil, coal, etc ; and one-third 
 of its exports have been manufactured articles ready for use, 
 such as machinery of all kinds, electrical goods, automobiles, 
 boots and shoes, wearing apparel, cloths, medicines, drugs, 
 points, varnishes, etc. 
 
 ••The marketing of these two broad classes of products in 
 foreign trade present very different problems. Many food- 
 stuffs and materials for manufacture, such as grain, copper, 
 cotton, etc., will sell themselves at some price, usually at a 
 price broadly established in competitive world markets. De- 
 veloping export business in these commodities is compara- 
 tively simple. There is often no need of creating a demand. 
 With this class of business the problem is greatly one of ob- 
 taining a more efficient system of selling, and partly one of 
 protecting our producers against combinations of foreign 
 buyers. At present, one of the most practicable means for 
 obtaining tbese results is co-operation among American pro- 
 ^hicers. 
 
 *'In the case of finished manufactured articles, the problem 
 
 is generally more difficult. In the factory products, both 
 staple and special, the manufacturer must often create the 
 demand for his particular goods. While it is not to be for- 
 
 COMBINATIONS IN FOREIGN TRADE 131 
 
 gotten that cheapness and quality of product are necessary, 
 organization for selling is also essentiaL 
 
 'To the producer of specialties, however, co-operation in 
 export trade does not offer such great advantages as to the 
 producer of staples. Absence of standardization is in the way 
 of its effective working and the field of foreign markets is far 
 more open and free to specialties than to staples. In some 
 lines American concerns making specialties have established 
 their products in a world-wide way and are ahead of competi- 
 tors from other countries. While, therefore, producers of spe- 
 cialties have to create their own market, many of them feel 
 that they can do this to better advantage individually. Some 
 of those whp have not yet established themselves in all their 
 markets, or who are but beginning their campaigns, favor co- 
 operation, but what they wish is co-operation with manufac- 
 turers of allied lines rather than with competitors. 
 
 ''To the producer of staples, the foreign manufacturer or 
 combination making the same line offers the most determined 
 competition. To establish the American goods requires strong, 
 practical selling campaigns. Not only must the customer be per- 
 suaded to prefer the American manufactured article but sales 
 must often be supplemented by the establishment of local 
 warehouses that will insure a prompt supply and the customer 
 must be given ample assurance that he can continue to get the 
 same goods year after year. Moreover, this demand must be 
 created in distant countries. In face of determined and skill- 
 ful opposition from competing foreign manufacturers united 
 in powerful combinations, this is a most difficult undertaking. 
 It is among American manufacturers of staples, therefore, 
 particularly the smaller concerns, that co-operation for esqport 
 business is especially needed. It will permit them to create 
 organizations which can compete on more equal terms with 
 the oiganizations of their foreign rivals. They can afford, 
 then, to advertise, to study foreign demands and customs, to 
 make demonstrations, to open branches, warehouses, and 
 stores abroad, to collect credit information, and to extend 
 credit, to empl<^ skilled salesmen familiar with foreign mar- 
 kets, and to maintain a direct representation of their own 
 which will be firmly established and effective in the markets 
 
m EXPORTING TO THE WORLD 
 
 to be covered. The expense of such promotion will not be 
 excessive when shared by a number of participants. 
 
 ^In many lines of mannlacture the export commission 
 houses and the export merchants are undoubtedly the best 
 agencies by which goods can be placed in foreign markets. 
 These ^ms have played a great part in the development of 
 American trade in manufactured goods, and their function and 
 their value in this respect should not be forgotten or under- 
 rated. But to many of the demands of international trade in 
 such goods they are inadequate. Frequently such articles re- 
 quire highly ^ecialized technical training on the part of sales- 
 men. In other cases long and expensive introductory work 
 must be done to create a market. Export commission firms 
 and export merchants are far less disposed to spend money 
 and energy in such work than are the manufacturers whose 
 continued prosperity depends upon the creation of markets for 
 their goods. The commission house and the export merchant 
 handle dozens of different lines of manufactures. Their profits 
 come from the total business, and it is the total with which 
 they are chiefly concerned. But the manufacturer is inter- 
 ested in a single line of products. He concentrates his effort 
 on the creation of business for that line, and he is much more 
 resolute in the matter than any intermediary who has no 
 capital invested in manufacturing plants and equipment. 
 
 "In domestic business, competition, independence, and the 
 pJay of individual forces is the settled policy of this country. 
 The law requires that this shall be the condition of business 
 here. Abroad the legal ccmditkms are different In many 
 countries combination is permitted and in some it ia even 
 encouraged. What is equality of opportunity for manufac- 
 turers within this country, therefore, becomes inequality and 
 disadvantage for them when they undertake to export to other 
 cooatries.** 
 
 H€w Combimaumi Are 
 
 Made Under Webb Law 
 
 The chief problem in combining under the Webb act seems 
 to be that of obtaining the centralisation with the least km 
 of individuality and independence on ^ part of tiioae con- 
 cerns entering the association. This apparently is a problem 
 
 COMBINATIONS IN FOREIGN TRADE 133 
 
 which must be left to the solution of individual industries and 
 groups. 
 
 Mr. Gilbert H. Montague, of the New York Bar, who was 
 counsel to the special committee of the American Manufac- 
 turers Export Association in support of the Webb law, in 
 analyzing the measure in a brochure for the Guaranty Trust 
 Company of New York City, gives the foUowing exa^le of 
 how various concerns met these problems: 
 
 "Such export trade as there was, in a certain American in- 
 dttstiy/' says Mr* Montague, ''had been confined to several 
 large concerns represented abroad tor branch houses or ei^ort 
 houses. ' 
 
 "Upon the return of normal conditions, it seemed certam 
 that general oYer-pfoductk>n would exist through the industry 
 at home, while abroad an active and constant demand would, 
 in all probability, be resumed in various markets at prices, 
 and for grades on which many concerns in the industry would 
 then be glad to quote. The handful of concerns already sell- 
 ing abroad were as yet unwilling to alter their existing re- 
 lations with branch houses and export houses. They would, 
 however, make with any joint selling organization compris- 
 ing the rest of the industry, satisfactory arrangements regard- 
 ing prices to foreign buyers, or terms of export sales, or 
 credits to foreign customers, or grades of export products, 
 or other subjects of common interest. A man experienced in 
 the industry, and acquainted with conditions in foreign mar- 
 kets, could be engaged for a reasonable salary and a fair 
 bonus arrangement as general manager of a joint selling or- 
 ganization. With him, and with one or two banks familiar 
 with conditions in foreign markets, plans had been worked 
 out for financing the sales abroad, and for financing the pur- 
 chases at home, and for a schedule of credits for sales abroad 
 and for porchases at home, and for opening sales branches be- 
 ginning sales promotion in several selected foreign markets. 
 From this, and from an estimate of prospective operating ex- 
 penses, a budget had been worked out of the probable finan- 
 cial requirements of the joint selling organization. With the 
 Ka«il<4«g aocommodatkm that seemed reasonably assured, and 
 with an ample margin of safey, an initial investment of pMr 
 
 000 seemed sufficient to start the organization* 
 
134 EXPORTING TO THE WORLD 
 
 How Corparaium 
 IVoi Orgmmed 
 
 "A corporation was finally determined upon to be organized 
 under the laws of one of the eastern states, with the purposes 
 carefuUy limited to those permitted by the Webb-Pomerene 
 Law, and with capital stock consisting of 5,000 preferred 
 shares and 5,000 common shares, the preferred shares to be 
 eight per cent per annum, cumulatiYe, par value $100 each, to 
 be all issued at organization, on which $40 per share was to 
 be paid up and $60 per share was to be subject to call, the 
 common shares to be without nominal or par value, to be is- 
 sued only as bonus, share for share, with subscriptions for 
 preferred shares, and only to concerns actually participating 
 in the joint selling arrangement No participating concern 
 was to have more than one vote, and each was to be repre- 
 sented upon the Board of Directors, whose powers, when not 
 in session, were to be vested in a small executive Committee. 
 
 "Each participating concern was to execute an agreement 
 with the corporation, amstituting the latter exclusive agent 
 of the former, lor the sale of the former^s entire export product 
 dnrii^ the life of the agreement. This export product was to 
 amount to a specified percentage of the participating concern's 
 output, consisting of specified grades and quantities. The 
 corporation was to fix the prices at which it should sell the 
 export product, and bill and collect therefor in its own name. 
 The partidpatmg concern was to standardize, label, mark, 
 pack, and ship its export product as directed by the corpo- 
 ration, and was to protect the latter in respect of all claims 
 by purchasers. The participating concern was to bear all 
 freight and other charges to the seaboard, but the corpora- 
 tion was to bear all freight and other charges beyond the sea- 
 board, and an selling expenses of the corporation. For expon 
 products which the -participating concern furnished the cor- 
 poration, the participating concern was to be credited upon 
 the basis of prices arrived at by one of a variety of ways. 
 Thus, the corporation might take from each participating coo. 
 cem ui opti<m for a specified period, upon specified grades and 
 quantities upon specified prices. Again, whenever the cor- 
 poration desired to quote upon a prospective order, it might 
 communicate with each participating concern, and fiU the 
 
 COMBINATIONS IN FOREIGN TRADE 135 
 
 order from which every participating concern named the loirest 
 price. As compensation for its services, the corporation was 
 
 to receive and retain the excess of the export price at which 
 it should sell such product over and above the price at which 
 it purdiased from the participating concern. The corpora- 
 tion was to settle with the participating concern for each 
 shipment within thirty days, less two per cent discount in ten 
 days. Out of the aggregate profits realized on the operations 
 of the corporation, the corporation was to retain an amount 
 {»ufticient to pay cumulative dividends at the rate of eight per 
 centum per annum on its preferred shares, and also such 
 amount as the Board of Directors should deeih proper lor 
 reserves. Out of any balance remaining the corporation was 
 to grant to each participating concern then in good standing 
 a rebate in the proportion which the amount of export product 
 guaranteed by each participating concern bore to the ag- 
 gr^te of similar txpott products guaranteed by all par- 
 ticipating concerns. 
 
 Another Example 
 of Co-operation 
 
 "Most of the concerns in another American industry had 
 had some experience in export trade and had suffered greatly 
 from one another's competition in foreign markets. 
 
 **Upon the return of normal conditions it seemed certain that 
 export trade would be resumed with a recurrence of the former 
 unsatisfactory conditions, in which foreign buyers, as formerly, 
 would combine to present a united front against each Ameri- 
 can exporter, and by playing one against another would force 
 each to underbid the other until as so often had occurred in 
 the past, the combined foreign buyers would obtain the prod- 
 uct below a fair and reasonable price. Most of the concerns 
 in the industry liad suffered so much in the past from these 
 conditions, and were so fully convinced of .^he wastes involved 
 in their competition with one another in foreign markets, that 
 they were ready to co-operate in any reasonable form of single 
 joint selling organization. A man who had made his mark as 
 foreign sales manager for one of the concerns, and whose in- 
 tegrity and impartiality were approved by all, could be en- 
 gaged as general manager. Desirable locations in a number 
 of foreign markets ooold be secnred simply by taking over 
 
136 EXPORTING TO THE WORLD 
 
 Imndiet ikeady maintained there one or another of the 
 participating concerns. There was abundant fiast experience 
 
 from which to plan the office management and sales organiza- 
 tion, to work out the details of selling, credits, financing, ship- 
 ping, and traffic, and to draw np a budget of prob|i>le fin a ncial 
 requirements lor a joint selling ofganisatioiL 
 
 How This Combination 
 Was Incorporated 
 
 "A corporation of $150,000 capitalization, entirely of paid-op 
 common stock, was finally determined npon, to be organized 
 
 under the laws of one of the western states, with its purposes 
 carefully limited to those permitted by the Webb-Pomerene 
 law. Only concerns which should agree to sell their entire 
 export output through the corporation were eligible to become 
 stockholders ; and no concern was to be entitled to more than 
 one vote, regardless of the number of shares it might own; 
 and no concern ot group of concerns was ever to maintain a 
 majority interest or dominating control of the corporation. 
 To carry out these provisions, every share of stock, excepting 
 the qualifying shares, was to be endorsed in blank by the 
 stockholders and deposited in trust with stock trustees. Upon 
 this stock the corporation was to have a first lien as security 
 lor the faithful observance and performance by the stodc- 
 holders of the corporate by-laws and resolutions and of any 
 agreements entered into or obligations incurred by the stock- 
 holder with respect to the corporation. In event of the stock- 
 iK^der's default in this regard, the Board of Directors could 
 tender to the stockholder the boc^ value, not exceeding the 
 par vahte, of his stock, less any indebtedness owing by the 
 stockholder to the corporation, and could then cancel his stock, 
 and reissue it to the stock trustees, who in turn might sell it 
 to concerns eligible to become stockholders. According to the 
 by-laws, specified geographical groups of stockholders were 
 always to be entitled to specified numbers of directors in the 
 Board of D i rect o rs and in the Executive G>mmittee. Divi- 
 dends were to be limited to seven per centum per annum, and 
 surplus earnings were to be retained for reserves, or expended 
 in sales promotion in export trade, according as the Board of 
 Directors miffht determine. 
 
 COMBINATIONS IN FOREIGN TRADE 137 
 
 Agre€mntis WUh 
 PartidpaHng Concerm 
 
 •*Each participating concern was to execute an agreement 
 with the corporation, constituting the latter the exclusive 
 agent of the former, for the sale of the former's export product 
 during the life of the agreement. This export product was to 
 consist of specified quota determined from time to time by 
 the Board of Directors of the corporation. The corporation 
 was to sell the export product at such prices as the corporation 
 should be able to obtain, and was to allot its orders fairly and 
 impartially among the participating concerns, as nearly as 
 possible in accordance with quotas determined from time to 
 time by the Board of Directors of the corporation. Each par- 
 ticipating concern was to accept and execute such orders as 
 the corporation should assign to it. The corporation was to 
 guarantee all accounts that it should sell, and was to settle 
 with each participating concern for each shipment within 
 thirty days, and was to retain for its services a commission of 
 two and one-half per centum. The agreement between the 
 corporation and the participating concern was to provide for 
 no rebate upon this condition, and the only refund at any time 
 to which the participating concern was to be entitled was in 
 the form of dividends upon such stock as the participating 
 concern might own in the ccHrporatioii. 
 
 Another Typical Case , 
 of a Combination 
 
 "Most of the concerns, in another American industry, had 
 lor years been selling a substantial part of their output in 
 export trade, and had suffered greatly, in the manner above 
 
 described, from combinations of foreign buyers. 
 
 "Much as the industry had suffered from this cause, how- 
 ever, certain concerns, whose co-operation was deemed to be 
 essential, were known to be adverse to becoming full members 
 of any single joint selling organization. Every concern, on the 
 other hand, had for years been accus t omed to sell its es^rt 
 product through one or another agent, whom it had paid, on 
 a commission basis, for selling, financing, and effecting deliv- 
 eries abroad. 
 
 ''A well qualified general manager, and suitable foreign rep- 
 
138 EXPORTING TO THE WORLD 
 
 resentattves, were readily available for a joint selling organiza- 
 tion. The financial requirements of such an organization, also, 
 were ascertainable with reasonable accuracy, and were easily 
 within the abihty of the industry to provide. A corporation 
 was accordingly determined upon, to be organized under the 
 laws of one of the eastern states with its purposes carefully 
 limited to those permitted by the Webb-Pomerene law, and 
 with a cash capital of $100,000 to be obtained by the issue of 
 partly paid common stock, the balance to be subject to call in 
 event of any unexpected increase in the financial requirements 
 of the corporation. Only concerns that should agree to sell 
 their entire export product through the corporaticm over a 
 specified number of years were to be eligible to become stock- 
 holders. 
 
 Methods of Sales 
 DistribuHoH 
 
 "Each participating concern was to execute an i^freement 
 with the corporation, constituting the latter the exclusive 
 agent of the former for tlie sale of the former's entire export 
 product during the life of the agreement. This export product 
 was to amount to a specified proportion of the participating 
 concern's output The corpofatioa was to sell the export 
 product at the best prices that it could obtain, and was to allot 
 orders among the participating concerns as nearly as possible 
 in proportion to the amount of export product which each had 
 guaranteed to the corporation. The participating concern was 
 to standardize, label, mark, pack, and ship its export product 
 as directed by the corporation, and was to protect the latter in 
 respect of aU claims by purchasers. The participating concern 
 was to bear aU freight and other charges to the seaboard, but 
 the corporation was to bear all freight and other charges be- 
 yond the seaboard, and all expenses of the corporation. For 
 such products as the participating concern furnished the cor- 
 poration, the participating concern was to be credited Uj^n 
 the basis of prices specified in a schedule attached to the agree- 
 ment As compensation for its services, the corporation was 
 to receive a commission of three and one-half per centum, and 
 to retain the excess of the export price at which it should sell 
 such product over and above the price at which it purchased 
 from the participating concern. The oorporatioii was to settle 
 
 COMBINATIONS IN FOREIGN TRADE 139 
 
 with the participating concern for each shipment within ten 
 days after delivery of shipment at the seaboard, less two per 
 cent discount for cash against bills of lading to the seaboard. 
 Out of the aggregate commissions received by the corporation 
 the corporation was to retain an amount sufficient to pay divi- 
 dends at the rate <^ seven per centum per annum on its capital 
 stock, and also such amount as the Board of Directors should 
 deem proper for reserves. Out of any balance remaining, the 
 corporation was to grant to each participating concern, then 
 in good standing, a rebate in the proportion which ^he amount 
 of export product guaranteed by each participating concern 
 bore to the aggregate of similar export products guaranteed 
 by all the participating coBcems. 
 
 "Traveling in 
 Double Hamessf 
 
 'This agreement was to be the basis upon which the corpo- 
 ration would sell the export product of concerns participating 
 
 as stockholders in the joint selling organization. But some 
 concerns, as already has been stated, were known to be ad- 
 verse to becoming full members of any single joint selling 
 organization. Each of these coroems, however, had for years 
 been accustomed to sell its export product through one or an- 
 other agent, whom it had paid on a commission basis, for sell- 
 ing, financings and effecting deliveries abroad. Each of these 
 concerns, accordingly, was to be invited to make an agency 
 agreement with the corporation, similar in all substantial re- 
 spects to the agency agreements which it had been accus- 
 tomed to make with its former agents. These agreements were 
 to contain proviskms for their temunation, by either party, 
 upon fairly short notice, so that each party would have a 
 prompt way of escape if these agreements should prove un- 
 satisfactory. During the life of these agreements, however, 
 the ccmcems entering into them could try out the experiment 
 of traveling in double harness with the rest of the industry-, 
 and if they found the experiment satisfactory, they could then 
 all combine, upon a more enduring basis, as stockholders and 
 full participating members, in a joint sdling organization. 
 
140 
 
 EXPORTING TO THE WORLD 
 
 The Joint Typg of 
 OrgmmaHon 
 
 "In the examples of joint selling organizations above de- 
 scribed it was the organization itself that undertook the work 
 of seUing abroad. This, however, is not an essential charac- 
 teristic of the joint selling type of organization. A joint sell- 
 ing organization, having contracted with its members for their 
 entire esqiort product, may find it the part of wisdom to con- 
 tract then with an export honse for tiie disposal of its export 
 product, on commission or on some other satisfactory basis. 
 The export house, as shown above, may undertake for the joint 
 selling organization the actual work of selling, financing, and 
 effecting deliveries of the export product controlled by the 
 joint selling organization. For the export house, this arrange- 
 ment might be attractive because it would result in the con- 
 solidation of a number of separate, small, indifferent accounts 
 into a single, substantial, desirable account For the partici^ 
 pating concerns combining in the joint selling organization, 
 the arrangement might be attractive, because it would promise 
 ptQ&t with the minimum of risk and overhead JMHH|e, and 
 would assure better terms, from the export house, ^^an each 
 of the participating concerns could possibly expect. Ag^in, a 
 joint selling organization, desiring itself to undertake the work 
 
 sdling abroad, but not on so ambitious a scale as in the 
 examples above described, might decide to seU througfi local 
 dealers, or through a traveler, in the mode characteristic of 
 those types of selling organization. Thus it might save all 
 the wastes of competition, and all the economies of combina- 
 tion, which savings and econimics the joint typt of organiza- 
 tk>n makes possible, and at the same time might obtain all the 
 advantages which other types of selling organization afford in 
 many foreign markets. 
 
 "A joint selling organization, having contracted for the en- 
 tire export product of its participating concerns, is therefore 
 unfettered in its choice of methods for selling in export trade, 
 and is in position to market abroad through branch houses, or 
 acport touses, or local dealers, or travelers^ througb any type 
 of selling organization whatsoever." 
 
 COMBINATIONS IN FOREIGN TRADE 141 
 
 Individual Methoas 
 Govern OrgamUation 
 
 "Nor should it be forgotten that joint selling organizations 
 like other types of Export Associations, may combiiM with erne 
 
 another into larger and more comprehensive joint selling 
 organizations, whenever greater economies, or more efficiency, 
 or any other advantages, to themselves and to the concerns 
 participating in them, appear to lie in that direction," says 
 Mr. Montague. 
 
 "And should conOMuations of this character appesu* desurable, 
 
 but obstacles be presented in the loss of individuality and in- 
 dependence which a larger joint selling organization might 
 involve* it should not be forgotten that single joint selling 
 organizations, instead of combining into a larger selling 
 organization, may simply enter into agreements with one 
 another regarding allotment of eaeport orders, or prices to 
 foreign buyers, or terms of export sales, or credits to foreign 
 customers, or grades of export products, or allocation of for- 
 eign markets, or pooling of foreign business, or apportion- 
 ment of output for export or division of sales territory abroad, 
 or common selling agencies for export, or joint representation 
 in export trade, or the like. 
 
 "Nor, finally, should it be forgotten, that the humblest 
 American exporter, whether he sells through an export house, 
 or local dealers, or a traveler, or only by mail order, may 
 nevertheless, deal at arm's length with the largest jmnt sellu^ 
 organization, or may come to terms with it, if the terms are 
 satisfactory to both parties, upon any agreement of the char- 
 acter above described, or, if he prefer, may go his own gait 
 in export trade, with absolute assurance that the Federal 
 Trade Gmimission will protect him against any act of his 
 big competitor that constitutes' unfair competition or restraint 
 upon his export trade." 
 
Chapter XI 
 HOW TO QUOTE PRICES 
 
 **One price to all" poor policy — System of discounts should 
 
 BE FLEXIBLfi — QUOTING PUCES IN AmE&ICAN CURRENCY — QUO- 
 TATION SYMBOLS MUST NOT BE ObHFUSBD-*MEANING OP IHFfER* 
 BNT SYMBOLS — ^METHOD OF COMPUTING C. I. P. PBICES— -T^MS 
 
 UPON WHICH GOODS ARE SOLD 
 
 There are two things that the American manu&ctcirer must 
 not do in quoting prices to foreign customers. One is, he 
 
 must not make one price for any and all merchants engaged 
 in the re-sale of goods in foreign countries. He must be care- 
 ful to draw the line hHween the importer, wholesaler and re- 
 tailer in a foreign country as wdl as the export merchant at 
 home. If he is going to do business with the exporter at one 
 of our American ports the latter alone should know the manu- 
 facturer's export price, and so on down the line. The mer- 
 chant who buys from the manufacturer is entitled to protection. 
 The iMrice at which be buys from the manuf actnrer should not 
 be revealed to the merchant to whom he sells the goods. 
 
 The second thing that the manufacturer must not do is en- 
 deavor to dictate the retail price of an article to be sold in a 
 foreign country. When it is remembered that the importer 
 must face a number of additional charges at the other end 
 snch as imp<»t duties, dock dnes, commis^ms to custom- 
 house brokers as well as risks due to a fluctuating currency 
 in a foreign country to which the goods are shipped the jus- 
 tice of this policy will be recognized. It is evident that the 
 imposition of an arbitrary retail price beyond which the mer- 
 dbaat may not go would be highly impracticable. 
 
 System of Discounts 
 Should Be FUxibU 
 
 A flexible S3rstem of discounts is usually necessary for the 
 
 148 
 
 HOW TO QUOTE PRICES 
 
 purpose of quoting different prices to variotss merchants in- 
 volved in the re-sale of goods. These discounts range as high 
 as 40 per cent and as low as 10 per cent. They are generally 
 determined by the character of the business in which the cus- 
 tomer is engaged. Importers, wholesalers and retailers who 
 ask quotations from manufacturers are subject to varying dis- 
 counts. The quantity of goods purchased during the year, and 
 the territory in which the customer is located, may also de- 
 termine the amount of the discount. With reference to ter- 
 ritory it must be remembered that it is more costly to develop 
 business in spaiaely settled regions of the world than it is in 
 the more thickly settled and prosperous sec^ons. The manu- 
 facturer who sells goods in London may quote a lower price 
 to the British merchant than to the Siberian or the merchant 
 from Punta Arenas. 
 
 Quoting Prices m 
 AmerieoH Cwreney 
 
 If a customer desiies to be quoted in the currency of his 
 own country the manufacturer should do so, only he 
 
 must be careful that due allowance is made in the rate of ex- 
 change at which the foreign money is converted into American 
 dollars. Also, if the foreign customer requests that the value of 
 the invoice be collected in the currenqr of his country or in 
 some foreign well-known currency, such as llie marie, franc or 
 pound sterling, the manufacturer should do so but with the 
 understanding that the value of the invoice will be converted 
 into the currency desired at the rate of exchange prevailing in 
 New York or in some other dty when the shipment is made so 
 that he may obtam the exact equivalent in American doUars.- 
 
 QuoMions Should 
 Be UnderskmdabU 
 
 When the manufacturer quotes a price on a certain article 
 the customer at the other end should know exactly what he 
 means. There should be no room for doubt. Neither should 
 
 the customer be compelled to write or cable for further in- 
 formation. This not only means delay, but causes unneces- 
 sary expense. In order to avoid this the manufacturer should 
 be sure that the following points are written down in black 
 and wUtt on qnotatkm forms wfaidi he may distribute: 
 
144 EXPORTING TO THE WORLD 
 
 (a) Description of merchandise; (b) Quotation of prices 
 in an understandable manner; (c) Name of city where goods 
 are to be delivered: (d) The kind of packing, and charges 
 made for special kinds; (e) Date of shipment; (f) Liabilities 
 that manufacturer will assume ; (g) Liabilities that customer 
 will assume : (h) Liability of manufacturer due to delays be- 
 yond his control; (i) Form of marine insurance to be taken 
 out; ti) Terms oi Payment; (k) Routing of shipment; (1) 
 Methods of shipment in absence of vpedAc instnictioiit. 
 
 Quotation Symbols 
 Must Not Be Confused 
 
 There is much confusbn in the use of qrmbols for quoting 
 prices to foreign customers. For instance, the symbol "F. 
 O. B." means "free on board" and when used in export trade 
 it should mean "free on board vessel," that is to say, all 
 charges involved in getting the goods on board the ship are 
 to be paid by the shipper. In quoting "F. O. B. Factory" or 
 *F. O. B. New Yotk,"* however, manufacturers generally mean 
 that the goods will be placed free on railroad cars or mland 
 freight charges are to be paid to New York, but all expenses 
 in hauling the goods from the railroad cars and getting them 
 on board the steamer must be borne by the customer. It is 
 necessary, tlierefore, when quoting "F. O. B." that the ship- 
 per qualify the symbol with additKMial mlormation. The 
 buyer must know whether "F. O. B. Factor/* means that 
 he must pay the freight from the factory to the port of ship- 
 ment, whether "F. O. B. New York" means that he must pay 
 lighterage and other incidentals involved in getting the goods 
 on the steamer, or whether ''F. O. B. Vessel" means that he 
 is relieved from these additional expenses. The latter quota- 
 tion is the proper one to use in export trade as it is difficult 
 for a foreign buyer to calculate the freight charges from fac- 
 tory to port of shipment and other incidentals involved in 
 getting ^ freight into the hold of the steamer. The shipper 
 should do this for him. 
 
 **F. A. S." (free alongside) is another expression that needs 
 explaining. An "F. O. B. Vessel" quotation includes all 
 charges of loading goods on steamer. An "F.A.S. Vessel" 
 quotatioo tndndes all chaiges except tiioae invdved in hoist- 
 
 HOW TO QUOTE PRICES 1« 
 
 ing goods of an extremely heavy character into the steamer. 
 When extra charges for loading heavy goods into the steamer 
 aie imminent, the shipper makes an "F. A. S. Vessel" quotas 
 tion unless he is willing to pay the extra charges himself. 
 Failure to make this distinction in quoting prices may lead to. 
 financial loss. 
 
 C. /. F. Quouuian 
 In Bxfart Trade 
 
 The symbol "C. I. F." means cost, insurance and freight 
 In quoting prices on a "C. I. F." basis the manufacturer 
 agrees to pay all charges involved in getting the goods on 
 board the steamer, the marine insurance premium, and the 
 freight. All other charges such as ccmsular fees, etc., not in- 
 cluded in the *'C. I. F." quotation must be borne by the cus- 
 tomer. In quoting "C. I. F." the manufacturer should inform 
 the customer as to the kind of marine insurance to be taken 
 out, and in time of war whether it involves a war risk clause. 
 
 To the foreign customer a •'C I. F." quotation is the most 
 attractive. Knowing what goods will cost him at the port of 
 destination he can easily calculate what the charges at the 
 home port will amount to. Knowing approximately what the 
 total cost will be he can then quote a definite price to his cus- 
 tomer without delay. 
 
 In quoting "C. I. F." however, the shipper assumes the 
 following risks : 
 
 Loss from fluctuatacm of charges involved in placing goods 
 on ship. 
 
 Loss from fluctuation of rates in marine insurance. 
 Loss from fluctuation of ocean freight rates. 
 
 Hm» Merchtmts 
 Profit on C. I. F. 
 
 On the other hand, however, a sudden drop of freight or in- 
 surance rates may mean an increased profit to the shipper. 
 As a matter of fact, some American exporters make their *'C. 
 I. F." quotations so dose that they usually depend on the 
 dianging freight and insurance rates to drop in their favor. 
 Their profits are obtained from the difference at which diey 
 
t4M EXPORTING TO THE WORLD 
 
 booked the freight and marine insurance and the final price 
 that was paid. Inasmuch as there is considerable risk in- 
 volved in quoting "C. I. F/' prices it is necessary to limit such 
 quotatioiis to a certain time only, as a protection to the shipper. 
 In order to expedite the doting of deals on a ''C. I. F." basis 
 the cable Is usually resorted to, and an answer by the same 
 method is generally requested. When quoting by mail on a 
 "C.I.F." basis an immediate reply by letter or by cable is asked. 
 
 The shipper who quotes a ''C I. F." prioe is re^Kmsibk for 
 tlie ioUowtng: 
 
 Delivery to shipping point. 
 
 Delivery of goods on vessel and payment of freight charges 
 and insurance premium. 
 
 It should be noted that the shipper is not responsible for 
 the delivery of the goods to destination. If the goods arrive in 
 
 a damaged condition or are lost the customer must pay for 
 them, nevertheless. He must obtain satisfaction from the car- 
 rier or the insurance company* not the manufacturer. 
 
 C. I. F. and F. O. B. 
 
 There is greater liability in quoting an F.O.B. point of ship- 
 ment than a C. I. F. destination as af^pears from an article in 
 the Bulletin of The American Mann&cturers' Association by 
 
 A. M. Fisher, in which he says: 
 
 "The world, or at least part of it, is talking of efficiency. 
 The CI. F.quotation is advantageous and desirable because it 
 is more efficient than the usual quotation F. O. B. shipping 
 point. There ate several reasons. 
 
 "It is well to understand the difference between the C. I. F. 
 price and the F.O.B. price and also to understand the difference 
 
 A leelriBa of interest to mmmdmdlmnn and e xp or f n i wfts recently fCsdcMd 
 
 by a Canadian court relating to the commercial expression, "F. O. B." The 
 court made it a ruling as to the significance of the term. The court held that 
 tfM tem mt Board" means that Utt seller, at his expenw^ places his goods 
 
 on the car or vessel which is to carry them from the point specified, and that 
 the buyer takes the risk onwards ; at the same time ths goods must, at destina- 
 tion be in coirfonBtty with conditions of sale or tfMT nay bo legally rejected. 
 Further, it is necessary to distinguish delivery from acceptance ; for said the court : 
 **The carrier is the agent of the purchaser, but his mandate is limited to the 
 transportation of the goods. The question to decide is whotlMr it was tfM tiring 
 sold that was carried from the point of shipment. If the vendor has correctly 
 delivered the thing sold, the buyer becomes the proprietor immediately. If he 
 de H iwe f aomethiair elee for instance if he has sold goods of first quality and 
 delivers goods of second quality — there is no delivery of the thing aoU. TlM 
 buyer can refuse them only when they arrive at their destination." 
 
 HOW TO QUOTE PRICES 147 
 
 as to risks. A C.I.F. price quoted for a foreign port, indudes 
 the cost of the goods F.O.B steamer, the marine insurance 
 charges and the steamer transportatkm charges, to the lordgn 
 port in accordance with the terms of the hills of lading. An 
 F.O.B. price is understood to be a price at point of sail, unless 
 Stipulated otherwise. By stipulatioii it may, of course, be 
 effective at any point nominated. 
 
 -'C. I. F. London and F. O. B. London are two very diffetent 
 things, as far as risk is concerned. The F. O. B. quotation, 
 as a rule includes all of the risks of the C. I. F. quotation, and 
 in addition covers other risks. A quotation P. O. B. New 
 York as opposed to a quotation C. L F. London, on a ship- 
 ment destined to London, will, as a rule, in practice, mvolve 
 more risks than the CL F. quotatkxL 
 
 '^itfa a C J.F. price no liability is involved beyond the cost 
 cf the goods and the prepayment of the insurance and frdg^ 
 charges. These prepayments are not mandatory however, if 
 the amounts are allowed to be deducted. With the C. L F. 
 quotation damage or loss after shipment does not accrue in 
 any way against the shipper save on proof of n^llgenee» 
 .which, of course, is not voided. 
 
 *'With the F. O. B. price all liabilities are with the shipper 
 until delivery is made in accordance with the quotation stipu- 
 latkML If the stipulation covers delivery at a foreign port the 
 risk is conmderable. If it covers delivery at point of ship- 
 ment it practically amounts to the same thing as a C. I. F. 
 price in view of the usual practice of the steamship companies 
 and insurance companies to require prepayment of charges. 
 
 "The donents of the CJJF. price will fairly be covered by 
 the following: 
 
 "Cost: The price of the goods F. O. B. steamer, including 
 initial factory price, rail carriage to port of shipment, truck- 
 ing or lighterage to steamer, derrick charges or lifting into 
 steamer if extra heavy or bulky, charges due to spedal haz- 
 ards, probable storage charges, at port of shipment, draw- 
 back, if any, consular charges, and petties and postage. 
 
 "Insurance: The premium charge covering a nominated 
 period of time, perhaps both before and after the voyage. 
 
 'Treigfat: All steamer diarges covering shipments to destina- 
 tion in accordance with the terms ol the biii of lading and the 
 
148 EXPORTING TO THE WORLD 
 
 customary rules of the outward port as to the interpretation 
 put ttpon the terms of the biU of lading. 
 
 **l have said that the C I. F. price is more efficient than 
 F.O.B. price made at the lading port, as is usually done. This, 
 you will readily understand when you consider the condition 
 at the foreign port and also the logic as to the seller's obligations. 
 
 "As to cost: The foreign haytr, if quoted at the factory^ has 
 no means of knowing the cost of rail or domestic carriage. If 
 quoted F. O. B. cars port of shipment the foreign buyer has no 
 means, except perhaps some bitter experiences, which enable 
 iiim to know or judge as to the charges for such matters as 
 tracidng, lighterage, derrick or lifting hazards, storage, 
 drawback, coosttlar leqatrements, to saj nothing of pctties 
 and postage. 
 
 "As to insurance: He has no means of knowing the insur- 
 ance rates or the premium amounts owing to a lack of knowl« 
 edge of other elements. 
 
 *'As to freight : He is, as a mle, unable to obtahi a quotation 
 oi an outward freight rate at an inward port ; that is, a steam- 
 ship quotation from New York will not be given in Mel- 
 bourne, but will be referred to New York. This is a general 
 practice of tbe steamship companies. They publish no tariffs 
 as do our domestic common carriers. Also, manufacturers 
 frequently make serious errors in stating the gross weight, 
 net weighty legal weight, and the cubic measurement of their 
 products. This, of course, is an essential piece of infor- 
 mation In figuring laid down costs in foreign markets. In 
 many cases the American manufacturers give no Informa- 
 tion related to this important matter, although they believe 
 themselves to be making serious efforts toward a development 
 of their export trade. It has come within my experience to see 
 errors of over 100 per cent, as to we^ts and measnrementu, 
 and substantial differences were frequent enough to inspire 
 profanity. It is a practical waste of time to make quotations 
 of any sort unless some idea, within safe limits, is given as to 
 weights and measurements. 
 
 "Yon will appreciate from the fcmgoii^ that the foreign 
 bu3rer Is at a distinct disadvantage unless prices are quoted 
 C.I.F. owing to conditions beyond his control. The result is 
 that their interests are more often in what may be termed 
 'heavy' or 'standard' lines, rather than what may be termed 
 
 HOW TO QUOTE PRICES 149 
 
 'specialty' lines. But few of the members of this association 
 
 are offering what I would term the 'heavy* lines; most of you 
 are offering specialties. As a rule the heavy lines are quoted 
 CJ.F., and, I believe, it is true that most of the specialty lines 
 are quoted F.O.B lading port by the manufacturer. The sell- 
 ers, being yourselves, are able to get all of the Information 
 required for the making of CJ.F. quotations promptly and 
 with certainty and little risk. If the elements arc combined 
 into the C.I.F. price, the buyer, who is really representing your 
 Interests, has his time conserved. His risks are materially 
 reduced and, incidentally, he is wiUing to work on lesser unit 
 profit, thereby enhancing the vdume of business placed with 
 you.** 
 
 When the manufacturer quotes "C. & F." he means cost 
 and freight, the insurance being eliminated. 
 
 Quoting "C A. F." should be avoided as it does not mean 
 *'Cost and Freight" in fore^ countries. Instead, it is sub- 
 ject to the French interpretatkm of "cost, assurance and 
 freight," which is the equivalent to "C. I. F." as "assurance" 
 is the French word for "insurance." 
 
 In some ooontrles the expense involved in exchange is in- 
 cluded in the qnotatkm of prices. The American manufac- 
 turer who wishes to include exchange in quoting prices to a 
 customer in Australia or in South Africa where the erohange 
 is usually figured in should use the following symbol : "C. I. 
 F. & E." which means "cost, insurance, freight and exchange." 
 ••C I. F. I. & E," means that interest is added, while "C I. 
 F. & C means tiiat commisskm is to be included. 
 
 Method of Computmg 
 "C. /. F." Pnees 
 
 In computing "C. I. F." prices the manufacturer must 
 
 know: 
 
 The approximate cost of a given weight of goods delivered 
 on board the steamer at the port of shipment. 
 
 The cubic measurements and gross weights of packages. 
 
 The approximate ocean freight rate to be paid. 
 
 To make up the "C. I. F." cost of a certain shipment of 
 goods the manufacturer must: 
 
 Compute the railroad freight, cartage, and other charges 
 incurred in placing the goods on board the steamer. 
 
 Calculate the ocean freight tiiat Is to be paid. 
 
m EXPORTING TO THE WORLD 
 
 Include the marine insurance. 
 
 If the shipment involves a hundred gross of a certain article 
 it will not be difficult to quote m price per gross I. F." 
 
 Quotations Acceptable 
 to the Customers 
 
 There are certain foreign markets in which business may 
 only be obtained by quoting prices delivered at the customer's 
 warehouses. The Germans, who have made a study of export 
 technique as thoronglily as any people in the world, have been 
 able to meet such conditions. In some markets, however, cus- 
 tomers arc able to handle merchandise more favorably when 
 quotations are F.O.B. port of shipment or C.I.F. port of arrival. 
 The Germans, always looking for opportunities to develop and 
 retain their trade, have met these peculiarities in a manner 
 satisfactory to the people they were doing business with. 
 Quoting prices in a manner acceptable for the customer repre- 
 sents only one of the little things that the Germans have gone 
 out of the way to accomplish in order to obtain their great 
 foreign trade. 
 
 The necessity of making intelligent quotations to Imeign 
 customers is paramount This is fllustrated m a Bureau of 
 Fore%n and Domestic Gnnmerce report on "Markets for Agri- 
 cultural Implements and Machinery in Argentina" by Frank 
 
 H. von Motz, which says: 
 
 "Manufacturers who want to enter the Argentine or any 
 other foreign market should arrange to quote prices for their 
 product, properly boxed for export diipment, and delivered 
 F. A. S. New York City. No single thing leads to so much 
 trouble as the quoting of prices F. O. B. cars at factory, F. 
 O. B. cars in New York City, or in any other place. The for- 
 eign merchant wants to know what the goods he intends pur- 
 chasing are going to cost him F. A. S. m New York Harbor, 
 so he can figure the landed cost at his port. 
 
 '*In normal times, prior to the war in Europe, Buenos Aires 
 importers of implements generally figured that 1^5 per cent 
 added to the cost FJV.S in New York Harbor would allow 
 enous^ margin to pay all costs inctdent to putthig the goods 
 in a wardiouse in one of tiie three port cities hi Argentina. 
 
 •In other words, the price F.A.S. in New York Harbor, witli 
 ?5 per cent, added, represents the landed cost in an Argentine 
 port These figures seem somewhat high, but as the majority 
 
 HOW TO QUOTE PRICES 151 
 
 of the importing houses figure their landed costs in that way 
 it is best to use the figures they do. To the landed cost 56 
 per cent, is added to find the list price, which is also the retail 
 price. To dealers a discount of 15 per cent, is given, with an 
 additional discount of 5 per cent for cash in 30 dajrs. 
 
 "In the case of repairs a different method is used. With the 
 exception of a few very necessary repairs, the nature of which 
 causes them to wear out very rapidly and on which special 
 prices are given, the American manufacturers' list price is 
 multiplied by five, and the result is the Argentine list price in 
 paper moneys In other words^ a repair listed at $1 in the 
 American manufacturer's catalogue is listed at $5.00 Argen- 
 tine paper in the Argentine importers' catalogue. An Argen- 
 tine paper dollar is worth $0.4246 American money, therefore 
 the Argentine list price is $2.12 American money. 
 
 ^Dealers get a discount of 15 per cent» with an additional 
 discount of 5 per cent, for cash in 30 days. As most American 
 manufacturers allow a discount from list of 60 per cent, or 
 even more, a repair listed in the American catalogue at $1 can 
 be placed in a warehouse by the Argentine importer at a price 
 which does not exceed $0.63. If the repair sold at retail, the 
 selling price is $S.18; if at wholesale, the seUuig price is $1.71, 
 assuming that advantage is taken of a cash discount** 
 
 Tmms Ufim Whkk 
 Goods Are Sold 
 
 In the United States ''net" means payment without dis- 
 count 
 
 In England *terms cash" means payment within one or two 
 
 days. 
 
 In the same country "ready cash" means payment within 
 five or ten days. 
 
 The British also offer a discount of from two to two and 
 one^half per cent for cash paid within five to ten days of de- 
 livery of goods. 
 
 The Germans ordinarily give thirty days with two per cent 
 discount or 90 days net. 
 
 In Germany and France the practice has been to include a 
 90 day note with the invoice to customers who returned ihm 
 to the sellers properly accepted. This is common also in 
 Canada. Such method is practicable where an open credit 
 business is conducted. 
 
15d EXPORTING TO THE WORLD 
 
 Reforms Urgtd in Makmg 
 Standardized Quotations 
 
 B^ore dosing this chapter it might be well to call attention 
 
 to the movement initiated by the leading export organizations 
 of the country, such as the National Foreign Trade Council, the 
 American Manufacturers' Export Association, the American Im- 
 porters' and Exp(Mrters' Association and others, to standardize 
 and clarify export quotations so as to prevent misunderstand- 
 ings as to their true meaning. It is common knowledge among 
 exporters in this country that confusion arising from the mis- 
 understanding and misinterpretation of quotations has been 
 the cause of the loss of thousands of dollars annually both to 
 buyer and seller. It is the purpose df the above mentioned 
 organizations to bring about a reform in this important detail 
 so as to simplify it to that point where even the least experi- 
 enced merchants engaging in foreign trade may easily 
 master it. 
 
 At a meeting in December, 1919, the organizations men* 
 tioned gathered at a conference in New York, and a tecooH 
 mcndation by the National Association of Manufacturers call- 
 ing for the abandonment of all the abbreviated terms in favor 
 of writing the words out in full was adopted. The action 
 taken at this conference, however, can only be in the nature 
 of a recommendation where there are so many engaged in the 
 trade throughout the country. Reliance is placed upon the 
 trade organizations to conduct a campaign of education look- 
 ing to the adoption of the proposed changes. 
 
 New Methods of Making 
 QmiaJtums Are Adopted 
 
 Tbe export quotations finally passed upon and adopted were 
 as follows: 
 
 F. O. B. (Named Point). 
 
 1. When the prices quoted applies only at shipping point, 
 and the seller merely undertakes to load the goods m or in 
 cars or lighters furnished by the raikoad company servis^ 
 the industry, or most conveniently located to the industry, 
 without other designation as to routing, the proper term is : 
 
 HOW TO QUOTE PRICES 
 
 153 
 
 **F. O. B. (named point)". (F. O. B. cars, mills, works 
 
 and factories all have the same meaning and obligation.) 
 Under the quotation: 
 
 (a) Seller must (1) place goods on or in cars or lighters, (2) 
 secure railroad bill of lading, (3) be responsible for loss 
 and, or damage until goods have been placed in or on cars 
 or lighters at shipping point, and clean bill of lading has 
 been furnished by the railroad company. 
 
 (b) Buyer must (1) be responsible for loss and, or damage in- 
 curred thereafter, (2) pay all transportation charges, in- 
 cluding taxes, if any, (3) handle all subsequent movement 
 of the goods. 
 
 F. .O. B. (Named Point). 
 
 Freight prepaid to (named seaboard point). 
 2. When the seller quotes a price including transportation 
 charges to the port of exportation without assuming responsi- 
 bility for the goods, after obtaining a dean bill of lading at 
 point of origin, the proper term is: 
 
 **F. O. B. (named point) freight prepaid to (named point 
 on the seaboard)." 
 Under this quotation: 
 
 (a) Seller must (1) place goods on or in cars or lighters, (2) 
 secure bill of lading, (3) pay freight to named port, (4) 
 be responsible for loss and, or damage until goods have 
 been placed in or on cars or lighters at shipping point, 
 and clean bill of lading has been furnished by the railroad 
 company. 
 
 (b) Buyer must (1) be responsible for loss and, or damage in- 
 cunred therei^ter, (3) handle all subsequent movement of 
 the goods, (3) unload goods from cars, (4) transport 
 goods to vessel, (5) pay all demurrage or storage charges, 
 (6) arrange for storage in warehouse or on wharf where 
 necessary. 
 
 F. O. B. (Named Point) Freight Allowed. 
 
 3. Where the seller wishes to quote a price, from which 
 the buyer may deduct the cost of transportation to a given 
 point, without the seller assuming responsibility for the goods 
 after obtaining a clean bill of lading at point of origin, the 
 proper term is: 
 
IH EXPORTING TO THE WORLD 
 
 **F. O. B. (named point) Freight Allowed To (named 
 point on the seaboard).** 
 Under this quotation: 
 
 (a) Seller must (1) place goods oil or in cars or lighters, (B) 
 secure railroad bill of lading, (8) be respcmstble for loss 
 and» or damage until goods have been placed in or on 
 cars or lighters at shipping point, and clean bill o£ lading 
 has beea furnished by the railroad company. 
 
 (b) Buyer must (1) be responsible for loss and, or damage in- 
 curred thereafter, (2) pay all transportation charges (buy- 
 er is then entitled to deduct from the amount of the in- 
 voice the freight paid from shipping point to named port), 
 (3) handle all subsequent movement of the goods, (4) 
 unload goods from cars, (5) transport goods to vessel, 
 ({)) pay all demurrage charges and, or storage, (7) ar- 
 range for storage in wardionse or on wharf where 
 ttecessarVa 
 
 F. O. B. Can (Naowd Point on Seabomd). 
 
 4. The seller may desire to quote a price covering the 
 transporution of the goods to seaboard, assuming respcmsi- 
 bility for loss and, or damage up to that point In this case 
 the proper term is: 
 
 **F. O. B. cars (named point on seaboard)." 
 Under this quotation: 
 
 (a) Seller must (1) place goods on or in cars, (2) secuie rail- 
 road bill of lading, (a) pay all freight charges from point 
 of shipment to port on seaboard, (4) be responsible for 
 loss and, or damage until goods have arrived in or on cars 
 at the named port. 
 
 (b) Buyer must (1) be responsible for loss and, or damage in- 
 curred thereafter, (2) unload goods from cars, (3) handle 
 all subsequent movement of the goods, (4) transport 
 goods to vessel, (5) pay all demurrage charges and, or 
 stxmge, (6) arrange for storage in warehouse or on wharf 
 where necessary. 
 
 F. O. B. Cars (Named Port), L. & L. 
 
 5. It may be that the goods, on which a price is quoted 
 covering the transportation of the goods to the seaboard, con- 
 stitute less than a carload lot In this case the proper term is : 
 
 HOW TO QUOTE PRICES 
 
 155 
 
 "F. O. B. cars (named port), L. C. L.** 
 Under this quotation: 
 
 (a) Seller must (1) deliver goods to the initial carrier, (2)1 
 secure railroad biU of lading, (3) pay all freight charges 
 from point of shipment to port on seaboard, (4) be re- 
 sponsible for loss and, or damage until goods have arrived 
 on cars at the named port. 
 
 '(b) Buyer must (1) be responsible for loss and, or damage in- 
 curred thereafter, (2) handle all subsequent movements 
 of the goods, (8) accept goods from the carrier, (4) trans- 
 port goods to the vessel, (5) pay all demurrage charges 
 and, or storage, (6) arrange for storage in warehouse or 
 on wharf where necessary. 
 
 P. O. B. Can (Named Port), Lighterage Free. 
 
 6. Seller may quote a price which will include the expense 
 
 of transportation of the goods by rail to the seaboard, includ- 
 ing lighterage. In this case the proper term is : 
 "F. O. B. cars (named port), lighterage free." 
 Under this quotation : 
 Xa) Seller must (1) place goods on (or) in cars, (2) secure 
 railroad bill of lading, (3) pay all transportation charges 
 to, including lighterage at, the port named, (4) be re- 
 sponsible for loss and (or) damage until goods have arrived 
 on cars at the named port 
 
 (b) Buyer must (1) be responsible for loss and (or) damage 
 thereafter, (2) handle all subsequent movement of the 
 goods, (3) take out the insurance necessary to the safety 
 of the goods after arrival on the cars, (4) pay the costs 
 of hoisting goods into vessel where weight of goods is 
 too great for ship's tackle, (5) pay aU demurrage and 
 other charges, except lighterage charges. 
 
 F. A. S. Vessel (Named Port). 
 
 7. The seller may desire to quote a price covering delivery 
 of the goods alongside overseas vessel and within reach of its 
 loading tackle. In this case the proper term is: 
 
 "F. A. S. Vessel (named port)." 
 Under this quotation: 
 (a) Seller must (1) transport goods to seaboard, (2) store 
 
IM £XPORXING TO THE WORLD 
 
 goods in warehouse or on wharf if necessary, unless buy- 
 er's obligation includes provision of shipping facilities, 
 (3) place goods alongside vessel, either on a lighter or on 
 the wharf, (4) be reqioasible for loss and (<^) damage 
 nntil goods have been delivered alongside the ship, 
 fb) Buyer must (1) be responsible for loss and (or) damage 
 thereafter, (2) handle all subseqnent movement ol the 
 goods, (S) pay eott of hoisting goods into vessel irfwro 
 weight of goods is too great for ship's tackle. 
 
 F. O. B. Vcssd (Named Port). 
 
 a The seller may desire to quote a price covering an ex- 
 penses up to and including delivery of the goods upon the 
 overseas vessel at a named port. In this case the proper 
 term is: 
 
 "F. O. B. Vessel (named port)." 
 C'F.^ O. B. named port" has the same meaning in the best 
 practice, but should be avoided altogether to prevent misun- 
 derstandings.) 
 
 Under this quotation: 
 
 (a) Seller must (1) place goods actually on board the vessel 
 and to meet all, in placing goods on the vessel, charges 
 incurred thereby, (2) be responsible for all loss and (or) 
 damage until goods have been placed on board the vessel. 
 
 (b) Buyer must (1) be responsible for loss and (or) damage 
 thereafter, (2) handle all subsequent movement of the 
 goods. 
 
 0» mkl Wm amed Poroigu Pwt)* 
 
 9, The seller may be ready to go further than the delivery 
 of his goods upon the overseas vessel and be willing to pay 
 transportation to a foreign point of delivery. In this case th« 
 proper term is: 
 
 ^C. and F. (named fofd^ port)." 
 Under this quotation: 
 
 (a) Seller must (1) make freight contract and pay transpor- 
 tation charges sufficient to carry goods to agreed destina- 
 tion, (2) deliver to buyer or his agent proper bills of 
 lading to the agreed destination, (8) be responsible lor 
 loss and (or) damage until goods have been delivered 
 alongside the ship, and clean ocean bill ol lading obtained. 
 
 HOW TO QUOTE PRICES 
 
 (Seller is not rei^Kmsible lor delivery of goods at desti- 
 nation.) 
 
 ^b) Buyer must (1) be responsible for loss and (or) damage 
 thereafter and must take out all necessary insurance, (2) 
 pay costs of discharge, lighterage and landing at foreign 
 port of destination in accordance with bill of lading 
 clauses, (S) pay foreign customs duties and wharfage 
 charges, (4) handle all subsequent movement of the goods. 
 
 C. L F. (Named Foreign Port). 
 
 10. The seller may desire to quote a price covering the 
 cost of the goods, the marine insurance cin the goods, and all 
 transportation charges to the foreign point of delivery. In 
 
 this case the proper term is: 
 
 "C. I. F. (named foreign port)* 
 Under this quotation: 
 
 (a) Seller must (1) make freight oontraet and pay freight 
 charges sufficient to carry goods to agreed destination, 
 (2) take out and pay for necessary marine insurance for 
 buyer's account, (3) be responsible for loss and, or, damage 
 until goods have been delivered alongside the ship, and 
 clean ocean bill of lading and insurance policy have been 
 delivered to the buyer or his agent (seller is not resp<»isi- 
 ble for the delivery of goods at destination nor for pay- 
 ment by the underwriters of insurance claim), (4) seller 
 to provide war risk insurance when necessary for buyer's 
 account. 
 
 (b) Buyer must (1) be responsible for loss and, or, damage 
 thereafter except as covered by insurance and must make 
 all claims to which he may be entitled under the insur- 
 ance directly on the underwriters, (2) pay costs of dis- 
 charge, lighterage and landing at foreign port of destina- 
 nation/ (3) pay foreign customs duties and wharfage 
 charges. 
 
 Shippers are reoonunended to clearly understand the |Ht>- 
 visions of their insurance protection on all foreign sales, irre- 
 spective of the general terms used thereon. In almost all 
 cases it should be possible, when making shipments by 
 steamer, to obtain insurance cover, giving full protection from 
 primary shipping point to designated seaport delivery and on 
 foreign port of delivery, as ordinary marine insurance under 
 F. P. A. conditkms, L e., free ol particular average, gives no 
 
m EXPORTING TO THE WORLD 
 
 protection against deterioration and (or) damage to merchan- 
 diae while in tranrnt^ when caused hy the fecognized hasards 
 attending snch risks. Shippers should endeavor in all cases 
 
 to obtain insurance under W. P. A., i. c., with particular aver- 
 ag^e, when in excess of the customary franchise of 3 per cent, 
 to 5 per cent. Under such form of insurance underwriters will 
 be called upon to pay claims for damages when these eaneed 
 llie stiptilat ed franchise* 
 
 Emphasiets NecessUy 
 
 of^ Set Ternts 
 
 The necessity of set terms in quoting prices is clearly em- 
 phasized by John F. Fowler in "The Americas," a publicatioii 
 ci tiie National City Bank of New York City, who says: 
 
 '^In sales c. i. f. to a port the buyer often pretends that he 
 has purchased at that port; and this quibble is a common trick 
 to shirk the goods if the market has turned adversely. 
 
 "The distinction between a sale 'delivered at destination' 
 and a sale i. 1 to the port' is sharp and dear to both the 
 experienced seller and buyer. Bnt the ignorance on this point 
 is amazing, among our American traders, and when laxity in 
 practice has been tolerated, by allowing the foreign buyer to 
 imagine or infer that he is dealing on the basis of 'quote de- 
 livered at' his port, the exporter is breeding trouble for him- 
 •df, aridng from the oontlngendes of voyage (which belong 
 absolutely to the bnyer), if anjrthing happens beyond the risks 
 covered by the bill of lading and insurance. Many such buy- 
 ers throw upon the seller the consequences of deterioration in 
 perishable goods, perhaps from the delay (arising from mis- 
 hap) en route, and for which the seller never contemplated 
 ally re^ionsibili^. 
 
 ''Again, say a sale has been made for shipment a month or 
 two later, and space for the cargo is immediately engaged with 
 the steamship line, but some mishap delays the boat and un- 
 avoidably she cannot load strictly on time. Perhaps, weltering 
 weather in summer, or a blizzard in winter, delays the factory 
 or railway or local steamboat; or an ice-bound harbor, or a 
 strike somewhere, retards the shipment for a week or fort« 
 night. The sale was made in all good faith, relying upon usual 
 facilities which generally operate on time, but something un- 
 controllable transpires, between sales and shipment the market 
 
 HOW TO QUOTE PRICES 
 
 159 
 
 has fallen, which &ct the customer is sure to know, but he 
 will likely await arrival of the goods to reject; them upon his 
 
 unhappy seller, or else exact an extortionate allowance. This 
 is bad enough in the case of staple commodities, but if ma- 
 chinery or other goods not easy of sale, the exporter is certain 
 to suffer heavily. 
 
 Quoting in any way except a ''c L f basis often wories a 
 hardship on a customer who lives in a country where ocean 
 freight rates are constantly fluctuating. In these markets it 
 is hard to do business unless the importer knows exactly what 
 the goods are to cost him landed at the port, and he is unable 
 to determine these costs unless he is quoted "c L i" 
 
 The disadvantagres of quottnir in anj manner exe^t on a **c L V tarif kl^ 
 the Ceylon market is told by Ralph M. Odell, who reported to the Bureau «! 
 Foreign and Domeitic Commerce on "Cotton Goods in Celyon," He says in part: 
 
 •Tn Cebron as in othet markets of the world, the importer stated that the 
 liractice of /mericaa mantcfMtwcrs and •Kp or teia 1m qaotiaff goods f . o. b. Nev 
 York instead of c. i. f. the port of destination made it very hard to do business. It 
 would dottbtless be difficult for the American exporter to make firm offers on a 
 e. L f. bam in view of the constant fluctuations in freight rates, but it is even more 
 diAodt for the hayottw Ctlfwi to SMeftda ntM of frdgfat mutrntud fm New 
 York. Inasmuch as present transportatioo charges are equal from eight to ten per 
 cent, of the value of the goods, the importer is afraid to take chances, particularly 
 as the margin of profit in cotton goods is very small. When prices are quoted f. o. 
 k New Ysti^ he does sot haow and has no mcen s of Meertaining without cablini^ 
 to the ex p o rte r , the rate of freight to be paid. 
 
 **It would certainly facilitate American trade if the exporter would quote prices 
 c. L f. Colombo with a stipulation that they were subject to cable confirmation. 
 Freight rates aad war risk ia s ttraace on shipments from Em-ope are changing almost 
 as freqneathr as tfM sates fram New York hot in s|^ of this fset all EnglUk aad 
 Continental cotton goods are still being sold c. i. f. Colombo. I explained to the 
 importers the difHculties which American exporters meet in conforming to the 
 practice, and while they appreciate these difficulties, they maintain that our trade 
 wmdd be wmOf facBkated if we eovld ofweoMi IImm «id qM • friee m aoods 
 mm w A hi Hm hMiw §t Cilirtn," 
 
CBAfTCR XII 
 
 FOREIGN CREDITS 
 Human nature same the world over — Why manufacturers 
 
 tKTUSB TO SaCTSND CUEDIT OfVERSBAS — HiSTORY OB CXOm IN KMt- 
 SIGN BUSINESS — CREDIT INFORMATION NOT DIFFICULT TO OB- 
 TAIN — What is necessary in credit information — Long 
 
 CREDITS NOT NECESSARY IN EXPORT TRADE — ^HOW TO COLLECT 
 OVERDUE ACCOUNTS IN lOKBIGN FISLa 
 
 All the crooks and "dead beats" in the world are not to 
 be found in regions outside of the United States. Neither 
 are all the honest folks concentrated in this country. Yet 
 the novice in export trade upon receiving an inquiry or an 
 order from a merchant in a foreign country generally demands 
 cash in advance before he permits the goods to leave his 
 hands. He has formed the opinion that foreigners are not 
 to be trusted. There is another Idnd oi a novice in the ex- 
 port trade, too. He is the exporter who become so enthusias- 
 tic over receiving his first order from some merchant in India 
 or in South Africa that he immediately makes the shipment 
 withimt consulting the credit inlormatioa sources which are 
 available. The shipment reaches its destination but the re- 
 mittance never comes ; and the novice is greatly disappointed. 
 
 Human nature is very much the same the world over. Busi- 
 ness is transacted akMig the same basic principles. There are 
 good and bad accounts in fordgn countries. There are good 
 and bad accounts in the United States. Business cannot be 
 transacted without credit, however. The world's greatest export- 
 ing nattoi^ have developed the markets ol the world by extending 
 credit American manufacturers and exporters have extended 
 credit. The pioneers will tell the novice that fewer losses 
 from bad accounts have been recorded against foreign cus- 
 tomers than against domestic buyers. There are still many 
 Americaa manu&cturers, however, who have not learned that 
 
 160 
 
 FOREIGN CREDITS 
 
 161 
 
 risks beyond the American boundary lines are just as safe as 
 those within our borders. 
 
 (Vhy Manufacturers Refuse 
 to Extend CreM Overseas 
 
 There are probably two reasons why American manufac- 
 turers refuse to extend credit to prospective customers in 
 foreign countries. One is that they are ignorant that there are 
 available in this country many agencies for the obtaining of 
 sufficient reliable credit information regarding foreign cus- 
 tomers, and the other is that American manufacturers are not 
 equipped to handle this kind of business. They do not wish 
 to assume the additional burden of looking up credit informa- 
 tion, and other risks involved in shipping goods to a fore^ 
 country,, and in the collection of the account. Added to this 
 is the necessity of obtaining a speedy return in the invest- 
 ment involved in the factory. 
 
 History of Credit 
 in foreign Business 
 
 Before proceeding with the methods by which an American 
 manufacturer may be able to obtain reliable credit informa- 
 tion and finance shipments without the necessity of tying up 
 capital the reader should have a general idea regarding the 
 growth and development of credit in the commercial relations 
 between nations. 
 
 In Special Agent Series, No. 62, of the United States Bu- 
 reau of Foreign and Domestic Commerce^ Mr. Archibald J. 
 VVolfe» Commercial Agent for the Department of Commerce 
 and Labor gives this interesting bit of light on the beginning 
 of credit relations between exporters in Europe and importers 
 ill foreign markets. 
 
 'In the early history of commercial relations between the 
 great exporting nations and the countries which are forced to 
 import the bulk of their manufactured goods, and therefore 
 from the principal 'export markets/ the financing of export 
 shipments was a comparatively simple matter," says Mr. 
 Wolfe. 'The European exporter maintained branches of his 
 own within the sphere of his activity in the eaqK>rt field. He 
 
m EXPORTING TO THE WORLD 
 
 supplied the goods, the foreign or local branch received them 
 and distributed them among the local dealers or consumers. 
 Wkea the latter were able to pay, the distributing house was 
 in a position to forward the proceeds to the parent house. 
 
 "The next step in the development of the export markets 
 was the rise of independent importers abroad, but these were 
 abo dependent npon the receipt of proceeds from their ots- 
 tomm before being able to settle with the European houses 
 which supplied them with the goods. The mode of payment 
 on the part of the local customers, however, depended upon 
 the purchasing power of the population, and that in its turn 
 hinged upon the yield of harvest, and the prices realised 
 abroad for native produce. 
 
 System of Barter 
 is Dying Out 
 
 ''The inevitable progress of economic development has 
 brought about certain changes in the relations between ex- 
 porters, importers, and native producers in the export mar- 
 kets. Excepting in certain sections of Africa and in the South 
 Sea Islands, the native producer no longer barters his produce 
 against his demand ioar foreign manufacturers or provisions, 
 and the relation between harvests and the purchasing power 
 is less visible on the surface, but none the less it is very real 
 In Guatemala, Venezuela, and Brazil, for instance, this inter- 
 dependence of purchasing power and the price of co&'ee in the 
 world markets is very clearly observable. 
 
 It is impossible, of course, to adjust automatically the si^ 
 ply ol manufactured inq>orts to the purchasing power of the 
 country. Yet anyone familiar with conditions in the export 
 markets notices the feeling of hesitancy in ordering goods which 
 pervades the entire commerce of these markets just before the 
 result of the harvest is reliably known. 
 
 "Originally, all this uncertainty, the risk of overstocking, 
 tiie liability to gauge the paying capacity of the local trade, 
 were burdens upon the shoulders of the European exporter. 
 The distributing house abroad was his own branch establish- 
 ment. Later the independent importer had to bear the risk 
 of being unable to dispose of his stock. His customers, as the 
 result of a bad harvest, might fail to fulfill their obligations 
 
 FOREIGN CREDITS 
 
 toward him. He had to have credit, because hb alMlity to pay 
 
 for his goods depended upon the payments of his customers. 
 
 **The European importers, therefore, granted him open 
 credit .This means that the shipments from Europe were 
 debited against the importer, leaving him a considerable 
 amount of latitude in settling. This latitude was generally 
 the subject of special agreements. 
 
 "The credit in this manner is elastic, inasmuch as the time 
 of the settlement by the importer is dependent upon the time 
 when he receives payments horn his customers. Open credit 
 was an absolute necessity at a period of the export business 
 when the shipments from Europe had to be balanced against 
 shipments of foreign produce. It was impossible to either 
 provide an absolute equivalent between shipments of manu- 
 factured goods from Europe and shipments of a ^x^duct such 
 as coflPee to Europe^ or to assign any definite time for the 
 letum shipment 
 
 *When the importers commenced to settle their indebted- 
 ness to European creditors by remittances of money, an ar- 
 gument in favor of open credit was the desire on the part of 
 the debtors to remit when the 'exchange' was favorable. At 
 this stage it may be remarked that die currency reforms in 
 many escort markets have to a great extent eliminated this 
 factor. 
 
 Absolute Confidence 
 is Necessary 
 
 "One of the essential conditions of this open credit trading 
 was absolute confidence on the part of the exporter in the 
 importer. Originally, the importing house was the es^rter's 
 own branch establishment Later, Euxopean exporters ex- 
 tended these confidential relations to houses of strictly Eu- * 
 ropean nationality, British or Germans located in the export 
 field. Competition and the search for wider markets forced 
 the European esqfXMrters to penetrate beyond the chain of im- 
 porters ak»g the coasts and to take up dealings with native 
 impcMters. China, and to some extent Japan, are the only 
 countries at the present time where every link between the 
 exporter in Europe and the ultimate consumer still remains — 
 the importer at the foreign port, the jobber, the wholesale 
 distributor in the intenori and the retail dealer* 
 
1C4 EXPORTING TO THE WORLD 
 
 "In place of the small group of importers oversea, many of 
 whom were blood relatives or friends of the exporters and 
 whose financial s t a ndin g was an open bode to the tetter, the 
 exporter deals now with a large number of strangers, whose 
 commercial status may be an uncertain quantity. This situa- 
 tion brings about the creation of settlement by means of 
 chraf ts. Each individual transaction is doctimentsffily attested 
 by means of a draft; the latter is accepted by the debtor ; the 
 credit granted by the exporter ceases on the day when the 
 draft matures. 
 
 Bimif Nattt a 
 Factor in Trade 
 
 "At this stage of the development of the export trade the 
 banks appear as an important factor in the credit business. 
 The bill of exchange becomes the foremost credit instrument 
 of foreign trade. The improvement in the stability of foreign 
 exchange and the organization of a network of oversea banks 
 were the principal causes which contributed to thi g . 
 
 ''The American manufacturers enter the export field as 
 important competing factors at a time when their British and 
 German rivals and predecessors have begun to reap the fruits 
 of a long period of preparation, organization, and adaptation 
 to foreign conditions. By sheer excellence of their products, 
 the result of unparalleled ingenuity and inventiveness, by their 
 manufacturing skill and remarkable enterprise, they invade 
 the markets of the world and attain a most enviable position 
 as an exporting nation. The vast home market, indeed, still 
 engrosses the attention of most American manufacturers. It 
 is comparatively a small number among them who have 
 studied the foreign markets with an eye to the future as well 
 as to the present Many of them r^rd the export trade as 
 a sideline or as an experiment. The results of this phase in the 
 growth of the American export trade are numerous complaints 
 from foreign customers. The farsighted manufacturers who 
 have built up a world trade are seldom objects of these com- 
 plaints, but the novice seems to be bound to pass througlr this 
 period of apprentkeship, until under the expensive tutorship of 
 experience he learns to transact his business with the foreigner 
 as smoothly as with the home customer."* 
 
 FOREIGN CREDITS 
 
 165 
 
 Manufacturers Refuse 
 to Give Credit 
 
 Mr. Wolfe goes on to cite the most popular criticism di- 
 rected against American manufacturers by foreign buyers— 
 that of the refusal of the former to grant credit to the latter. 
 
 "It may be admitted here that the demand for credit in the 
 export markets is a vital one and that European exporters 
 adequately meet this demand," says Mr. Wolfe. "The Ameri- 
 can manufacturers, on the other hand, have been persistently 
 blamed for ignoring it. The result of this attitude, it is 
 pointed out, is that Americans lose trade to the nations which 
 will grant the credit requured in the export field. 
 
 "'Cash against documents' in New York at this period 
 comes to be known as the cast-iron rule of many American 
 manufacturers. Some, indeed, have listened to the reproaches 
 of critics and have shown a tendency to be liberal to foreign 
 customers, and as a result have met with financial losses. 
 They soon realize that while refusal to giant credit may lead 
 to loss of trade, indiscriminate credit granting is sure to lead 
 to loss of money." , 
 
 Credit Information Is 
 
 Not Difficult to Obtain 
 
 With the growth of the American export trade American 
 merchants ami manufacturers have recognized the necessity 
 of accommodating foreign buyers to some reasonable extent in 
 the matter of credit. With the expansion of American banking 
 institutions into foreign fidds and the development of trade 
 associations and otficr competent agencies the facilities for 
 extending credit to foreign merchants have been bettered 
 without imposing difficult burdens on those whol extend it. 
 A study of a bank's functions in connection with foreign trade, 
 and metiiods of obtaining credit informatkm will soon con- 
 vince the beginner that doing bunness wi^ m fcmgn cus- 
 tomer is not as difficult as it may seem. 
 
 The American manufacturer who sent a form letter to a 
 foreign customer in which the latter was asked to answer a 
 number of queilkNit ifgarding his financial standing is well 
 
IM EXPORTING TO TU£ WORLD 
 
 known. Neecfless to say, he was not compeUed to wait rtrf 
 long for an answer in which the foreigner called attention to 
 his impertinence. An exactly opposite policy was adopted by 
 another manufacturer who sent a valuable shipment of goods 
 to an unknown customer in Ai^ftntina without firsi investi- 
 gating his credit standing. He never obtained payment for 
 Ins goods* 
 
 Means of Obtaining 
 CredU InforwutHam 
 
 No shrewd manufectnrer will ship goods on credit to a 
 
 foreign customer unless he has first made a full investigation 
 regarding the merchant's financial standing. Where can he 
 obtain tliis inlormaticMi? Is it jreliable information? The 
 manufacturer may obtain reports r^farding the financial 
 standing of a foreign prospect at home, or he may obtain 
 them in the field to which he is asked to make a shipment. 
 
 The following sources for obtaining information in the 
 domestic fiekl are available to the manufacturer: 
 
 (a) The American mercantile agencies; (b) American 
 banks having branches or correspondents in foreign coun- 
 tries; (c) Export Trade publications in the United States; 
 (d) Foreign Trade associations in the Unit^ States; (e) 
 Foreign exchange bankers in the United States; (I) Ameri- 
 can manufacturers; (g) Credit protectk>n societies. 
 
 Among the fore^ sources for obtaining credit reports on 
 the standing of customers are the following: 
 
 (a) Banks in the countries where the proposed risk is in 
 business; (b) Foreign mercantile agencies; (c) American 
 Chambers of Coounerce in Fmign countries; (d) American 
 manufacturers* traveling salesmen in foreign eonntries; (e) 
 Customers' own references. 
 
 It is possible now to obtain credit reports from almost 
 every section of the v^orld where there is business. The two 
 large American mercantile agencies years ago recognizing the 
 necessity of tliis function for American business interests, es- 
 taWshed branches and correspondents in various sections of 
 the world where American business was likely to penetrate. 
 American Foreign Trade associations, also, went into the 
 foreign field to cooperate with American manufacturers and 
 
 FOREIGN CREDITS 
 
 167 
 
 exporters. These organizations established foreign credit bu- 
 reaus for the collection of credit data which was available to 
 all members. Other foreign trade associations recently or* 
 ganized are fast developing this department of their activities 
 so that the element of risk in doing business with foreign mer- 
 chants may be reduced as much as possible. Correspondents 
 have been sent to all sections of the world for the collection 
 of this data in the interests of the members of the various 
 associations. 
 
 Frocedmrg im 
 
 Obtaining Reports 
 
 One organization goes about the obtaining of credit reports 
 in this fashion: It organizes a corps of direct correspondents 
 
 located in nearly every city and town of commercial import- 
 ance in every country in the world outside of the United 
 States. It endeavors to secure statements from firms in- 
 quired about, and whta given, to communicate with their 
 trade and bank references, at the same time having one or 
 more of its own correspondents make independent investiga- 
 tions. Where firms refuse to give statements the business 
 connections of the firm in the United States or Europe are 
 communicated with. The testimony from all sources is 
 sent to headquarters from where it is sent to the inquirii^ 
 manufacturer. As the use of the mails frequently means too 
 long a delay it has its own cable codes by which the essential 
 information may be secured by cable at a minimum expense. 
 
 American banks having foreign branches or correspondents 
 are, perhaps, tiie most reliable sources from which credit in* 
 f ormatk>n may be obtained. It is to their interest ti^ com- 
 plete reports on the standing of customers in cities in which 
 the American manufacturer may desire to do business, should 
 be kept. An American merchant desiring information regard- 
 ing the standing of a customer in Rio de Janiero should go 
 to the Ameriqm bank that has a branch or correspondent in 
 that city. These banks wiU furnish the data if they have it 
 on file provided they believe the inquirer will make use of 
 their service in the financial transaction involved. If the in- 
 formation is lacking on that particular merchant the bank 
 can easily obtain it by cabling. Unless tlie transaction in- 
 
168 EXPORTING TO THE WORLD 
 
 volves a large sum of money, however, this expensm pto- 
 cedure is not usually followed. In ordinary cases a letter will 
 do just as welL It may require a month or more but not any 
 longer than the time necessary to close a transaction with an 
 overseas customer. 
 
 Banks in foreign countries may be addressed direct and 
 generally an opinion is sent in reply to the manufacturer's in- 
 quiry. These banks generally give brief information, and ad- 
 ditional reports are often necessary to supplement the data 
 f4»tained from these sources. By piecing together all other infor- 
 mation that has been obtained from various sources the manufac- 
 turer should be in a position to intelligenUy judge of the 
 customer's credit standing. 
 
 The manufacturer's credit man should be a subscriber to 
 all competent and available mercantile agencies. If one 
 agency is unable to furnish the required information perhaps 
 the other might. If the information cannot be obtained from 
 any agency the bank might be able to furnish it 
 
 The practice of asking foreign merchants to submit refer- 
 «ices from other fellow merchants is not generally the best 
 method. The latter do not like to be disturbed, and the former 
 ordinarily do not like to subject their fellowmen to such obli- 
 gations. The manufacturer should take advantage of the 
 regular channels— the banks, tiie estabUshed mercantfle 
 agencies, or his own traveling salesmen abroad— for such 
 data. 
 
 Wkai Is Necessary «i 
 Credit Information 
 
 The foreign customer is always a risk, regardless of the 
 competence of the credit reports that the manufacturer may 
 receive from the regular sources. Oredit reports are merely 
 opimons. Th^ are not authentic rqxwts contahimg a guar- 
 antee that the custmner will pay when required. Much de- 
 pends on judgment— judgment on the part of the manufac- 
 turer and his credit man. The latter must Jmow his man, 
 how he shall proceed in doing busmess with b>m, and how &r 
 lie can trust him for merchandise obtained from the manu- 
 lacturer. 
 
 The credit man must have the following information so that 
 he may intelligently arrive at a decision; 
 
 FOREIGN CREDITS 
 
 169 
 
 (a) Customer's general trade reputation ; (b) The approxi- 
 mate financial worth of the customer ; (c) Whether he is an 
 old established business man or a recent arrival in the field ; 
 (d) His repuUtion in meeting foreign drafts ; (e) His reputa- 
 tkm in meetmg bills at home; (f) His general character and 
 standing in the community. 
 
 These are only a few of the points that a credit Report 
 should cover. A good credit report can never contain too much 
 information. The experienced manufacturer or exporter deems 
 it ffgent*^! to know tiie customer's reputation in meeting his 
 foreign drafts. If his record in this respect is dean he is gen- 
 erally considered to be a good risk. 
 
 The credit man must remember that the foreign credit re- 
 port will not be as complete as that one to which he is ac- 
 customed at home. Many of the essential details familiar in 
 the domestic market such as capital, assets, debts, value of 
 merchandise, etc., will be missing. Foreign merchants are 
 reluctant to furnish this data. In some countries they regard 
 the mere asking as an insult. The Latin American or Chinese 
 merchants object to giving out reports of such a personal 
 character. But the time is coming when the foreign merchant 
 will recognize the necessity and value of making his business 
 an open book for the perusal of American manufacturers, just 
 as it is done in the domestk field. It must be remembered that 
 American merchants had to be educated to this metiiod of 
 obtaining credit data. At first they furnished it unwillingly, 
 but later when they recognized its value in their business they 
 consented to give out complctr r^K>rts. 
 
 Credti Skmdards 
 
 Differ Abroad 
 
 -\gain quoting Mr. Wolfe: "Due to the difference in trade 
 oiganization, the credit man will therefore not measure the 
 icnreign rqiort to the standard of an average American credit 
 report, either in size or in the quantity of definite data. No 
 one in India or in Turkey or in many other countries can tell 
 accurately what his neighbor is worth, and the neighbor 
 won't tell. Some very good foreign customers will as soon 
 divulge the combination of their safe to a chance inquirer 
 as to state just what ^ey are worth, to whom they owe for 
 
i;0 EXPORTING TO THE WORLD 
 
 merchandise, and how much money they have in the bank. 
 Therefore, except in commercially well developed countries, 
 such as Canada, the Continent of Europe, and the United 
 Kingdom, and a few others, a report will be even more of a 
 licarsa/ nature than at home« 
 
 •Tin most foreign countries information regarding a credit 
 risk will be the result of inquiry among the rivals of the risk, 
 among houses supplying him with goods, among banks, whole- 
 sale houses, etc. For this reason it is wise to {Mrocure rqiorts 
 from more than one aouice. No one n^xMter, no one re- 
 porting office, will always ascertain all of the aacertamable 
 data regarding a customer. This is not so important when 
 the general gist of the report is in itself decisive for a given 
 transaction. A report may read: *X and Co. are one of the 
 oldest and most honorable houses on this coast and have 
 been In business for upward of 40 years. Their wealth is 
 several hundred thousand pounds sterling.* This will fully 
 suffice to a credit man considering the advisability of ship- 
 ping X and Co. $300 worth of goods. Pages of most de- 
 tailed data would not alter the fact On the other hand, the 
 report may read : *Y & Z are a notorious firm of international 
 swindlers, warned against frequently by consuls and others,' 
 and the matter is settled again. 
 
 '^These examples, of course, are esctreme, but thcj tend to 
 show that mere size is not the decisive dement in a foreign 
 credit report. What decides is not the number of words or 
 details, but the clearness with which the actual standing of the 
 customer is portrayed, enabling the credit man to come to a 
 decision." 
 
 IjMig Cndks Af9 Nift 
 Nmsmry m Esport Trade 
 
 If one is to believe all the charges directed against the 
 American manufacturer in connection with the granting of 
 reasonable credit to foreign custonms one would be tempted 
 tn visualize Unde Sam as the "Shylodc" of the export trade 
 field. "The American manufacturer demands his pound of 
 flesh" is a statement that is becoming very common to our 
 ears. Travelers arriving home from foreign countries bring 
 back stories to the effect that American merchants are losing 
 
 FOREIGN CREDITS 
 
 171 
 
 business because of their refusal to extend liberal credit to 
 prospective customers. The newspapers are full of such 
 stories. Yet if these individuals who innocently bring back 
 these reporto would only sit down and study the methods 
 employed by other great exporting nations they would readily 
 become convinced that this seemingly "distasteful" policy is 
 not peculiar to the American manufacturer alone. Other 
 countries will not grant credits indiscriminately, but when 
 they do offer accommodations it is always with the coopera- 
 tion of banks engaged in financing foreign trade, and usually 
 when these foreign merchants are playing the role of ex- 
 porters with branches in other foreign countries. In direct 
 dealmgs with foreign customers, however, it will Ibe found 
 that the German or British manufacturer is just as reluctant 
 in extending credit to an unknown foreign importer as the 
 American manufacturer. The latter cannot afford to tie up his 
 capital for an unreasonable length of time. He does not do 
 it if he can help it It is generally true that credits of 90 
 days are considered satisfactory in foreign trade but credits 
 over that period are ex9eptional, even among foreign inter- 
 national traders. 
 
 While it is tr\ie that Germany and Great Britain— Germany in 
 particular — are accustomed to extend the most liberal credit 
 terms to overseas customers it must be remembered that this 
 practice has been- confined to those countries in which unusu- 
 ally longer credits are required than in other sections of the 
 world. For instance, trade between Germany and the United 
 States has generally been on a cash or short term credit basis. 
 The reason for this is obvious. These two countries are 
 highly developed, and actual payment for merchandise does 
 not depend so much on transitory conditions. In dealing with 
 countries whose point of development is still below a satis- 
 foctory margm, however, it is quite necessary to be more le- 
 nient m the matter of payments. 
 
 German exporters have taken these factors into considera- 
 tion, and consequently we find in many cases that extremely 
 liberal credits have been granted to customers in certain quar- 
 ters of the globe such as Latin America, certain parts of Africa 
 and the East Indies. 
 
 The customary length of German drafts on over-seas coun- 
 tries before the war was as follows : 
 
178 
 
 EXPORTING TO THE WORLD 
 
 South America: 3. 4, 6, 9, and 12f months; most frequency 3 
 to 6 months. 
 
 Central America : and West Indies : 4, 6, and 9 months. 
 Australia: 30, GO, 90 and 120 days. 
 
 China and Japan : Mostly 3 months; also 8, 4, and 6 months. 
 
 Dutch East Indies and Straits Setaements: 30, 60, 90, and 
 120 days, np to 6 months. 
 
 British India 30, 60, 90, and 120 days. 
 
 South Africa : 60, 90 and 120 days, up to 6 months. 
 
 Northern Africa and Asia Minor: 4 to 9 months. 
 
 It win he noted that length of credit varies with the character 
 of the territory in which the importer may be doing business.^ 
 Even now, however, as is mentioned elsewhere in this chapter, 
 there is a general movement in aU quarters for the elimhiation 
 of this long credit evil. In Germany protests have frequently 
 been made against a too liberal policy in this respect. British 
 exporters are frowning on the idea. The general thought seems 
 to be that the customers who are constantly askmg for time 
 arc those who may be less desirable on the books of the export 
 merchants. It is doubtful whether this loose policy will be 
 renewed unless competition becomes so strong among the 
 nations that they will agam become reckless in making special 
 
 1 -XStMfrflF Ewopera homn aOow cnm of at least six months. If Colom. 
 -«i mercnants c«uo obtain tbe ttaM tanna iraa tha Uaitad Stataa this would 
 
 be an important factor in increasingr the business betweaa tha two nminiiiin. It 
 l^Tt^'-l'^t United States merchant cannot ftaat aa«er terms it would 
 . ^1 ^^"^'^^ ^^^^ necessary facilities in the 
 
 TermA^^ r ^ ^ coUecting should grant easy 
 
 terms, because m Colombui payments are not mmSty voy pnetinl* tUa doaa oot 
 mean that the acceptance of the draft is not good, but there is considerabk lat- 
 itnde m Colombia m the matter of paying drafts. The intermediaries do not care 
 to asmne te^Nmaibimy nor to take the trouble to protect the drafts, as the pro- 
 cedure is not so rapid or eamnient as in oChar ooomrica. Mottmr as the ma- 
 jcnty of the drafts that reach Colombia from manufactwara ar« — .^n ^ bBaW 
 jvho c ollects has more work than a baakar in aaothar ooHrtry aad liaa to A« a 
 hi^ar coouaission. ^ 
 
 _ hiVortatiooa iaio Bogota ara on a ciodit basis, through the 
 
 medium of commission houses who diaw on roiluiaiii at ISO or 160 dawL 
 
 American manufacturers, with some exceptiooa, do Mt coro fer tUa Uod of 
 business and usually demand payment against shipping documents in New York 
 i-'^j'fT^ acceptable to the merchants of Colombia. The latter are 
 teqM to plaae ^ mmt^ !• Haw York at tfw tioie they order, and manufac- 
 turers some times dalaj mootha in mm tha oitea wilk tka loMIt that tha mJ^r 
 k»ses interest in Colombia, where rates are high. 
 
 "Of late large interests in Manchester England, have been cutting down tfM 
 tine gfaotcd oo Colombia by giving only four months instead of six 
 
 months and upward.--B«aa« of Fofoipi aai DooMstk Conaaioa Special AgenM 
 
 FOREIGN CREDITS 
 
 173 
 
 offers of credit to prospective customers in order to get their 
 
 business. 
 
 The Necessity of CredU 
 To -ike Foreign Buyer 
 
 The problem of credit will always command the most serious 
 attention of tiie exporter because of the varied factors involving 
 transactions of this character in dealings with foreign buyers. 
 
 As Mr. W. E. Tarlton, export manager, Brown Shoe Co., said 
 at the Fifth National Foreign Trade Convention: 
 
 "I feel that we are all agreed that credit has been on'^ of the 
 fundamental necessities in the development of our present, almost 
 perfect commercial structure, and if it has been necessary in 
 order to mature the commercial life of any nation, it is equally 
 necessary to produce like results in all nations. Some of the 
 countries that represent today the most lucrative field for Ameri- 
 can products have an insufficient home capital for the needs of 
 ^leir k^cal commercial interests and the simultaneous develop- 
 ment of their own natural resources. Merchants m such coun- 
 tries are compelled to play a most important part. They are of 
 necessity forced to place goods with the consumer on credit, due 
 to the fact that returns yielded on invested capital from agricul- 
 tural enterprises (which, of course, go to make up the principal 
 industries of these less devdoped countries), while liberal, do 
 not occur at sufficiently rapidly recurring intervals to permit 
 cash transactions. These same merchants or importers are also 
 called upon to advance heavily for freight, duty, landing charges, 
 and etc., and unless credit is extended, they are not in a position 
 to buy f leely. In sparsely settled countries these same mercliants 
 in many instances, are also baiikers and as such are hampored at 
 certain seasons of the year for ready cash. The long dday in 
 securing imported merchandise due to transportation difficulties, 
 manufacturing delays, etc., necessitate the importer in these 
 countries carrying larger stocks than would be necessary were 
 suppfies available in shorter time; 
 
 Lack of Stability m 
 Exchange a Paetar 
 
 "Another unfailing argument in favor of credit in some nations 
 is the lack of stability in exchange rates. The seasonable exchange 
 fluctuations in some of our Central and South American countries 
 are to be seriously redDoned with and are a constant source of 
 
174 EXPORTING TO THE WORLD 
 
 innoyance. I eaniestly look forward, however, to the day when 
 some master intellect among our banking friends will offer a 
 satisfactory solution to this ever-perplexing problem. 
 
 "Competition is also a much used, possibly abused excuse, espe- 
 pedally in the moitths of leaders of industries new m the practice 
 of exportuig, and is quoted freely gfi a cause for the extension of 
 credit in foreign countries. 
 
 "Credit is and always has been an absolute necessity. Remove 
 the principle of credit from our daily conunerce and you leave 
 ooty a trifle over $10,000,000,000 of protected currency or cash 
 in the coffers of the world, and as daily transactions between 
 buyer and seller represent a volume hardly measurable in the 
 terms of dollars and cents, you can quickly appreciate that 
 business wouki be so materially curtailed as to completely 
 nullify Ac commercial efforts of the past hundred years or more. 
 The safe, sane credit systems and practices now prevalent make 
 possible the magnitude of the world commerce which we now 
 enjoy, 
 
 CmuUmtHams m IA# 
 Formation of Credit Policy 
 
 "I have always liked to feel that there was a certain obligation 
 on the part of the business houses to take their place in the game 
 as a wbttkt hy e xten d mg credit to an amount commensurate with 
 the vohmie they were enjoying and the returns or profit tiicy 
 aedc* 
 
 "Manufacturers anticipating a permanent export business must, 
 of course, in the fulness of time, decide upon some definite 
 policy r^^arding the subject of credits. As a rule there are 
 three points to cmisider: 
 
 "(a) Your product, and if perchance, you are producing such 
 goods as are non-competitive you are fortunate indeed, for in 
 that case you can of course, insist upon such terms and prices 
 as you want' If, however you are producing articles that are 
 subject to competition you will find yourself face to face with 
 the problem of doii^ as the Romans do. 
 
 "(b) You must consider your market and the requirements 
 thereof as to credit. The various markets of the world have 
 established rules, some of which have been in existence for 
 many g en e tations, and these people will be sbw to change Iran 
 
 FOREIGN CREDITS 
 
 175 
 
 these rules simply as an accommodation, as they put it, to Ameri- 
 can inflexibility. 
 
 "(c) Your buyer must be reckoned with, and he will, of course, 
 consider cash transactions only as a last resort. His hrst thought 
 is whether he is in a poutioa to pay in advance or whether his 
 means are such that he must have credit. No truer remark has 
 ever been made on this subject than was made by an exporter 
 before this convention in New Orleans in 1915, who said: 'The 
 question of credit is one of the difficulties with which exporters 
 have to deal, but if yoU want to export at all your credits must 
 be handled in the same intelligent way and along lines not funda- 
 mentally dissimilar to those employed in dealing with our 
 domestic trade.' 
 
 "American exporters have been harangued by writers of vari-^ 
 ous creeds and tongues, even American writers, for their frigidity 
 of terms, and in contradistinction thereto mention has been made 
 of the liberally of Germany. We, of course, have today our 
 ideas as to the extent of Germany's liberalities. England and 
 other exporting countries have been extolled and their praises 
 sung. We have been told of their philanthropy of their enter- 
 prise, of their investments made ior pioneering enterprises with 
 lo desire for return except as a benefit to their country as a 
 whole, but all of this is quite misleading. True enough, in your 
 experience as exporters, you will find that m many instances long 
 terms have been granted and liberal terms ext^ided by manufac- 
 turers in these various countries, but analysis of the situation will 
 invariably show that these long terms and liberal credits have been 
 extended only after careful investigation and after applying the 
 same general rules that should always govern the extension of 
 credit of any character. Even our so-called 'American' cash 
 terms are quite freely indulged in by our competitors in inter- 
 national trade, and more often than otherwise are demanded by 
 them. Conservatism pervades the niind of every intelligent credit 
 grantor, whether he learns it from an American business primer 
 or from an English, French or Dutch. The short terms principle 
 which, I admit, is desirable by every American manufacturer, is 
 fundamentally somid, ideal and, in fact envli^ and the time is 
 ripe for a forceful attitude toward short terms, especially in lines 
 of quick turnover possibilities and commodities. 
 
m EXPORTING TO THE WORLD 
 
 Americans Future 
 Credit Policy 
 
 "Up to the present tune it has not heen expedient nor neees- 
 saiy that we shotdd place onr goods In foreign fields on long 
 
 terms or under a system of loose credit. In fact, it has not 
 been necessary that we sell our goods to foreign countries at all 
 except where it could be done on an extremely profitable basis, 
 and kmg terms and profit are not compatible onkss they are 
 accompanied by a mediator — ^long prices. Implicit faith iir 
 American business capacity and ingenuity prompts me to feel 
 
 overcome any and all con^tition, how- 
 ever, when once we have f oond k necessary to do so. The 
 manufacturing capacity of the United States has heretofore just 
 about equalled our demand, but, of course, we are beginning to 
 realize that there will be surplus production so soon as the high 
 peak load toward which we have heen so fast climbing is reached. 
 
 "That we, as exporters are willing to grant credit is an irre- 
 futable fact One h u ndr ed and forty-one r e p re s e n t a tive firms 
 were asked the question, 'Are you granting credit to concerns 
 located in countries other than our own V One hundred and ten 
 replied affirmatively, thirty-one only were insisting on cash in 
 every instance. Our American firms are as able to extend credit 
 or better able, in fact, tiian any competitor we have. We have 
 the financial strength, and when the propitious moment arrives 
 and a reasonably substantial basis for credit can be shown, we are 
 perfectly ready to extend the necessary credit. Importers of our 
 goods, however, must know or he tanght, if they do not know, 
 that mercha n dise on credit costs mm; tint short terms are eoo- 
 nonucal, sound, s^d safe; ^t Vm^ terms and the pernicious 
 abuses of cre^ which have been so prevalent in some countries 
 should be wiped out at this the most opportune time of all history. 
 
 *'Up to this time I have not attempted to differentiate between 
 the term 'open credit' and 'time a€CQ>tances.* Both are credit, one. 
 extrcmdy hazardous, the odier considerably less ttlMHre are, of 
 course, sound, honorable business men in every civilized country 
 in the world, and I for one, deeply appreciate the truth of this; 
 but these qualities are most loudly extolled by those whose ckise, 
 first-hand knowledge and c xper ieiice are not wpr ti ae f U t d by maiiy 
 years of actual, open-credit rdatkmship widi merdants in for- 
 eign countries, and I mean it as no reflection upon these mer- 
 
 FOREIGN CREDITS m 
 
 chants when I warn against open credits. It is a policy only to 
 
 be dealt with with eyes wide open and after a thoroughly com- 
 prehensive and efficient investigation and a compilation of com- 
 plete, satisfactory data. 
 ''Open credit is based solely upon confidence. Confidence is 
 
 the result of one*s own or someone else's experience and should 
 only be dealt in when one is familiar with the details of such 
 
 ''There will come times, in die experience of every eiqxurter 
 
 who does any volume of business to speak of, when he must ex- 
 tend open credit or lose profitable business, and in many cases, 
 under any and all sorts of circtanstances, and in most any 
 country, some open credit can be extended with no more attend- 
 ing dangers than is average with any well organized house, 
 even though dealing exclusively with domestic trade. 
 
 "Summarizing, I have attempted to show what credit is— to 
 show also diat it is vitally essential to the development of big 
 bushiess, either dooMStic or taagoti; to show tiiat manufacturers 
 must decide upon their credit policy; that as a Nation wte are 
 willing to extend credit and are financially able to do so; that 
 we should not extend long terms, but that we should apply to 
 the extension of credit to merchants in foreign lands the same 
 intelligent rules that have built up the fabric of commercial 
 cre^t m our own country. We need badly f urther^help from our 
 enormously large financial institutions. They, at least some of 
 them, have had the vision and are bending every effort toward 
 promoting the interests of American exporters. We need also 
 serious study on the part of om- l^slatures toward expansion of 
 f ordgn trade interest, hut, greater tiian all these is the need that 
 the mist of mdiffei^ence and busmess I4»tiiy be removed from the 
 eyes of our manufacturers that they may not only see the benefits 
 that will accrue to thiem as individuals by closer study of this 
 vital issue, world commerce, but that they may consider it a duty 
 to interject their energies into it so that a nation may become a 
 real &ctor. It is not enough that we buy and sell to one another, 
 we must likewise buy from and sdl to other countries, as only 
 by so doing can we contribute to the economic growth and ex- 
 pansion of the United States. The time is ripe, American goods 
 are favoraUy known in every quarter of the globe. With the 
 ^.ft fftttt m of hostilities in Europe and the assurance of open seas 
 and world iMt denmrnqr* ^ Amercan merdumt nnnne 
 
in EXPORTING TO THE WORLD 
 
 commensurate with the standing of our country opportunities 
 will be far in excess of any we have previously had." 
 
 Mwment to Discouragi 
 Vu af Lomg CfwdUs 
 
 With changed conditiona brought about by the end of the 
 war, and the world settling itsdl down on a more substantial 
 basis there has grown a movement in which bankers, and ex- 
 porters, and importers alike from all parts of the world are shar- 
 ing a part to discontinue the economically unsound policy 
 of extending unreasonable credits. Buyers who have 
 been accustomed to obtaining the most favorable terms tram 
 manufacturers and exporters are already beginning to rec- 
 ognize the advantages of doing business on a cash or short term 
 basis. Purchases under such conditions usually mean lower 
 frkes and better discounts. Reliable reports to the effect that 
 large nundiers of buyers may be found in the principal ports of 
 the United States with ready cash for purchases of American 
 goods for their foreign clients seem to indicate that a step is 
 being taken in this direction. With the development of the 
 machineiy of financing foreign business, however, the American 
 manufacturer can kxik txpm the business of developing trade in 
 foreign countries on reasonable credit as invohring as Uttle risk 
 as at home. 
 
 EspaH CretKi 
 
 Insurance Plan. 
 
 As the necessity of obtaining rdiahle credit information from 
 
 foreign countries is increasing with the tremendous growtii of 
 our trade there have been advanced within recent years various 
 pWte aimed to solve the problems of credit managers in connec- 
 tion with foreign business. 
 
 I^haps, the most substantial plan is Aat whtdi has been re- 
 cently developed in Great Britain. This plan invohres the insure 
 ing of the payment of bills in export transactions. 
 
 There are two export insurance schemes in operation in Great 
 Britain: (a) the British Government Export Credit Insurance, 
 whidi is carried on under a department of the Board of Trade 
 known as the Exports Credit Department, and (b) a second 
 scheme consists of two private companies, the British Trade C3oP- 
 pofatkm and the Trade Indemnity Ca 
 
 FOREIGN CREDITS 
 
 179 
 
 Under the plan of the British Government Export Credit In- 
 surance the seller of British merdhandise to merchants in the 
 new States receives immediately a certain portion of his btil, 
 even up to 80 per cent. The whole transaction is carried on 
 directly with tliis branch of the Board of Trade, which has ar- 
 ranged witii the banltt of the United Kingdom, through their 
 head offices in London, to scrutinize the shipping documents and 
 report in a note as to the reputation of the buyer as well as the 
 seller, so far as can be ascertained. The buyer is not given open 
 credit, but nmst pay for tiie goods in the mon^r of his country 
 at the rate of the pound steriing exchange before the goods are 
 delivered to him. The banks in the United Kingdom do not 
 handle any of the funds, the whole transaction being carried 
 on in the foreign country through the branches of the Govern- 
 ment department, the banks acting only as information bureaus. 
 
 The object underlying the project is to help these new States 
 organize their foreign trade and at the same time to build up a 
 sound British business with these countries. The requirement 
 that the goods be paid for in the money of the country of pur- 
 chase will, to a large extent, eliminate losses and will build up 
 a trade with only st^ firms as have substantial financial backing. 
 
 Terms Upon Which 
 Jnsmrmee is gkfm 
 
 The British Government is prepared to consider applications 
 for advances up to 80 per cent of the cost of the goods, plus 
 freight and insurance, for goods wM to 
 
 Finland : 
 
 The Baltic Provinces (Latvia, Esthonia, and Lithuania) ; 
 Poland; 
 
 Czechoslovakia: 
 
 Jugo-Slava; and 
 
 The areas in Russia to which the scheme for insurance 
 against abnormal commercial risks applies; 
 subject to the foUowing conditions: 
 
 1. Docmnentt are to he surrendered to the buyers against 
 their acceptance of a bill hi sterlmg drawn 1^ tiie sdlers for the 
 full amount of the invoices, together with security (sec next 
 paragraph). The Government will release the drawers from any 
 recourse against them for the amount of the advances made. 
 
180 EXPORTING TO THE WORLD 
 
 2. The purchasers must agree to take up such documents 
 against a deposit of currency calculated on the basis of the 
 mafkiet exdianges, such deposit to be made with an approved 
 bank in the country of purchase and to be hdd as security for 
 the due payment of the bills. 
 
 3w When the advance is needed, the relative documents will 
 have Id be accooqpaiued by a letter of guaranty from an apptoved 
 bank of the country of purchase, stating that tiie documents will 
 be promptly taken up against such deposit of currency and under- 
 taking that the amount of such currency shall always be main- 
 tained at a figure snfficicnt to give a margin of 16 per cent 
 over die value of steriing as based vtpoa tiie exchanges (not 
 upon the official exdianges, if any). All applications accom- 
 panied by a bankers' guaranty of sterling payment at maturity 
 of the bill will receive preferential ctmsideralion. 
 
 4 The department will con^der proposab for a di^odt of 
 p ro duc e or securities instead of currency. 
 
 5. The advances made by the department will be a first 
 charge upon the proceeds of the bills and securities; but» il 
 sudi proceeds are less than the cost, phis freight and insurance, 
 the loss represented by the difference will be divided between 
 the department and the drawer of the bill in the proportion of 
 the advance made to the cost (plus freight and insurance). 
 
 6b The credits are to ontstand only for such periods as the 
 department may determine in each case at the ttai of applica- 
 tion for the advances. 
 
 7. The Government will settle from time to time the countries 
 and goods to which the sdieme rdates, hot advances will not 
 be made for the export of raw materials and preferences wiU 
 be given to the finance of goods where the larger part of the 
 cost is due to manufacture in this country. 
 
 8. All applications must be passed to the department by the 
 bankers of the sdkrs, whose recommendation must be attached. 
 
 9. After satisfaction of the advance the bin and secnritiei 
 will be handed to the seller if payment of the full amount of the 
 bill has not been made. 
 
 10. At any time after maturity of the bUl or after any default 
 die dqwrtment will be entitled to ckise a transaction and hud 
 over the security held, die seller bearing his prqxMtion, as in- 
 dicated above, of any loss incurred. 
 
 FOREIGN CREDITS 
 
 11. The conditions set out above may be modified at any 
 time in special cases. 
 
 The BriHsh Trade 
 CorporaHan's Pkms 
 
 The British Trade Corporation, on the other hand, has formed 
 a subsidiary company which may possiUy devekip into an under- 
 taking of importance to British commerce aU over the world. 
 The new undertaking is called the Trade Indemnity Co., and its 
 subscribed capital, which is entirely owned by the corporation, is 
 100,000 pounds, of which 20,000 pounds has been paid up. 
 
 "The object of the new company is to assist British merchants 
 and manufacturers in developing overseas busmess, by insurance," 
 it is explained by a London firm to an American consul. "Pofides 
 are issued insuring the payment of commercial debts, thus en- 
 abfing an exporter to increase his present volume of trade with- 
 out mcurring greater capital responribiUties. Under approved 
 conditions the company will advance to die assured the amount 
 of its liability in respect of any debt insured, against transfer 
 of the debt, and payment of interest on the amount advanced, 
 until the net outcome of an estate is ascertained. The company 
 granto policies insuring up to two-thirds of a client's whole 
 turnover against ultimate loss. Policies are also granted to cover 
 a proportion of such losses as may arise shooMatoced rewk 
 of goods become necessary in consequence of buyers becomuig 
 msdvent and thereby unable to take up shipping documents. 
 The company likewise grants policies insuring against a propor- 
 tion of tiader's losses in any one year in excess of an agreed 
 percentage of loss on turnover to be home by the aasnr ed. The 
 company is also prepared to grant polideft insoring approved 
 accounts up to three-fourths of the amount of a ddit 
 
 "These last-named policies, insuring specific accounts will be 
 issued on diree iMffeient bases. Under policies issued under 
 basis A die company wiU piqr to die assured an agreed 
 proportion of die net loss after die dd>tor has become 
 insolvent and all dividends recovered or asccrtahied. 
 Under basis B the assured will receive within seven 
 days after satisfactory proof of insolvency a sum equal 
 to 18. 4d. ki die pound [$8.24 m each $4.87] on the 
 proportion of the debt hisured wider Ae po»cy. in fnU wtisfac- 
 tion of the liability of the company ; but die assured, besides re- 
 
m EXPORTING TO THE WORLD 
 
 cchriog this certaui payment, will be entitled to any dividends 
 that may be for^icoming. Under basis C the company will under- 
 take to pay to the assured, in the event of the dishonor of any 
 duly accepted bill, an agreed proportion of such bill as is covereil 
 by the poliqr within a lew days of satisfactory pcoof of such 
 dishonor and asngnment of the dd>t to the company. Any 
 amoont collected by the company from the estate of the defaulter 
 in excess of the amount paid by the company, plus interest and 
 charges, will be returned to the assured. 
 
 Development Has 
 Taken Many Yemrs 
 
 "Hie development of a baas on which to estabKsh a system of 
 insuring trade credits has taken many years. For perhaps a 
 century or more the principles of insurance on a mutual basis 
 were carried out in the form of sharing or pooling credits. 
 Tills was confined to one or two trades where it was deemed 
 necessary for self-protection for a number of merdiants to par- 
 ticipate in some commercial venture in which the magnitude or 
 the dangers were more than usual, but where the prospect of 
 profits was also of a nature to encourage the merchant's taking 
 the extra hazard. 
 
 ''Between twenty and thirty years ago several institutio ns pfo- 
 aioted schemes for guaranteeing the payment of bills of ex- 
 change, but made no discrimina^on between trade and accommo- 
 dation paper. No definite system, however, matured from these 
 eflForts, and with one or two exceptions the insurance and trust 
 companies stopped this class of business entirdy. In America a 
 certain amount of success followed a scheme based on die 'cradit 
 ratings' of Dun and Bradstrect, but these ratings books were 
 apt to put a material limitation on the granting of credit and 
 if anything tended to a restriction of trade. 
 
 "The Germans had a somewhat similar system, based on a Gov- 
 effnment information bureau. It was, however, too conqilicated 
 to encourage its general use, and very few availed tfaemsehres of 
 the scheme, except as regards the export trade— in which, previ- 
 ous to 1914, it was being taken up and encouraged by the banking 
 houses. In Germany, however, the bankers' readiness to discount 
 bills of eacdiange wiAout recourse to tiie drawer was largely 
 iloii^ away wiA tiie necessity of guaranteeing payment of credits. 
 This accommodation to the merchant was of great service, as the 
 
 FOREIGN CREDITS 
 
 183 
 
 seller was relieved of his Bability, and his transactions were 
 brought to a cash basis, thus enabling him to increase his turn- 
 over on a mudi smaller capital than would otherwise have been 
 possible. In England also it was possible to discount trade bills, 
 but this venture was and still is in the hands of foreign bankers. 
 
 "The discounting of insurance of bills of exchange was found 
 quite faadfqMatf^ to meet the requiremoits of the merchant and 
 manufacturer. By far the greater number of cre^t transactions 
 were effected without the use of bills of exchange, being simply 
 the aUowing by the seller of an open account to the buyer. A 
 syndicate of Loyd's underwriters formulated a policy to cover 
 this class of risk. It was recognized that with bills of exchange 
 a definite "proof of debt" existed, but with open-account trans- 
 actkms certaui difficulties presented themselves. These were 
 overcome by granting a somewhat lenieni form of poliqr and 
 trusting to the good faith of the assured. 
 
 *'The demand for credit insurance,with the comparatively simple 
 forms, adopted by the underwriters, grew very rapidly. The 
 merchant immediately recognized its utility, and althoi^ the 
 business was conducted without any of the usual methods of 
 publicity it became of great service to both the home and the 
 foreign trader. It was obvious to Acm that they could extend 
 their trade without increasing their capital It gave the merchant 
 greater confidence in entering foreign markets with which he 
 was tinarqwatnt^id, and in many instances he was enabled to build 
 up a trade that would otiierwise have been impossible without 
 material help from his banker at a cost (represented by a fwc- 
 mium paid) much less than that necessary for actual bankers* 
 Hffffifft^nr^ A cautious merchant also benefited by being enabled 
 to grant larger credits without disturbing his ideas as to the 
 limitation of individual credits and, as more tiian one merchant 
 observed, "without forfeiting a night's rest" by jeopardizing 
 his own financiai resources. 
 
 This system of insurance also greatly facilitates tiie opening of 
 new accounts, both home and foreign. The independent sources 
 of information possessed by the insuring company, added to re- 
 ports obtained by the seller, invariably tends to strengthen the 
 confidence necessary for the conducting of commercial inter- 
 course between buyer and seller. 
 
184 
 
 EXPORTING TO THE WORLD 
 
 Premiums determined 
 By Naime of Risk 
 
 "Many methods of ummng credits liive been tried, and the 
 conditions of Iht pcJicies granted have varied materially. The 
 insurance of specific accounts is perhaps the most useful and 
 most generally adopted at the present time. Under this form of 
 policy the applicant must submit the names of the customers 
 whose accounts he desires to cover, and furnish the insurance 
 amaptaxy with the iqipnmmate amount of credit he prc^ioses to 
 grant eadi customer and the terms of the credit. The premiums 
 quoted by the company are based on the merits of the i)roposal. 
 It would be impossible for the company entertaining this class 
 of risk to fix a tariff except on a very broad basis, as it must 
 readily be seen that the standing of the customer, tiie period of 
 credit, the country in whidi the customer is domiciled, and many 
 cdier factors must influence the rate of premium. 
 
 "No hard and fast policy has yet been drawn up, nor is it 
 possible to devise a simple form to meet the various needs of 
 the commercial community. In specific accounts insurance alone 
 three forms of pdicy are generally used: First, a policy to cover 
 Mll-of-exdiange transactions iq> to a special turnover; second, a 
 similar policy to cover open accounts; and, Aird, a policy to 
 cover a specific period (usually 12 months) against the event 
 of the insolvency of the customer occuring within the agreed 
 period. In the third form the policy is issued for an amount 
 whidi the applicant estimates to be tiie largest figure that wiB 
 be owing by the customer at any one time, ^ no account is 
 taken of the actual turn-over. 
 
 **Until quite recently the proportion of the risk entertained has 
 been limited to one-half, but, with more experience to guide 
 the underwriting company, this has been extended to three- 
 fourths, and there is no reason why ultimately the insunnoe 
 conqMuiy should not act as the exporter's guide and accept the 
 whole 'del credere,' but tins would mean a much closer mutual 
 understanding than at present exists." 
 
 In 1916 the Associated Chambers of Commerce of Great 
 Britain adq[>ted formal resolutions asking for some form of 
 insuring fore^ credits, but it was then thought that die idea 
 would not be practicaL British bankers criticised the plan on the 
 ground that a commercial bank should not conduct credit insur- 
 ance or purchase bills "without recoiorse," because of the high 
 
 FOREIGN CREDITS 
 
 185 
 
 proportion of "mercantile risk" involved with the risk of the 
 purely financial and personal credit of buyer and seller in trans- 
 actkms. This critkism was supported by quite a number of 
 bankers whose opinkms were asked on the subject 
 
 Special committees representing various trades appointed by 
 the Government's Board of Trade to study after- war problems 
 took up the matter of studying tiie resolutions of the Associated 
 Chambers of Commerce with the result that the oflkial reports 
 of these committees influenced the semi-government body whidi 
 esUblished the British Trade Corporation, to incorporate an in- 
 surance feature in that institution's program. 
 
 In connection wiA this British effort to assist its exporters by 
 establishing some form of credit insurance. **The Americas," the 
 publication of the National City Bank of New York City says: 
 ''Some idea of the probable working of the British plan may 
 possibly be irtrtt i^H from the official recommendations of the 
 committees. They aslod for a guarantee of specific bills, based 
 upon the credit of the foreign consignee. It was jwrticularly 
 stated that the British trade corporation should organize a com- 
 plete credit survey of foreign countries, obtaining much of its 
 mformation from the conunercial banks, which, the committees 
 thought, would be willing to ke^ the corporation informed about 
 the credit of foreign firms, inasmuch as its insurance facilities 
 would probably assist them in their banking business, if sudi 
 information were kept in confidence. And upon the information 
 tlius gathered, the corporation ought to be able to found very 
 accurate averages of credit experiences, and by varying from the 
 average tn tiie case of individual for^ conrignees, quote a 
 premium on specific bills in case of business with them. The 
 committees regarded it as a probable business development that 
 British eaqporters would be able to charge the insurance premiums 
 to customers, oflEsetting the charge by the reduction in the 
 price of the goods irinch bang insured of immediate payment 
 would enable them to make. In the course of Ae repwt of 
 the textile committee it was stated: 
 
 "It has been brought to our notice by several witnesses, though 
 we have not been able to obtain any reliable details on the sub- 
 ject, tiiat diere exists in Germany a form of insurance company 
 which is willing, for a commisskm of about 4 per cent to guaran- 
 tee approved lon?r-dated bills of foragn trade. Thus, for in- 
 stance, this German company is said to guarantee to the German 
 
186 EXPORTING TO THE WORLD 
 
 manufacturers the due payment of bills accepted by Russian 
 purchasers. 
 
 *The existence of such a financial institution would, undoubt- 
 edly facilitate the granting of credit in the export trade. The 
 insorance company wotild be able, by its agents and branches, to 
 have on its books firms m foreign countries to whom they would 
 be able to give an insurance credit of a certain amount so that 
 the intending purchaser, at the time of his purchase, would be 
 able to say that the credit asked for would be guaranteed. The 
 endorsement by the insurance company of the bills given would 
 make them laigdy marketable securities^ and would, when they 
 approach the last six months of maturity hnag them as n^iotia- 
 ble instruments within the discounting functions of the ordinary 
 joint stock bank. The functions of such an insurance company 
 could well be covered by the British Trade Bank. It is a business 
 which requires the greatest care and skill, but should be quite 
 posable of attainmoit The main objections would be tiiat a 
 firm of standing asking for credit would probably not be willing 
 to consider that they should be guaranteed, because, in fact, the 
 cost of the guarantee would fall upon their purchase. We attach 
 great importance to the establishment of the finest possible finanr 
 cial intdHgence department in connectioii with the proposed 
 British Trade Corporation, so that traders in tiiis country and the 
 Colonies may not be dependent on competing countries for in- 
 formation, which is absolutely essential if credit is to be given 
 with reasonable safety." 
 
 London Paper Explains 
 Credit Insureme. 
 
 The ''London Times" m its issue of Aug. 16, 1919, comment- 
 ing upon credit insurance and its bearing upon foreign trade 
 gives a very clear explanation of the operation of credit insur- 
 ance. It says: 
 
 "Insurance of credit seems promised an important place in 
 both oversea and domestic commerce. The way in which it 
 would facilitate over-sea commerce may be illustrated by an 
 
 example. An English manufacturer may be offered the busi- 
 ness to an importer, say, in Brazil, on the strength of six 
 months' credit. He him self knows nothing ajbout the financial 
 standing of the firm in Brazil. He would therefore go to an 
 English insurance institution which would be in communica- 
 
 FOREIGN CREDITS 
 
 187 
 
 tion with a similar institution in Brazil The Brazilian insti- 
 tution would investigate the credit on the spot, and, if it 
 found the credit satisfactory, the institution would be expected 
 to retain part of the risk and receive a pro rata proportion 
 of the premium. The English institution would complete the 
 transaction by giving the English manufacturer indemnity 
 to the extent of three-fourths of the sums insured. The 
 Brazilian exporters could likewise insure their British credits. 
 
 **The Brazilian exporter might have no means of knowing 
 the financial standing of the importing house in the United 
 Kingdom, but he could cover himself by insuring through a 
 British office, whidi would be in a position of having, or being 
 able to secure, accurate information. Precisely the same sort of 
 transaction would take place in connection with trade between 
 Great Britain and the Scandinavian countries, or, indeed, any 
 other countries in the world. 
 
 ^'By such methods as these an intelligence system of an ex- 
 tremely valuable character would be gradually evolved for the 
 benefit of international trade. The system would be greatly 
 strengthened by reason of the fact that all the correspondents 
 in supplying information would have a direct, substantial in- 
 terest in its accuracy. The development of suchascheme would 
 relieve manufacturers of much of the worry they now expe- 
 rience in respect of the credits they may give, and it would 
 allow them to devote themselves more freely to their principal 
 business, which should be the improvement of their production. 
 It would not relieve them altogetiier of thought respecting the 
 financing of their business, since they would still be required to 
 bear a proportion of the risk. But for this proviso they would 
 obviously be encouraged to reckless trading. Many cases are 
 known in which merchants have refused to bear even 50 per 
 cent of the risk and wanted to insure the whole of the credit. 
 
 "Another example may be given to show the working of 
 credit insurances. A has been in the habit of granting mod- 
 erate credit by supplying goods to B, a customer domiciled 
 at home or abroad. B wishes to increase the credit received 
 from A, possibly in consequence of the present higher level of 
 values. A feds that, considering B's capital, the larger credit 
 is more than he is justified in giving. A has no reason to 
 doubt the bona fides or the solvency of B, but, as everyone 
 else, be likes to limit his risks. 
 
188 EXPORTING TO THE WORLD 
 
 **A goes, therefore, to the insurance company, explains the 
 position and is at once asked: "Have you contracted to part 
 with your goods to B?" If the answer is "'Yes/' then the 
 amapuiy declines to insure. If the answer is "No/' the next 
 step is for the company, by various means at its disposal, to 
 make inquiries as to B's standing. Assuming the result of these 
 inquiries to be satisfactory the company grants an insurance 
 for a percentage of the debt, leaving A to carry the balance 
 at his own risk 
 
 •*The consequence is that A, assuming a share of the risk, has 
 proved that he believes B to be sound. The insurance company, 
 through its own inquiries has confirmed A's opinion. The two 
 parties consequently have checked each other's informatioo. If 
 ever they should prove to have heen wrong and B fails tiien tiie 
 procedure will be for the insurance company to see that the 
 claim is a proper one. There are certain traps to avoid. It 
 might be that, although A has agreed to bear part of the risk, 
 he has not really done so, for there are various ^means, such 
 as holding some secret security or having some tet-off against 
 the debt by which tins state of things could occur. Strict 
 clauses are necessary in the policy to insure that A really does 
 share part of the risk. Otherwise the safeguard of the double 
 opinion referred to above is nuUihed^ 
 
 * 
 
 How LasM€S 
 
 Are Settled 
 
 '^'Supposing the loss is found to be in order and is admitted 
 by the insttraoce ccunpany, then it must still be borne in mind 
 tiiat the company is an insurance office and not a bank. The 
 
 marine underwriter does not pay a total loss in respect of every 
 ship which runs ashore. He first sees what, if any, is the pros- 
 pect of salvage. He pays the final loss only when ascertained. 
 So, too with credit insnranoe; it is the final loss whadi b pay- 
 able. Obviously there must be finality. It has therefore been 
 the practice in Ae past to settle the loss either six months after 
 the default or when the assets have been realized, whichever 
 date is the earlier. This procedure is really the same as that fol- 
 lowed with all kinds of insurance, and no doubt A's banker 
 would finance him, if necessary, in the meantune^ oo the security 
 of the insurance policy. 
 
 FOREIGN CREDITS 
 
 189 
 
 "The foregoing is a brief outline of the foundations on 
 which it would seem credit insurance should be based. There are 
 many varieties of it— the insurance of bills, of open accounts, 
 and of the whole of the firm's debtors— and these call for dif- 
 ferent forms of policies and different arrangements. Of 
 course, difficulties will have to be faced, but no reasonable 
 grounds exist for delay in furthering such a scheme. The 
 present time* in addition to the extreme urgency of encour* 
 aging export trade, is particularly appropriate for developing 
 it, since British banks are now opening branches abroad, and 
 it is hoped that the banks will be willing to lend their sup- 
 port and even take a direct interest in the promotion of the 
 necessary institutions. 
 
 •'If credit and debts were known to be ultimately secure, 
 that scramble for safety which causes a financial panic would 
 certainly be moderated, and possibly prevented altogether. 
 Insurance has already done immeasurable good for the com- 
 munity, and in this direction of safeguarding credit a bril- 
 liant future of public service would seem to be before it." 
 
 Relations Between 
 Merchant and Underwriter. 
 
 The "Times" in a subsequent artide oontmned its discussion 
 
 of credit insurance, with particular reference to the reladcMis 
 between the merchant and the underwriter : 
 
 "In a recent article which was published describing the 
 present condnct and prospects of credit insurance, an example 
 was given of a merchant who was asked to extend the 
 credit given to another firm, in the shape of goods 
 dehvered, and approached an insurance company in 
 connection with the proposal. The pdnt was made that the 
 first question put by the insurance compuiy would be 
 whether the firm had contracted to part with the goods, and 
 that if the answer were in the affirmative, the company would 
 decline to insure the credit. If, however, no such contract 
 had been made, then the company would proceed to deal 
 
 with the proposal. 
 
 "As the reason for this line of action is often not fully appre- 
 ciated by business firms, it will be useful to explain the prin- 
 ciple. The position is somewhat analogous to the procedure 
 
190 EXPORTING TO THE WORLD 
 
 in marine insurance. It is asstuned in the case of a ship 
 or goods which it is intended to send by vessel, that when 
 the insurance is olfered the voyage has not been started. In 
 
 practice, cargo is sometimes insured after a voyage has com- 
 menced, but that is because the goods may have arrived 
 shortly before the vessel left port and the merchant did not 
 egqpect that the shipment would be included; but in all such 
 cases the fact is f»ie of wMch underwriters expect disclos- 
 ures* 
 
 Mmme and Cre^ 
 
 Insurance Practice. 
 
 **Wlien the State war risk's scheme of insurance was in 
 Operation the government o^ce, as a general rule, would 
 not accept the insurance of cargo by vessds which had left 
 port, although in the later days of hostilities this attitude was 
 modified to the extent that voyages between ports supposed 
 to be comparatively safe were occasionally accepted after 
 the ship had started. As communication on commercial mat- 
 ters during the war was exceedingly difEcult and the mer- 
 chants wett constantly without late news of their goods, 
 such belated insurances were frequently offered to under- 
 writers and insurance companies. Often, partly because by 
 that time an underwriter or insurance company might have 
 a full line on the vessel or cargo, higher rates of premium 
 had then to be paid. Presumably the decision of the go\ - 
 crmnent authorities not to accept insurances of this kind 
 yms based on the argument that ^e proposer might have had 
 later information. There was the possibility of superior in- 
 formation. For instance, a merchant might have reason to 
 believe that a submarine had been operating in the vicinity 
 of the ship and so might desire to increase his insurances. 
 In any case, the venture had started. 
 
 "So in the case of credit insurance. The time for effecting 
 insurance is before the risk commences. The proposer is 
 assumed to have no superior knowledge than the insurance 
 company to which he submits the rislc All the knowledge 
 which he may have at his disposal respecting the standing of 
 the customer to whom he is proposing to extend the credit 
 should be at the disposal of the insurance company. Also, 
 he undertakes to bear a proportion of the risk himself, there- 
 
 FOREIGN CREDITS 
 
 by proving his good faith. Once he has undertaken to part 
 with the goods, or has parted with them, the risk has started; 
 in the same way as the risk starts in the marine insurance 
 when the vessel sails from port. 
 
 "In many trades there are no written contracts, and so the 
 time when the manufacturer or merchant parts with his 
 goods is the *vital' moment. In other trades the important 
 moment arrives when a contract is signed or a signature is 
 placed to a letter accepting an order in which definite terms 
 are specified. If he does not approach the insurance com- 
 pany before this 'vital' moment— L e., when the risk com- 
 jnences— there is a feeling in tihe underwriter's mind that some 
 information or rumor may have reached the proposer which 
 may have led him specially to seek protection. The pro- 
 poser may thus have some ulterior motive in desiring insur- 
 ance whkh is not known to the insurance company. 
 
 How Bu^ness Volume 
 
 Affects Premium Rates 
 
 "The attitude of the proposer for credit insurance should 
 be that of a man who is offered a new position and seeks a 
 safeguard of insurance to enable him to accept it It is on 
 such lines that a very large business should be possible, to 
 the great advantage of British oversea commerce. 
 
 "During the war business in the European countries was 
 conducted mainly on a cash basis. There are signs now, with 
 a very gradual reversal of commerce to peaceful conditions, 
 of credit being frequently asked. British firms must in many 
 cases be prepared to give it or let the business go to coun- 
 tries where it may be obtained. The position of British firms 
 will be very much simplified in granting the desired credit 
 by being able to secure the assistance of British insurance 
 companies in bearing a large ptoportbn of the risk. 
 
 "The larger the volume of credit insurance transacted the 
 lower should be the level of premium^s tend. Naturally, in 
 cases where the merchants only offer to the underwriters a 
 small percentage of their business that gives them particular 
 reason for uneasiness. Higher rates are apt to be quoted 
 than when the underwriters are offered a large volume <rf 
 business, including risks of varying character.** 
 
m EXPORTING TO THE WORLD 
 
 Credit Insurance 
 •ft Germany 
 
 The need of further facilities of credits is recognised in Ger- 
 mmy, as the merchants of that country have heen working on 
 
 plans along* the lines adopted by Great Britain. Dr. Emil Hcrz- 
 felder, director of the Hermes Insurance Bank, which combines 
 a limited credit insurance with discounting, says in a recent 
 article: 
 
 The estahltshmcnt of a wepmtt hisurance con^aiiy is war^ 
 ranted on the gfround of increasing necessity. As a result of the 
 
 recent inflation credit relations have become much more uncer- 
 tain, and in some places the amounts of credit have rolled up 
 to such huge sums that the striving for the thrusting ofT of a 
 part of the risk t^oa idiottlders more c^^aUe of hearing the 
 burden is fiyely. Qises are growing more and more numerous in 
 which it is not the creditor but the debtor who requires a guaran- 
 tee of a third party. The employment of credit as capital for 
 merchants and manufacturers who are efficient but lacking in 
 funds, in the rehahilitatkm of their concerns, obviously seriously 
 affected by the war, will open up another apbm of activi^ to 
 the new company in the poriod of tran^tion and also bter on." 
 
 Credit Insurance 
 Not New Device 
 
 Certain forms of credit insurance have been in existence not 
 only in Em^and and Germany for many years, but m America 
 as wen. Thus says 'HThe Americas 
 
 "In Germany insm-ance banking has been carried on by pri- 
 vate merchant bankers just as the acceptance by proxy through 
 established London houses of world-wide credit for a considera- 
 tk» gave rise in London to the 'acceptance' as we have just 
 begun to know it in thb country. These German firms, strongly 
 entrenched in Hamimrg, are the ones referred to ^e British 
 committees and their operations are very well known. For a con- 
 sideration bearing from one-tenth of one per cent to four per 
 oent of tiie amount involved they wouki assume the risks of over- 
 teas merchandiitng credits hi ahnost any manner tiwt coukl be 
 asked of them. 
 
 "A German manufacturer or trader, with a transaction pend- 
 ing, was able to go to one of these houses and obtain an option 
 
 FOREIGN CREDITS 
 
 193 
 
 upon his guarantee of the credits involved at a fixed rate. He 
 could go on with the transactkm or not, as he saw fit, but lie 
 
 could figure exactly on the financing of it, because the Hamburg 
 insurance banker would give him a rate for guaranteeing the 
 paper at once^ so that he could rdy an absolute sale of 
 his bill for cash hnmediatdy, and figure upon that Or the in- 
 surance banker would offer to discount without recourse, or buy 
 his bill outright. If the exporter was willing to wait till^his 
 goods reached the purchaser, who would accept them and thus 
 elimmate the 'mercantile risk* of a miscarriage of the trade, the 
 insurance banker would take his paper, with only the customer's 
 liability to become insolvent or shirk his debt, at a much lower 
 rate. He would give the German a particularly easy rate if he 
 only desired insurance on half Iht risk and carrying half the 
 credit on his own account. He would also insure credit trans- 
 actions on "open account" and sometime make a cash 
 arrangement in connection with these. The great German com- 
 mercial banks have erroneously been credited with giving 
 German export business tiie services as a matter of patriotumu 
 They may have taken bills of favored concerns 'without re- 
 course,' but they did not give the privileges to ordinary German 
 manufacturers. It was the insurance bankers who did this, and 
 they charged for it and made a lucrative business. 
 
 Kind of CredU 
 
 Insurance Needed 
 
 "In this country we have had a system of domestic credit in- 
 surance which, however, would not serve the purposes for which 
 exporting manufactturers now demand the new facilities. Our 
 credit-uidemnity companies have insured the selling merchant 
 against excessive losses from all his transactions, or from a fixed 
 aggregate of transactions covering a certain period of time. 
 To do this, they commonly make an examination of a merchant's 
 records and arrive at an average of his credit experiences. 
 They study his line of business and his methods, also his 
 customers. They then offer him a contract, with restrictive 
 conditions he must live up to in granting credits, by which 
 for a certain amount they agree to indemnify him for losses 
 running in excess of a certain percentage of his gross busi- 
 nesi. Th^ lima yhrtaally insure him against excessive losses 
 
m EXPORTING TO THE WORLD 
 
 from changes in general economic conditions, etc., rather 
 than from the particular losses from specific transactions. 
 
 ''What the exporters of Ei^laiid, the United 'Sutes and 
 Germany are demanding is an absolute insurance of the col- 
 lection in full of specific bills, by a big concern of financial 
 weight sufficient to make its guarantee on a bill the equiv- 
 aknt of a Ing bank's 'accqytance' of oat, as far as negotiability 
 13 concerned. When a bank 'accepts' a bill, it guarantees to 
 future buyers of that bill that it will be paid when due with- 
 out question or delay, and thus enable the maker to sell it at 
 a prime valuation. The bank, however, 'accepts' only upon 
 the understanding that it will have recourse to the maker, 
 ^ man who sold the goods, if the buyer should fail to pay. 
 The bank gives a guarantee only to the holder of the bill. 
 It will pay him, but it will proceed to collect the money from 
 the exporter here if his foreign customer refuses to pay. What 
 tiie exporters who now demand credit insurance desire, is 
 that some strong institution will take a small commissioii and 
 guarantee the payment of bills so that they can obtain their 
 cash by selling their bills and have no further liability. It 
 is a perfectly reasonable wish for carrying the liability upon 
 bills during transit and collection limits their ability to obtain 
 credit for doing more business. Moreover, it is the rule for 
 manufacturers to add, say, two per cent to their prices as a 
 margin of guarantee to cover an imaginary or real average 
 of loss through bad credits. 
 
 "'Almost any one would rather be able to pay one-half of 1 per 
 cent, have Ms credits all guaranteed, and use the l}i per cent in 
 meeting competition, or increasing the profit Tlie service of a 
 feasible credit insurance would be double ; it would enable manu- 
 facturers to trim prices and it would virtually add to their work- 
 ing ca^tal. German manufacturers are now demanding that this 
 Govennnent recognize die national aspects of tiiese economic 
 features of credit insurance and ^tmr reoommendatkms for a 
 State bureau to guarantee export Wlls. 
 
 'The commercial banks of this country and England, which 
 are so strongly organized with foreign branches as to be able to 
 know the credit of fcmign buyers intimately, have often been 
 criticised because, on the strengtii of their foreign credit knowl- 
 et^ tiiey. do not buy outright, without recourse to tfie sdler, 
 and on the credit of the consignee, the bills of exportatioOt 
 
 FOREIGN CREDITS 
 
 195 
 
 charging a reasonable commission for the sendee. The banks 
 
 have resisted the temptation to take these profits, on the ground 
 that they must confine themselves to pure banking risks, and the 
 ••meicantile ri8ks"--as they are caUed-~of foreign collections are 
 not withm the reahn of commercial banking. In actual foreign 
 business the bulk of difficulty in makmg f ordgn collection arises 
 not from the dishonest refusal of foreign merchants to pay but 
 from refusals to accept consignments because of a wide range of 
 reasonable misunderstanding between the parties. Busy manu- 
 facturers and merchants are not given to careful, detailed des- 
 cription in tiieir correspondence. The buyer writes a brief order 
 with one idea in his mmd; the exporter fills it conscientious^ 
 with another in his. A few months ago an Argentine manufac- 
 turer of bathtubs sent an order to the United States for galvan- 
 ized iron sheets. When the sheets arrived at Buenos Aires he 
 refused to take them. The whole correspondence was referred 
 10 a mediary. Botfi principals it is evident from the records, 
 acted in absolutely good faith. The Argentine expected Imt^' 
 sheets; he received perfect *'gray" sheets. At the worst tiie 
 American concern was careless. Both are financially responsible. 
 But a bank tiiat would have bought the bill for that shipment 
 outright would have been at a loss for it The variation of tiiese 
 miscarriages of commerce is legion. 
 
 "The "problem" of insuring foreign bills will be comprdiend- 
 ed ahnost entirely in the question how to fix a premium that will 
 fit an average 'mercantile risk.' It can be solved, undoubtedly. 
 The British Trade Corpotation has arranged witii a well-known 
 marine msurance company to be its credk-insurance department. 
 The marine underwriters of England are tiie worid's most ver- 
 satile judges of risks of all kinds. Lloyds will consider any 
 kmd of risk submitted to them, it is said. 
 
 To Be a Success 
 Premium Must Be Lm 
 
 -It is entirely feasible to judge of particular "mercantile risks.** 
 But to be a success the prenuum must be tew. It wiU probacy 
 become highly competitive. If we take up tiie insurance of 
 foreign bills over here there is no doubt that while thf 
 insuring institution will write its full guaranty of a bill as bene- 
 fiting a buyer of the bUl in order to make msured bills freely 
 negotiable, it wiU have a contract pving it mome against the 
 
m EXPORTING TO THE WORLD 
 
 maker in case of palpable errors in tnisiness transactions. It 
 
 might require a general bond of the insured, covering a range 
 of business. It might require 'acceptance* of the bill in ad- 
 irance by a bank, and then insure against the mercantile risks 
 imly. Or it might employ some practicable system of inspection 
 of the goods to see if orders and documents conform exactly to 
 specifications. Special laws might be adopted, holding exporters 
 to stringent compliance with certain standards when they insnre 
 transactions. It has even been suggested that some great cor- 
 poration should combine express business or forwarding, pack- 
 ing, and insurance. This would give it full control over the 
 physical m e r chan d ise, and enable '4 to make sure of the met- 
 cantik risks.' 
 
 "It has been said by advocates of this proposed facility for our 
 commerce that the establishment of world-wide credit insurance 
 in international commerce, either by one or more very large in- 
 ttitntkins, or by groups of smaller companies working closely as 
 underwriters do would automatically diminish the mercantile 
 risks of trade by forcng both exporters and importers to conform 
 absolutely to standards. A general vogue of insurance at f lactioii- 
 al rates would with its economies make it: well nigh impossible 
 ior escporters to export or importers to import without it. A 
 record of continuous bad practice on the part of an exporter, 
 or many refusals to accept goods, without the very best reason, 
 on the part of an importer, would soon result in his being 
 classed as a bad risk, with a high premium on his business, or 
 exchision. It would enf<Hrce cai^ul Iiyti4iitig of exportatlons 
 and discourage captious or dishonest refusals to accept importa- 
 tions." 
 
 Hmf ta Collect Overdue 
 
 Accounts in Foreign Field 
 
 It should be understood, that the credit man often runs up 
 against the situation involved in the collection of a poor ac- 
 count in the foreign market. This is natural. It often hap- 
 pens that some sort of a collection machinery most be put 
 into action to force pajrment from a customer whose credit 
 standing is not of the best. This is a regular thing in the local 
 market. Collection agencies thrive on this sort of business. 
 It is not di£&cult for the manufacturer to turn over the col- 
 
 FOREIGN CREDITS 
 
 197 
 
 lection of a bad account to one of these agciicie»-«iid they 
 
 generally do the work. 
 
 But when there is a bad account to collect in a foreign 
 country what must the credit man do about it? If the manu- 
 facturer or es^rter has a branch office in the foreign country 
 where Ae bad account exists the matter is not so difficult. Col- 
 lections will be made just Uke it is done by other concerns in that 
 particular field. But for the manufacturer or expcMter who falls 
 victim to a foreign customer on an open account proposition 
 when he has not the adequate facilities to enforce coUection the 
 problem of collectioii becomes a difficult one. 
 
 Foreign Aceomi 
 Difficult to ColUet 
 
 It is generally more difficult to make coUectkms from 
 foreign customers than it is from domestic merchants. The 
 distonce between seller and buyer gives the latter a sense of 
 security. He knows that the seller will find himself in aU 
 sorts of trouble in endeavoring to effect a collection. 
 
 Sometimes the failure to pay is not the fault of the debtor, 
 however. The shipment of goods contrary to mstructions 
 is a none too rare occurrence among American manufacturers. 
 This causes misunderstanding. It may finally be setUed after 
 kxng drawn out correspondence. In instances of this kind the 
 best thing for the manufacturer to do is to settle the matter 
 as smoothly as possible. He should be Uberal in a compromise. 
 It is the best way out. Where the customer is behind m 
 his payments the nature of the indebtedness, the state and 
 conditbn of the debtor, and his locality must be considered. 
 The nature of the indebtedness may vary from a small item 
 on an open account to a large sum; it may be merely delay in pay- 
 ment, a refusal to pay, or hiaWlity to pay, either official (bank- 
 ruptcy), or inofficial, or finaUy plain tedc of available funds to 
 meet the obligation. 
 
 It catena happens where the rate of exchange is constantly 
 changmg from week to week that the foreign merchant awaits 
 a favorable opportunity for the setttemeat of his account This 
 
 may often cause several weeks of delay, and Ihe manufacturer 
 might be tempted to write his customer a letter "dunning" him 
 for his money. The manufacturer should be very careful in 
 the use of his language in the coUection of an account of 
 
'm EXPORTING TO THE WORLD 
 
 this character. An insultiiig letter from the manufuctiifer's 
 cmrespondence department may cause the loss of thousands 
 
 of ddlars worth of business for the year. 
 
 There are instances, of course, where it is necessary to com- 
 pel prompt settlement on the part of foreign buyers. Mr. Archi- 
 bald J. Wolf e> who compiled a i^qK>rt on foreign credits for 
 the Bureau of Foreign and Domestic Commerce explains the 
 metiiods that should be employed in collecting a bad .debt. "A 
 bank may be well employed to press a draft to the debtor,"' 
 says Mr. Wolfe. "Full details should be submitted to the 
 bank at the same time, and a courteous letter should be writ- 
 ten alao to the debtcnr. If this fails, the customer is phunly 
 an undesirable one. It will be then necessary to wei^h on 
 the one hand the cost and the probable chances of litigation,, 
 and on the other hand the amount of the claim made by the 
 delinquent. It may be frequently worth while to agree to the 
 unjust claim and communicate the incident to the mercantile 
 
 • 
 
 
 
 fl4 
 
 The difficulty may he in some of these cases so delicate that 
 the credit man might do well either to intrust his claim to 
 a bank in the debtor's city with instructions to handle it 
 through its attorney or to turn it orer to some such institution 
 as the f ore^ collection bureau maintained by the National 
 Association of Manufacturers. 
 
 "In the case of delay due to a temporary embarrassment it is 
 necessary to judge each case on its own merits. The wise 
 credit man will immediately make a searching inquiry into 
 the financial standing of his customer in order to learn 
 whether an improvement may be soon looked for. In many 
 instances a little patience will retain a faithful and a desirable 
 customer temporarily short of funds while in other cases prompt 
 and decisive action is vindicated. It all depends on the standing 
 of the customer, the thoroughness of fiitfttyHal informalioo, 
 and on die d^;ree of security the credit enjoys. 
 
 *Where the debtor is dishonest the creditor, evidently had 
 been negligent in granting credit to an undeserving customer. 
 Such accounts are the most difficult to collect" 
 
 Collections Should Be 
 Made am Their Menu 
 
 In endeavoring to collect a bad aceoont by c o ff t ft pc ii 4 ence 
 
 FOREIGN CREDITS 
 
 199 
 
 it has been the custom among some American merchants to 
 make pleas for their money on a varied number of grounds. 
 
 Some confess that their funds are low and they need the money ; 
 others state that the prices at which their goods were sold 
 aiesokywtfatttitisimpoasibletocixtetMli credit It is questic»iable 
 whether such metihods of obtaining remittances of old accounts 
 are productive of good results. It is usually done in the United 
 SUtes but such methods have often been condemned by the 
 more enlightened members of credit associati o ns. It seems that 
 the best argument for demanding settlement of an account is 
 that it is due, and that the money rightly belongs to the mer- 
 chant who made the accommodation. A letter along these lines 
 can easily be written by an experienced correspondent. He can 
 use tact and diplomacy— and force, without the necessity of 
 admitting into the correspondence a list of wteak reasons why 
 the foreign customer should pay hb t»lL Perhaps, tiie best way 
 to remind a foreign buyer of the necessity Of meeting his bills 
 promptly is to insist on the payment of a regular rate of interest 
 from the time of the invoice date until the account is paid. In 
 countries where there exist high interest rates this will inspire 
 customers to settle th^ obligatkma with promptness. 
 
 Claims Against 
 Bankrupt Estates 
 
 An attorney having eieperience in foieign countries or a 
 bank having branches in tiie foreign country where the debtor 
 resides should always be consulted in the matter of collect- 
 ing claims against bankrupt estates. The manufacturer will 
 learn that many foreign countries have strict regulations per- 
 taining to the filing of claims against insolvent estates within 
 a certain time limit, or to representation of fore^ daims, 
 or to the form in which powers of attorney and proofs of 
 claims are to be made out. So many different features enter 
 into the claims against bankrupt estates in foreign countries 
 that good business judgment dictates that they should not 
 be handled direct The collection bureaus of good standing 
 as well as many banks are in a position to handle such daii 
 for a nominal fee. 
 
 In most foreign countries it is unnecessary to prove the ac- 
 count item for item, where an acceptance or note is sui 
 
800 EXBORTING TO THE WORLD 
 
 evidence of the claim. For this reason it is much more difficult 
 to sue on open accounts in most foreign countries. In placing 
 drafts in the hands of banks for collection care must be taken 
 by the manufacturer that he instruct such institutions to pro- 
 tect them within the required limit in case of nonpay- 
 ment, if there is reason to believe that the drafts will not be 
 taken up. A non-protested acceptance in a foreign country 
 amounts to nothing more than an evidence of indebtedness. 
 
 Amenem Mmmfachtrers al 
 DisodvatUage m Suing 
 
 Foreign creditors are at a disadvantage when suing in many 
 countries. For this reason they should endeavor to avoid 
 Udgatiim if possible. Once gettii^ into the courts the Ameri- 
 can manuficturer not only loses money, and time but suffers 
 the disadvantage of not being able to present his case ef- 
 fectively. Unless it is possible to settle amicably out of 
 court, or the claim itself is of sufiicient importance, resort to 
 litigation as a last recourse is then advisable. 
 
 Chapt£k XIII 
 
 HANDLING AN ORDER 
 
 Method of handling orders determines manufacturkr's 
 SUCCESS — Customer's instructions must be closely fol- 
 
 LOWBD— CONFIDBNCS OF FOREIGN CUSTOMER MUST BE WON — 
 ExECUnVB ABIUTY IN HANDLING OKDEBS. 
 
 A manufacturer can either kill or create a splendid export 
 business in accordance with the method he adopts in the 
 handling of his first order. If the first order is to represent 
 the b^inning of a lucrative export business the manufacturer 
 must devote that tsme and attention to it that he did when 
 he received his first order from a domestic customer. Busi- 
 ness is not built up on the first order. It is not the order that 
 comes in through the mails or other sources today that counts. 
 It is the order of tomorrow or the next day or next month or 
 year that is gmng to determine the manufacturer's success or 
 failure in business. If the manufacturer has established a 
 fixed policy of not engaging in foreign business then he should 
 IX)litely refuse to accept business from foreign quarters. Ex- 
 port trade is not meant to satisfy the whim of the moment. 
 To be worth while it must be permanent, and to be perman- 
 ent it must be intelligently handled.^ 
 
 1 In this country today, scarcely a popular magazine article on the subject of 
 trfaning foreign markets or "grabbing" the export trade fails to teU a 
 the painful experience of this or that foreign purchaser of American ^^ea, cawea 
 by the /.mcrican way of looking at the export trade. The story ttsualljr mns that 
 tbe foff«in buyer had at length decided to risk an order with American manu- 
 factaren and that the first Aipment of the American goods proved very satis- 
 Srt^ It may be that a aeeond shipment was^ obtained and proved equally 
 StiJKtory. but at about this Stage th^ foreign buya- was shocked to receive 
 a «ply to one of his new ordeiiito the effect that the "f^^I 
 was so^ busy in supplying the domestic market that he could not botier with fhe 
 onier at that time. This, of course, disrupted the business of the foreign 
 l^^wS» ?rwilSy aMOOnced tliat this would be his last experience with Amer- 
 \^ ^Z^n^sL^tmiiy turned to the German nj^nufacturers from whom 
 he knew he could expect more courteous and businesslike ^HH^^f'. 
 
 Altliough this story is hackneyed, the fact "^YXwrX tSf^lff^?tei 
 
 eler who returns from a business trip abroad and who is able to 8^n«^"*»«J«; 
 pubUslwd in the magazines tells a, story along this hne would seem to prove 
 Siat^maxiT foreign buyers of American merchandise have had such disagreeable 
 SWt^SJu SSSr American manufacturers. The American manufacturers have 
 h^S^rSflrh^tivity S the ^^Stous home market in the United^ States that 
 ?hey hav? ^St deemed fSreS» toST^h working for. When some foreign trade 
 has comJ ?o them bv one chance or another, they have regarded it as Tying at 
 
 201 
 
202 EXPORTING TO THE WORLD 
 
 A foreign otstomer^ no matter in what section of the globe 
 he is living, is entitled to the best possible service that the 
 
 manufacturer can give in a manner consistent with the trou- 
 ble and risks involved. The quality of the goods to be sent to 
 foreign customers should not be determined by the color or 
 race of the person to whom they are gmng. The Chinese, 
 Australian, Mexican, Scandinavian or Islander is just as 
 much entitled to serious consideration in the matter of orders 
 as the Canadian or Englishman. 
 
 "Here is a man from across the seas who writes asking 
 me to smd him a sample order of my goods/' a manufacturer 
 says. ^Here is a diance to develop a foreign business/' he 
 reasons. **This man has given me an opportunity to make a 
 start. He has taken an interest in the things I produce, and 
 in tlie utility of my product. I, on my part, am going to take 
 an imetest in his order ; I shall see that he gets a square deal 
 and that his instructions are closely followed." 
 
 As a result of this manufacturer's foresight the foreign cus- 
 tomer receives his samples according to instructions and in 
 very good condition. He is pleased with them. He tells his 
 friends ,and his friends order from the same house. The 
 manufacturer's business grows, and his aqmrt trade is as- 
 sured, and all because he took his first carder seriously. He 
 "delivered the goods." 
 
 Customers* Instructions 
 Musi Be Closely Followed 
 
 Cases are none too rare where manufacturers have en- 
 deavored to prove to a foreign customer that black is white 
 
 and that silk is cotton, etc. This vicious practice enjoyed a 
 great popularity during the days of the war in the stampede 
 to conquer new commercial markets. Hundreds of American 
 salesmen fiocked to foreign countries in the quest of the 
 
 when production has beta ao great that there has been a snrpltis of merchandise 
 foi the American market many an /merican manufacturer has turned with avidity 
 to the export merchants and sought a chance to dispose of his surplus abroad. 
 Such, however, was only in incident and was regarded as outside the ordinary 
 course of trade. Naturally, when the foreign trade of a particular manufacturing 
 establishment has been of this incidental character, it has received only in- 
 cidcstal and scant attention. Now, however, if the American oianufacturers are 
 
 foing to make a direct effort to capture foreign trade, this attitude «ust be changed, 
 he foreign customer must receive the same careful consideration that the do- 
 mestic customer receives. He must not be disappointed and made to feel that the 
 American manufacturer cares litte whether he has his trade or not. Regularity 
 in meeting the wishes of the foreign customers is *ffrthlli^ — Mitrtilitffil Utiill, 
 No. 57 BwtMa of Foreiga and Domestic Conuncrce. 
 
 HANDLING AN ORDER 
 
 903 
 
 "golden fleece," dragging along with them trunks full of 
 samples and catalogues representing American manufactured 
 articles. With their stocks running low during the trying 
 days of the war foreign customers purchased right and left 
 in great quantities and when actual shipments of orders were 
 finally made months later they discovered to their sorrow 
 that the goods were not according to sample and that instruc- 
 tions had been loosely followed. The majority of these crimes 
 must be laid at the doors of concerns new in the export game, 
 however, and not at the doors of the pioneers in the business. 
 The unfortunate part about it was, nevertheless, that foreign 
 customers did not discriminate between good and bad houses 
 in the United States but condemned the "Yankee" generally 
 for his sharp practices. 
 
 What was the result^ of this? Here is an illustration. A well- 
 known Chilian merchant who fell victim to some of these 
 unscruptdous traders toM the audior on the day the armistice 
 was signed the following: **You can say to some of your 
 business men in the United States that I am through with 
 them. They have had a fine opportunity to build up a fine 
 trade with the Chilian merchants but they have thrown it 
 away owing to their methods. We have been forced to buy 
 from you because we could buy nowhere else. Now that 
 the war is over we shall go back to our friends in Europe. 
 Your merchants have lost a splendid opportunity to establish 
 a permanent business here." 
 
 Not long ago a customer from Ecuador ordered a consign- 
 ment of suspenders from an American manufacturer. The 
 merchant plainly wrote that black suspenders were required. 
 Instead of following instructions the manufacturer sent the 
 suspenders in assorted colors believing, perhaps, that "they 
 were just as good." But he did not reckon with his customer. 
 The shipment came back. The manufacturer did not get his 
 money. Nearly three months were required to straighten out 
 a little matter that could have been intelligently attended to 
 
 in the first place. 
 
 The Ecuador merchant might have had a reason for de- 
 siring black suspenders. The American manufacturer might 
 have had a reason for sending a shipment in assorted colors. 
 
 He should have given it in a letter accompanying the goods, 
 and couched in polite terms, explaining his inability to fill 
 
m EXPORTING TO THE WORLD 
 
 the Ofder as had been requested, and askiiig if the cdort he 
 was sending would prove satisfactory. This he did not do— 
 
 and he lost the confidence of the customer. 
 
 Quite a contrast is the method employed by a New York 
 wiaard in the export business which extends to the Orient 
 where trade has been developed with Chinese merchants. 
 This expert not long ago received an order from a Chinese im- 
 porter for electrical parts. As it happened the manufacturer 
 was not making any more of the kind desired, but he had 
 enough on hand to partially fill the order. Did the wizard 
 substitute all the new goods for the old ones and send the 
 shipment along to his Chinese customer? He did not But 
 this is how he worked it: He filled as mudi of the order as he 
 could with what he had left of the old stock, and sent samples 
 of the new kind along with a letter asking the merchant to 
 carefully examine them and if he found them satisfactory to 
 communicate with him in New Yoric and the balance of the 
 order would be promptly filled. The Chinese merchant was 
 satisfied. Those who understand the methods of dealing with 
 Chinese merchants will readily agree that the wizard knew 
 his business. 
 
 Confidence of Foreign 
 
 Customer Must Be Won 
 
 If there is any doubt in the mind of the manufacturer that 
 the order he is about to send to a foreign customer will not 
 
 be satisfactory, or suggest an attempt to "put something 
 over" he should by all means hold it until it is possible for 
 him to fill it according to instructions or until he has received 
 authorization to make whatever changes may be necessary. 
 A dissatisfied customer is worse than no customer at all. A 
 dissatisfied customer by word of mouth can do great injury 
 to an American manufacturer who consistently endeavors to 
 cut sharp corners in his dealing with foreign customers. The 
 necessity of strictly adhering to mstructicms is illustrated in a 
 story the author recently heard r^rding a shipment of pen- 
 cils to an importer m the Far East. The importer had re- 
 ceived a shipment of these pencils with the trademark slightly 
 blurred. The pencils, themselves, were satisfactory, however, 
 and some months later another order specifying exactly the 
 same brand was sent in. On the second order the HnXty 
 fMrintmg of the trademaric had been corrected and m the course 
 
 HANDLING AN ORDER 
 
 205 
 
 of time shipped. When the order reached the importer it 
 proved to be unsatisfactory. The origmal trademark was 
 missing. The pencils went back to the factory with the fol- 
 lowing note: 
 
 *T am sorry, but I cannot use these pencils. The trade is 
 now accustomed to the pencils with the blurred trademark, 
 and I wish you would send them to me in that way." The 
 factory at home saw the point. The methods of printing the 
 
 trademark on the pencils were slightly rearranged, and to this 
 day, the story goes, there is a reason for blurred trademarks 
 on a certain kind of pencil in the Far East 
 
 Liability of Seller 
 to Fmimk Goods 
 
 Two points should be remembered in handling export orders. 
 One is that the seller is bound by the acts of his agent in foreign 
 countries as long as the latter does not violate the specific 
 instructions given him. The only time when a manufacturer 
 may place the responsibility on his agent is when he exceeds 
 his authority. If the agent does this, he alone, is responsible. 
 Another point to be remembered is that in accepting orders 
 from foreign customers the manufacturer or sh^E>per should 
 have it specifically written in the contract or agreement that 
 he shall not be held responsible for contingencies beyond his 
 control. Unless this is written in the contract or agreement 
 the courts of the United States or Great Britain will hold him 
 f<Mr a breach of contract. The manufacturer is bound to ship 
 his goods at all costs or suffer tiie consequences unless he in- 
 cludes the clause referred to in his agreement of sale. This 
 is not the law in other countries, however. 
 
 The manufacturer must be very careful that the date of the 
 bill of lading is in accordance with the actual shipment. 
 ''Shipment in January^ means shipment some time during 
 that month and not in February. If the manufacturer is un- 
 able to ship his goods on the specified date he should com- 
 municate with his customer to obtain authorization to change 
 the date. 
 
 Executive Ability in 
 Handling of Orders 
 
 The capable handling and the intelligent interpretation of 
 
206 EXPORTING TO THE WORLD 
 
 txport orders rests with the export manager. The business 
 may fall or rise in the ratio of the export manager's skill. 
 
 The duties of the export manager in relation to his customers 
 abroad cannot be better told perhaps, than in an editorial ap- 
 pearii^ in '<The WcMrld's Marketo" published by R. G. Dun 
 and Co. The editorial says: 
 
 "There is scarcely an export executive today who is worthy 
 of the name but who has in the past four years overhauled 
 his whole system of handling export orders, from their first 
 receipt to the final payment. Indeed, there is a constant pro- 
 cess of revision. Systems entirely adequate in normal times 
 have been made watertight ag^jlnst war time storms — and 
 they will remain watertight i^^ainst the unusual conditions 
 which will arise from time to time even in most normal 
 periods. 
 
 "Foreign buyers appreciate the change. Nowadays, when 
 buyers are in the United States and visiting the factories 
 whkk supply them, the visits are not alone of a social char- 
 acter, nor devoted merely to trips through the factory to see 
 the latest laboratory triumphs and automatic machinery. In- 
 stead, can be seen, from San Francisco to Portland, Maine, 
 buyer and seller with heads close together, working out ways 
 and means to overcome the various obstacles which He be- 
 tween the goods on the factory floor and their safe receipt 
 in a foreign warehouse. 
 
 "Nor is it enough for the exporter merely to keep abreast 
 oi the mandatory regulations at home or abroad. Unless he 
 steeps himself in the spirit of the times, unless he comes to 
 know tendencies before they become facts, he is doing his 
 foreign customers a grave injustice and working the cables 
 overtime. Every outgoing mail from the good exporter car- 
 ries with it letters of warning of chamred conditions, and 
 indications of the way probable regulations will affect both 
 buyer and seller. 
 
 "The present situation is not taken by the serious-minded 
 export man as a wonderful opportunity for ready-made ex- 
 cuses to cover slow deliveries. Rather is it accepted in the 
 best of spirit as an opportunity to display executive ability 
 In complying in the letter and the spirit with the wishes 
 of governments, yet contesting against artificial handicaps 
 
 HANDLING AN ORDER 2W 
 
 to maintain for his customers abroad the steady arrival of 
 merchandise. 
 
 Htwards for those Who 
 Play the Game 
 
 •The rewards have been great for those who have played 
 the game. It became apparent to those whose enlightenment 
 comes from within that the imperative need of the first few 
 months of the war was the creating in the minds of their 
 foreign customers of a thorough and abiding confidence in 
 the exporting manufacturer. 'Strange things are going to 
 happen/ they said to themselves, 'and unless our good friends 
 thousands of miles away are willing to trust to our judgment 
 and honesty we shall be woefully handicapped and they will 
 be robbed of profits entirely possible, provided they have con- 
 fidence in us.' 
 
 "These far-seeing executives appreciated even as early as 
 the closing months of 1914 that their position was to be re- 
 lieved of the task of selling goods, and that their abilities 
 were to be taxed with the problem of deliveries. 
 
 "Today, many an export executive is still virtually a manag- 
 ing partner of thousands of merchants. He not only decides 
 what to ship, but also when to ship it and the prices at which 
 the merchandise shall be forwarded. One of the ablest mer- 
 chants in the Far East has picked out the dozen sources of 
 supply in which he has the greatest confidence, and left with 
 each the message: 'You are to ship me anything which you 
 feel that we can resell at a profit, in any quantities which you 
 can spare, by any means which you may think advisable, 
 whether it be a row-boat or an 18,000-ton liner. Bear in 
 mind that I am still far more interested in deliveries than I 
 am in prices, and that you are to be the sole judge as to the 
 price at which our lines are to be invoiced.' The executives 
 honored by such a trust can scarcely be considered as less 
 than managing partners of this merchant of the Far East.** 
 
 After all the business of buying and selling involves a part- 
 nership between the buyer and seller. The strength of this 
 partnership, however, depends not so much on the capital ^ 
 invested as on tiie judgment of the seller, and the confidence 
 and trust of the buyer across the seas in the man who is sup- 
 plying the merchandise. 
 
208 
 
 EXPORTING TO THE WORLD 
 
 Invoicing Goads 
 far Export 
 
 Invokes lor export trade uiTolve many features tliat are 
 foreign to the ckmiestic docmnent. Export Invoices, moreover, 
 
 are correctly termed "invoices" and not "bills'* as in some 
 foreign countries ''bills" are recognized as bills of exchange, 
 or drafts. 
 
 The most important features of an ideal invoice are its 
 
 accuracy, completeness and clearness. This is absolutely es- 
 sential in dealing with a customer thousands of miles away. 
 The customer has got to check his shipment when it reaches 
 him, and unless the invoice is perfect he will find himself in 
 considerable trouble. Instructions from a foreign customer, 
 therefore, should be followed to the letter in the matter of 
 making out invoices, no matter how absurd they may seem 
 to be. 
 
 NMsmy Features 
 in Export Invoice 
 
 The salient features of an export invoice are these: 
 
 Simplicity and clearness in language. 
 
 Full description of goods invoiced, eliminating abbrevia- 
 tions or terms known to the trade only. Officials who are re- 
 quired to examine them may not understand these terms. 
 Foreign customers cannot be expected to know them. 
 
 Use of dollar sign before all prices, extensions and footings. 
 
 Complete and exact weights and measurements such as 
 widths, lengths, weights. Guess work must be avoided. 
 Figures must be exact. 
 
 Uniformity in handwriting or by typewriter in making out 
 
 invoices. 
 
 The number and date of the order. 
 
 Text in language of the customer when necessary. 
 
 The method of transportation and route. 
 
 Numbers, weights, dimensions, marks and nature of pack- 
 ages—whether cases, bales, crates, barrels, bags, sacks, etc 
 Terms of carriage. 
 
 Separate code word for each item to fadlttate ttttnact 
 to it by cable. 
 Invoice of each item m the shipment 
 
CUSTOMCRS OROCR Na 
 CUR OROIR NO. 
 
 IheRemingiqnArmsUnidn Neiallic Cartridge CdmpanyXinc) 
 
 MANUFACTURERS OF 
 
 BHaTBUNB, MILITAHY & BPORTINIl RIFLES & AMMUNITICIH DF ALL KINDS 
 
 WOOLWORTM RUILOIN9 
 
 ' 233 BHUADWAY 
 
 NKwYaHK APRIL 26,1917« 
 
 CABLE ADDRESS HARTUV NEW YORK 
 
 REMINGTON 
 UMC 
 
 TERMS 
 
 90 OAn 8I0HT SRAfT SOLOTO C.STBVBNSOir 4 CCUPtHK 
 
 SANTIAGO CHIU. 
 
 100 
 
 U4 
 
 smPPCO VIA. "BAMB 07 8TSA1IER" 
 
 WEIGHTS «WfL6BI5_ 
 •uiuMEDC I EACH CASE I EACH CASE 
 NUMBERS I iKTLM. MMMIM. MCT KIbM WtOM KILOS 
 
 190 206 66.27 
 
 101/102 151 16} 66.59 
 
 105A04 199 221 90.25 
 
 105A06 176 196 79.82 
 
 107/106 224 246 101. 58 
 
 109A10 216 240 97*95 
 
 DCSCmPTION 
 
 99.42 
 
 75.92 
 
 100.21 
 
 66.6C 
 
 112.46 
 
 106.64 
 
 10 
 
 10 
 
 Ul/112 122 150 55.32 
 
 U CARTRICCES CALIBRB ^2 8%W 
 inA8.25xl}x9|« 1 CASK 
 
 X CARTRIfiOn CMiXBtS 96 SMT 
 IBAB.l5ixl?xlO|« 2 CA8B8 
 
 U Vm CLUB CAIVrRIDGE8 l6 GAUGE LOAD 565 
 iaA8.29|xl7xlO* 2. CA8S8 
 
 X NITRO CLtIB 
 1ISAB.15X 
 
 106 142 46.07 
 
 106 142 48.07 
 
 66.0S 
 
 64.4< 
 
 64.40 
 
 20 iRisinroTO] 
 
 X RaUNGTON CARZRIi)6£8. 
 
 iaAB.l5x9x9*' 
 
 U ARROV CARTRI DG 
 lC£A8.l5x9|x9i* 
 
 UNIT PRICE 
 
 lUgb load B1< 
 
 LOAD 7*4 
 A8ES 
 
 8 12 GAUGS LOAD 
 2 CA8X8 
 
 10 
 
 10 
 
 fO RHUS KODBL 12A 22 qiSLim 
 »9i* 2 CA8S8 
 
 -5 
 
 D.1 
 
 RBflNCTOV AUTOLOADIITG 8H0TGUH3 X/llA 12 (^AtKJfi 
 XBAB.56|xl6|xl6» 1 CA8I 
 
 RSUIKGTOir RSPEATHrO 8R0TGU178 UODICL lOA li GAtTOS 
 1IIBA8.56ixl6^xl6" 1 CASE 
 
 CASas marebd:. 
 
 VALPARAISO 
 
 A specimen of an Export Invoice. Manufacturers have dilTcrent forms drawn up in distinct metliods. Terms of payment, marking, weights in pounds and kilos and meas- 
 urements of each case will be noted here. 
 
 EXPORT VALUE 
 
 TOTA>..NeT 
 
HANDLING AN ORDER 
 
 209 
 
 Invoice of material for which no charge is made, such as 
 catalogues or electrotypes. 
 
 Invoice of accessories of spare parts for which no charge is 
 made with value attached. 
 
 Gross and net weight of each package, and number. 
 
 Gross and net weight of each package when a number of 
 them are bound together so as to form one package, as well 
 as gross weight of whole. 
 
 Conver8k>n of value of invoice into foreign currency, when 
 necessary, at the foot of invoice. 
 
 Signature of responsible member of firm or official having 
 authority to sign for firm. 
 
 Placing at bottom of invoice and.O. £." (errors and 
 omissions excepted), tlm gives shipp^ right to correct 
 errors, etc. 
 
 Other Essential Details 
 
 in Connection With Invoice 
 
 It b good practice to always supplement the invoice with a 
 letter explaining in fuller detail the shipment, and giving all 
 the additional information that the customer may desire to 
 know. If the letter is sent in advance of the shipment the 
 
 customer may want to know the name of the steamer on 
 which the goods are being sent, the date of the shipment, the 
 route to be followed, and information regarding transshipment 
 as well as probable arrival of the steamer at destination. Ex- 
 port invoices should be made out in triplicate. When deaHi^ 
 with the bank more are necessary as the bank will require 
 two invoices. The third one will go to the customer. 
 
 Discounts should be calculated and deducted on the face 
 of the invoice so that the net costs will appear with each 
 exteHsiottt 
 
 Other Doeumenis in 
 
 Connection with Invoice 
 
 Sometimes all additional expenses are enumerated in the 
 commercial invoice, such as transfer to steamer, ocean freight, 
 insurance, etc. The better form, however, is to limit the in- 
 voice purely to the cost of the goods. Additional expenses 
 should be incorporated in a separate sheet known as a State- 
 
210 EXPORTING TO THE WORLD 
 
 ment of Charges. This Statement of Charges will include the 
 invoice total as well as additional charges as have already 
 been indicated. The Statement of Charges must always be 
 attached to the invoices. 
 
 A Packing List or Measurement Note indicates what each 
 case contains as well as its net and gross weight, and qsbic 
 nticasiirements. 
 
 A iM>tice of a draft by shippers indicating the amount and 
 terms of the draft, and the method of collection is customary 
 in export trade. 
 
 Additional papers such as certificates of inspection, analysis, 
 weight, etc., may be demanded in varioas countries. The 
 shipper should consult the omsuls of the countries to which 
 his goods are going for information, on the matter. 
 
 Chaptbr XIV 
 
 PACKING FOR EXPORT 
 
 Inexperienced exporters are to blame for poor packing — 
 
 MBSCBANmSB MUST BE SECURELY PACKED— POOR PACKING MEANS 
 
 LOSS OP ORDERS— Factors to be considbred in packing rat bx- 
 
 j oRT — Kind of packing required for shipments for export — 
 How machinery is packed for shipment — Foreign require- 
 ments MUST BE MET IN PACKING — ^EFFECT OF WEIGHT ON CUS- 
 TOMS DimB»— RbGULATIONS IN OyUNtRIBS THAT MAY AFISCT 
 PACKING— How CASES FOR EXPORT SHOULD BE MARKED. 
 
 American manufacturers and exporters have been accused 
 by writers in the pc^mlar trade magazines, and hy foreign 
 merchants of being negligent in the matter of properly padt- 
 ing merchandise, for foreign destination. While it would be 
 difficult to run down the basis for such a sweeping criticism, 
 nevertheless, in justice to the pioneer American foreign trade 
 merchants it must be said that business men from foreign 
 countries have often appkttded and pointed out to their fellow 
 men the efficiency of the American exporter's packing, and 
 emphasized the necessity of copying his methods in order to 
 satisfy the overseas merchants. It would seem, therefore, 
 that the monopoly of proper packing is not confined solely to 
 European or other foreign fields. There is no doubt that a 
 great volume of merchandise leaving American ports arrives 
 in a damaged condition at its destination owing to negligence 
 in packing. But if one should trace this trouble to its source 
 one would likely find that this is due to inexperience and ig- 
 norance on the part of the hundreds of American manu^* 
 turers and eiporters who are as yet new to tte foreign trade 
 game.^ 
 
 1 That the packing and shipping methods used hf locomotive exporters 
 are ^ not inferior to those employed in other countries is well shown by the fol- 
 lowing examples : One company shipped a locomotive into Colombia over moun* 
 tain trails which necessitated transportation on mule back. After the locomotive 
 had been biiift 6ie United States it was taken down and the parts placed to- 
 gether in large cases and shipped to Medellin, Colombia, where it was landed. The 
 pistons, cylinders, rods and other parts were then aecurcly wrapped in burlap and 
 
 2U 
 
813 EXPORTING TO THE WORLD 
 
 It is the purpose of this chapter to deal with some of the 
 ptinciples and methods governing packing for export as well 
 UB some of the Goiiditkms under which mefchandiae is trans- 
 ported to its final destination m foreign countries. 
 
 Merchandise Must 
 Be Packed Securely 
 
 Merchandise for export mnst be packed securely. There 
 
 is no use to attempt to eliminate costs by packing goods for 
 foreign customers as cheaply as possible. It is false economy. 
 The foreign merchant is interested in a shipment that arrives 
 in good order and not in one in which half the merchandise 
 has been damaged hj water or by rough handling. American 
 manufacturers are often tempted to pack their goods for 
 foreign use in cases that are inexpensive in order that they 
 may avoid higher quotations. 
 
 This, however, is not sound policy. It is better to properly 
 and safely pack goods for export* and either make an extra 
 diaige for packing, or advance the quotations to cover the 
 entire costs. After all, the foreign customer is interested in 
 the safe arrival of his goods for re-sale. Often these foreign 
 importers would rather pay an additional sum for goods 
 properly protected against damage than suffer loss as the 
 
 packed on mules, reaching Bogota, after many days, in perfect condition. The 
 locomotive was then assembled and operated perfectly. 
 
 Since the war began another locomotive company has shipped more than 400 
 l oc waa U t f to interior Siberia. They were built in the United States, packed for 
 atttpaMat. sent via Magellan and the Panama Canal, to Vladivostok, erected in 
 record time in the yards of the Siberian railroad, and proceeded under their own 
 steam to their destination. Today they are hauling the vast stores of munitions 
 imported through the back door of Russia from the Unitol States and Jm vfm , 
 When the transaction was completed not more than one-lMdk of 1 per ecat of die 
 order was found to have been broken or lost in transit 
 
 Locom ot ive manufacturers have been called upon to ship to the most out-of- 
 the-way places which formerly obtained their rolling stock from Europe. Engines 
 have gone to Katanga, away in the interior of Africa, in the Belgian Kongo, to the 
 Gold Coast, to Rhodesia and to Portuguese and East i*frica, and up to <Ute not a 
 •angle complaint has been received, although it was the fint time that Jtmtticam 
 locomotive orders liad been received from mese places. 
 
 The first steam railway in Chosen, connecting Chemulpo, on the seacoast with 
 Seoul, the capital, was built and its equipment ordered from the United States as m 
 result of the far-sighted activity of an American business man. The track was tho 
 American gauge, 4 feet 8i inches. When this road was extended by the Japanese 
 after their occupation of Korea the American gauge was stffl used, and when tho 
 South Manchnrian Railway was Imked up with it the American gauge was continued. 
 American locomotives and rolling stock have accordingly a preference in that market 
 •M the bulk of the equipment is manufactured in the United States. 
 
 Possibly one of the most severe tests for good packing_was endured by a caao 
 ■ ■■ t l lii ing a locomotive packed by an American firm. The lack of huid-loeked 
 ■"feJLS? *^l£.^*?* f°n^°r"*v America compels the discharge of cargo in open 
 
 fo a d H c ada. The nse and fall of lighters readera arduonsly dangerous the unloadin« 
 of heavy merchandise. Nevertheless, when a case containing a locomotive cab and 
 locomotive parts went overboard as a result of improper handling, it floated The 
 tide swept it out to the Pacific for several miles before a tug could overtake it 
 but it was towed back and finally landed with the contents vaianaired The 
 examples of brilliant enterprise in American export trade are too nmnerous for 
 
 PACKING FOR EXPORT 
 
 213 
 
 result of poor packing. Some American firms have followed 
 the British method of adding additional charges for certain 
 
 kinds of packing for goods that require it. In England pro- 
 fessional packing companies undertake this work for ex- 
 porters and make charges in accordance with services ren- 
 dered* 
 
 lyho Is Responsible for 
 Poor Packing for Export f 
 
 If the manufacturer is exporting direct it is his duty to 
 become acquainted with all the requirements peculiar to ex- 
 port packing as well as the existing regulations in fordgn 
 
 countries regarding the packing and marking of goods. If 
 the manufacturer is supplying a commission house with mer- 
 diandise intended for foreign customers the commission 
 house should give full instructions to the manufacturer re- 
 garding the packing of the goods. The commission house is 
 supposed to know where the goods are going, how they are 
 to be transported, when they reach a foreign country, and 
 how they are to be marked, etc. Of course, if the manu- 
 facturer violates these instructions he must be held responsi- 
 ble. 
 
 Manufacturers do not often follow these instructions, how- 
 ever, as the following statement from an official of a New 
 York export house suggests: 
 
 "We do little or no packing ourselves; the goods are 
 packed by the person fnnn whom we order for export and 
 the cases are not opened by us. In all mstances, we give 
 instructions to pack most carefully, but we regret that our- 
 selves and our friends have had, in very numerous instances, 
 to suffer considerably through the carelessness, indifference, 
 or Ignorance of the American manufacturer in reference to 
 this important particular. * * * The American manufacturer 
 fails to realize that while he may sometimes save a few 
 
 An old-established manufacturing concern that has systematized its foreign 
 bosiness so that it moves right along automatically wMi the dooeatie penaita «s 
 
 to describe the way an order is handled by its forces. 
 
 This company has devoted much study to the packing of merchandise sent 
 abroad, but the uninitiated onlooker in the packing room would notice nothtng 
 extraordinary about the handling of South American shipments if his attention were 
 not speeiftcally called tr it. The whole thing has been well systematized. The 
 man wfco is at the head Jf the packing department personally supervises or himself 
 packs Uie export stuff. He is an adept at this. ... 
 
 In the first place, he has had all his packing materials assorted, and the best 
 of the wooden boxes are set aside for the export orders. He does not use boxes 
 different from those needed for domestic orders. He says that the railroads handle 
 boxes in no gingerly way, and so he must pack well even for a 100-mile shipment. 
 OiiifQr the taw to be SMt to Soitth AaMfieg he fiehe tfw beet aheola the aidet 
 
214 EXPORTING TO THE WORLD 
 
 dollars at this end on a shipment, the buyer in foreign mar- 
 kets, by reason of lack of facilities to replace broken parts 
 readily and cheaply, often has to pay out five or ten times 
 what would have been the original cost in this country, or, 
 filing to be abk to dnplicate, there is lots of time and in« 
 terest on the value of the shipment for the several mcmths 
 until parts can be brought from this country." 
 
 Negligence on the part of the manufacturer and agent alike 
 is illustrated in a report from Consul General William H. 
 Michael, of Calcutta, which is as follows: 
 
 ''It is probable that the reason the goods were packed so 
 poorly for foreign trade was because the manufacturers 
 packed at the factory for shipment to their export houses in 
 New York or other ports, and the export agents, instead of 
 repacking, simply forwarded the goods in the original cases. 
 While the original cases were strong enough and entirely 
 suitable for transportatk>n from the factory to the shipping 
 port, the packing was utterly unsuited to the long and severe 
 
 :8l 35 ££ynr.ii?^thWltr/^ kw 
 
 Wherever possible. South American shipments are made in burlap baits. A 
 large order from one of the west-coast minmg companies for overall wmm 
 packed m this way It went in bundles of 10 dosen jaekctiw Tile TmSkM for 
 each bale were carefully stacked, one bundle mn another in a tcrew press with 
 ab<Ard at thcbottom and another at the top. The press was screwed down till the 
 ^ck of J ac hats occupied less than two-thirds of its loose bulk. Then four stout 
 '«Pi5* passed around the top and bottom, outside the boards and securely 
 
 tied. When the pressure was released, the bundle was found to be pressed hard 
 together, each garment so tightly held that it was impossible to move it without 
 CHlting the ropes. 
 
 c • J¥ *bout 10 imnittes. ^ two^ men's time. The chief packer 
 
 finished the packmar after the bandlc had been thrown upon his work table. A 
 Irafth of new burlap^ • fMce of heavv waterproof paper of the same size, and 
 Meets enough of a special tough "leather paper" to cover this were already on 
 the table. Deftly the packer covered the bundle in another 10 minutes, sewing the 
 burlap with heavy twine with a seam that knots it together every 2 inches, io that 
 ■taakage of the cord anywhere would not permit the covcrisf to come oflF 
 
 Not all the company's goods can be baled in thia way. The tight* pressure 
 weaks composition buttons on some garments. Others It is necessary to box, 
 bccanw baling would result in their reaching the customer so sharply creased or 
 |»ressed out of shape, as to be less salable than when boxed. When boxes are used, 
 the goods are carefully placed in them and in most cases forced in with some 
 pressure in order that there shall be no movement or any space of the box lUW 
 occupied. A tightly packed box, securely sailed and stmppedwith iron bands or 
 Cood twisted steel wures. will not coase mn as easily as one loosely filled. The 
 ■«■ « ■ used by this concern are of wood about three-quarters of an inch thick. They 
 •re especialhr reinforced at the edges. The lining of waterproof paper, next the 
 wood, and of "leather paper," next the goods, is always put in foreign shipments. 
 
 The marking and shipping instructions are especially given upon the order 
 blank which the packer receives with the merchandise. The marking is usually 
 done according to the customer's directions, which conform to the customs reqvSre- 
 ments of the country to which the shipment is bound, with the rules of the steam- 
 ship company, and win we customer's own business system. The btmdle wrapr^ed 
 in burlap was going to a mining company in Chile. It has its own rules This 
 company^s private mark was to be stenciled on the top of every bundle or box and 
 on three sides, together with the dimensions, the gross and the net weight girett 
 both in pounds and kilos, and the name of the port of destination. The aaa» 
 facturmg company add«l its own name and the legend "Made in U. S. A." la the 
 extreme corner cf oae «de. The work of packing and marking is done with rapidity 
 that comes fro<A long practice fai this company's shipping room. The packer had his 
 ^■Ick way of measuring, weighing, and stenciling. 
 
 A special employee in New York attends to the shipping of foreign goods, 
 another cooperates in secunne insurance documents, seeing to consular invoicea 
 aad billa of Uding, and indealing with the bank that coUccta the dnilL vhkk ia a 
 iHt <if tfM iiMiaitiw ^Thm Ammhrn," ^ • 
 
 PACKING FOR EXPORT 
 
 strain of transit from point of shipment to India. If manu- 
 facturers would either pack the goods intended for foreign 
 markets at the factory as they should be packed, or require 
 their export agents to take the goods out of the original 
 cases and repack, much trouble and damage to American 
 foreign trade would be overcome." 
 
 Poor Packing Means 
 
 Loss of Many Orders 
 
 A great number of eacport orders are lost to American manu- 
 facturers and exporters because they do not seem to take 
 
 any interest in the condition of the goods on arrival at their 
 destination. A Brooklyn manufacturer lost a fine order for 
 machinery for a merchant in Ecuador because the packing 
 in which it was contained broke down upon lyrrival at an ex- 
 porter's place of business across the river in New York. 
 What chance would such a shipment have in a long voyage 
 to Ecuador? 
 
 Manufacturers should follow instructions from importers 
 closely. Perhaps, some of these instructions inay seem queer 
 but it must be remembered that the importer probably knows 
 what he is talking about. He has a reason. He knows better 
 than the manufacturer that certain conditions must be met 
 and he probably has learned what packing will prove satis- 
 factory. 
 
 l actors to Be Considered 
 in Packing for Export 
 
 The greatest volume of our e9qK>rt trade goes to countries 
 where transportation facilities are as good as in the most 
 advanced countries of the world, but there are countries 
 where the means of transportation have not been so highly 
 developed and where it is necessary to ship annually millions 
 of dollars in American merchandise. The problem of trans- 
 portation, therefore, becomes a factor in the method of pack- 
 ing for export consumption. Goods shipped to England may 
 not require that degree of care that goods shipped to the 
 interior of Peru or Bolivia may demand. Shipments to Can- 
 ada do not require any more attention than shipments from 
 New York to San Francisco. Shipments which involve rail 
 and water transportation may require a oer^un method of 
 
«16 EXPORTING TO THE WORLD 
 
 packing. In some places transshipment is necessary. Here, 
 also, the best packing possible is necessary in order that 
 goods may not be damaged. 
 
 In order to efficiently pack for eaqport, therefore, the 
 factorer most not only know how to pack in order to meet 
 all sorts of transportatk>n conditions, but also know when 
 such packing is necessary. Goods may be carried by mule, 
 burro, llama, bull, and camel and by coolies. Such transporta- 
 tion requires a limit in the weight of cases. They should 
 be limited to 200 <Mr 1^0 ponnds each as some of these beasts 
 of burden cannot be overi<Mtded. The loads that various pack 
 animals can cany arc approximately as follows : Mule, 200 to 
 S50 pounds; burro, 150 to 200 pounds; llama, about 100 
 pounds; camel, 350 to 450 pounds. Packages for transporta- 
 tion by these animals should be one-half the forgoing weights 
 ms one package is carried on each side. Thus, a mule can 
 cany 860 pounds if divided into two packages, but if a pack- 
 age weighs over 150 pounds he can carry one only, and as 
 this rests on his backbone, he can not carry much above this 
 weight. Man carriers are capable of carrying from 100 to 
 160 pounds. 
 
 Climatic Conditions 
 Affect Export Packing 
 
 In Honduras it rains hard for at least five months in the 
 year and freight going into the interior covered with canvas 
 is usually damaged unless it is pnyperiy packed to meet this 
 condition. A like conditkMi exists in Ccrfombia where ma- 
 chinery destined for the interior is frequently exposed to the 
 rains. The rainfalls in India produce a dampness in the air 
 that may damage goods not protected to meet this peculiar 
 condition. In Venezuela the tropical moisture may destroy 
 food products such as dried fruit and cereals if packed in 
 cardboard boxes. Oimate, then, is another factor that de- 
 termines the method of packing for export. 
 
 Port C&ndiHans Also a 
 Factor in Export Packing 
 
 In many ports of the world such as those found along the 
 west coast of South America lighters are employed in getting 
 merchandise oft the steamer. In these places goods are sub- 
 
 PACa^NG FOR EXPORT 
 
 217 
 
 jected to rough handling. The lighters ride alongside the 
 ship and the cargo is hoisted from the hold in slings. Each 
 sling load usually contains a variety of goods from ink bottles 
 to dry goods, and weighs a ton or more. As the lighter rises 
 or falls with the waves the sling load will endeavor to meet 
 it, and there is a crash. The well protected goods are safe, 
 but those whkh were not carefuUy packed to meet just such 
 contingencies are doomed. Nor is this all. There is yet to 
 lemove the goods from the lighter to the quay. More man- 
 handUng. Once again, they may probably require placing 
 on freight cars for shipment to the interior. These condi- 
 tions must be taken into consideration by the American ship- 
 per if he desires to retain the good will of his foreign cus- 
 tomer. The manufacturer should know the treatment his 
 goods are to receive in shipment to a certain foreign point. 
 He should, therefore, do his packing accordingly. 
 
 Protection from 
 Pilfering Necessary 
 
 Various methods have been suggested for packing to dis- 
 tourage pilfering in foreign ports. This crime is quite common 
 particulariy where shq^ments of boots and shoes, dry goods, 
 hardware, notkms, and food products are involved. The use of 
 tongued and grooved lumber for boxes, strapping of cases and 
 boxes with steel bands, the use of wire drawn around each end 
 and the middle of the case so tightly that it sinks into the 
 wood at the corners, the ends of the wire then being twisted 
 and cut ck>se with nippers, the use of safety dips of various 
 kinds to bind the top and bottom oi the case to the sides- 
 all these have been recommended to prevent pilfering. 
 
 In a circular issued by the Federal Export Corporation- of 
 New York the following method is recommended: "Stealing 
 from export packages has been the bane of the export trade 
 for centuries, and pilfering has become such a matter of 
 course that longshoremen in foreign ports have been known 
 to strike because one of their number was arrested for break- 
 ing cases and stealing goods. The use of matched lumber, 
 with box strapping, will go far to retard pilfering, but a stiff 
 No. 8 or No. 10 wire, drawn about the case so that it bites 
 ^ into the wood, will be the best preventotive. Use an old- 
 fashioned fence stretcher to pull the wire taut, staple the 
 
118 EXPORTING TO THE WORLD 
 
 twisted ends fast to the case and seal with lead. Any case 
 can be broken into, so your success will be attained if you 
 make it too difficult to open wttiiottt detection.'' 
 
 Kinds of Pockmg Riquwed 
 for SMpmenis for Export 
 
 Merchandise may be packed in cases, crates, or f>ales. The 
 character of the packing generally depends upon the nature 
 of the goods, and the section of the world to which they are 
 destined. Cases, of course, are the strongest and best. Paper 
 or paste-board boxes will never do for export packing. The 
 inmber used for the manufacture of boxes or crates should 
 be sufficiently thick to give ample protection to the merchan- 
 dise. The thickness of the lumber should depend upon the 
 weight of the contents. Lumber as light as is consistent with 
 safety should be employed in order to reduce the weight of 
 the case as much as possible. Knotty lumber should be 
 avoided. If knots exist, however, they should be covered 
 over with tin from the inside. 
 
 As, in many cases, freight is charged on the basis of cubic 
 measurements, it should be the aim of the manufacturer to 
 pack his merchandise as compactly as possible. Every avail- 
 ahle inch of i^ce should be utilized. Goods should be tightly 
 packed in order to avoid shifting within the case. The manu- 
 facturer should visualize the career of a case from the moment 
 it leaves the factory to its final destination. He will then 
 realize the necessity of having it so carefully prepared that it 
 will stand the most vigorous handling, and the contents will 
 remain intact whether the case is standing on its head or on 
 its side. 
 
 An interesting story was told by Captain H. R. Moody, 
 Q.M.C., U. S. A., Chief of the Packing Service in connectkm 
 with baling goods for eaqiort to ^ A. E. F. at the Sixth 
 Annual Foreign Trade Convention in Chicago. Captain 
 
 Moody said: , 
 
 "In no respect did the Packing Service effect greater space 
 economy than in the packing of clothes for the A. E. F. 
 Formerly clothing had gone forward to troops padced kwsely 
 in wooden boxes. The Packing Sendee devised the system of 
 baling all clothing, and a baling plant was set up at the army 
 supply base in Brooklyn. The Service gave scientific atten- 
 
 PACmNG FOR EXPORT 
 
 219 
 
 tion to the proper folding of garments and eventually, after 
 
 exhaustive experiments, developed a system of folding tfiat 
 allowed the maximum number of pieces to a bale. It was 
 found that these new methods saved two-thirds of the space 
 that had been used formerly for the shipment of the same 
 quantity of goods in boxes, to say nothing of the great saving 
 both in labor and boxing materials. 
 
 "The baling plant in New York in the calendar year of 1918 
 shipped to France approximately 1,000,000 bales of clothing 
 and textile and other equipment that could be baled. The 
 saving in money to the United States Government by this 
 method of packing at this one plant in a single year amounted 
 to approximately $55,000,000. The largest item in this econ- 
 omy was the matter of cargo space, which is estimated at 
 $49,000,000, saved to the Government The complete state- 
 ment of the financial saving in the shipment of these 1,000,000 
 bales is as follows: 
 
 fl 
 
 Material $1,940J)00 
 
 Labor 683,000 
 
 Tare Weight '^^^OOO 
 
 Caigo Space 49,080,000 
 
 Total $61,078,000 
 
 "In addition to the financial saving there was a large saving 
 in raw materials which count for more money to a nation 
 engaged in a desperate war. This million bales of clothing 
 saved 68,000,000 board feet of lumber which would have been 
 used in boxing, had the old system of packing been followed. 
 The lumber which would have gone into these boxes re- 
 quires 30 years for its growth, while the burlap covering the 
 bales was made of jute which is raised in semi-annual crops. 
 
 "The size of the bale adopted was 30 inches by 15 inches 
 by 14 and up |o 19 inches. It is interesting to note that this 
 size was determined upon ~t>ecause it was found that the 
 burlap covering bales of this size would cut into sand bags 
 with a minimum amount of waste material. The army abroad 
 used great quantities of sand bags. Thus, by wrapping bales 
 in burlap pieces of proper size, there was saved a considerable 
 amount of cargo space previously occupied by bated burlap 
 which had formerly been shipped to France to be made into 
 
m EXPORTING TO THE WORLD 
 
 •and iMigs. It is also notable that baled clothing arrived in 
 France in much better condition than clothing which had been 
 packed in cases." 
 
 Captain Moody's report reveals the tremendous economic 
 saving that may be accomplished by Amcricaii shippers if 
 they pay dose attention to packing. 
 
 The process in packing goods in bales is sometimes like 
 this: (a) wrap goods first in ordinary paper; (b) a sheet of 
 canvas should then be laid over the entire bundle; (c) a layer 
 of tarpaulin or cloth should follow next; (d) the final layer 
 should consist of a double canvas or burlap. The outer cover- 
 ing is then tightly sewn with strong twine. 
 
 The necessity of watertight linings in packing has already- 
 been emphasized elsewhere in this chapter. Tarred or oiled 
 papers may be used for this purpose. The British generally 
 use hermetically sealed zinc or tin-lined cases to avoid ex- 
 posing goods to rain or dampness. Manufacturers have a 
 right to expect an additional amount to cover the cost of such 
 cases, however. 
 
 Sometimes cases lined with waterproof paper, inside of 
 which additional layers of ordinary packing paper are placed* 
 are used. Manufacturers also use oilcloth or taupanlin but in 
 scmie countries a duty is charged for oilcloth which the im- 
 porter may not desire to pay. 
 
 Shippers usually use either excelsior, straw, hay or waste 
 paper for stuffing empty corners in cases. The character of 
 this material depends, however, on the nature of the goods 
 and the route which the shipment is to follow. 
 
 II ow Machinery Is 
 Packed for Shipment 
 
 Machinery in transit must be protected from water. A 
 covering of vaseline or grease on the bright steel parts will 
 provide ample protection. The greatest care should be ex- 
 erdsed in preparing machinery for shipment to foreign coun 
 tries as the effects of climate encountered in other parts of the 
 world may sometimes prove disastrous. The cases may be 
 several weeks in reaching their destination during which time 
 they may be exposed to the rain as as occasional doses 
 of salt water. The composition of the coating is therefore of 
 first importance; but here again no rule can be laid down, as 
 conditions vary so much. Crude gasoline, white-lead paint, 
 
 PACKING FOR EXPORT 
 
 221 
 
 boiled oil, and tallow may be used. The coating, however, 
 must be free from all acid and capable of spreading evenly. 
 It must set quickly to a sufficient firmness, and must dissolve 
 easily when wiped down with oil, turpentine or petroleum. 
 
 Essentials in Packing 
 Goods for Exportation 
 
 A double check should be made on all goods entering cases 
 for packing for export. Unless this precaution is taken the 
 manufacturer will learn without much delay that he is Reaving 
 a trail of disappointed customers in foreign countries whose 
 chief complaint may be that there is something missing from 
 their origfinal orders. In instances where the shipment consists 
 of a number of parts of one article, as a machine for instance, 
 the greatest care is necessary. The machine must be com- 
 plete. Every part and accessory must be in the packing 
 room. Countershafts, change wheels, spare pulleys, belts, lu- 
 bricators, and spanners should be grouped alongside the ma- 
 chine. With the aid of an assistant the packer should care- 
 fully check off every item on his packer's sheet. The leaving 
 out of one single part may result in disappointment, delay and 
 in much correspondence, not including the additional ex- 
 pense in later forwarding the missing parts. 
 
 The weighing of the contents of each case before packing 
 is essential. This involves the net weight of the goods, and 
 the gross weight when packed. With the totals in his pos- 
 session the manufacturer has sufficient proof against claims 
 that the exact quantity of the goods as checked was not 
 shipped. Also, some countries require data on the "legaV* 
 weight — ^the actual weight of the goods themselves with 
 their immediate containers, as well as the gross weight of 
 the entire case. 
 
 Foreign Requirements Must 
 Be Met in Packing 
 
 The essential factors in packing may be listed as follows: 
 Strong cases, waterproof linings, straps made of strong mate- 
 rial, and protection against pilfering. It has already been 
 indicated how trani^KMtation facilities, the character of the 
 port to which goods are destined, and climatic conditions are 
 determining factors in the matter of intelligently packing for 
 
m EXPORTING TO THE WORLD 
 
 export. There is still another consideration involved. What 
 kind of packing does the man at the other end require in 
 Older to satisfy the customs r^;ulations or any other peculiar- 
 ities iB that rcgicm? Of course, the manufacturer should 
 know this. He can obtain full instructk>ns from his foreign 
 customer. Once obtaining all the necessary information in 
 coimection with the preparation ol a shipment to a foreign 
 couatry he should see ^t the customer's requirements are 
 fully satisfied. If one method of packing is much more eco* 
 nomical than another and the customer requests the economi- 
 cal method the manufacturer should see that the buyer's 
 wishes are considered. The following story may illustrate 
 the point : A dealer in a Central American country received a 
 shipment of tobacco from the United States packed in zinc- 
 lined cases instead of the customary bales. The difference 
 in freight and duty amounted to $300. In the country to 
 which the diipment was sent the dnty on tohacoo was the 
 gross wei^^ instead of ad valorem and the packing cases had 
 to be paid for at the same rate as the tobacco. The fault 
 here lay in the failure of the manufacturer to study the regu- 
 lations of the country to which the goods were destined. Also, 
 he should have asked for specific instructions from his buyer 
 as to Ac method of paddqg, etc., and the buyer should have 
 furnished them. 
 
 CmuuUSlumld 
 Be CmmHed 
 
 In shipping goods to foreign countries the manufacturer 
 who has had no experience in packing to meet foreign con- 
 ditions should consult either the Department of Commerce, 
 
 the Pan-American Union, or, if he is a New York manufac- 
 turer, he should consult the consul of the country to which 
 he is shipping the goods. Reliable information may be ob- 
 tained from these source^ and it may save the shipper a great 
 deal of trouble. ^ 
 
 In packing for foreign shipments the manufacturer must 
 take these additional matters into consideration: (a) weights 
 and dimensions of cases or packages should be reduced as 
 much as poseuble in order to cut freight costs: (b) cases 
 siiould be small and light in order that they may be easily 
 handled for interior transportation ; (c) packages should con- 
 
 PACmNG FOR EXPORT «»3 
 
 tain only one class of goods if possible as different classes of 
 
 goods are subject to different rates of duty in certain foreign 
 countries; (d) advertising matter should not be included with 
 goods in cases as duties are imposed on such matter which 
 the buyer may not desire to pay unless he has requested it 
 from the shipper; (e) in countries where duty is imposed on 
 gross weight the manufacturer should make cases as light as 
 possible; (f) in countries where some goods are subject to 
 duty cm gross weight and some on net weight goods subject 
 to the same kind of duty should be packed separately, and not 
 mixed : (g) in other countries, however, mixed packing is al- 
 lowed as long as merchandise has been properly declared. 
 
 Effect of Weight on 
 Customs Duties 
 
 In some European countries the dutiable weight of the 
 imported merchandise is determined by the rate of duty. 
 Merchandise subject to a rate of duty above a certain amount 
 is dutiable on actual or l^^l net weight, while merchandise 
 
 subject to a lower rate is dutiable on gross weight. In Latin- 
 American countries, however, the basis for duty is generally 
 indicated in the tariff of each item. It is important to note 
 that actual net weight means the weight of the merchandise 
 alone, without packing; l^;al weight is understood to mean 
 the gross weight less a certain percentage for tare, which dif- 
 fers in accordance with the container, and is fixed by a sched- 
 ule annexed to the tariff. In some countries the weight of the 
 immediate containers is sometimes included in the dutiable 
 weight of the article. 
 
 Articles of commercial value used as containers may be 
 dutiable separately in some countries. French regulations 
 provide that articles imported as containers of merchandise 
 dutiable on gross weight are dutiable separately only if the 
 rate applicable to them exceeds by more tban 10 per cent the 
 rate i^plicable to the contents. 
 
 Duty may be reduced to a minimum if the manufacturer en- 
 deavors to keep the weight of the packing as low as possible 
 not only for goods subject to duty on legal net weight but 
 also on goods subject to duty on gross weight. 
 
 It has been suggested that a saving on duty may be ef- 
 fected by shipping the inner containers separately hem the 
 
m EXPORTING TO THE WORLD 
 
 merchandise for which they are intended. In some countries 
 the weight of the goods akme is nsed as a basis lor duty 
 while the inner containers shipped separately may be ad- 
 mitted at a lower duty. 
 
 Regnkakmi m ComUnes 
 Thai May AfFect Packing 
 
 RcgttlaticMis in different countries affecting packing are 
 constantly changing and the wise manufacturer will make it 
 his duty to apply for the latest information on the subject 
 from the available sources that have already been mentioned 
 in this chapter. As a basis for determining the actual re- 
 quirements» however, the following information from the prin- 
 ce countries will prove of value to those who are making 
 iore^n shipments: 
 
 Argentine— Most articles listed in the tariff dutiable on 
 legal weight. Shipment of merchandise of different classes in 
 one case should be avoided as customs authorities may apply 
 duty of highest-taxed article in shipment to entire shipment 
 
 Bolivia— Some articles are dutiable on net weight, some on 
 gross weight, and some on weight of merchandise together 
 with immediate packing. As long as mixed packing is not 
 intended to defraud customs there is no penalty for such 
 packing. 
 
 Brasil—Duty on gioss we^ht, or on legal net weight or 
 actaal net wdght may be imposed on articles dutiable by 
 
 weight Gross weight means weight of goods with packing, 
 except rough wooden containers. Legal net weight means 
 gross weight less tare allowances. Actual net weight means 
 weight of goods without any packing. Duty on actual net 
 weight is imposed on goods dutiable on 1^ net we^t and 
 actual net weight if imported in same package. Packages 
 containing only merchandise dutiable on net weight but with 
 different tare allowances are subject to same rule. Weight 
 of packing is distributed proportionately when goods subject 
 to different duties, but dutiable on gross weight; are imported 
 on same package. 
 
 Chile— Merchandise subject to duty by weight may be duti- 
 able on net weight, gross weight, weight including packing, 
 or weight including containers. The customs tariff should be 
 consulted for further information. 
 
 Cok»nbia-— Duty levied oo gross weight, and mefthandlse 
 
 PACmNG FOR EXPORT 
 
 225 
 
 subject to different rates of duty may be packed in same con- 
 tainer provided gross and net weight of each kind of mer- 
 chandise is indicated. 
 
 Costa Rica— Practically same regulations as Colombia. 
 
 Cuba— Articles dutiable on gross weight, actual net weight 
 or legal weight. 
 
 Ecuador — Merchandise dutiable either on gross or net 
 weight Only requirement in packing in same container mer- 
 chandise subject to different rates is that shipper state in 
 consular invoice net weight of each kind of merchandise as 
 well as gross weight of entire package. 
 
 Guatemala — Duty on merchandise may be levied on net 
 weight, on weight including packing, except outer containers, 
 or on gross weight. Where goods dutiable on weight in- 
 cluding packing, imported loose in outer container, weight of 
 latter is not included in dutiable weight When goods duti- 
 able on weight including packing are imported in same re- 
 ceptacle with goods dutiable on gross weight, duty on latter 
 merchandise levied on weight including packing with addi- 
 tion of one fourth thereof, to compensate for outer container 
 which is not included in weighing merchandise. Merchandise 
 subject to different rates of duty in same receptacle subject 
 to fine. 
 
 Honduras — Merchandise subject to duty is dutiable on 
 gross weight. 
 
 Mexico— Duty on merchandise dutiable by weight is levied 
 on net, legal, or gross weight. No penalty imposed for mixed 
 packing if merchandise is declared properly. This data is 
 taken from provisions existing in normal times in Mexico. It 
 is subject to change. 
 
 Nicaragua — ^Duties levied on gross weight. Packing of 
 merchandise in one container limited to 10 different kinds. 
 
 Panama — Imports dutiable ad valorem and not on weight. 
 
 Paraguay — Argentine rules apply to Paraguay. 
 
 Peru — Where articles are dutiable by weight, basis for 
 levying duty may be net weight, gross weight, or l^;al weight. 
 When goods dutiable on gross weight are imported in same 
 container with goods dutiable on different basis or subject 
 to different rates of duty, or with samples without value, 25 
 per cent is to be added to weight of such merchandise weighed 
 
m EXPORTING TO THE WORLD 
 
 with its immediate packing and its share of the straw, atlftV- 
 ings, or similar packing material. 
 
 Salvrndor-^Dtity is levied on gross weight No objection to 
 mixed packing as long as merchandise is properly declared. 
 
 Uruguay — Some articles dutiable on gross weight, some on 
 legal net weight and in some cases weight of inner receptacle 
 is included in dutiable weight No penalty for mixed pack- 
 ing. 
 
 Venezuela — Duty levied on gross weight. Rate of highest 
 taxed article is applied to entire shipment when articles sub- 
 ject to different rates of duty are imported in same packing. 
 
 EUBOiPB 
 
 Owing to unsettled conditions in Europe only those coun- 
 tries which maintained their commercial relations with other 
 nations during the war are indicated here. There have probably 
 been many recent changes and the information given bek>w is 
 given as a basis merely. 
 
 Belgium — Goods dutiable either on actual net weight, or a 
 tare allowance is made. 
 
 Denmark— Duties levied on net weight which includes 
 weight of immediate receptadet in which goods are sold in 
 letatl trade as well as wrappers of paper or cloth. 
 
 France — Articles subject to rate of less than 10 francs per 
 100 kilos (87.6 cents per 100 pounds) are, dutiable on gross 
 weight; articles subject to higher rates are dutiable either on 
 actual or l^;al net weight 
 
 Italy— Articles subject to rate not exceeding 80 lire per 100 
 kilos ($1.75 per 100 pounds) dutiable on gross weight; articles 
 subject to higher rates of duty are dutiable either on actual 
 or Itgsii net weight 
 
 Netheriands— Duty levied <m legal net weight 
 
 Norway — ^Duty levied on 1^1 net weight, but in some 
 cases only weight of outer container is deducted from gross 
 weight while that of immediate packing is included in dutiable 
 wdfht 
 
 Portugal— Articles subject to rate not exceeding 5 rds per 
 kilo (88.6 cents per 100 pounds) dutiable on gross weight; 
 
 articles subject to higher rates dutiable either on actual or 
 legal net weight 
 
 PACKING FOR EXPORT 
 
 827 
 
 Spain— Dutiable weight not determined by rate of duty. 
 
 Most articles dutiable on net weight, which includes weight 
 of immediate packing and containers in which goods are 
 
 sold in retail triade. 
 
 Sweden— Duty levied on legal net weight, tere allowance 
 being specified in tariff for each item. In some cases dutiable 
 weight includes also weight of immediate containers. 
 
 Switzerland— Duty levied on gross weight Where articles 
 are imported without usual containers certain percentage 
 added to dutiable weight 
 
 Other Countries 
 
 Imports are usually subject to ad valorem rates of duty in 
 the most important British possessions as well as in China. The 
 customs tariff of France applies to the French colonies. The 
 net weight is taken as a basis for the collection of duty on 
 imports dutiable by weight in Japan. 
 
 How cases for 
 
 Kxport should be marked 
 
 Symbols instead of names of customers in full are used in 
 marking cases for export The determining factors in the 
 choice of symbols used are quick identification, abbreviations 
 and secrecy. Secrecy is sometimes desirable when the manu- 
 facturer does not wish to reveal the name of the consignees. 
 Quick identification is necessary in order to avoid delay on the 
 docks, etc, or in the ship's cargo. Only the essential marks 
 should be used on cases or packages. If old cases are used 
 care should be taken that the old marks are removed. The 
 contents of a case should not be revealed by writing on the 
 outside, as this serves as a tempting bait for thieves. 
 
 The symbol of the consignee, the name of the port, the 
 serial number of the case, the gross and the net weight in 
 pounds or in kilos or in both, the measurement of length, 
 breadth and thickness of the package in feet and inches are 
 the essential marks on cases for export. Consignees often ar- 
 range their own symbols and they usually assume a variety 
 of shapes. The marks should be legible so that they will not 
 be blurred or ^Faced when the shipment reaches its final des- 
 tination. Marks should either be stenciled, as required in 
 
m EXPORTING TO THE WORLD 
 
 making shipments to Chili, or painted. Marks by crayon, tags, 
 or cards should not be used, for obvious reasons. Serial num- 
 bers must be ghren to all cases. Duplication of numbers must 
 be avoided as the customs officials may suspect that an at- 
 tempt at fraud is being made. Neither should any number 
 in a series be overlooked as the consignee may suspect that a 
 case IS missing. 
 
 Accuracy in the marking and noting of the gross and net 
 weights of cases so that it will correspond with the equivalent 
 to the invoices and consular documents is absolutely essential. 
 Consignee's marks, also, should tally with those in the ship- 
 ping documents. Unless this precaution is taken the shipper 
 may hnd that he is causing his customer considerable trouble 
 as fiiies, delays and other inconveniences are the fruits of such 
 negligence. 
 
 Longshoremen are not easily persuaded to handle cases or 
 other packages with care merely by such signs as glaring danger 
 marks such as "handle with care/' "glass," "keep in dry 
 place/' "this side up,** etc These phrases are generally use- 
 less. The safe principle to follow is to properly pack goods at 
 the factory, and if there should be a necessity for calling the 
 attention of fragile goods to those who handle the cases 
 warning phrases in English and in the language of the country 
 to which the goods are destined should be written carefully 
 on at least two sides of the cases. In some countries the gross 
 and net weight of merchan d is e must be indicated in Idlos. 
 
 CHAPTER XV 
 
 HOW SHIPMENTS ARE MADE 
 
 Method of shipping ooots from iNTEaioft— Bdotine ikvolved 
 
 IN SHIPMENT— Documents requirei>— How bills of lading 
 AiB Mia* OUT— Shipowner's liability to the shipper— Con- 
 
 SULAB INVWCES-SpEOAL KECOT-mONS IN VAIHOUS COUNTRIES. 
 
 The manufacturer whose factory is situated at some inland 
 point experiences more difficulty in shipping his goods to thk 
 foreign customer than the manufacturer with his plant at the 
 port of embarkation. The former requires an agent at the 
 port to attend to the numerous shipping details, while the 
 latter may personally see that his merchandise is properly and 
 safely loaded into the ship. 
 
 Let us trace the shipment of a manufacturer from an m- 
 terior point to its destination. How may a manufacturer 
 provide for the shipment of his goods to the port of embarla- 
 tion, and what is the process to follow so that they may be 
 safely placed on board the ship for transportation to some 
 foreign port or, perhaps, to some inland point in a foreign 
 
 country? . . 
 
 He may choose one of two ways. One method is to ship the 
 goods on a through export bill of lading, and the other is to 
 ship the goods on a local railroad bill of lading in care of a for- 
 warding agent or a steamship company, or the manufacturer s 
 own agent. When shipping goods on a through export bill 
 ot lading the railroad company instructs its foreign freight 
 agent at the port to engage ocean freight space on the steamer. 
 The foreign freight agent is supposed to attend to all the 
 detaiU in connection with the placing of the goods on board. 
 The more important loads have foreign freight agents at the 
 principal ports whose functimis are' to handle these matters. 
 
 In shipping goods on a local railroad bill of lading, how- 
 ever, the goods are consigned to some specific person, such 
 as the foreign freight forwarder, a shipping company or the 
 
 229 
 
2S0 
 
 li.Al'UKTING TO THE WORLD 
 
 manufacturer's own representative. It is the duty of the 
 consignee to engage freight space on the steamer and to ar- 
 
 tange all other details in connection with the placing of the 
 merchandise on board the steamer. The railroad's responsi- 
 bility, moreover, ceases with the delivery of the goods at a 
 stated place at the port It is customary to send an Arrival 
 Notice** to the parson who is to receive the shipment so that 
 he may have ample time to arrange all details. 
 
 There Should be no 
 Delay tn SkipmenU 
 
 It should be remembered that a steamer usually calls at 
 several ports along its route, and that goods are loaded into 
 the hold of the vessel in the order in which they are to be 
 unloaded at foreign ports. For instance, a steamer makin:; 
 its first stop at Havana, Cuba, to discharge freight will load 
 the merchandise destined for that port on the last day la 
 which freight is received so that it may be at the top of the 
 heap. When the steamer arrives in Havana the goods are 
 imloaded without the necessity of "digging" into the hold 
 after them. Again, if Buenos Aires is the last port of call the 
 freight destined for that city will be found at the bottom of 
 the hold. It would be necessary, therefore, for merchandise 
 intended for Buenos Aires to be sent to the loading port on 
 the date required by the steamship company which may be 
 several days before the date of departure. Sometimes freight 
 lor the first port of call may be received on the day the 
 steamer is scheduled to leave. 
 
 The railroads will give full instructions regarding shipments 
 for foreign destination. Manufacturers, especially those who 
 are situated at inland points, can obtain all the necessary in* 
 fcnrmation in ccmaection with foreign shipments at the rail- 
 road offices* 
 
 Routine Involved 
 in Shipment 
 
 If the manufacturer is to rely on the foreign freight for- 
 warder whose functions will be discussed later he need not 
 bother about details in connection with his foreign shipment 
 
e 
 
 ji 
 S 
 
 o 
 
 e 
 
 § 
 
 I 
 
 C8 
 
 a 
 
 ? O! 
 SI ^\ 
 
 Oi 
 
 fii 01! 
 .§ 0- 
 
 0 
 
 IS 
 
 (A 
 
 I 
 
 q: I 
 
 VC 
 
 i ft? 
 
 I 
 
HOW SHIPMENTS ARE MADE 231 
 
 at the port of embarkation. All that he is required to do in 
 this case is to consign the goods to the foreign freight for- 
 warder with the necessary instructions and the latter will do 
 the rest. If, on the other hand, the manufacturer is to take 
 the entire responsibiii^— -atich as engaging freight space, 
 preparing the shipping documents, etc.,— -there is a certain 
 routine that must be followed. It is something like this : 
 
 Inquiry about rates among the steamship companies operat- 
 ing lines to the ports for which shipments are intended must 
 be made first of alL 
 
 When a satisfactory rate has been obtained freight space 
 must then be engaged. The steamship companies have their 
 own individual rules regarding the booking of freight space. 
 Information must be obtained from them. 
 
 A Shipping Permit which instructs the receiving clerk at 
 the steamship company's dock to accept freight of the shipper 
 on a stated date is delivered to the manufacturer or agent 
 when the freight space has been obtained. 
 
 The Shipping Permit reads something like this: 
 
 To the Receiving Qerk. 
 S.S- "Imperial" 
 
 PAN-AMERICAN STEAMSHIP CO. WHARF 
 Pier North River 
 
 RECEIVED FROIM Smith Exporting Company 
 Twelve (12) cases Typewriters 
 To be delivered September 18-26 
 
 It is to be understood that this engagement is on the con- 
 dition that delivery shall be made promptly at the time called 
 for in this permit or space will not be reserved, and the 
 steamer and its agents shall be absolved from any and all 
 liability arising out of the issuance of or under this permit, 
 including any liability that may arise on account of the 
 steamer's proceeding to sea without the goods. 
 
 PAN-AMERICAN STEAMSHIP COMPANY 
 
 Per ProForma 
 
 New York September 16, 1919. 
 
 A clause stating that all risk of loss or damage while goods 
 are on the wharf is to be incurred by the shipper, etc., is 
 written into the usual Shipping Permit 
 
232 EXPORTING TO THE WORLD 
 
 Upon presentation of the Shippings Permit at the dock the 
 drayman is given a Dock Receipt signed by the receiving 
 clerk which serves as an acknowledgement of the receipt of 
 the goods for shipment by the steamer. The Dock Receipt 
 ccmtains the weights and measures of the goods received. It 
 is customary for the shipper to supply his own receipt forms 
 when several deliveries are to be made to the steamer and 
 against one Shipping Permit. When all the goods have been 
 delivered at the pier the shipper may present these receipta 
 which have been signed by the receiving clerk and obtain 
 possession of the Dock Receipt which covers the details of 
 each delivery. 
 
 Having an acknowledgement in the form of a Dock Receipt 
 from tlie receiving clerk tliat the goods have been delivered 
 the shipper is now prepared to go through the formality of 
 clearing the shipment through the custom house at the port. 
 This must be done before the steamship company issues its 
 formal bill of lading. Clearance involves the preparation of a 
 Shipper's Export Declaration in which the following informa- 
 tion is written: 
 
 Name of steamer ; destination, marks and numbers of pack- 
 ages; the kind of goods contained in each; value, etc. The 
 description of the goods must be correct and if the shipper is 
 imable to supply this specific information he should consult 
 the official schedule of classification of goods which may be 
 obtained from the Bureau of Foreign and Domestic Com- 
 merce. The information given in the declaration muj$t be ab- 
 solutely correct as it is from these statistics that the govern- 
 ments of the world compile their reports on commerce. 
 
 The Shipper's Export Declaration must now be attested by 
 either the manufacturer or some agent upon whom formal 
 authority has been bestowed for this detaiL 
 
 Upon presentation of the certified Shipper's Export Declara- 
 tion, the Dock Receipt, or other necessary papers including 
 the bill of lading, at the steamship company's office the latter 
 will be duly signed and turned over to the shipper. ■ 
 
 Principles of Steamship 
 Bin of Lading 
 
 A bill of lading is a receipt for goods as well as a contract 
 
« 
 
 PAN-ASIAN 
 STEAMSHIP COMPANY 
 
 44 Whitehall 
 
 New York 
 
 KTWEEN NEW YORK AND FAR EASTERN 
 
 \ 
 
 PORTS 
 
 SHimmS MARKS A NUIMNtm 
 
 44809 
 
 Kobe 
 •#1/20 
 
 tiianty (20) Caa«8 faoe 
 
 Export License 
 #56908 
 
 I 
 
 Export Declaration 
 . #6874863 
 
 Rotlfy iiltlaate oozisignee 
 Reizo Matsuoka^ 
 Kobe 9 Japan 
 
 90 
 
 MO 
 
 P9r 40e. ft.. 
 
 if 
 
 4t 
 
 .(g). 
 
 3>er ton 
 
 Kobe 
 
 in appArent food ord«r and eondiUon from. 
 
 r 
 
 to be transported by the good steamship.^. .Graaiaxe : t(X 3£il from the port of NEW YORK and bound for 
 
 FAM JBAS7C}AM POBTB via Panama Canal. Suer. Canal or Cape of Good Hci]>e» or otherwise 'with liberty to substitute another steamer* or stcanaiers, or to transship the goods 
 btfort or aflCT the coauneneement of the 'vojrave by any other tteadMr* or steamirib and also with liberty to drydock with or without cargo on board, to proceed to and stay at any 
 porta or places whatsoever, althouRb in a Contrary direction to, or cut of the roiitc to or beypnd the port of discbclrge, once or oftener, in any order, backwards, or forwards, for load- 
 ing or discharging cargo, coal and passengers, or for Any purpose whatsoever, i nd all such ports; places and sailings shall be deemed 'to be included within the intended voyage (this 
 li Ml t9 bt «QMidu«4 fMrlsUd Iqp aay vordi la thii oootSMl. whettM r vrittcn qr pcialidl* 
 
 .being marked and numbered as per margin, shipper's weight (quality^ quantity* eontent 
 
 marks, gause, weight and value unknown), and to be delivered subject to the exceptions aud conditions hereinafter mentioned in iik« apparent pood order and condition from ahip'l 
 dtck (whert carrj^^^t^onsibility sbaU cease) subject to ship's engagements not hereby disclosed ^^^hrough altering the voyage or mvolvtu'g & deviation therefrom* at the port of 
 
 - (or as nexir thereto as she may safely get) unto --jor to h«a or their ***'gTni Frtisht for the Mid Cdodi 
 
 to he paid by the shippers in X^iew York, ou delivery of Bills of Lading, in caijih without deducUoo. 
 
 That the steamer shall have hbesty to sail wilk Or without pilots, and to deviate for tac purpose of saving life or jproperty. that the carrier shall have liberty to convey goode in 
 erait and/or iightert to aixd from the steamer at flM liak of the owners of the goods; to transship the gooda to their d^ination by any other •tcamer or •teamen aa otUu aa the ahip* 
 
 That the carrier shull not be liable for loss or damage occasioned by perils of the sea or other wat^i^s aud dangers of navigation or whatsoever kind, by collision, ftrandingt 
 jettison or wreck ; or for loss or damage due to or caused by any act, default or omission of tiie Administration, either of the Suez Canal or of the Panama Canal, or from any inters 
 ruption of trallie through the Sues Canal or through the Panama Canal, by fire from any cause or wheresoever occurring on board in craft or on shore; by barratry of the master or 
 crew ; by enemies, pirates, robbers or thieves, by land or sea ; by theft by any person on booard, in craft or on tsbore, whether in the employ of the shipowner or not ; by err eet or 
 restraint of princes, rulers or people; by hostilities, by riots, strikes, or stoppaKe of labor or epidemics; by explosioa ; by bursting of boilcra, or by steam, however arising; by breaks 
 down of shafting or nwchiocry ; by defect in any part of the hull, builcrs. engines, machinery or appurtenances of the vessel ; by unseawortbiucss of the steamer* whether existing at 
 time of shipment or at the beginning of the voyage* provided the 9wner8 have -exercised due diligence to make the steamer seaworthy ; by heating, frost, decay, evap<»ation, smell or 
 t^t from or eontact with other goods; putr«£Mtioa* rust, sweat,* Wdn or spray. <thange of eharaeter* drainage, leakage, breakage, vermin, or by c:iplo6lon of any of the goods, whether 
 shipped with or v.iihout disciosure of liitir nature, or any loss or danaat;e arising from the nature of the goods or the insuthciency of packages or inaccuracy or obliterations, errors, 
 insuihciency or absence of murks, numbers* address or deeeription of cargo ; or for land damage ; or for ri&k of ci-aft, hulk or transshipment ; or for any loss or damage caused by the 
 pfolaajetton of the voyage ; and that the carrier shall not be conchided as to th( i eoReetaese oC itatemente horein of quality, quantity, sauge^ contents, weight and value. 
 
 That General Average Bhall be payable according to York-Antwerp Rules, 1^90, and as to matters not therein provided for according to the usages of the Port of New York. 
 Average Bond with values deciaicd therein to be signed, aiiio sullicient security to be given as required by i^laster or Agents. If the owners siiall have exercised due diligence to rr^^^ 
 the steamer in all respects seaworthy and u> have her properly manned, equipped and supplied, it ta hereby agreed that in case of danger, damage or disaster, resulting from acoi^ 
 denta or faults or errors in navigation* or in the management of the steamer, oi from any defect in the steamer, her machinery or appurtenances, or from unseaworthine^^s, whether 
 tzisting at the time of shipment or at the beginning of the voyage (provided the defect or the unsea^^rorthineas was not discoverable by the exercise of due diUgcnce) . the shippers' con- 
 signees or owners of ihe cargo shall, neverthelcBs, pay salvage, and any special dharges incurred it wepect of the cargo, ard shall contribute with the shipowner in General Average 
 to the payment of any uacrihces, looses or expenses of a General Average nature ihat may be made or incurred for the common benetit, or to relieve the adventure from any common 
 peril, all with tlic sioue lorce and etfcct, and to the same extent* as if such-d&ng4^ diwaga ar dlMlMr had aol icnlted from, or h&m oecaeiOBed Ivt aceidente or IhutU or errors in 
 navigation, or in the uianagcmcnt of the vessel, or any de.fect or unieaworthines&j 
 
 IT IS ALSO MUTUALLY AGREED that this shipment is subject to all. terms and provisions of, and all the exemptions trom liability contained in 
 the Act of Congress ol the United States, approved on tte 13th day of February, 1893 (aud entitled, An Act Relating to Navigation of Vessels, etc ), 
 aad nothing in this Bill of Lading shall operate to limit at deprive mt Shipowner or carrier of any Statutory protection or Umitation of liability to 
 „t„^.- i. ^1 1 *u J ^1 — entitled. 
 
 which he would, in the abience ol the conditions and eaceptumi 
 
 I.-IT IS MUTUALLY AGREED that the value of the goods receipted 
 
 any part a 
 had ad valorem freight paid thereon. 
 
 ah^m dog 
 ^"^■Sief 
 
 doca not eju;eed 4«0v per frcigiit ton* or in proportion for any part of a 
 
 tedMialB 
 
 vatat he axpneely Mated 
 
 ALSO, that the steamer, lighter or carrier shall not be liable for Articles 
 in iicclion U6L of the Kevised Statutes of the United States, unless written 
 Uie true character and value tliereiAf is givea at tiie time of lading and 
 ia tbt Bik oC • ^ 
 
 S^AliiO, that the shippers shall be liable for any loee or damage to 
 
 cargo, h;};hter or wharf, caused by inUammable, explosive, or dangerous goods. 
 Without tuil disclosure oi their naiurc, wnetbcr such shipper be Principal or Agei 
 and such goods oiiay Lc thrown over^ard or destroyed at any time without comp 
 Uoiu £xtra charges, if any, fur discharging. iisiUerage or other erpeneee oa 
 *t)AM. dadftred or ooBsideMd oa enah hv ^Mi ov mihtanf 
 by shippara aod/or eoniigneei. 
 
 4.— ALSO, that tiie carrier shall have a Hen on the goods for all freights, 
 primages and charges, and also for all fines or damages which the steamer, lightjer 
 or cargo may incur ur kuUer by reason of the incorrect or insulBclent marking, ni 
 herine or addressing of paekagoK or desoription of U»eir contenta, Biile of 
 ■Mitbe flsade out in aecordaaee *with the preseriptiona Mid regnlatloiw of Port, 
 toms or Consular authorities. Consular, Board of Health or other certificates reqi 
 to accompany the goods are to be procured by shippers, and any detention, charg^ 
 or penalties occurring to steamer or cargo, owing to the want of eoeh ecrt^eat 
 are to be boraa hy tht ahippaih aad/or c ontlgn aee. and the cargo to ba lehjeet tol 
 Ilea therefor. 
 
 •.p-ALSO* that ia caM the ahlp ahall be prdveated fay quaraaUaa from 
 the goo ds at the asuaLpl>M J?' discharge or from rea d 
 earner may^iscFarge the goodslhto any Depot or LacarelUH either 
 or at any previooB or subsequent port at which the ship callai and flnch disci 
 iball be deemed a liaal deiiVeiy aadar thia eontract^ and all lha 
 •arred on the goods ahall be a Ilea thoaaa. 
 
 tr'AUBO, thM fn OMO «ii war* boetlllMca latarrections* eivU ooaMBOtlon* tlrfili 
 
 or lockouts, disturbances, blockade or Interdict of the port of discharge, warlike 0t 
 naval operations or demonstrations, whether at or near the port of discharge 
 elaewbere in the courae of the voyage, or of ice or closure by Im* or of the happeii* 
 lag of any other matter of event, wheUter of like nature to thoae above mention^ 
 or otherwlee» and whether existing or anticipated, before eommcncement of or during 
 the voyage, which in the judgment of the Master is likely to result in damage to or 
 Icol of the vessel or give rise to xUk of captures ceiture or detention of veseel aod/or 
 MBMb or of any part tt tha aaigo^ or whkh la hie ladlB— t aay mOn It aaaafe 
 ca iaprndent for any reason to proceed on or continue the voyage, or enter or dia- 
 charge cargo at the port of discharge, or which in his Judwnent is likelv to give rice 
 to delay or ditJiculty in reaching, discharging at or leaving the port of discharge, the 
 Maitar ihaM be at iibcriy, in his discretion* to change ta aad proceed b>- any roolc 
 dhreet or tedircet or to devitae or to proceed or rdora to or etop and discharge the 
 cargo, or any part,> thereof, at such other port or ports as he may consider safe or 
 advisable, under the circumstances* and thereupon when so discharged the eazgo ti^^ 
 be at the risk and expense of the shippers and/or reoeivera thereof, and the steev 
 Owaerc*. Agents andMaster chali ba fiaed aad dlwbiirgcd from aay taitbtr 
 
 it hMTCOI* 
 
 T.—ALSO, that the ftoods are to be received by the "^weiamf Imnedsstely tas 
 vessel ia ready to discharge, and continuously at ail such hours as the Custom House 
 or Port Authorities may give permission for the ship to work, or if necessary, to 
 discharge into lighters at tbe risk and expense of the Consignee. And it ia expressly 
 understood that the articled named in this 13111 of Lading sluUl be at the risk of the 
 Owners, Shipper, or. Consignee thereof as soon as delivered from the tackle aad/or 
 eeck of such steamer at her port of destination, aud they shall be received by the 
 Consignee, package, by package as so delivered, end if not taken away the same day 
 hy him they may (at the option of the Vessel's Agent) be s^t to store or warehouses 
 er permitted to lie where landed at the expense and risk of the aforesaid Owner, 
 Shipper or Consignee, and ahall be subject to a lien for wharfhge, rent of dock* wharf 
 dr atore or any other expense that njay be incurred in respect thereof. If on' the 
 arrival of the steamer at the port of delivery any of the bales or packages shipped 
 under the Bill Ox Lading cannot be identihed by reason of ineufhciency of marks, 
 obliteration of marius, or no marks, then in any such> case, the Ueceiverf shall take 
 in full discharge* accord and aatisfaction, any bales or packages which may be on 
 board the ateamer and be tendered there by the Owners or their Agtnts, notwithstand- 
 ing that such bales or packages do not bear the marks and description izidicated "In 
 the margin thereof. The Collector of the Port is hereby authorized to gw mt « ceneftnl 
 order for discharging immediately after the entry of the ship. ^ * 
 
 . 8*---ALS0, that Ui eaae any part of the within goods cannot be found durilig 
 Ship s stay at port of destination, they are, when found, to be sent back at the Mer- 
 ehant's risk and Ship's exbenhe The Ship shall not be liable for Incorrect delivery 
 onless such packages ahaU have been distinctly and permanently marked by the Shin- 
 
 tpee befo^ shipment with the name of the port of destination. Goods overcarried to 
 e returned to Consignee at Ship's expense, but free from Uability for any JoMi da> 
 reeiaU<m or toiage aitisiag from overcarriage or frota return carriftgeT^ 
 
 k»- "'*^'^^l^]?®fT»^e^ft^ for short ddivfery ofTor damage eargo 
 
 being made, the Garner shaU not be hSble for uiore tiisa the net Invoice priie^S 
 freight and insurance less all charges saved, and any loss or damaae for wU^ tfm 
 OwKfar aaay be liable ahall be adjoated pro rata oa the said baaliu 
 
 Neither the Carrier, the Vessel, nor the Agents shall be liable for anv 
 
 damage to goods in any event unless notko fa, writing of the da^ 
 ShaU have been presented to the Ship's Agents at the pert of diaSiwir? bSL« S 
 l^val^df tha cooda taa tha fihip'a custody. ^mk^JTSu^^SS^^^^ 
 
 u^^t^' ^ merchandise on wharf or in lighter or other craft shall be at 
 ilcrchandisc Owner's risk of loss or damage in every case and partleolarmlan 
 shall be proven that such loss or damage baa been caused tav 
 lid tht Omicr er Us servants* -^•-•••••w 
 
 s ^ut^^rr^^' ^ Shippew are hereby notified that this and all 
 of this Line carry general cargo for all torts. Including kerosene oil and nrodn^ 
 of petroleum, spirits of tujpentine, aU kinds of chemical products «id lloiSda to^S 
 t^'u^'^ packages, and it is agreed- that 8team« and wi^^ 
 
 SSSL'i^'LS £i«««!u!?Jfe.^^u«^ resulting f?^ cSSla « tSSLSS 
 Vila* or pMsinAtj to* or tbaclieet of other cargo on board. ""•■•^ ^ 
 
 Glasa. CMna* Castings and other goods„of _a_.bzittiA_aad 
 
 steamers 
 
 TBANSSIllPMENT CLAUSE:— Transhipment of aaiio for ports where t* 
 an conditions, stipulations aad asceptions in tha cQstoaaaiy form of bill of ladir 
 transit. Tha shipowner is not* and sbaB not be deemed to be the agent for such 
 delay in regard to the goods after they shall have left the steAmship's tackle and/f 
 practicable* but tlie shipowner shall not be liable for detention and the risks and 
 
 TIlStmiN AMD SHANOHAl OABGO may be Ughteied from below the ba 
 
 MANILA AN D TUILIPPINB l*OIITS CABGO— In accordance with the i 
 'consignee's risk and cxponce, from the steaaier to the Custom House wharf* aad IA 
 such deliveiy shall constitute a full diseharge of the carrier^s obUgatloo. nadcr iMs 
 bg the Customs authoritic* or employees* wben the iropds were delivered into their 
 shortage, loes or mlsddlvary of, or any damage to eargo* shall be presented by tl 
 asmpietion of tha dlsihaiit ad the vasssll and la Mtalk «C laih aslls^ Ito afidta 
 Habk therefor. ' — 
 
 FUPAID FBEIOHT Is to bt iBBslilfli 
 l ata rr up tlon or abandonment of the voyage at a 
 the cost of forwarding shall be payable by the 
 
 frngde nature or unprotected pieces are carried at Skipper** rislf hLtm't*^ rt»i».r 
 
 not to be held responsible for any breakage of or injunr thoSST ••eww 
 f^? * ^ shipowner's purposed, is to be at the shipowner's expense 
 freight notr In nao at the time of the transhipment by the carrier or oirriS? 
 
 and snbjeet to 
 or carriers completing tfM 
 '^r any loss, damage or 
 forwarded as 
 their consignees. 
 
 'PTSStSs'^^Slhte^aSr^^^^ 5? twS^o'Tr'lJ'pfr^Wid^^ 
 
 Owners or Consignees of the goods tnd shaU constitute a Uen on toe goods. wrvaiaea Pf ^mmta of the i 
 
 or if there be a forced 
 same Line, or otherwise^ 
 
 iditions, whether written or printed* as fully as if they 
 uLL^"* ^™BBi(>F, tSMaBtor cr Agent oi 
 
 PREPAID 
 ★ 
 
 In accepting this Dill of Lading, the shipper, owner and consignee of the go^ and the bolder of tho BIB lliiSfn* mctma 4^/, Kii %^^a v n ^. . . 
 '^^SSI^:!ii!^^''^:^^JS*^^ « were aU siiSd by sudi dCper. hlS^ ^ stlpuJationf. ezeeptioBS and 
 
 - saia aup hftth afflnned tojlMc iMIto of 
 
 Ran-Asian Steamship Cbmpany 
 
 Agents for Masters 
 
 DaUd In New York, this ...^ of i^fll^?".?.^*... . ....... i$..19 
 
 ' hr « la behalf of any government, whether prior to or subsequent fb » 
 
 •s opened at^/a r 
 
 wlln any orders or dbaetlcns as to employment, departure, arrival, routes^ ports of call, stoppages. 
 
 The ship Shan act be re^onslble for 
 
 •The ship shall have Bberty to _ 
 
 subject whatsoever given by any GovemiAt. or any department thereof, or any person acting' or purporting 'to act* wlt^ thVauthMity'of "a^^ 
 thereof, or by any committee or persons Kying under the terms of a war risk insurance (if any) the right to give such orders or directions and. if 
 
 S2 ^^tl.I?2!l^':f^l!•;'«^^!52'*"ft Sr?SlL*l^»-"* ""At "SSu?^ • de?iatlon,*or ^ defauH. and shan not giv 
 
 SSi. nr *iTr?fyt^.^*fr;gr,yi":^i?L'*--' ^^ * ^^"^ *»»*J?«Li?*** notwithstanding anything to the contrary contained herein, the ship 
 
 SmS? ^y..j!'™y-*^»!?*-ui,»'^^' ®I «W .W>>y? y*d may discharge the whole or part of the cargo at 
 
 where ship s responsibility shall cease, or taagr tma s bl p at any ilaot tf the vcfnos tta whde ar gaft cf tha saiaa lato aar athsr veesel Ibrcarrt 
 or to any other port or place whatsoever,** " ""^ ▼•ww wr 
 
 I? S*^ ft? ■i'** ^ Uber^to proceed via any route to deallaatlon. and to deviali fkam ar chaaga tha advertised, ar I 
 
 ^ yTrimTi y*rif fi Il7^ hi Kit er la Pii tola eg iwhi el «vpwtb iMt iT iiriir7,.T iT^ J JlL^Lt ^ . 
 
 Ku^nt 
 
 nuijitions, or to any other 
 Lent, or of any department 
 Reason of aad in compliance 
 to any Uability on the 
 In pursuance of advices, 
 |?ort or place whatsoever* 
 tha poci of desUnatloa 
 
 led roote at any time or 
 rev Si the 
 
 PRO FORMA 
 
 Sti:."T-h-p r.ill of Lading. I ron, three to eleven copies are required under different circumstances. Three sipned copies constitute a nepotiahle "full set." Should be inr 
 Tl*i> Uill oi lading has been drawn "to order" with the "notify" clause. It is endor^d in blank by the shippers. When a Bill of Lading is drawn directly in the name ■ 
 
 ou back by shipper. There are many forms of Ocean Bill of Lading. 
 )rcign consignee no endorsement by shippers is necessary. 
 
HOW SHIPMENTS ARE MADE 
 
 to carry them. It is negotiable. When drawn to a shipper's 
 own order or to a consignee it conveys ownership in the 
 goods it represents. Hence, it requires the endorsement of a 
 person in authority. The signature of a clerk is not sufficient. 
 
 Bills of Lading are furnished by the steamship companies 
 without charge usually. They are made out by the shippers, 
 rilie number of copies that the shipper is required to prepare 
 depends on the number he needs for his own purposes, and 
 the number Xhe steamship company and consular office may 
 require. 
 
 Not all steamship bills of lading furnished by the shipper 
 are negotiable, however. Only the signed copies, usually two 
 or three in number, are negotiable and these constitute what 
 is called a "full set." Banks through which the customary 
 documents are to pass generally require a full set of steam- 
 ship bills of lading. Unless the bank has all these documents 
 in its possession it has not the necessary title to the goods 
 involved. A single bill of lading — negotiable — not in the pos- 
 session of the bank eliminates the latter's security in the 
 goods. 
 
 The non-negotiable copies of the bill of lading may be used 
 for the manufacturer's files or for the customer abroad. The 
 steamship company will require at least one copy. The con- 
 sular offices must be supplied with at least one copy as well. 
 
 When Title to Goods 
 Is Transferred 
 
 Unless the consignee has paid cash in advance, or has 
 furnished security of some kind to justify the transfer of 
 an open account the bill of lading will not be made out di- 
 rectly to the foreign customer. No experienced exporter is 
 willing to give an importer title to the goods unless the latter 
 has either made a settlement before the goods are shipped or 
 funiished security of some kind to justify the transfer of 
 title. When the shipper desires to ship the goods but retain 
 title he makes the bill of lading out "to order." Not until the 
 shipper endorses the bill of lading drawn after this fashion 
 does title pass from one person to the other. Neither can any 
 one obtain possession of these goods unless the bill of lading 
 is properly endorsed by the shipper. 
 
tU EXPORTING TO THE WORLD 
 
 It is permissible to insert a "Notify" clause on the margin 
 of the bill of lading- authorizing the steamship agents to notify 
 the consignee of the arrival of the goods at the port of desti- 
 nation. The "Notify" clause simply reads: "Notify Smith 
 and Co." or who ever happens to be the consignee. Title, 
 however, is not transferred until the consignee is able to pro- 
 duce a properly endorsed bill of lading which he may have 
 obtained from the bank after a satisfactory disposal of the 
 draft has been made. Or, he may have obtained a properly 
 endorsed bill from the shipper himself. 
 
 If the bill of lading is drawn to the order of the shipper 
 then the latter must endorse it before title to the goods can 
 be transferred. If the bill is drawn to the order of the con- 
 signee the latter may obtain possession of the goods upon 
 endorsing it The shipper's endorsement in this case is not 
 necessary. The formality of endorsement is necessary in the 
 "full set" of bUls of lading. 
 
 Haw BUls of Lading 
 May Be Endorsed 
 
 Bills of lading may be endorsed either "specially" or "gen- 
 erally." When endorsed "generally" the person in possession 
 of the document is entitled to the goods. If the person claim- 
 ing the goods is onable to produce a properly drawn bill of 
 lading he may furnish a bond to the steamship company to 
 protect it against any claims that might arise through the 
 appearance of the rightful owner. It is not very often that 
 occurrences like this are recorded, but in order to avoid any 
 such situations the shipper should be very careful about hU 
 bills of lading. He should see that they arc properly endorsed 
 and directed to the proper persons. 
 
 Hozv Bills of Lading 
 Are Made Out 
 
 There arc no uniform bills of lading. They vary in size, 
 shape and color. The clauses contained therein are generally 
 alike although in some instances there appear slight modifica- 
 tions in order to comply with conditions or customs ia certain 
 countries. Some of these clauses protect th^ steamship com- 
 
liODBL OF INVOICE WHICH MUST fiS FILED WITH GENERAL CONSULAiTE OF CHILE IN UNITED STATES 
 
 4 
 
 No 
 
 CoNSULADo General de Chile en Los Estados Unioos. 
 
 ^anttm de la$ mertadertoB dapadiadoM por THE REMIM 
 
 OKVOICB OW nmtCHAMDISS SmPffSD BY) 
 
 en Nueva York abordo del vapor 
 
 (IN NBW YDIUC ABOARD TH8 8TBAMBR) 
 
 jNMilo de„» .VALPARAISO. CHILE . 
 
 iOBMBRAL CONSULATB OF CUILB IN TUB ONITBD STATBS) 
 
 NtMM Yoi*, EL as PE ABBH OF 
 
 HIP. CABTBinfiE COMPANY^ INC. 
 
 xon destino al 
 
 (DESTINBD POR TUB FORT OF) 
 
 8ANTIA60 CHILE 
 
 ie^ 
 
 fvdor total de la mercaderia 
 
 a coim&uuAon de fit 8TEVFWS0W & CO 
 
 (TO THB CONSIGNMBNT OF) 
 
 pwcmntade. 
 
 OK>B ACGOIINT Of) 
 
 Xim 8TFVFN«SnN h CO 
 
 CVOTAL VAI^DB OF THB MBRCHAND] 
 
 joio oiMticaiio 
 
 (AMBUCAN OOUI 
 
 NUMBSOS 
 
 (liUHbMi) 
 
 VALPARAISO 
 
 BULTOS 
 
 CtASB 
 
 00NT8NIDO 
 
 
 1 PESO TOTAL EM KILOS 
 1 (Total ^veight in Kilograms) 
 
 VALOR TOTAL DC OAOA 
 
 (FMfa«W) I 
 
 (CiMt) 
 
 
 
 NBTO H BRim> 
 
 1 ^INKb^^^ II ^^9hp00B) 
 
 ITEM DE MERCADERIA 
 (Total valae ol mc3k UmM 
 
 #100/1(J. 
 
 6 
 
 CAJAS 
 
 CAJAS 
 
 SUMA 
 (TOTAL) 
 
 CAJAS 
 
 CARTUCHOS CARGADOS PARA 
 REVOLVCRES* 
 10000.- CALIBRE 52. 
 10000.- CALIBRE 38* 
 
 CARTUCHOS CAR6AD0S PARA 
 ESCOPETAS. 
 8000.- 16 GAUGE. 
 8000.- 12 GAUGE. 
 
 ARUMS OE FUEGO. 
 
 20 RIFLES CALIBRE 22. 
 20 E8C0PETA8 12 GAUGE. 
 
 223.45 
 
 739.20 
 
 241.26 
 
 820.78 
 
 THE IemiNGTON 
 
 N METAILIC CARTRIDGE COMPAMY IH 
 
 SOMA 
 (TOTAL) 
 
 206.78 
 
 264.84 
 
 2 
 u 
 
 I: 
 s 
 
 < 
 
 fa 
 O 
 
 u 
 
 < 
 > 
 
 s 
 
 OB 
 
 D 
 
 as 
 s 
 
 i 
 
 Consular Invoice, Chilian form. All shipments to Chile must be accompanied by Consular Invoice. 
 
HOW SHIPMENTS ARE MADE 
 
 pany against claims on the order and condition in which goods 
 were shipped. Therefore, the clause reading "Shipped in 
 good order and condition" applies only to the external con- 
 dition of the cases or packages. Steamship companies are 
 not presumed to know the condition of the goods within their 
 cases, according to court decisions the world over. 
 
 The clause "quality, quantity, gauge, contents, weight and 
 value unknown" is aimed to protect the steamship company 
 against claims involved in the descriptions cited. However, 
 the steamship company may be held responsible for damage 
 to goods when such damage is not covered in the bill of 
 lading clauses. For self protection, therefore, it is very care- 
 ful in the matter of receiving goods in damaged case s or 
 packages. When such packages have been received a nota- 
 tion is made on the dock receipt as well as on the bill of 
 lading. When this condition is reported on the bill of lading 
 it becomes known as a "foul" bill. Bankers frown on "foul" 
 bills because they are always susceptible to claims at the 
 other end. Shippers should be very careful against permitting 
 damaged packages to be sent Instructions should be left 
 with the receiving clerks to advise them whenever broken 
 cases arrive at the dock so that they may be replaced and a 
 "clean" bill of lading obtained. Sometimes, however, the 
 steamship company may be induced to issue a *'clean" bill 
 even though it has received a number of cases or packages in 
 a damaged condition. The steamship company in this case win 
 require a "letter of indemnity" from the shipper, however, which 
 shall protect the former against losses arising from claims at the 
 port of destination. If these claims arise the steamship com- 
 pany will settle and later recover from the shipper. Letters 
 of indemnity are attached to the steamship company's biU of 
 lading. 
 
 The Shipowner's Liability 
 to the Shipper 
 
 The shipowner must see that the ship is seaworthy at the 
 
 beginning of the voyage. It must be free from defects of any 
 kind. If an accident occurs on the high seas and it is due to 
 a defect that existed before the steamer left port the ship- 
 owner will be liable for all damage to merchandise. If, how- 
 
23G 
 
 EXPORTING TO THE WORLD 
 
 ever, an accident occurs after the ship leaves port, and was 
 not due to some defect that existed before the ship left port, 
 the shipowner is free from liability. 
 
 Suse of Packages 
 Required in Shipment 
 
 Some steamship companies issue Parcel Receipts to cover 
 packages of a limited size and of small value. These command 
 a very small freight rate. The feature of these Parcel Re- 
 ceipts lies m the opportunity that the consignee has of ex- 
 amining and showing samples of goods shipped by the same 
 vessel on regular bills of lading. Consignees are often able 
 to sell their stock from the samples while the cargo is still 
 being unloaded. Parcels having a small value may also be 
 shipped under a Parcel Receipt although restrictions as to size 
 and value are made by the steamship companies. Packages 
 measuring more than 3 to 5 feet will rarely be accepted. 
 Neither shall they be valued at more than $50. Parcel Re- 
 ceipts, moreover, do not cover the steamship company with as 
 much responsibility as the bill of lading. 
 
 Consular Invoice 
 in Foreign Trade 
 
 A consular invoice, r^rded by many manufacturers and 
 exporters as a nuisance, is a document in which the details of 
 an invoice must be accurately stated, and presented and sworn 
 to by the shipper or his representative in the consulate of the 
 cDimtry to which the goods are to be sent. All the inq)ortant 
 foreign countries maintain consulates in the principal Ameri- 
 can ports. Some consulates require two copies, others five 
 or six or eight. It depends on the regulations of each in- 
 dividual country. Consular invoices may be obtained at the 
 consular offices for a nominal price. Each country has its 
 own regulations in connection with the charges made for 
 certifying consular documents. Consular invoices arc re- 
 quired for large shipments only and not for parcel post pack- 
 ages, excepting in the case of one or two Latin American 
 countries. 
 
 The lack of uniformity vat consular regulations affecting 
 
236 
 
 EXPORTING TO THE WORLD 
 
 ever, an accident occurs after the ship leaves port, and was 
 not due to some defect that existed before the ship left port, 
 the shipowner is free from liability. 
 
 StMe of Packages 
 
 Required in Shipment 
 
 Some steamship companies issue Parcel Receipts to cover 
 packages of a limited size and of small value. These command 
 a very small freight rate. The feature of these Parcel Re- 
 ceipts lies in the opportunity that the consignee has of ex- 
 amining- and showing- samples of goods shipped by the same 
 vessel on regular bills of lading. Consignees are often able 
 to sell their stock from the samples while the cargo is still 
 being unloaded. Parcels having a small value may also be 
 shipped under a Parcel Receipt although restrictions as to size 
 and value are made by the steamship companies. Packages 
 measuring more than 3 to 5 feet will rarely be accepted. 
 Neither shall they be valued at more than $50. Parcel Re- 
 ceipts, moreover, do not cover the steamship company with as 
 much responsibility as the bill of lading. 
 
 * 
 
 Consular Invoice 
 itt Foreign Trade 
 
 A consular invoice, r^rded by many manufacturers and 
 
 exporters as a nuisance, is a document in which the details of 
 an invoice must be accurately stated, and presented and sworn 
 to by the shipper or his representative in the consulate of the 
 country to which the goods are to be sent All the in^rtant 
 foreign countries maintain consulates in the principal Ameri- 
 can ports. Some consulates require two copies, others five 
 or six or eight. It depends on the regulations of each in- 
 dividual country. Consular invoices may be obtained at the 
 consular offices for a nominal price. Each country has its 
 own r^^lations in connection with the charges made for 
 certifying consular documents. Consular invoices are re- 
 quired for large shipments only and not for parcel post pack- 
 ages, excepting in the case of one or two Latin American 
 countries. 
 
 The lack of uniformity in^ consular regulatkms affecting 
 
9-uasM Mkmu 
 
 RepuUica del Ecuador 
 
 Factan PiMnAr a. U m.«.»A^ q... po, A LOS .Sr ES THE 6E0 L SQUIER MF6 COMPANY 
 
 A. NUEVA YORK ClUDAD 
 
 01 « L Sr. g VifiNQLD 
 
 ..del puerto de 
 
 GUAYAQUIL 
 
 Iv^ M VAPOR " ADVANCE 
 
 ^^yj^^^u ^^^^ 9 
 
 ■iwi su Liapitan 
 
 procedente de New York, con destino a GUAYAQUIL ECUADOR 
 
 cuyo valor es de $ 49? >35 , equivalentes a 5y. 98i^«50 ^ gu^re igual a $0.50. 
 
 
 NUIUSOS 
 
 BULTOS 
 
 tUSE 
 
 CONTENIOO 
 
 Peso Bruto 
 
 wKUograBK 
 
 Peso Neto 
 
 •8 KiiQirUMS 
 
 VALOR 
 
 « (Mint 
 
 B 
 V 
 
 1/2-1 1/12 
 
 \ 
 
 CAJAS 
 
 MAQUINAS PARA U INOUSTRIA 
 
 710 
 
 52U^ 
 
 
 25 
 
 GUAYAQUIL 
 
 TOTAL 
 
 it 
 
 CAJAS 
 
 
 710 
 
 524 \ 
 
 
 25 
 
 N^Yi^20 DE MAYO DE iQi 9 
 
 QinfrAAcrito Contul Gonfind do 1a RopuMira del F-^ii**!**** 
 certifica la factom pncedente da — L JLJ — Boitos con el peso 
 J a ( 7iP ) — Kilaawflnofc pratawta J« aa S ai< 
 
 CO A6E NTES 
 
 MAY 2 2 1919 - 
 
 Consular Xnvoicc, Ecuaderian form. While Consular invoices are required for nearly Ul Latin- American countries there is a distinction 
 the method of drawing ui> Consular Invoices as an examination ol the Chilian and Ecuaderian forms will indicate. 
 
LEY DE ADUAXA 
 
 AsT. 67. — Cuando los Administradores de Aduanas observaren <^ue el valor 
 lal de tes mercaderias entuneradas en la factura consular es evidentemeBte 
 ina>'or que el declarado en ella, pondriui este hecho inmediatamente en conoci- 
 miento del Jurado de Aduanas, para que este, plenamente comprobado el 
 hecho, y ccn audicncia del interesado imponga como pcna el quintuplo de la 
 cantidiad que, per efecto de la falsa declaracion, se pretendio defraudar per 
 dtfcchos de certificadon^ £1 valor que se ddie dedarar es el de la mercad^ia 
 CB d faigar deorigm. 
 
 Los Consoles qne, al certificar ana factura encontraren notable diferencia 
 entre el 'valor respective y el declarado, liaran prcsente tal circunstancia al 
 cmbarcador; y si este insistiere en el despaclio, certificaran la factura, y, por 
 el correo inmediato prevendran de lo ocurrido al Administrador de la Aduana 
 correspoodiente al puerto hacia el cna1-va dirigido el cargamento "Ea caso de 
 litigio entre el vendedor y el importador aquel no podra demandar a este sino 
 por el valor declarado en la factura consular. 
 
 Art. 71. — Si al recibir el importador la factura consular encontrare algun 
 error en las dcclaraciones o pesos que puedan ocasionarle pcnas podra evitarlas 
 p iewtan do el Gobeemador de la Frovinda, dentro de los primeros sds dSas 
 habilcs de haber Uegado el cargamento, una solicitud por triplicado indicando 
 tales crrores y pidiendo que aotorice el reconodmiento previo de los bultos que 
 nccesitcn este requisito. 
 
 El Gobemador, hara dejar copia de ella, certificada por su secretario. en 
 un libro que para el efecto se llevara en la Gobernacion y decretara al pie de 
 dicha soiicitiid que se proceda al reconodmiento de las mercaderias, ordenando 
 que wm ejeoqdar se remita al Ministerio de Hacienda, otro al Administrador de 
 Aduana y que el tercero se devuelva al solkitante, a mas tardar al dia sitfuiente 
 de su presentacion. 
 
 £1 Administrador hara reconocer los bultos respectivos en presencia suya, 
 del Intcrvcntor y de un Vista que designara para cada caso, y firmari con estos 
 d leumocji nicnto por triplicado. Uno de los ejcmplares quedara cn poder del 
 Intcrvcntor otro lo enviara el Administrador al Ministerio de Hacienda y el 
 tcrcero se entregara al importador para que lo acompafie a su pcdido, que debe 
 scr igual rcconocimiento, pedido que el Administrador ordenara sea despachado 
 por otro Vista Si del reconociniiento restdtare qu^ no hubo tal error en la factura 
 consohr, o que las dcclaraciones o pesos estuvieren con formes a lo declarado en 
 cUa, se cobrara al interesado un rccargo de 10% sobre los deicdios del bttltO-O 
 kaltos que motivaron la tramitacion anterior. 
 
 Para el rcconocimiento expresado en este articulo la aduana cobrara: 5 
 ccntavos por cada bulto del mismo contenido, cuando estos scan de tal natnr- 
 alea qpe ao fncre necesario abrirlos para sab^r su contenido o cuando el peso 
 total & una partida se puede verificar pesando una parte de ellos ; 20 centavos 
 por cada bulto, cuando siendo del mismo contenido, sea preciso reconocer y 
 pesar cada uno, un sucre por bulto, cuando scan de diverso contenido. 
 
 Akt. 72. — Cuando un comerciante no pudiese manifestar por menor sus 
 mercaderias, por &lta de factura o cono dm iento del contenido de lot 1ioltos» 
 podra pedir al Adm^istrador, dentro del terauno de 120 dias, contados desde la 
 llegada del buque, que el interventor y un Vista formen la factura mediante 
 d pago de cinco a cien sucres ; remuncracion que senalara el Administrador segun 
 la importanda del trabajo. £1 Administrador hara despachar los bultos asi 
 factmados con an Vista distinto del que fdnii6 la factnra, la que no destmye 
 la lKtu«-a consular. Si al llegar esta se encontrare diferenda entre lo que con- 
 tenian los bultos y lo declarado en la factuar constilar, se cobrari un 25% da 
 ffccargo y para el efecto, la solicitud debe ser garantizada. 
 
 Art. 108. — En los articulos formados de diversas mercaderias, se practicara 
 d aforo por la dominante. Se entiendo por materia dominante, la que entrando 
 CB aiis de dncaeata por dcnto cn los oompoiientes de tm attkido^ dct e f mina so 
 Mtanka, o la qoe, en las tdas culm an si^erficie. 
 
 Art. 110. — ^ los pesos resultaren en la Aduana dfstintos a los declarados 
 cn el pedido se cobrara 50% de recargo sobre los derechos correspondientes, 
 cuando el exceso del peso fuere de 15% o mas que el declarado ; pero si el exceso 
 lucre menor, o d peso inferior al declarado, se cobrara por lo que resultc. 
 
 Aet. 113. — ^Todo bulto manifestado por mayor y no entregado a la Aduana 
 nor d buqoe lias£a trdnta dias despues de su ll^da, seri aforado de con- 
 ionnidad con la factnra consular ; y sus derechos servidok c impncilM cob c adoa 
 par fat Aduana al Agente o consignatario del buque. 
 
 Todo bulto entregado por el buque con su contenido robado parcial o total- 
 mente, sera aforado como de contenido pleno y los derechos, servicios e ira- 
 poestos de lo corre^Kmdiente a*la faha serim cdbiados por la Adnaaa al Agente 
 
 Declaracion del 
 r e m i t e n 
 
 Servicio Consular 
 Elcuatoriano 
 
 Fto 
 
 COLON PANA MA 
 
 JTaeAa 
 
 20 DE MAYC OE 1919 
 
 vapor , ADVANCE 
 
 Naeionalidad , AM^R IC M A 
 
 Imgar del embarque^ 
 
 mm YORK 
 
 CIUOAD___ 
 
 JuayaSil 
 
 , ECUADOR 
 
 THE GEO L SQUIER MF6 COMPA NY 
 MUEVA YORK C lUDAO 
 
 c,,„^o SR B VIGNOLO 
 
 GUAYAQUIL ECUADOR 
 
 Valor en doUurt $ ^9%25 
 
 VtUor en sueree _ 
 
 Las facturas deberan scr prcsentadas a mas tardar 
 liasta 6 horas antes de la salida del vapor 6 buque* 
 •egun anundo oficial de la compania, de lo contrario 
 tendran d recargo dd deredio adkional corretpon- 
 
 diente. 
 
 Las facturas deben ser pagadas y retiradas al 
 •Igiitente dia detpu^s de haber lido entregadas en la 
 acccion. Exportacion del Consulado y hatta dos horas 
 antes de la hora oficial asandida paim la talida dd 
 
 b^aue. 
 
 No se permite escrlMr entre lineas. 
 Ni hacer enmendaturas ni borrones. 
 
 LEY DE ADUAJ>jA 
 
 
 
 O -J 
 
 
 UJ LU 
 
 1 
 
 
 o 
 
 
 UJ — 1 
 
 
 
 
 1— « 
 
 
 NoTA. — T o d o s los 
 daros de estos form- 
 ularibt dd>en ser Ilcna- 
 doa por los interesados, 
 quienes pueden dirigirse 
 al C6ntiil 9aca cualquier 
 dnda* 
 
 DERECHOS CONSULARES 
 
 Toda importacion en el territcrio de la Rcp6blica 
 del Ecuador requiere, para su dcspacho cn las aduanas 
 nacionales, la presenUct6n de una factura consular que 
 exprese: a) los nombres del rcmitente, del consigna- 
 tario, de la cmbaracacion y su capiian, la bandera del 
 barco y el lugar de destinacion; b) el valor total de las 
 mercaderias comprendidas cn la factura; c) las marcas, 
 numeros y numero del bulto; d) las clases de los 
 mismos; por ejcmplo; • fardos, cajas, barrilcs, etc.; e) 
 cl peso bruto y ncto, cn kilos, dc cada bulto separada- 
 mente 6 dc varios bultos juntos, siempre que contcngan 
 la misma mercaderla; /) su contenido, prccisando la 
 clase de mercadeiias, ain vsar tenniaoa generaleak 
 tales como lanas, algodones, ferreterlas, etc. Las 
 facturas consulares debcn estar redactadas en espanol 
 y lirmadas por sus remitentcs 6 representantcs cn c^ 
 pucrto de cmbarque. 
 
 Tanto las facturas consulares co^o los sobordos 
 y las listas de cncomicndas seran extendidos cn cinco 
 cjemplarcs iguales, todos los cuales «crin prescntados*/ 
 para la certificacion consular, antes de que la cmbara- 
 cacion a que se refiercn hubiera salido del puerto, 
 debiendo el Consul dcvolver un original, firmando de 
 su puno y letra al cmbarcador y armador, respectiva- 
 mente. 
 
 Los consules ecuatorianos cobraran los siguientes' 
 derechos^ 
 
 Por ccrttficact6n.dc facturas consiilares hasta el 
 valor de den sucres, un quinto de condor, sea dot^ 
 sucres 6 su equivalente. 
 
 Por certificacion de facturas cuyo valor exccda de 
 cien sucres, tres por ciento sobre el valor declarado. 
 
 Por certificacion de sobordos, cuarcnta por cicnto 
 sobre el valor total dc las recaudacioncs por facturas* 
 
 Por certificaci6n de listas de encomiendas, vetnti- 
 cfnco oentaros de sucrc por cada cucomlenda. 
 
 Por certificacion de dcclaraciones rcferentcs a 
 factura consular, sobordos, listas dc encomiendas, etc, 
 un condor, 6 scan diez sucres. 
 
 Por certificacion de patentes de sanidad, un condor, 
 6 sean diez sucres. 
 
 Cuando las facturas, sobordos, listas de encomien- 
 fueren prcsentados despu^ de haber salido la 
 embarcacidn k que se refieren, se cobrari por su 
 legalizacion, ademas de los derechos ya expresados, 
 lot siguientes derechos adicionales; por facturas, uno 
 por ciento mas; sobordos, diez por ciento mas; por 
 listas de encomiendas, diez centavos de sucre mas por 
 cada una. 
 
 NOTA.— Un condor vale diez sucres," 6 sea $5.00. 
 El Sucre (S/.) esta dividido en cien centavos. Equi- 
 Valencia del sucre: lOlSO oro. 
 
 ( 
 
 I 
 
HOW SHIPMENTS ARE MADE 237 
 
 shipments to Latin America has been the subject of consider- 
 able criticism of late. This problem has received much con- 
 sideration at all the international conferences of American 
 states, and resolutions have been passed recommending the 
 adoption of a uniform consular invoice, the abolition of cer- 
 tificates of origin, consular certification of bills of lading, and 
 the reduction of the consular fees as far as possible to amounts 
 necessary to cover the cost of maintaining the consular serv- 
 ice. These reforms still remain to be adopted. 
 
 There is justification, however, in the requirement of the 
 presentation of consular invoices in connection with the clear- 
 ance of shipments to various countries on the ground that it 
 facilitates the compilation of commercial statistics, prevents 
 undervaluation and fraudulent entries, and supplies the funds 
 to maintain the consular service. 
 
 With the exception of three countries in Latin America- 
 Argentine, Costa Rica and Uruguay— the rest require presen- 
 tation of consular invoices for the clearance of shipments. 
 Failure to comply with this requirement will provoke a heavy 
 penalty in certain countries. In other countries importers are 
 allowed to clear their shipments without the consular docu- 
 ments, but are obliged to furnish a bond for their subsequent 
 presentation. It is important, therefore, for the shipper to 
 forward the consular documents by the same steamer in which 
 the goods are being sent to protect the consignee against fines 
 or delays* 
 
 Contents of 
 Consular Invoice 
 
 While there are some differences in consular invoices to 
 foreign countries the following information is generally re- 
 quired from the shipper: Name of shipper, vessel, captain, 
 consignee, and port of destination; mark, number, and weight 
 of each package, character of packing employed, number of 
 packages, contents value. 
 
 Description of the contents must be in detail. It must l^e 
 absolutely accurate. Information must be given in connection 
 with the component material, and, in case of fabrics, detailed 
 
m EXPORTING TO THE WORLD 
 
 information is usually required as to length, width, finish, and 
 thread count. A separate consular invoice is required for 
 each consignment, and in most cases for each mark, even when 
 ccHistituting part of a consignment 
 
 The language of the country of destination should be used 
 wherever possible although in some countries invoices in 
 English are permissible. Consignees who do not understand 
 English, however, may be compelled to have translations 
 made, which is quite an expense in itself. 
 
 How Comuiar 
 Fees Are Deiirmined 
 
 Cbflsnlar fees involved in the certification of invoices arc 
 determined by the value of the shipment, excepting in a few 
 cases. They range from $1 per set of inviMces, regardless of 
 
 the value of the shipment, to 6 per cent of the invoice value 
 on some shipments. Some countries require certification of 
 bills of lading, in others no fee is charged for this service. 
 
 Special Regulations 
 im Certain Countries 
 
 In some countries like G>lombia and Venezuela "to order" 
 
 shipments are prohibited. In the case of Venezuela, for in- 
 stance, "to order" shipments are subject to a surtax of 25 
 per cent of the duty, in addition to the penalty imposed on the 
 master of the vessel carrying the shipments. This r^^ation 
 prevents foreign exporters from financing their shipments to 
 those countries by the method of ''draft attached to docu- 
 ments which is customary in business transactions with other 
 countries. Shipments to these countries where "to order'* 
 documents" are prohibited must be consigned direct to the 
 consignees who may obtain possession of the goods without 
 the formality of accepting the drafts. The only way to give 
 a bank control over goods in these countries, to be paid for 
 on arrival, is to name the bank the consignee, and at the same 
 time instruct it to turn over the goods to the importer upon 
 the payment of the draft. 
 
 HOW SHIPMENTS ARE MADE 239 
 
 American manufacturers and reporters should not take any- 
 thing for granted in the matter of making out consular in- 
 voices and preparing them to meet the requirements of 
 foreign countries. They should ask for instructions from 
 their foreign customers who are presumed to know the chang- 
 ing regulations of their own country better than the stranger, 
 and what is more important, the American manufacturers and 
 exporters should religiously follow them. This should keep 
 them out of trouble. 
 
 Other Documents in 
 Foreign Shipments 
 
 9 
 
 The tariff laws of certain countries involve two columns 
 of duties. In one of these columns is contained a general 
 duty and in the other, which is called "the most favored na- 
 tion column," is the duty applying to products of nations with 
 whom special treaties exist. A Certificate of Origin is' 
 necessary in order to take advantage of the lower rates in- 
 volved in "the most favored nation" column. This certificate 
 of origin must certify that the goods arc the product of one 
 of the exporting nations involved in the treaty, and it must 
 accon^pany the goods to port of destination. 
 
 "No Dumping" certificates arc required in certain British 
 colonies such as Australia, New Zealand, South Africa and 
 Canada. These certificates are aimed to prevent the dumping 
 of goods in these colonies at a price lower than the cost offi 
 production. The shippers must certify that the invoice prices 
 are the customary prices obtainable in the country of th«r 
 origin. 
 
 Where there is a difference in the prices or discounts at 
 home from tbe export figures two sets of figures arc required, 
 one in a column called "home consumption" and the other 
 called "export" prices. 
 
 The foUowing summary stotement is given showing in 
 tabular form the most important requirements relating to 
 consular documents. 
 
240 
 
 EXPORTING TO THE WORLD 
 
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 HOW SHIPMENTS ARE MADE 
 
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 EXPORTING TO THE WORLD 
 
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 CHAPTER XVI 
 
 THE FOREIGN FREIGHT FORWARDER 
 
 Foreign freight forwarder must be well informei>— F(»- 
 wari»x should have his own warehouses— how foreign 
 
 FREIGHT FORWARDER OPERATES— MetH<X)S DIFFER ON THE ATLAN- 
 TIC SIDE — Large concerns use freight forwarders — What 
 
 FORWARDER CHARGES FOR HIS SERVICES— ADVANTAGES OF FREIGHT 
 FORWARDERS— CRITiaSlC AGAINST FORWARDING BUSINESS. 
 
 The Foreign Freight Forwarder Js a handy man. 
 
 Without him hundreds of manufacturers would be forced to 
 attend to their own shipments at the port of loading, but with 
 him the work of loading merchandise on ships and supervis- 
 ing its proper movement at the port is ma.de easy. Without 
 him manufacturers at inland points would of necessity have 
 to appoint agents at the seaports to handle the routine of 
 placing goods on board the ships. 
 
 W. J. Riley, Export manager of the Judson Freight For- 
 warding Co., of New York City says this about Foreign 
 Freight Forwarders: 
 
 "A freight forwarder is one who is able to handle in every 
 detail any kind of a shipment from any point in this country 
 to any point in any other country, which can be reached by 
 any form of recognized transportation. 
 
 "A forwarder is in business because the requirements of 
 business have created him. His services are sought for the 
 same reason which impels a man to hire a plumber when he 
 has a leaky faucet, or to employ a doctor when he is sick. The 
 point is that the forwarder is a specialist in his line, just as 
 truly as any tradesman or professional man is a specialist in 
 his vocation. 
 
 "He must know, or be able to find out very quickly, what 
 articles our government will permit to be imported. If there 
 are any restrictions, he must know the character and extent 
 of such limitations and how to overcome them. 
 
 843 
 
244 EXPORTING TO THE WORLD 
 
 Foreign Freight Forwarder 
 Musi be WeU Informed. 
 
 ''He must know all about permits, licenses and declara- 
 tions which are required and how to obtain them. He must 
 have a thorough knowledge of all banking requirements and 
 collection facilities in this country and other countries; he 
 
 must be able to quote instantly approximate figures and quick- 
 ly to quote actual figures of cost to handle a shipment of any 
 commodity from point of origin to final destination, including 
 all of the elements which form a part of that cost 
 
 '^e must know all about the various kinds of insurance 
 covering Marine, War, Theft, Pilferage, Loss and Damage, and 
 be able to quote cost of average against these risks. 
 
 "He must know the customs regulations at home an4 
 abroad, as well as the most favorable trade routes at different 
 seasons and under varying conditions, in order that the 
 promptest, most economical and most satisfactory service 
 may be secured not only for the consignor in this country, 
 but for the consignee in a foreign country. 
 
 "In short, a Forwarding Agent must know everything in 
 connection with transporting a shipment which the shipper 
 does not know, and which he cannot learn without incurring 
 a greater expense than the cost of the forwarder's services. 
 
 "Having stated v^hat a forwarder must know, it follows 
 that he must be able to translate his knowledge into service. 
 Otherwise, his service which is all that he has to sell, would 
 be useless as the wisdom of an astronomer in toting a hod 
 of bricks. 
 
 "He must make prompt, complete and courteous replies to 
 all inquiries, and must antic^mte the shipper's needs and 
 provide him with shipping instruction blanks to be filled out 
 to meet all possible emergencies. 
 
 Forwarder Should Have 
 His Own Warehouses. 
 
 "He should be able to immediately place insurance with any 
 
 insurance company named by the shipper or to arrange for 
 such insurance under a blanket policy which every up-to-date 
 forwarder provides for immediate use. He must maintain 
 
 THE FOREIGN FREIGHT FORWARDER 245 
 
 his own warehouse or have warehouse connections to take 
 care of goods at assembling points and at ports of exit pend- 
 ing shipment He must make aU arrangements to comply 
 with custom house and consular requirements. 
 
 **The Forwarder must secure and book steamship space for 
 each individual shipment; and in many cases, he must con- 
 tract such space in advance for the protection of, and in antici- 
 pation of, the needs of his patrons. 
 
 "He must maintain offices manned by experts who are 
 capable of attending to every detail in connection with clear- 
 ing shipments from port of exit In many cases, this involves 
 the work of locating cars in railroad yards and shipments in 
 freight houses and warehouses, and in seeing that they are 
 moved at the proper time to the docks, and cleared oa the 
 steamer for which booked. 
 
 "He must not only maintain offices in United States ports 
 of exit, but he must have agents or representatives in the 
 principal ports and cities of all foreign countries. 
 
 **He must have banking credit and facilities for discounting 
 drafts when required and for making collections at foreign 
 destinations. 
 
 **In order to take care of the prepajrments of rail and ocean 
 charges which are demanded by railroads and steamship com- 
 panies pending reimbursements on the part of the shipper, 
 the Forwarding Agent must have a considerable amount of 
 invested capital." 
 
 How Foreign Freight 
 
 Forwarder Operates 
 
 The actual operation of a Foreign Freight Forwara^r 
 through the various ports of the United States is described by 
 
 Mr. Riley. He says: 
 
 "As the methods of handling shipments via the Pacific differ 
 
 somewhat from the methods via the Atlantic and Gulf port?, 
 it may be well to describe these conditions briefly and separ- 
 ately. 
 
 "Consignments to Australia or the Orient are, with few 
 exceptions, handled on thru bills of lading, covering rail and 
 
 ocean movement from point of origin to final destination. 
 "To enoy the proportional rail export rate and other bene- 
 
m EXPORTING TO THE WORLD 
 
 fits of these thru bills of lading, it is necessary that every 
 consignment shall be contracted for and booked in advance 
 with a steamship line. 
 
 "A rail permit must be obtained and the shipment mtist 
 then be made v^rithin the limits prescribed by railroad regula- 
 tions, namely, from twenty-five to thirty days from Chicago 
 territory, and from thirty to thirty-five days from eastern 
 territories prior to the scheduled sailing of the steamer on 
 which the shipment is booked. The permit number must be 
 shown on the initial line of the bill of lading. 
 
 **These thru export bills of lading are not, as might natural- 
 ly be expected, made by the railroads, but are made up by the 
 forwarder at his own expense. The railroad company fur- 
 nishes the blanks ; the forwarder fills them out in every detail 
 including shipping permit numbers, order numbers, descrip- 
 tive markings, and every item and condition necessary to make 
 a complete document. On nearly all Trans-Pacific shipments, 
 it is necessary for the forwarder to make up fjrom twenty to 
 twenty^five copies of each lading. The shipper usually re- 
 quires two or three originals and several non-n^tiable 
 copies for his own use ; the other copies are required by the 
 railroad and steamship companies and also for the use of the 
 forwarding agents at port of exit and for custom house pur- 
 poses, etc. 
 
 ''As soon as possible after the shipment moves from point 
 of origin copies of the bill of lading and full instructions as 
 
 to steamship bookings are mailed to the agent of the forward- 
 ing company at port of exit, who then takes care of the cus- 
 tom house requirements, checks up the shipments to see that 
 they are brought down to the docks and piactd on the boat. 
 The forwarder's agent at port of exit then advises the home 
 office of particulars of clearances, which are, in turn, com- 
 municated to tlie shipper. 
 
 Methods Differ on 
 The Atlantic Side 
 
 "As is generally known, railroad companies do not issue 
 thru bills of lading covering export shipments via Atlantic 
 G>ast ports. The rail movements and the ocean movements are 
 handled separately. On less than carload lots, it is not abso- 
 
 THE FOREIGN FREIGHT FORWARDER 247 
 
 lutely necessary to make advance steamship bookings al- 
 though it is desirable to have these bookings made when- 
 ever this is practicable. These LCL shipments must, of 
 
 course, be warehoused between the time of arrival at New 
 York and departure of steamer. 
 
 "Carload lots require the issuance in advance of a G. O. C. 
 permit, which permit is not issued until after a firm booking 
 has been made with steamship company and evidence sub- 
 mitted that this has been done. This permit specifies the dates 
 within which the shipment must be made. Notice of arrival 
 of cars is furnished to the forwarder's agent at the port, who 
 arranges for prompt transfer to the loading dock. 
 
 ^he steamship companies furnish blank bills of lading to 
 the forwarder, who makes up, at his own expense, all neces- 
 sary copies to comply with the requirements of the shipper, 
 the banks, the steamship companies, customs house, etc. This 
 entails issuance of from fifteen to twenty copies of each 
 steamship bill of lading. The forwarder's agent at port oi 
 exit sees that all the papers controlling or concerning the ship- 
 ment are mailed on the boat which carries the freight or on 
 some fast mail steamer which will reach the consignee as 
 early or earlier than the goods will arrive at destination. 
 
 'The forwarder's agent at the port advises the home office 
 of clearances, which are in turn communicated to the shippers. 
 
 Gulf Port Shipments 
 Same as Atlantic 
 
 "Shipments via Gulf ports are handled practically in the 
 
 same way as via the Atlantic. It might be stated at this 
 point that the question of having railroads issue thru bills 
 of lading from point of origin to destination via Atlantic and 
 Gulf ports is now having serious consideration. The consensus 
 of opinion is that arrangements for such thru bills of lading 
 will be made in the near future." 
 
 Large Concerns Use 
 Freight Forwarders, 
 
 Larger concerns that have their own export organizations 
 are accustomed to employ the services of the Foreign Freight 
 
248 EXPORTING TO THE WORLD 
 
 Forwarder, declares Mr. Riley. "The reason for this " says 
 Mr. Riley "is that the forwarder's connections and dealings are 
 so wide and cover so many different fields of operation, bring- 
 ing him into contact with cargo or so-called tramp steamships 
 as well as with all of the regularly established lines, that he 
 can frequently offer facilities to the big industrial companies 
 which their own organizations do not cover. 
 
 'The forwarder, thru his agents and correspondents in 
 foreign countries, is able to obtain particulars of manufac- 
 tured articles and materials for which there is a market in 
 foreign countries. These opportunities are submitted to the 
 forwarder's customers, who are thus enabled to increase their 
 business and frequently are placed in a position to open up an 
 entirely new field of trade. Many merchants and manufac- 
 turers of this country have received their first foreign onlera 
 thru the information originally furnished by the forwarders, 
 and these orders were subsequently retained by the services 
 of the forwarder.'* 
 
 fVhai Forwarder Charges 
 Far His Services 
 
 Every Foreign Freight Forwarder has his own price. Rate 
 cards vary. 
 
 While rate cards show charges for packages of various 
 we%hts to all the principal ports of the world it must be 
 remembered that these charges are generally subject to 
 change. Circumstances often govern the size of the bUl from 
 the Foreign Freight Forwarder. 
 
 In figuring up his charges the Foreign Freight Forwarder 
 takes these points into consideration: 
 (a) The port of destination. 
 
 .(b) The volume of other shipments going to the samt 
 port 
 
 (c) Volume and character of the individual shipment 
 The Foreign Freight Forwarder depends on the prices he 
 can obtain for the shipment of goods on a combination sUp- 
 ment which otherwise would be subject to a steamship com- 
 pany's minimum chaiges. 
 
 Here is the way the plan works out: 
 \m Twen^ different manufacturers having goods to ship for 
 
 THE FOREIGN FREIGHT FORWARDER 249 
 
 tlie same destination abroad are clients of the Foreign For- 
 warding Agent. Each one of these manufacturers has a 
 
 shipment weighing half a ton each. The ocean freight rate 
 at the point of destination is $50 per ton and the steamship 
 company has a minimum charge of $50. Therefore, if any 
 one of these manufacturers undertone to ship his half ton of 
 merchandise alone the freight would cost him $50. In order 
 to reduce the cost, however, these manufacturers have ar- 
 ranged with the Foreign Freight Forwarder to ship all their 
 goods on one bill of lading so that the combined shipment 
 would weight ten tons and command a $£»0 rate or a cost to 
 each manufacturer of $25 per ton. The Foreign Freight For- 
 warder then may charge each manufacturer about $35, and 
 even with this added charge each manufacturer effects a 
 saving of $15 on freight 
 
 The Freight Forwarder's principal source of revenue comes 
 from these freight charges although he makes minor charges 
 for bills of lading, and other things such as cartage, insur- 
 ance, etc 
 
 AdvoHtages of 
 Freight Forwarders. 
 
 Aside from being almost indispensable to inland shippers 
 in the preparation of combinations of small shipments Foreign 
 Freight Forwarders will perform the service of sending goods 
 forward "freight collect" when steamship companies require 
 payment in advance. The Forwarding Agent pays the freight 
 charges in advance and instructs his correspondent abroad to 
 make the collection from the consignees. Foreign Freight 
 Forwarders will also send goods C. O. D. with instructions to 
 their correspondents to make collections. 
 
 Foreign Freight Forwarders sometimes advertise the fact 
 that they discount manufacturers' drafts on foreign customers. 
 Operations of this sort are conhned solely to a few large con- 
 cerns that have a sufficient amount of capital to undertake 
 such banking functions. As a matter of fact Foreign Freight 
 Forwarders in offering to discount manufacturers foreign 
 drafts merely discount them with some foreign exchange 
 banker and then charge the manufacturer a small amount for 
 their trouble. Most assuredly, they first obtain a full report 
 
«48 EXPORTING TO THE WORLD 
 
 Forwarder, declares Mr. Riley. "The reason for this," says 
 Mr. Riley "is that the forwarder's connections and dealings are 
 so wide and cover so many different fields of operation, bring- 
 ing him into contact with cargo or so-called tramp steamships 
 as well as with all of the regularly established lines, that he 
 can frequently offer facilities to the big industrial companies 
 which their own organizations do not cover. 
 
 "The forwarder, thru his agents and correspondents in 
 foreign countries, is able to obtain particuljtrs of manufac- 
 tured articles and materials for which there is a market in 
 fore^ countries. These opportunities are submitted to the 
 forwarder's customers, who are thus enabled to increase their 
 business and frequently are placed in a position to open up an 
 entirely new field of trade. Many merchants and manufac- 
 turers of this country have received their first foreign orders 
 thru the information originally furnished by the forwarders, 
 and these orders were subsequently retained by the services 
 of the fOTwarder." 
 
 What Forwarder C/targes 
 Fmr His Smices 
 
 Every Foreign Freight Forwarder has his own price. Rate 
 cards vary. 
 
 While rate cards show charges for packages of varioi^ 
 weights to aU the principal ports of the world it must be 
 remembered that these charges are generally subject to 
 change. Circumstances often govern the size of the bill from 
 the Foreign Freight Forwarder. 
 
 In figuring up his chaiges the Foreign Freight Forwarder 
 takes these points into ccmsideration : 
 (a) The port 6f destination. 
 
 .(b) The volume of other shipments going to the samt 
 port. 
 
 (c) Volume and character of the individual shipment. 
 The Foreign Freight Forwarder depends on the prices he 
 can obtain for the shipment of goods on a combination ship- 
 ment which otherwise would be subject to a steamship com- 
 
 pany's minimum charges. 
 
 Here is the way the plan works out: 
 tm Twenty different muiufactnrers having goods to ship for 
 
 THE FOREIGN FREIGHT FORWARDER 249 
 
 the same destination abroad are clients of the Foreign For- 
 warding Agent. Each one these manufacturers has a 
 shipment weighing half a ton each. The ocean freight rate 
 
 at the point of destination is $50 per ton and the steamship 
 company has a minimum charge of $50. Therefore, if any 
 one of these manufacturers undertook to ship his half ton of 
 merchandise alone the freight would cost him $50. In order 
 to reduce the cost, however, these manufacturers have ar- 
 ranged with the Foreign Freight Forwarder to ship all their 
 goods on one bill of lading so that the combined shipment 
 would weight ten tons and command a $50 rate or a cost to 
 each manufacturer of $25 per ton. The Foreign Freight For- 
 warder then may charge each manufacturer about $35, and 
 even with this added charge each manufacturer effects a 
 saving of $15 on freight. 
 
 The Freight Forwarder's principal source of revenue comes 
 from these freight charges although he makes minor charges 
 for bills of lading, and other things such as cartage, instur- 
 ance, etc 
 
 Advantages of 
 freight Forwarders. 
 
 Aside from being almost indispensable to inland shippers 
 in the preparation of combinations of small shipments Foreign 
 Frei^t Forwarders will perform the service of sending goods 
 forward ''freight collect" when steamship companies require 
 payment in advance. The Forwarding Agent pays the freight 
 charges in advance and instructs his correspondent abroad to 
 make the collection from the consignees. Foreign Freight 
 Forwarders will also send goods C. O. D. with instructions to 
 their correspondents to make collections. 
 
 Foreign Freight Forwarders sometimes advertise the fact 
 that they discount manufacturers* drafts on foreign customers. 
 Operations of this sort are confined solely to a few large con- 
 cerns that have a sufficient amount of capital to undertake 
 such banking functions. As a matter of fact Foreign Freight 
 Forwarders in offering to discount manufacturers foreign 
 drafts merely discount them with some foreign exchange 
 banker and then charge the manufacturer a small amount for 
 their trouble. Most assuredly^ they first obtain a full rq>ort 
 
UQ EXPORTING TO THE WORLD 
 
 of the manufacturer's financial standing before offering to 
 discount his paper. Foreign Freight Forwarders are not 
 bankers in principle, and unless there is a specific reason 
 manufactttrers and exporters should have their drafts hand- 
 led through institutions whose chief functions are to handle 
 operations of this character. 
 
 The extent of service offered by Foreign Freight Forward- 
 ers varies a great deal Some forwarden despatdi shipments 
 to all parts of the world while others have only a limited field. 
 Some excel in the service rendered in certain sections of the 
 world than in others. The domination of a certain territory 
 by a Foreign Freight Forwarder often results in favorable 
 quotations on fteight. 
 
 The wise manufacturer who wishes to have his goods ship- 
 ped to a foreign country through a Foreign Freight Foi- 
 warder will ask for quotations from a number of them. In 
 tliis way he can obtain the best terms^ and possibly a distinct 
 service to suit his particular needs. Thm are plenty of 
 Foreign Freight Forwarders to be found in the principal 
 American seaports. The idea is to seek the competent one. 
 
 Criticisms Against 
 Fonmrimg Bumeu 
 
 Like any other business ^ere are abuses that creep into 
 the profession of Foreign Freight Forwarding that must be 
 guarded against. The shipper can protect himself against 
 these abuses if he follows the principle that his oUigatioo to 
 the cons%nee is not ended untU the goods have been actually 
 placed in his possessicm. The shipper should know if his cus- 
 tomer is entirely satisfied with the manner in which his goods 
 were sent. This is not often done. For instance when Foreign 
 Freight Forwarders ship goods to a foreign c(Mrrespondent 
 they send a "Way Bill" at the same time with instmctkms as 
 to the various packages ams^fned to his care. These foreign 
 correspondents are ordinarily instructed to either collect 
 their own charges from consignees or to send the bill to the 
 forwarder in this country. The latter method gives the manu- 
 facturer or shipper a chance to see what the e^^wses at the 
 other end were. The former method, however, keeps the 
 shipper in the dark and he knows nothing of the charges made 
 
 THE FOREIGN FREIGHT FORWARDER 251 
 
 to the consignee unless he makes an inqtiify. Sometimes 
 these charges are exorbitant, and the customer may not like 
 it This has been the cause of considerable complaint on the 
 
 part of shippers. 
 
 Sometimes, a Foreign Freight Forwarder is very slow in 
 making his shipments to out-of-the-way places. For instance, 
 if a forwarder received a consignment of merchandise to be 
 shipped to some island in the Orient he would wait until he 
 had received other shipments to the same point to make a 
 saving. This often causes considerable delay and frequently 
 comes up in the freight forwarding business ; and it is the clever 
 and experienced forwarder wbo usually can make proper 
 combinations to avoid any possible delay for his cUent. 
 Manufacturers are ^titled to prompt and economical service. 
 The functions of the Foreign Freight Forwarder are to render 
 such service. 
 
Chapter XVII 
 
 MAMNE INSURANCE 
 
 Hisromr of ''UMi]ntwBnBB8r---PiiMCiPii» w 'MAsmi 1m- 
 8UBAKCB— What is written in Marine Insurance Policy- 
 Explanation OF CLAUSES IN MARINE INSURANCE TOLICY— HOW 
 MARINE INSURANCE IS TO BE TAKEN OUT— GfiNERAt AND PAR- 
 TICULAR AVERAGE IN MARINE INSURANCE. 
 
 Marine insurance is the oldest insurance in the world 
 
 The early traders who bnved the perik of the Medit^^ 
 in the eariy oenttaries rccogniziiig tiie necessity of protecting 
 their investment against the perils of the seas, worked out some 
 form of insurance, the principle of which is still contained in 
 the present marine insurance policy. 
 
 Rome knew of marine insurance.. Loans were in those 
 days in security of ship and cai^ which was repayable only 
 if the ship retnmed to port safely. These loans commanded 
 high rates of interest, and were a favorite form of investment 
 among the wealthy Roman speculators. 
 
 Modem insurance may be said to have begun in the 18th 
 century in Flanders and Portugal where maritinie commerce was 
 at its height in diat poriod. The LonOiard merdittits, also, 
 adc^ited marine msnrance to protect their ships and cargoes 
 against the perils of the seas in those days. It is believed the 
 Lombards introduced marine insurance into England in the 
 16th century where it has flourished ever since. It is said tiiat 
 three-fourths of marine insorance is taken out in Gfeat Britain. 
 The business is mostly in iht hands of stock and mutual com- 
 panies as well as associations of underwriters, the oldest and 
 chief of which is Lloyds. The large shipping companies insure 
 their own vessels by keeping a book account as insuntnee, and 
 charging the losses against a certam percentage of the earnings. 
 
 The American coknies were introduced to marine insurance 
 early In the 17th century, although the majority of maritime 
 shipments from the colonies was covered by insurance in London. 
 By the middle of the 19th century most of the business done 
 by American companies was on home risks. It is 9M that 
 prevkitts to the War over half of tiie marine issorance, and tmh 
 
 252 
 
 MARINE INSURANCE 
 
 253 
 
 fifths of the premiums went to American branches of foreign 
 concerns. 
 
 History of 
 "UnderwriUrs " 
 
 Ptefliaps, the pkmeer insurance oompany of the world today is 
 
 the Corporation of Llo3rds which does business to this day prac- 
 tically along the same lines as 200 years ago. Lloyds orig- 
 inated from an informal gathering of marine insurance men 
 at a poptdar coffee house established in London by Edward 
 Lkyd as early as 1«9«. From these mformal meetings grew 
 an association of marine insurance underwriters, and later the 
 Corporation of Lloyds which now consists of over 400 mem- 
 bers, was formed. 
 
 A risk in Lloyds is usually assumed by a number of in- 
 dividuals. The British shipper who wishes to have his vessel 
 insured gives full particulars of the risk on a memorandum 
 which is passed around to the members of Lloyds for their 
 consideration. Those desiring to assume a portion of the 
 risk place their initials on the slip together vrith the figures 
 indicating the portkm of the total value for whidh they accept 
 the responsiblity. When the entire risk is covered a formal 
 policy is prepared, and this becomes the actual marine m- 
 surance policy. It is then signed by the individuals who ac- 
 cepted shares in the risk. This is called "underwritii^." 
 While marine insurance underwriters flourish in England it is 
 to be remembered that they do not control the business of 
 that country. There are hundreds of companies that assume 
 the entire risk just like they do in the United States where 
 the practice of underwriting marine Insurance has become 
 obsolete. 
 
 Principles of 
 Marme Intmtmee 
 
 When the shipper sends goods by rail from one interior 
 point to the other he need not insure his shipment because 
 the railroad ordinarily ^umes the re^Kmsibility but when he 
 sends his goods out of the country by water he must then take 
 out marine insurance if he wishes to protect his shipment 
 against loss. Steamship companies are exempt from all forms 
 
264 
 
 EXPORTING TO THE WORLD 
 
 of liability excepting loss or damage arising from negligence, 
 improper loading, stowage or delivery of merchandise. All 
 other risks must be assumed by the shipper or the consignee 
 ol the goods. In order to cover these risks they must take 
 out marine insorance. 
 
 Marine insurance is primarily intended to cover only mar- 
 ine risks. The shipper must show that loss or damage was due 
 to perils encountered on the high seas. Marine insurance 
 policies do not cover loss from other causes such as deterim- 
 tion of perishable goods, breakage, leakage and robbery, or 
 poor packing. The term perils of the sea does not cover 
 every accident or casualty which may happen to the mer- 
 chandise on the high seas. It must be a peril of the sea. In 
 1887 Lord Herschell said: "It is well settied that it is not 
 cveiy km or damage of whkh the sea is the immediate cause 
 that is covered by the words, 'perils of the sea.' They do not 
 protect, for example, against that natural and inevitable action 
 which results in what may be described as wear and tear. 
 There must be some casualty, something which could not be 
 foreseen as one of the necessary incidents of the adventuie. 
 The purpose of the policy is to secure an indemnity against 
 accidents whidi nmy happen, not against events which must 
 happen." 
 
 What is Wfittm m 
 Marim InsmroHCf PcUey 
 
 Very few persons ever take the trouble to read the contents 
 of a marine insurance policy. Exporters should become thor- 
 oughly familiar with it even thou^ many of its dauses have 
 become obsolete. Periiaps they are rehictant to peruse a solid 
 mass of type that is difficult to read and often necessitates a 
 magnifying glass to make it out. 
 
 Here are a number of clauses to be found in a marine in- 
 surance policy: 
 
 'This pdlky shaU not be vitiated by any unintentional 
 error in description of voyage or interest or by deviation of 
 the vessel from the voyage described, provided the same be 
 communicated to assurers as soon as known to the assured 
 and an additional premium paid if requiied. 
 
 ''Beginniiig die adventure upon the said goods and mer- 
 
 MARINE INSURANCE 
 
 255 
 
 chandise, from and immediately foUowing ^ loading thereof 
 on board of the said vessel, as aforesaid, and so shall continue 
 and endure until the said goods and merchandises shall be 
 safely landed as aforesaid, AND it shall and may be lawful 
 for the said vessel, in her voyage, to proceed and sail to, 
 touch and stay at, any ports or places, if thereunto obliged by 
 stress of weather, or other unavoidable accident, without 
 prejudice to this insurance. The said goods and merchandise, 
 hereby insured, are valued (premium included) at not more 
 than $100,000 by any cme vessel. 
 
 "Touching the adventures and perils which the said in- 
 surance company is contented to bear, and takes upon itself 
 in this voyage, they are of the seas, fires, jettisons, barratry 
 €xf the master and mariners, unless the assured on cargo be 
 in part owner of the vessel, and all other perils, losses and 
 misfortunes (illicit or contraband trade excepted in all cases) 
 that have or shall come to the hurt, detriment or damage of 
 said goods, and merchandises, or any part thereof. 
 
 "And in case of any k>ss or misfortune, it shall be lawful 
 and necessary to and for the assured, his or their factors, 
 servants and assigns, to sue, labor and travel for, in and 
 about the defence, safeguard and recovery of the said goods 
 and merchandises, or any part thereof, without prejudice to 
 this insurance; nor shall the acts of the assured or insurers, 
 in recovering, saving and preserving the property insured, 
 in case of disaster, be considered a waiver or an acceptance of 
 abandonment; to the charges whereof, the said insurance 
 company will contribute according to the rate and quantity 
 of the sum herein insured; having been paid the consideration 
 for this insurance by the assured, or his or their assigns, at 
 and after the rate of as per endorsement hereof. 
 
 **And in case of loss, such loss to be paid in thirty days after 
 the proof of loss, proof of interest, and adjustment exhibited 
 to the insurers (the amount of the Note given for the premium 
 if unpaid, and all sums due to the Company from the assured 
 when such loss becomes due being first deducted, and all sums 
 coming due being first paid or secured to the* satisfaction of 
 the insured), but no partial loss or particular average shall in 
 any case be paid, unless amounting to five per cent. Provided 
 always, and it is hereby further agreed, that if the said assured 
 shaU have made any other msutiace upon the property afore- 
 
256 
 
 EXPORTING TO THE WORLD 
 
 Slid, prior in day of date to this Policy, then the said insur- 
 ance company shall be answerable only for so much as the 
 amount of such prior insurance may be de&cient towards fully 
 covering the proper^ hereby insured. 
 
 ''And the said insurance craipany shall return the premium 
 upon so much of the sum by them insured as they shall be by 
 such prior insurance exonerated from. And in case of any in- 
 surance upon said property subsequent in day of date to tins 
 policy, the said insurance company shall, nevertheless, be 
 answerable for the full extent of the sum by them subscribed 
 hereto without right to claim contribution from such sub- 
 sequent insurers. And shall accordingly be entitled to retain 
 the premium by them received in the same inanner as if no 
 such subsequent insurance had been made. Other insurance 
 i^n the property aforesaid, of date the same dayas this pol- 
 icy, shall be deemed simultaneous herewith; and the said in- 
 surance company shall not be liable for more than a raUbk 
 contribution in the proportion of the sum by them kmmd 
 to the aggr^te of such stmultaneous insurance. 
 
 "It is also agreed, that the subject matter of this insurance 
 be warranted by the assured free from' loss or damage arising 
 from a riot, civil commotion, capture, seizure, or detentiim or 
 from any attempt thereat, or the subsequences thereof, or 
 the direct or remote consequences of any hofftilities, arising 
 horn the act of any government, people,, or persons whatso- 
 ever (ordinary piracy excepted), whether on account of any 
 illicit or prohibited trade, or any trade in articles contimband 
 of war, or the violation of any port regulation, or otherwise. 
 Also free from loss or damnge resulting from measures or 
 opcrationa incident to war, whether before or after the decla- 
 ration thereof. 
 
 "In the event of risk of war being assumed bv endorsement 
 under this policy, the assured warrant not to abandon in case 
 of capture, seizure or detention, until after the condemnation 
 of the pioperty insured; nor until 90 days after notice of said 
 COn<kmnation is given to this company. Also warranted not 
 to abandon m case of blockade, and free from any eiq>ense in 
 consequence of detention or blockade; but in the event <rf 
 blockade, to be at Uberty to proceed to an open port and 
 there end the voyage. 
 
 ''Memorandum. It is also agreed, that bar, bundle, rod. 
 
 MARINE INSURANCE 
 
 25; 
 
 hoop and sheet iron, wire of all kinds, tin plates, steel, mad- 
 der, sumac, brooms, wicker-ware and willow (manufactured or 
 otherwise), straw goods, salt, grain of all kinds, rice, tobacco, 
 Indian meal, fruits (whether preserved or otherwise), cheese, 
 dry fish, hay, vegetables and roots, paper, rags, hempen yam, 
 bags, cotton bagging, and other articles used for bags or 
 bagging, pleasure carriages, household furniture, skins and 
 hides, musical instruments, looking glasses, and; all other 
 articles that are perishable in their own nature, are warranted 
 by the assured free from average, unless general ; hemp, tobac- 
 co stems, mattmg and cassia, except in boxes, free from aver- 
 age under 20 per cent., unless general ; and sugar, flax, flaxseed 
 and bread, are warranted by the assured free from average 
 under seven per cent., unless general; and coffee, in bags or 
 bulk, pepper, in bags or bulk, free from average under ten per 
 cent, unless general. Profits warranted free from chum for 
 general average, but subject to the same per centum of partial 
 loss as if the insurance were on goods. In case a total loss of 
 profits be claimed, the underwriters to be entitled to a credit 
 of the same per centum of salvage as if the insurance were on 
 goods, and in case of ccmtribution in general average for any 
 portion of the goods at the customary sound value, this com- 
 pany to be free from claims for loss of such portion. Not 
 liable for loss arising from wet, breakage, leakage, or ex-, 
 posure of goods shipped on deck. 
 
 "Warranted by the assured free from damage or injury from 
 dampness, change of flavor, or being spotted, discolored, mus- 
 ty or moldy, unless caused by actual contact of sea water with 
 the articles damaged, occasioned by sea perils. In case of 
 partial loss by sea damage to dry goods, cutiery, or other 
 hardware, the loss shall be ascertained by a separation and 
 sale of the portion only of the contents of the packages so 
 damaged, and not otherwise; and the same practice shall ob- 
 tain as to all other merchandise as far as practicable. Not 
 liable for leakage on molasses or other liquids, unless oc- 
 casioned by stranding or collision with another vesseL 
 
 "Warranted by the assured that this msurance shall not 
 enure dhnecUy or mdirectly to the benefit of the carrier or 
 other bailee, by stipulation in bill of lading or otherwise, and 
 any breach of this warranty, and any act or agreement by the 
 assured, prior or subsequent hereto, wherdby any carrier, or 
 
EXPORTING TO THE WORLD 
 
 party liable for or on account of loss of or damage to any 
 property insured hereunder, is given the benefit of any in- 
 ■mmiice affected thereoii»«^iaU render this poliqr ol insurance 
 nnll and void. 
 
 **In case of any agreement by the assured, prior or sub- 
 sequent hereto, whereby any right of recovery of the as- 
 soied for loss or damage to any property insured hereunder, 
 against any person or corporation, is released, impaired or 
 lost, which would on acceptance of abandonment or payment 
 of a loss by this company, have inured to its benetit, but for 
 snch agreement or act, this company shall not be bound to 
 pay any loss, but its right to retain or recover the premium 
 shall not be affected. 
 
 "Warranted by the assured, that the assignment of this 
 policy or of any insurable interest therein, as also that the 
 subrogation of any right thereunder to any party, without the 
 consent ol this company shall render the insurance affected 
 by such assignment or subrogation, void.'* 
 
 The foregoing clauses are found in Marine Insurance policies 
 for occasional shipments only. Details of a given shipment 
 are usually written in these policies. Regular shippers, how- 
 ever, insure under "open policies," meaning that they cover 
 all shipments for a stated period or to a specified value, against 
 which each individual sh^mient is ^deckved** as it is made, 
 and Certificate issued* 
 
 Explanation of Clauses 
 in Marime Jnsmrtmce PoUey 
 
 "Beginning the adventure upon such goods and merchandise 
 
 from the loading thereof aboard said ship" found in the or- 
 dinary marine insurance policy is usually amended to read 
 "including risks of craft to and from the ship or vessel, each 
 craft to be considered a separate risk." This amendment is 
 necessary in order that the plain policy may apply before the 
 goods are actually placed on board the vessel. There Is great 
 risk in loading vessels from lighters or barges, and this makes 
 the amendment necessary for full protection under the in- 
 surance policy. 
 
 '"Thefts" refer to thefts by violence only. Pet^ thievery or 
 pilfering by crews or stevedores are not in clnd cd imder 
 
 MARINE INSURANCE 
 
 "thefts/* The former must be covered by a special contract 
 but an increased premium is required in such cases. An im- 
 porter cannot make a claim against losses by petty thievery 
 or pilfering by crews or stevedores unless he is covered by 
 contract and has paid the extra premium. The matter of 
 seeking this protection rests with the importer. He is the 
 better judge whether he cap run the risk of losses from these 
 sources or pay the extra premium. When a merchant falls 
 victim to the wiles of expert pilferers he naturally makes a 
 claim against the carrier. He is promptly met with a denial 
 of responsibility on the ground that the bill of lading merely 
 calls lor tiie delivery of so many packages ''said to contain** 
 merchandise, and that the carrier has no evidence to prove 
 that the packages contained the goods stolen from them. 
 Unless his insurance policy includes a clause providing for 
 protection against such losses even the insurance company 
 will turn him down. 
 
 "Jettison" means the throwing overboard of a part of a 
 cargo or part of the equipment of a ship. 
 
 "Barratry of the master and mariners" means the wrongful 
 and wilful act committed by the master or crew to the preju- 
 dice of the owner or charterer of the ship. Mutiny on board 
 ship is barratry. Barratry is not as common nowadays as 
 it used to be. 
 
 A **warranty** means that the assured undertakes the obli- 
 gation of doing or not doing a particular thing, or that some 
 condition shall be fulfilled, or whereby he affirms or n^;atives 
 the existence of a particular state <^ facts. 
 
 The "memorandum** is included in marine insurance policies 
 in order to secure a minimum limit to the underwriter's liabil- 
 ity for damage to perishable articles. 
 
 Special Risks May be 
 Covered by Coniraci 
 
 A marine insurance policy does not cover all risks. A con- 
 tract must be written in these policies whenever a special risk 
 is required to be covered. For instance, cai^o carried on dedc 
 commands usually a double rate for insurance than if it were 
 carried under deck. When a premium for such risk is paid 
 
260 
 
 EXPORTING TO THE WORLD 
 
 the clause "Including the risk of jettison and washing over- 
 board" is written into the insurance policy. 
 
 Protection against war risks reqnires a separate insurance 
 pohcy m each case. These special policies are necessary of 
 course, only duringr war times. Little use was made of them 
 during the Spanish-American war bnt when the Enropean 
 war broke out their nse became imperative. 
 
 Some of the clauses in a certificate of insurance against 
 war risks only, are these: 
 
 This insurance covers only the risk of capture, seizure or 
 destruction or damage by men-of-war, by letters of mart, by 
 takings at sea, arrests, restraints, detainments and acts of 
 kmgs, pnnces, and people authorized by and in prosecution of 
 hostilities between belligerent nations; but excluding claims 
 for delay, deterioration and or loss of market and warranted 
 not to abandon in case of capture, seizure or detention, until 
 after condemnation of the property insured, nor until dxty 
 days after notice of said condemnation is given to this com- 
 P«iy. Also warranted not to abandon in case of blockade, and 
 finec tom any claim for loss or expense in consequence of 
 Wockade, or of any attempt to evade blockade, but, in event 
 of blockade, to be at liberty to proceed to an open port and 
 there end the voyage. 
 
 '•Warranted covering while waterbome only and excludimr 
 any risk on land. ^ 
 
 •Warranted no German, Austrian or Turkish ownership, 
 mterest, consignee or destination; and warranted free of con- 
 demnation on the ground of such ownership, mterest. con- 
 signee, or destination. 
 
 •*On shipments to neutral countries in Europe it is war- 
 ranted that the bills of lading shall show the name and ad- 
 dress of the neutral consignee." 
 
 It is to be noted that higher premiums are demanded when 
 n^rchandise is shipped in steamers owned by belligerents than 
 ^hose owned by neutrals. During the European war British, 
 French, Russian, Italian or Japanese steamers were subject 
 to a high war risk insurance owing to the acUvity of German 
 submarines. There was .no war risk insurance to be had on 
 German. Austrian or Turkish steamera because they were 
 driven compktdy from the high seas soon after the war 
 started* 
 
 MARINE INSURANCE 
 
 "Warranted covering while water borne only and excluding 
 any risks on land** on a war risk insurance policy means that 
 war risk will be assumed while the property is actually on 
 the water. 
 
 Goi f e mm emi Bwtm of 
 War Risk Insurance 
 
 By Act of Congress in August, 1914, there was established a 
 Bureau of War Risk Insurance in the United Sutes Treasury 
 Department which was empowered to issue only insurance 
 against risks of war. Congress appropriated $5,000,000 for the 
 operatk>ns of the Bureau. Within a year, however, the Bu- 
 reau showed a large profit The Uw under which the War 
 Risk Insurance operated provided Aat protecticm should be 
 confined strictly to vessels and cargoes owned by American 
 interests, and the following clause was inserted in all cargo 
 polkies: 'Warranted that tbe title to the property insured 
 remains continuously in citizens ojE the United States during 
 the term of this policy." 
 
 Kimdi of Protsctim 
 Now OhimnobU 
 
 The shipper who wishes to pay the premium may receive 
 almost any sort of protection nowadays from the marine in- 
 surance companies. All that is required is the inserting of 
 a special danse covering tiie particular risk to be covered sub- 
 ject, of course, to the approval of the underwriters. These 
 clauses generally known as riders, are affixed to the regular 
 policies. Shippers can be covered by these clauses against 
 damage to goods while en route from inland point through to 
 inland point of fore^ country by rail» steamer, etc They 
 can bck protected against fire» tiieft» lealmge, breakage, ^rth- 
 quakes, or tidal waves. 
 
 How Marine Insurancs 
 Is to Bo Token Qui 
 
 Shippers should always demand instructions from their 
 
263 EXPORTING TO THE WORLD 
 
 customers as to the kinds of insnnuice protectioii desifeS as 
 the latler must pay the bill in the end. It is tip to the customer, 
 therefore, to explain what he wants in the way of insurance and 
 what he is willing to pay for it. In quoting c.i.f., however, 
 manufacturers should always be careful that they accurately 
 describe the kind of insurance proposed and included in the 
 Ci.f. prices. When goods are shipped through Foreign Freight 
 Forwarders it is usually the custom to instruct how and for 
 much to insure. Export commission houses attend to their 
 own insurance without waiting for instructions. It is the 
 manufacturer who does his own shipping, however, who must 
 be careful that this important matter is attended to and never 
 overlooked. 
 
 The safest tiling to <k> is to see that the insurance com- 
 pany covers all risks from the moment the goods leave the 
 factory until they actually reach the foreign customer. Some- 
 times, there are delays in clearing the goods at the custom 
 house in a foreign country. It is a wise thing to allow a 
 margin of about 20 or 30 days so as to have full protection 
 up until the time they actually reach the consignee. The 
 matter of insurii^ for land risks as well as sea risks should be 
 taken up with the customer, however. He may not desire to pay 
 the higher premium unless he knows what it is actually about. 
 When he is convinced of the virtue of such a policy he will read- 
 ily agree to pay. 
 
 Hew Imtmmce 
 
 Bakers Operate 
 
 There are Marine Insurance brokers to be found in all the 
 principal ports of the United States. Eaqxvrt oommisskm 
 houses and laige manufacturers usually employ the services 
 of insurance brokers because they are in constant touch with 
 conditions in the marine insurance business which gives them 
 an advantage of being able to obtain not only lower rates but 
 additional features of protection. 
 
 Insurance brokers derive their income from commissions 
 awarded to them by the insurance companies. These com- 
 missions range anywhere from 2^ per cent to 5 per cent. 
 Brokers are in very close touch with all marine insurance 
 
 MARINE INSURANCE 
 
 263 
 
 companies. They understand their pdides and their practices 
 thoroughly. 
 
 General and Particular 
 Average in Marime Inmrance 
 
 Partial losses sustained in the shipment of merchandise by 
 sea are known by the name of average. According to Ben- 
 jamin Rush, President of the American Foreign Insurance 
 Association, particular average is the damage resulting to 
 the subject matter one has insured, such as the bale of goods 
 being damaged by water, or the mast being carried away in 
 a storm. "General Average," says this same authority, "re- 
 quires the act of man. It is the oldest law of commerce in 
 existence. It came into existence in the Island of Rhodes, 
 over 8,000 years ago. This is the way it came up : In those 
 days ships were very small, propelled by one sail or oars, and 
 the merchant accompanied his gpods. Frequently a storm, 
 would come up, and the only way to save the lives of those 
 on board was to jettison some of their merchandise, and every 
 merchant would say: *You throw overboard my friend's goods 
 and leave mine here.' This involved disputes, of course, and 
 many valuable lots of merchandise were sunk and many men 
 drowned because of those occurrences. Finally they came to 
 the condusioa that if one man's goods were tiirown overixMurd 
 they would all chip in and pay their proportionate share. In 
 other words, that which was sacrificed by one would be paid 
 by the contributions of all. It has got to be the voluntary 
 sacrifice by the act of man to avert a threatened peril at 
 sea, and it has got to be successful at least in part. When it 
 occurs everybody chips in his proportionate sluure of the loss, 
 the man who lost his particular merchandise chipping in his 
 contribution also. Every man gives alike. Then if your mer- 
 chant is insured he goes to his underwriter and says: *I have 
 suffered a general average loss of two or five or ten per cent 
 on my goods; pay up. And on practically every policy, unless 
 it is written free of all average, you get whatever proportion 
 it is insured for." 
 
 This definition means that an exporter who loses his goods 
 by general average must also pay his share of the loss as 
 welL This liabtli^ for a oontributioa to general average is 
 
S64 EXPORTING TO THE WORLD 
 
 justified t)y the common law. If the shipper has not protected 
 the goods he is shipping by a marine policy that covers general 
 average he is the loser. The shipper or the rightful owner of the 
 goods will be notified in due coarse that he is subject to 
 assesment to meet general average costs. If a marine in- 
 surance policy protects him he has only to notify his under- 
 writer and the latter will take care of this matter. 
 
 The "YcHrk-Antwerp" rules framed in a conference of ship- 
 owners, merchants, and underwriters many years ago in the 
 cities of York and Antwerp serve as the basis for determin- 
 ing what general average losses really are. ' Bills of lading 
 usually contain a provision providing that general average 
 adjustments shall be made under these rules. In the absence 
 of this provision, however, the laws of the country to which 
 the ship is botmd govern these adjustments. 
 
 General average amtributions are justified when voluntary 
 sacrifices of property or expenditures are made for general 
 safety. They must be reasonably made. The cutting of masls 
 spars, sails or rigging for common safety in a storm is ad- 
 mitted under general average as well as the throwing over- 
 hoard of merchandise for nfety. Cargo damaged by water 
 used to extinguish a fire on board is protected under general 
 average. 
 
 Particular average practically means partial damage. The 
 British law has this to say about particular average: "Where 
 the whole or any part of the goods or merchandise insured 
 
 has been delivered damaged at its destination, the measure 
 of indemnity is such proportion of the sum fixed by the policy 
 as the difference between the gross sound and damaged values 
 at the place of arrival bears to the gross sound value." 
 
 The proceeds realized from the sale of damaged goods 
 represents the damaged value of goods. 
 
 The market value of the goods had they arrived at port of 
 destination sound, as taken on the day of sale of the damaged 
 goods represents the sound value of the goods. 
 
 The difference between tiiese two values represents the de- 
 preciation of loss and this rate of depreciation is applied to 
 the insured value of the damaged goods. 
 
 A close study of the marine insurance policy will show that 
 the clause called the "memonuidum*' exempts insurers from 
 
 MARINE INSURANCE 
 
 265 
 
 a certain percentage of loss. It is provided in this clause that 
 certain goods are free from particular average unless the 
 damage amounts to a certain specified percentage. These 
 percentages vary in a great number of marine insurance policies. 
 
 Insurance With 
 PartiaUar Av€rQg§. 
 
 When goods are susceptible of being damaged through rough 
 handling or by contact with water, insurance with particular 
 average is taken out. Insurance with particular average is 
 generally taken out in the shipment of textiles or other mate- 
 rials likely to be damaged. In instances where goods are 
 usually considered free from particular average from their 
 very nature, and in the absence of specific instructions the 
 shipper covers them F.P.A. the consignee should always give 
 full instructions as to covering his shipments. Unless he does 
 this misunderstandings are likely to arise. In the memoran- 
 dum of ^e insurance policy quoted in this chapter it is seen 
 that a long list of articles are named as being free of par- 
 ticular average. Some of these articles, however, such as 
 liardware would be damaged if wet by sea water. Unless the 
 importer is protected with particular average he would have 
 to bear the entire loss. 
 
 Open Marine 
 Insurance Policies 
 
 Large shippers do not like to be bothered by taking out 
 r^lar marine insurance policies whenever they have ship- 
 ments to make. A short-cut in this routine is effected by tak- 
 ing out Open Policies. These Open Policies cover risks up 
 to a certain amount of money, provide for all contingencies 
 against which protection is desired such as theft, breakage, 
 fire risks, etc, and tt a fixed premium. These Open Policies 
 are good only for a certain length of time or until their values 
 have been entirely exhausted. When the shipper prepares to 
 send merchandise overseas he notifies the insurance company, 
 covers for a certain value, gives the name of the steamer, and 
 the date of departure. The open policy is endorsed and a 
 certificate of msuraoce is sent to the shipper. The terms of 
 
EXPORTING TO THE WORLD 
 
 MARINE INSURANCE 
 
 the original are not written on the certificate of insurance 
 
 although it has the full force of the r^fiilar marine insurance 
 policy. 
 
 Dtdming Values 
 Under Marine Insurance 
 
 Under a marine insurance policy no proof of value is re- 
 quired. Under fire insurance the actual value of the goods 
 destroyed must be proven. If a person insures his store for 
 $10,000 under a fire insurance policy, and it is destroyed by 
 fire, an adjuster will endeavor to place the damage at a figure 
 below the insured value. In marine insurance, however, if a 
 shipper insures for $50,000 and the ship is lost, he will get 
 $50,000. This is the difference between marine and fire in- 
 surance. The insured value is the indemnity value in case of 
 total loss. Iii case of partial loss under a marine insurance 
 policy a comparison of the damaged value and the sound value 
 with the insured value determines the amount of loss. 
 
 A value greater than the actual value of the goods is gen- 
 erally declared for marine insurance. This is done in order to 
 cover incidentals such as freight, cartage, etc. As a matter 
 of fact a shipper can declare almost any value under a marine 
 insurance policy as long as he is willing to pay the higher 
 premium* 
 
 Cost of Premiums Vary 
 For Maritie Insurance 
 
 The nature of the goods to be hisured, the diaracter of the 
 ship transporting them and the port of destination determine 
 
 the premium. Policies covering merchandise shipped to Eu- 
 rope during normal times do not command as high a rate as 
 policies covering merchandise shipped to South American 
 ports. The flag flying on the mast of a ship does not change 
 the imtes. 
 
 In connection with marine insurance rates Mr. Benjamin 
 Rush who has already been quoted in this chapter says this: 
 
 "I am aware that the idea of the general public regarding 
 the way insurance rates are made is that a few insurance 
 company officials, who are absolutely devoid of consdenoe. 
 
 get together once in so often, and agree to charge just as high 
 rales as they think they can get out of a patient and long- 
 suffering public 
 
 "If it were possiUe to get up a monopoly on such a perfectly 
 liquid subject as insurance, possibly this might be done, but, 
 as a matter of fact, it is not possible, and consequently the 
 conc^tion which I have just stated is entirely erroneous. 
 
 must always be remembered that there are two ends to 
 every transaction of international commerce — one, let us say 
 in the the United States, and one, say in some foreign country. 
 
 "If, therefore, an underwriter in the United States fixes his 
 insurance rates too high, the merchant instructs his consignee, 
 or the shipper, as the case may be, to place his insurance in 
 some foreign company and country. 
 
 "There are literally hundreds of marine insurance com- 
 panies, and members of Lloyds in every maritime country in 
 the globe, and since the dawn of Marine Insurance I have 
 never heard of anybody being skillful enough to combine ^h^n> 
 into what is principally known as the Trust; therefore, any- 
 body who knows how to write, and has the price of a three 
 cent stamp, can avail himself of the competition of the whole 
 insurance world upon his own individual business. 
 
 "Furthermore, the laws of the various states of the United 
 States are so drawn that it is possible for citizens with a 
 small amount of capital, say from $100,000 to $200,000 to or- 
 ganize an insurance company and obtain a state charter. 
 
 ''Therefore, just as soon as the margin of profit cm marine 
 insurance operations rises above a fixed minimum marine in- 
 surance companies are organized to compete with those pre- 
 viously established. 
 
 New companies 
 Enter field 
 
 **K very good example of the latter is to be found in the 
 last three years when the large amount of business resulting 
 from war conditions and the profits made on war insurance 
 induced a number of American fire insurance companies, 
 which had not hitherto written marine tnstuance, to enter the 
 marine field, and which also induced a number of foreign 
 
26« EXPORTING TO THE WORLD 
 
 companies not hitherto operating in America to establish 
 agencies in the United States. 
 
 ''Also, many new insurance companies were chartered and 
 established both in the United States and abroad. 
 
 **I think it is safe to say that the marine insurance capacity 
 of the United States market has been doubled by this means 
 since 1914. There is at present, I believe, ample insurance 
 capacity to take care of American marine insurance require- 
 ments, and it is to be hoped certainly from the merchants' and 
 shipowners* point of view that this large capacity will be main- 
 tained and increased, because it is a guarantee against rates for 
 marine insurance bang unduly h^;h. 
 
 "As a matter of fact, over a series of years, taking good 
 years with bad they are not high. 
 
 "I should say from my own experience that in a period of from 
 20 to 30 years any company which could show an average 
 profit year in and year out, of say five per cent of its business 
 tnrn over, which five per cent would also include the in- 
 terest on its invested funds, would be doing remarkably welL 
 
 ''Now as regards the apportionment to hazard between man 
 and man, every marine insurance company keeps what is 
 known as a classification system, the purpose of which is to 
 show cm what branches of its business it is taking or losing 
 
 "This classification is divided into several hundred sub- 
 divisions or book accounts, so that the profit or loss in any 
 given branch of the business can be followed up promptly, and 
 necessary rate adjustments made. If, for Instance, a dasdfi- 
 cation showed that on trade with England, the insurance 
 company was losing money, and that on trade with Brazil it 
 was making money, the insurance company would be put on 
 notice to increase its rates to England, and if its profits to 
 Brazil were unduly high some competitor, who also kept a 
 classification, would not be very long in forcing it to reduce 
 rates to that country or lose its business. 
 
 **Also an account is usually kept of the premiums received 
 from, and the losses paid to, each ship owner or merchant. 
 
 **Dtgrte& of business abilities of different firms differ coo- 
 «derably. It is a usual oc cur re n ce to find merchants in the 
 same trade operating with varying degrees of profit to them- 
 
 MARINE INSURANCE 
 
 selves and to their underwriters. This is also taken into con- 
 sideration in the making of rates. 
 
 "A cargo on any given vessel on any voyage may well con 
 sist of several hundred different kinds of merchandise, each 
 subject to various susceptibilities of damage, and it is the 
 business of the insurance underwriter to see that his insurance 
 rate is adjusted accurately to those hazards for each par- 
 ticular kind of cargo shipped, for every voyage, and by every 
 kind of conveyance, and to all the various hazards which are 
 generally lumped under the head of marine perils and which 
 are changing continually. 
 
 ''As an illustration of the amount of bookkeeping necessary 
 to enable a marine underwriter to correctly adjust his rate 
 to hazard incurred, I would like to say that some years ago 
 the company of which I am president employed a firm of ex- 
 pert accountants to go over our accounting and classification 
 system with the idea of introducing improvements, and they 
 reported that they had just finished performing a 8«»ii'^ar 
 service for the United States Steel Corporation, and they were 
 considerably surprised to find that in order to achieve the 
 results desired it was necessary for us to have a considerably 
 larger amount of bookkeeping than did the United States Steel 
 Corporation, although our turnover at the time was, say, $10,- 
 000,000, and the steel corporation's turnover very many hun- 
 dreds of millions. 
 
 'Unless the underwriter adjusts these rates accurately to 
 these changes and conditions, one of two things happens. If 
 he fixes his rate too high, a competitor comes along and takes 
 his business. If he fixes it to low he loses mbney, and if he 
 keeps on long enough, he will have to retire from business. 
 
 "With a marine underwriter, therefore, it is a matter of 
 literal business life to see that his rates are on the whole 
 correctly gauged to the hazard run. 
 
 "If he fails to do so, he is very speedily eliminated from 
 the field of competitive insurance, but even if he succeeds in 
 doing all that I have outlined hitherto, in order to turn in a 
 satisfactory balance sheet at the end of the year, he has got 
 to be a good deal more than a mere keeper and observer of 
 accounts. 
 
 **The way the marine underwriter makes his money is by 
 taking the business which has been operating at a loss, find- 
 
270 
 
 EXPORTING TO THE WORLD 
 
 ing out tht cause of that loss, and eliminating it By doing 
 this he can for possibly a year or two, until his competitor 
 finds out his method, obtain a fair share of profit upon a given 
 trade. 
 
 "I can cite as an instance in point, the insurance of the live 
 animals between this country and Europe, where by the ini- 
 tiative of private underwr ite r s a saving of some sax cents on 
 every dollar of value on such exports was secured to American 
 
 shippers and producers of cattle. The saving to the con- 
 sumer, in the course of years ran into hundreds of millions of 
 dollars, and a business which had been insured at a loss at a 
 rate of seven per cent, ultimately was insured at a profit, at 
 a rate of one quarter per cent. 
 
 "Another illustration which occurs to me, was the insurance 
 of merchandise to Australia, where there had been a very bad 
 run of fires on shipboard for several years, which fires were 
 ultimately traced to the shipment of some oil clothing that 
 had caused spontaneous combustion. 
 
 **Argus, himself, with his hundred eyes, is no more alert 
 than is a marine underwriter to the adoption of every ex- 
 pedient which may result in saving of loss by avoidable perils, 
 and thereby obtaining a profit on his transaction, and in the 
 IcHig run a reduction in the cost of insurance to the con* 
 sumer.'* 
 
 How Marine Insurance 
 Clmms Are CoUecUd 
 
 The shipper usually collects all claims due on the marine 
 insurance policy for the consignee although the matter of 
 collection is up to the latter. The shipper does this merely 
 out of courtesy. He assumes no re^nmsibility in the matter; 
 he merely acts as agent for the consignee. 
 
 When daims are made against marine insurance companies 
 having agents in foreign countries the matter of collecting 
 insurance money is charged with little difficulty. Shippers 
 and consignees should always take pains that they cover them- 
 selves with insurance policies of companies having agendea 
 in the countries involved. Such connections make it easy to 
 collect their just claims. 
 
 In cases where the goods are damaged it is difficult to {dace 
 
 MARINE INSURANCE 
 
 271 
 
 the responsibility for such damage. Who must pay, the ship- 
 owner or the marine insurance company? If the damage to 
 
 merchandise is caused by the shifting of the cargo the ship- 
 owner would be held responsible unless the captain of the 
 vessel immediately upon arrival at port files a Protest in 
 which he declares that the vessel experi^iced unusual lou^ 
 weather durii^ the voyage which might have caused the shift- 
 ing of the cargo. This Protest is duly attested to before the 
 consul of his country at the port of destination. When such 
 I'rotest has been filed daim for damages is laid before the 
 insurance people who are then held responsible. Payment is 
 immediatdy made unless they dispute the captain's daim. 
 
 The following steps are necessary in collecting insurance: 
 
 Underwriters should be immediately informed of the ar- 
 rival of the damaged goods so that they may appoint an expert 
 to examine the goods. 
 
 The expert will then make his recommendations which are 
 usually that the goods be sold at auction. 
 
 Evidence in Ae form of a bill of lading is required to show 
 that the goods were actually shipped. 
 
 Title to the insurance which is conveyed by the Certificate 
 of Insurance must be produced. 
 
 A formal sworn statement of the amount of damages sus- 
 tained whidi may be had from the local authorized represent- 
 ative of the underwriters' should be obtained. If it is impossible 
 to obtain this statement the official statement of the custom 
 house authorities certified by the consul of the country from 
 which the goods were shifted is suffident 
 
 A sworn statement indicating how the damage was caused 
 is necessary. The sworn statement from the examiners is 
 usually sufficient but where this will not be allowed it may 
 be necessary to obtain a certified copy of the captain's sworn 
 Protest which should give full particulars. Without tiiese 
 particulars it will be difficult to convince the insurance oom^ 
 pany of the justice of the claim. 
 
 A copy of the commercial invoice is necessary. 
 
 The foregoing documents once in the hands of the con- 
 signee should serve to make the ootlection on the insurance 
 easy.* 
 
 The collection of claims from marine underwriters in which frequent delay it 
 ocperieneed, is in most instaacea d«e to the kck of necessary docmnents and 
 ouer information. In snch proceedings the shipowner, the charterer, the exporter 
 MM utm importer, each has a duty to perform, and unless that duty is properly 
 
272 
 
 EXPORTING TO THE WORLD 
 
 discharged the marine underwriter is naturally delayed in arranging the payment 
 of a claim. With a view to facilitati^ HUb work» the Fraak B. Hall ft ComiNmr 
 have issued a small booklet which points out that before a claim can be collected 
 from the insurance companies, or underwriters, it is necessary to show that a peril 
 inarad agaiast kaa eoaM to tlw liort, detfiu i cu t or daaaage" of the ship or tiM 
 interest insured, and that it amounts to the required percentaga. This is usually 
 done by doctunents known as the protest (generally an c«tendad protest), the 
 fcportt of aanrey and the receipted repair MBa or Tow clwi . 
 
 As soon as possible after the arrival of a vessel at a port of refuge or of 
 destination (and within twenty-four hours after arrival) the captain (or master) 
 •f tbe vcaad arasl Bole Ma proleal bcfare a aotary pnbHe or eoaattlar oAeer hiMtf 
 stating what has happened. If it then appears that the loss or damage is sufRcient 
 to warrant the making of a cktim upon nnderwriters, the protest most bo extended to 
 Inehrfe a a ari atl v e of voyage, detaiHng tiw eaoaea of A« loaa or damage. 
 Whenever possible, the master should be sent to the office of the adjusters to 
 have them extend the protest. Tbe log books for the voyage daring which the 
 loaa OiT daango haa occ li n ed A o old bo ddivercd to tiia adfvatera. The note of 
 protest is not a sworn document and is sigrned by the master only. An extended 
 yaotest is signed and sworn to by the master, one or more deck officers, one or 
 ■Mfo aBgteocr oftccra nd ona op flMro awiibafv of tiM CMW« 
 
 Immediately upon arrival of a damaged vessel at • fort of distress, or of 
 destination, the master must notify his owners by caUa and the owners in turn 
 ■mat immediately notify tfw adiastera, wbo win notify tbe Tariona tmderwritera 
 interested. The owners or their agents may appoint a surveyor to represent owners' 
 interests, or their own superintendent, if they have one, may act. A survey will be 
 arranged by titt adhwtera with the u a de i ' w rit er a . If possible, all the san re y o ra 
 should agree apon the causes and extent of the damage and should sign a joint 
 survey report. Any surveyor differing from the others should decline to sign tho 
 joint survey. 
 
 After the damage has been repaired, the surveyors should make further reports 
 stating that repairs have been completed to their satisfaction and that the vessel 
 is in a se a wo rthy condition and fit for the carriage of dry and perishable e a rg o ea 
 or of such cargoes as in their judgment she is fit to carry. If the vessel be tem- 
 porarily repaired, the reports of surveyors must show this and their recommendations 
 for final repairs. Cottfnaioa ahoold aoC bo made batwaea tiie reports of ebMaifeatioa 
 auryeys and damage surveys. If no marine surveyors are available, the master and 
 engineers of other vessels in the port may be called upon, but masters must com- 
 municate with their owners immediately in every case and bear in o^ad tiiat th^ 
 mtist not assume responsibility unless absolutely necessary or their owners instruct 
 them to do so. Owners should always confer with and obtain tiba assistance of the 
 adjusters. 
 
 All repair and other bills relating in any way to the loss or damage, should 
 be forwarded at once to the owners and by them to the adjusters. The adjusters 
 will examine them and after consultation with vmmat, aMatar* aanrajrara, etc, 
 determine which may be for owaer'a account. 
 
 Bills should be receipted or rece i pts attached before they are forwarded to the 
 adjusters. Owners should furnish to the adjusters particulars of the credit, if any, 
 to be allowed for old material and should also advise if any of the repahr work was 
 done on overtime. Where this latter is the ease, underwriters may be charged with 
 the overtime bonus only to the extent to which they have benefited thereby as by 
 the saving of drydock dues. Where the repairs have involved the drydocking of the 
 iressel owners shoald advise the adlnaters when tiie Tesael was last previously on 
 drydock, and whea die would have been due for docking in the ordinary course. 
 Where the survey reports call for the painting of the vessel's botttmi, the adjusters 
 ahonld be given ^e date when the Teasel woold next hare been &ue for painting 
 in the ordinary course. If the repairs made at a foreign port are partly temporary 
 and partly permanent, or if they are partly for owner's account and partly for 
 nnd crwrite i s * aceoont, or if they are paruy on aceotmt of particvlar average damage, 
 that ia accidental damage, and partly on account of general average sacrifices, the 
 anrveyors at the time of their approving the repair bills should be requested to 
 indicate on these bills Ik»w the various items should, in their opinion, be dealt with. 
 
 Where a vessel having sustained loss or damage in the nature of general average 
 arrives at a foreign port, the agent of the vessel or master must see that no cargo 
 is delivered to tiba cearigwaei until a general average bond or agreeaMBt has been 
 signed and a guarantee given by acceptable underwriters or their agents, for the 
 payment of all general average, salvage and (or) special charges, or until a deposit 
 sufficient to cover what they will amount to has been collected from the oauigBaaa. 
 The adjustera ahoald ahraya be c o n au lt a d , and if poaaibla attaad to tbaaa Mtlara 
 tlxemselves. 
 
 Where the cargo is aeeessarily discharged in the geaaral iatarest, care shoald 
 be taken to note any damage which may be sustained in consequence of this forced 
 discharge. While the cargo is out of the vessel it should be specially covered by 
 Inaarance. Geaeral average d i a b ur s ements incurred at a port of refasa lioiiM bt 
 aovarad laaKaaaa fraaa fha port ol ftfma to the port of daaliMtloM* 
 
CHAPTER XVIII 
 
 HOW ORDERS ARE FINANCED 
 
 American exporters have always enjoyed good banking 
 VACiUTiES — Methods of finanong shipments for export — 
 Selling Goooe on open csedit basi»— How commercial credits 
 ARE €MNn>--^AccinA]fci cnDiiB---BaL m exchange, or 
 
 DRAFTS. 
 
 The matter of financing foreign trade is becoming less 
 difficult. 
 
 Amencan banldng instvttttions under pressure of the neces- 
 «ty of meettng the demaiids d Americaii numu^ictttreni and 
 exporters are establishingr tMranches in the principal trading 
 
 centers of the world where they may be able to render service 
 in tne matter of financing the vast amount of business that is 
 now done between buyer in a foreign country and seller in 
 the United States. American exporters are last learning how 
 to use the madunery that mil htmg bade to tiiem the proceeds 
 from the sale of merchandise to a customer whom they have 
 never seen and who is doing business thousands of miles 
 away from the source of supply. 
 
 Perhaps one of the strongest barriers that prevents the 
 average American business man from efmying in busmess 
 with merchants in fordgn countries is fear— fear that he may 
 not be able to get his money for goods shipped. There is an 
 uncertainty about it all, he reasons, and yet if he knew the 
 familiar paths followed in this seemingly difficult function, 
 and the ease with which he could transact business whether 
 his customer happened to be in India or Australia or South 
 America the barrier of fear and prejudice would soon dis- 
 appear. 
 
 American Exporters Have Always 
 Enjoyed Banking Facilities 
 
 The machinery of financing export trade is old. American 
 
 274 
 
 HOW ORDERS ARE FINANCED m 
 
 pioneer commission houses and other export firms have been 
 
 familiar with the function of financing export shipments for 
 many years. Although there were fewer branches of American 
 banks existing in foreign countries in the early days, our pioneer 
 export merchants never found it difficult to sell thdr goods and 
 obtain their money in due time from their customers. If there 
 were no American branches in certain foreign countries where 
 American exporters did business surdy there would be bank 
 branches of British, German, French or Italian origin. Within 
 recent years, however, American banking institutions recog- 
 nizing the necessity and value of extending their activities to 
 foreign fidds in order to cooperate with the growing number 
 of American merchants in the foreign markets of the worid, 
 have placed their branches in all the important trade centers 
 of the world, and today there is not an important city in any 
 section of the giobe that does not boast of having a branch 
 office of some powerful American banking house. There is no 
 question that this branching and broadening out has served 
 as a powerful stimulant in the development of commerce be- 
 tween this country and other regions of the earth. 
 
 Methods of Fktancing 
 
 Shipments for Export 
 
 "Wdl, we have got the machinery for handling our export 
 trade,** says a merchant. ''We have got the ships to carry our 
 
 merchandise; we have got our customers abroad to buy our 
 goods; how, then, shall we go about it to obtain our money?" 
 
 That is the first question that any manufocturer who is 
 branching out for business in the Far East or in South Amer- 
 ica will ask. "How can I get my money?" 
 
 It is the purpose of this chapter to briefly describe these 
 methods so that the details that are necessary to be learned 
 may be clear to those who are ready to engage in export trade. 
 
 The financing of exports may be divided into the following 
 divisions : 
 j (a) Open credit. 
 * (b) Draft against importer. 
 \ (c) Cash shipment. 
 
276 
 
 EXPORTING TO THE WORLD 
 
 StUmg Goods on - 
 Op€n CredH Basis 
 
 Open credit means a book account. The merchant trusts and 
 the customer is supposed to pay when bills are rendered in 
 acccMrdance witli a prevknss agreement In domestic trade 
 open credit is common. Trading mider this method is done 
 to some extent in foreign trade. American exporters, how- 
 ever, are reluctant to grant open credit which is in general 
 demand the world over. Open credits make collections un- 
 certain; risks are increased. Foreign customers in many in- 
 stances do not show the indinatbn to meet their obligations 
 at the stated time under the open credit basis. Distance lends 
 them an air of indiflference, and they are less susceptible to 
 the demands of their creditors than they would be i£ within 
 easy reach. The enforcement of prompt payment iS not an 
 easy task when the buyer and seller are separated by thou- 
 sands of miles, and when cable toUs are high and the mails 
 are very slow. 
 
 f Open credits may be successful, however, where the Ameri- 
 can manufacturer or e3q>orter has a branch establishment in 
 
 ^the foreign country in which he is operatmg. It is less diffi- 
 cidt for iht resident representative to keep in close touch 
 with his customers, and to make his collections at stated in- 
 tervals, and to enforce payments by lawful means when cus- 
 tomers are rather slow in remitting. As a matter of fact, 
 open credits are uniformly soccessf ul only under such con- 
 ditions, or when there is a special agent of the seller on the 
 ground to see that mcmeys due are paid withm the prescribed 
 period. 
 
 Cash Terms m 
 Espari Traie 
 
 The general rule followed when a new customer applies for 
 merchandise and terms in the United States is cash in New 
 York or at any other A^ierican port There is nothing strange 
 abont this rule. It is even f<^lowed in the domestic business 
 where it is quite difficult for a new customer to buy merchan- 
 dise on credit from a firm unless he can produce a satisfactory 
 commercial rating. There is no reason why this rule should 
 
 HOW ORDERS ARE FINANCED 277. 
 
 be done away with in doing business with a customer in a 
 foreign country. Contrary to opinion this rule is not pecu- 
 liarly American. The British, Germans, French and other foreign 
 tradii^ nations demand cash in advance of shipment from cus- 
 tomers with whom they have not done business before and those 
 who are unable to produce adequate financial references. A 
 man uf ac t urer or exporter cannot extend credit to a person he 
 does not know, and an importer should not ask for it until he 
 has established himself in the confidence of those from whom 
 he wishes to make his purchases. 
 
 There are cases, however, where importers have very con- 
 scientiously sent their cash in advance as payment for ship- 
 ments they expected within a reasonable time. Unfortunately, 
 they have been compelled to wait months and months for 
 their merchandise, due to the negligence of some manufac- 
 turer or exporter in this country. It is no wonder, therefore, 
 that occasional criticisms are made against the practice of 
 compelling cash in advance of shipment from import^s. On 
 other occasions it has been noted that goods have been re- 
 ceived at destination in a damaged condition as the result of 
 improper packing. In other instances, substitutions have been 
 made, and the injury has been deep. The importer sends his 
 money in advance and he esqiects the things he has ordered. 
 Cash in advance is demanded, however, only in cases where die 
 foreign importer is practically unknown to the American ex- 
 porter or where he fails to submit proper financial credentials.^ 
 The bulk of our foreign trade is done on a credit basis, and the 
 machinery for these credit operations is so simple that any one 
 having the proper commercial rating and reputation may use 
 it 
 
 A foreign importer who submits to the terms imposed upon 
 him by an American exporter may be able to make his cash 
 pajnoient in the following manner: 
 
 (a) He may send his remittance direct to the exporter. 
 
 (b) He may send his remittance through the bank in the 
 exporter's coimtry, against the delivery of the necessary 
 documents. 
 
 (c) He may send his remittance through a local bank in 
 his own territory, against the delivery of the necessary 
 
 documents. 
 
 The latter two methods of financing export shipments may 
 
«78 EXPORTING TO THE WORLD 
 
 be effected under a banker's credit of which there are many 
 forms. Presently, we shall show how the latest of all meth- 
 ods — the acceptance credit — may be used by importers in 
 loreigfi countries for the purchase of their merchandise in the 
 United States. In the meantime the opening of a commercial 
 credit must have the reader's attention/ 
 
 How Commercial Credit 
 May Be Opened by Importer 
 
 A manufacturer upon receiving an order from a foreign 
 customer with whom he has never done business before may 
 suggest to him that his policy is to obtain cash for his goods 
 
 Ere they leave the country, but that arrangements can 
 y be made for the nuttual prolectioa of both buyer and 
 T for the establishment of a commercial credit wi^ a 
 f teliable American banking institution so that the payment ot 
 ' itierchandise may be obtained upon the presentation of the 
 
 i^per papers by the shipper. This plan safeguards the im- 
 pOTter who knows that his money is in good keq>ing, as well 
 as the manu^icturer who knows that he may obtain his cash 
 the minute he presents his draft and necessary documents to 
 complete the transaction. A commercial credit of this kind is 
 j advisable only when large sums of money are involved. 
 ! The importer who desires to cipen a commercial credit in 
 this country may go to his own local banker and make ar- 
 rangement for the establishment of this credit with his cor- 
 respondent in the United States. C ommercial credits a re 
 either confirmed or unconfirmed. The local banker will in- 
 struct its correspondent in the United States to pay certain 
 monejrs to certain persons in the United States under certain 
 conditions. If the importer happens to be an old» reliable 
 customer of the local banker he need not put up any money 
 for this service immediately, but he may make payments only 
 as the local banker requires. The local banker, of course, 
 charges interest and a small commisskm for services rendered. 
 
 If the local banker opens a confirmed credit for his client 
 in the United States it means that it cannot be cancelled dur- 
 ing its life unless with the consent of all the parties thereto; 
 the applicant for the credit, his banker, the issuing bank and 
 the beneficiaiT. 
 
 HOW ORDERS ARE FINANCED »79 
 
 An unconfirmed credit is subject to revocation at any time 
 
 by any of the interested parties, and on this account is not as 
 acceptable to beneficiary as is the confirmed or irrevocable 
 credit, particularly where merchandise is in process of manu- 
 facture. The rate of charged by a bank on a con- 
 firmed credit is slighdy higher than that charged on an un- 
 confirmed credit. 
 A confirmed or irrevocable credit reads something like this : 
 Guaranty Trust Company of New York. 
 
 New York, October 16th, . 
 
 To The American Export Association, 
 
 140 Broadway, New York City. 
 Dear Sir: — 
 
 In accordance with cable instructions received from Ban- 
 co Mercantil Americano del Peru, Lima, Peru, we open an 
 irrevocable credit in your favor for account of The South 
 
 American Import Company, Lima, Peru. 
 
 Amount $100,000 (One Hundred Thousand Dollars) 
 
 covering shipment of General merchandise from New York 
 to Callao, Peru. 
 
 Drafts under this letter of credit are to be drawn at sight 
 on us and arc to be accompanied by a set of Shipping Docu- 
 ments of a character which must meet with our approval, 
 consisting of: 
 
 Shipper's invoices 
 
 Consular invoices if such documents are required in ccm- 
 nection with this shipment. 
 
 Marine and War Risk insurance policies. 
 
 Full set of ocean steamer Bills of Lading made out to order 
 and endorsed in blank, or to the order of the Banco Mercantil 
 Americano del Peru*^ 
 
 This letter of credit is valid only upon there havit^ been 
 issued an appropriate Export License, covering the trans- 
 action. 
 
 It must be understood that payments under this Credit will 
 only; be made provided the goods are actually on board or 
 loading on the Vessel named in the B. of L. 
 
 If Government regulations restrict the issue of order Bills 
 of Lading, please communicate with us and we will advise 
 you in the premises. 
 
 Marine insurance sfiould cover from Warehouse to Ware- 
 
88a EXPORTING TO THE WORLD 
 
 lioase, and not less than ten days after arrival, and also in- 
 clude deviation clause, craft and lighter clause, negligence and 
 or latent defect clause. Policies reading Free of Particular 
 A¥mig« completely, miist not be tendered without prior ar- 
 rangement with ua. 
 
 This letter of Credit is issued subject to all rec^ulations and 
 enactments of the United States Government and its Allies 
 and to any proclamations of the President governing export 
 shipments. 
 
 The document should be presented whenever possible in 
 
 time to be forwarded on the steamer carrying the merchandise. 
 
 This Letter of Credit expires June 30, 1920. 
 
 If you are unable to comply with the terms as indicated 
 above, please communicate with us promptly, and oUige, 
 
 Yours respectfully, 
 Guaranty Trust Company of New York. 
 
 The confirmed credit differs from the unconfirmed or re- 
 vocable export credit in that, as an irrevocable credit, it can- 
 not be cancelled prior to the date specified in the credit with- 
 out the cmisent of the four parties thereto. 
 
 Commercial 
 Letters of CredU 
 
 When the shq»per presents the necessary papers to the 
 bank and complies with all the conditions under a commercial 
 credit he receives his cash immediately. This kind of trans- 
 action is generally called a cash credit and opposed to it is the 
 time credit which is drawn for a longer period and is covered 
 by a commercial letter of credit The commercial letter of 
 credit authorizes an exporter or manufacturer to draw a draft 
 imder certain conditions against an importer for merchandise 
 he has sold. The letter may be addressed direct to the ship- 
 pers or to the bank. When addressed to the shippers it reads 
 something like this: 
 
 **You arc authorized to draw upon The International Bank 
 in (name of city) under the following conditions." 
 
 When the letter of credit is addressed to the bank it simply 
 authorizes it in writing to accept the drafts of the shipper 
 under certain conditions. If the letter <^ credit is confirn^ed 
 to the shipper by the banker then the shipper has no further 
 
 HOW ORDERS ARE FINANCED 281 
 
 responsibility in the matter. No recourse can be had on him 
 even if the importer fails. The banker alone is responsible 
 now, and he is fully secured by the bill of lading and other 
 papers made out to his order and which he sends to the foreign 
 local bank with the draft for collection under terms that the 
 local bank has arranged with the customer.. The customer 
 pays the local bank which remits the money to the American 
 instituticm in time to meet the draft at maturity. 
 
 The agreement between the bank and the person for whom \ 
 the letter of credit is drawn virtually provides that the latter's 
 drafts will be duly honored upon presentation and under the 
 conditions upon which the credit was given. There is a time 
 limit to these letters, usually; also provision is made that all 
 drafts against the credit be accompanied by the customary 
 documents such as the bill of lading, insurance certificates, 
 invoices, etc. 
 
 Batik Connections 
 Determine Farm of Credit 
 
 The form of the credit is usually determined by the char- 
 acter of the banking connections of the importer. The rates 
 of exchange between one country and another may also de- 
 termine its form. The importer need not always open up a 
 credit through his local bank. He may open credit directly 
 in the exporter's market if his financial standing is satisfactory, 
 thereby dispensing with the local bank and the necessity of 
 paying an extra commission. 
 
 The operation of these commercial credits when made avail- 
 able in this country is described in a "Handbook of Finance 
 and Trade with South America" issued by the National City 
 Bank of New York as follows : 
 
 "Our branch or correspondent in foreign country through 
 which credit is established, informs us of the opening of 
 Credit, and we in turn inform the beneficiary that credit has 
 been established by foreign firm in his favor, and also the 
 amount and the conditions under which we will make pay- 
 ments or accept drafts drawn thereunder. 
 
 "Many lai^e purchases are e£Fected through this medium, 
 through credits of this nature being arranged not only by 
 South American firms in favor of firms in the United States, 
 
m EXPORTING TO THE WORLD 
 
 but also by Americaii fimis in favor of South American and 
 
 European houses. 
 
 "In cases where the foreign merchant does not open a com- 
 mercial credit to cover his merchandise purchases in tliis 
 country, payment is usually effected through the medium of 
 draft which is forwarded for collection, either with or without 
 shipping and other documents, to our foreign branches or cor- 
 respondent banks/* 
 
 How Revotvmg CredU 
 Moy Be Effected 
 
 Reference to a Revolving Credit is also made in the hand- 
 book. It says: 
 
 "Where the <^>erations between two parttei in different 
 countries are to be more or less continuous, a convenient and 
 
 economical form of credit, known as a revolving credit, may 
 be established. 
 
 "Under this form of credit once the conditions are agreed 
 tapoa they may be made permanent for future credits by 
 simply embodying the conditions under which the amounts 
 
 may again become available. Through the medium of a credit 
 of this nature, as the amounts drawn thereunder are liquidated 
 they again become available under the conditions of the orig- 
 inal credit without the necessatj of further cabllqg or oor- 
 respondence. 
 
 •Revolving credits may be divided into three forms. To 
 
 illustrate : 
 
 "A in foreign country opens a credit in favor of B in this 
 country up to say $20,000, the conditions of which permit B 
 to* draw, as shipments are made, upon bank through which 
 credit is made available, the said bank honoring such drafts 
 when accompanied by documents covering a specific ship- 
 ment Upon liquidation by A of the amount or amounts 
 drawn by the amount or amounts so liquidated again be- 
 come available to be drawn against by B under the original 
 conditions. Should the total amount of the credit become 
 exhausted, no further drawings thereunder may be made by 
 B until liquidation by A of all or a portion of the drafts drawn 
 by B. This explains the revolving feature of this credit, in- 
 asmuch as the full credits or sudi poftions thereol aa have 
 
 HOW ORDERS ARE FINANCED 283 ' 
 
 been liquidated by A, again become automatically available 
 to be drawn against by B. 
 
 **The second class of credit under this revolving form per- 
 mits B upon A's instructions to the bank, to draw a specified 
 sum in one draft. Upon maturity and payment of this draft 
 by A, the same amount again become available to be drawn 
 against by B upon the same conditbns which governed the 
 original drawing. 
 
 "Under the third class of revolving credit, A in a foreign 
 country permits B in this country to draw in one draft for 
 the full amount involved, whereupon the credit again becomes 
 automatically available for a similar amount and so on in- 
 definitely until the expiratwn of the time Hmit specified in 
 the original instructions. 
 
 "This last form of credit is limited as to time, but as to the 
 amounts drawn thereunder it is only limited as the unit in 
 
 j 
 
 
 ma< 
 
 
 
 amount which may be drawn thereunder. 
 **It is also possible to limit drawings to a certain amount 
 during specified period, to be drawn in one or in various 
 drafts, the original amount again becoming available at the 
 expiration of each of such periods. 
 
 **The revolving credit is very elastic in its application and 
 may be made to serve any reasonable requirements along the 
 lines suggested in the illustrations. Furthermore, it should 
 be noted that the commission charged by the bank is calcu- 
 lated not upon the full amount for which the credit is original- 
 ly opened, but upon the amount or amounts as availed of 
 tiieiei 
 
 Opening of Commercial 
 Credit Illustrated 
 
 The Natbnal Gty Bank's Handbook of Finance and Trade 
 with South America, presents a very concise illustration of 
 a complete transaction involved in the opening up of a com- 
 mercial credit. The bank traces the transaction from the 
 opening of the credit to the payment to be made under its 
 terms. It is as follows: 
 
 "A merdiant in Argentina, we will say, has ortiered a quan- 
 tity of machinery from a Chicago house. As the Chicago house 
 
' 284 
 
 EXPORTING TO THE WORLD 
 
 is not familiar with the credit stancling^ of the Buenos Aires 
 £rm, let us suppose that the information in our credit &les and 
 our clients, is not, in this instance, of a natiue to 
 warrant the extension of time. The Chicago bouse thereupon 
 cables the Argentine merchant that order will be entered if a 
 confirmed commercial credit is opened in their favor through 
 The National City Bank. 
 
 ''A confirmed credit is required in this instance, because 
 the machineiy may be of special manufacture, and the Chicago 
 house, before commencing work upon it, wishes to be secured 
 against a possible revocation of the order when perhaps the 
 machinery is half completed. 
 
 "The Buenos Aires merchant, acquiescing in the demand of 
 the Chicago house, arranges with the Buenos Aires branch of 
 the National City Bank of New York for the opening of, say, 
 a §20,000 confirmed credit, to be availed of through the head 
 office of the Bank in New York. 
 
 ^The Chicago house is made the beneficiary under this 
 credit, which is practically an order on the New York office 
 of the bank, either by cable or letter to pay to the Chicago 
 house the amount stipulated, generally upon delivery to the 
 bank of a full set of shipping documents covering the ship- 
 ment. If the credit were an 'acceptance credit,' the New York 
 office of the bank would 'accept* the draft of the Chicago house 
 for, say thirty, sixty, or ninety days, as may have been agreed 
 upon. Upon receipt at New York of either the cable or 
 letter opening the credit, the Bank at New York immediately 
 notifies the beneficiary (the Chicago house in this instance) 
 that such credit has been opened and the conditions upon 
 iNdiich payments thereunder will be made. It will be noted 
 upon reference to the definition of a 'confirmed credit* that 
 this kind of credit can be revoked only with the consent of 
 the four parties concerned, viz., the Buenos Aires merchant, 
 the Buenos Aires branch of the National City Bank of New 
 York, the New York office of the National Gty Bank of New 
 York, and the beneficiary at Chicago. 
 
 Chicago House Prepares 
 ia Make CMecikm 
 
 "The machinery having been completed, the Chicago house 
 
 HOW ORDERS ARE FINANCED 285 
 
 consigns it on a railroad bill of lading, to its New York agent, 
 or, in the absence of a New York agent, then to some reput- 
 able forwarding house at New York, the shipping port, with 
 instructions to secure the ocean bills of lading. Consular In- 
 voice, insurance certificates, jtnd other necessary documents. 
 These documents are thereupon presented to the bank, and if 
 they are in order and meet the requirements of the credit, 
 payment will be made by the bank, usually through the medi- 
 um of a bank check to the order of tfatf beneficiary^ If, how- 
 ever, beneficiary is a depositor of the bank, it is probable that 
 the amount will simply be credited to his account. 
 
 ••The bills of lading are generally made out *to order' and 
 are endorsed in blank by shipper, after which they are for- 
 warded to our Buenos Aires branch. To order* bills of lading, 
 however, are not permissible to Venezuela and Colombia, to 
 which countries it is necessary to consign documents and 
 merchandise direct to the consignee. More care is therefore 
 necessary in looking into the credit standing of consignees in 
 those countries* 
 
 ••It wiU be noted in the transaction we are following that as 
 the bills of lading have been made out 'to order' and endorsed 
 in blank, the bank, having possession of the documents, prac- 
 tically controls the shipment, and the Buenos Aires branch 
 will only sttrrender these evidences of title, which we wiU 
 assume have gone along on the same steamer carrying the 
 shipment, upon compliance by the purchaser in Argentina 
 with whatever conditions were agreed upon in the undertaking 
 creating the credit. These conditions may take various fcmns. 
 If the credit standing of the Aigentine merchant is beyond 
 question, it is possible that he has established with our branch 
 a line of credit to cover his commercial credit operations, in 
 which event the documents may be surrendered to him with- 
 out collateral security being placed with our branch bank. 
 
 ''Should security be deemed advisable, however, this may 
 ^dre various forms, such as, depositing with the branch ac- 
 ceptable securities (bonds or stocks) until liquidation of the 
 obligation, or perhaps, the depositing of a note bearing the 
 endorsement of a responsible individual or firm. It may have 
 been agreed that such surrender is to be made upon accept- 
 ance by the Argentine merchant of a draft to be drawn upon 
 him for an agreed tenor by our Buenos Aires branch. It may 
 
S86 EXBORTiNG TO THE WORLD 
 
 alao take the form of a trust receipt to be deUvered to the 
 
 branch by the Argentine merchant, under which title to the 
 merchandise remains in the name of the bank, the proceeds 
 of partial sales to be turned over by merchant to the branch 
 until complete liquidation erf the transaction. There is usually 
 more form than substance to a trust receipt, however, as once 
 the merchandise has been placed in the warehouse of the 
 purchaser it is not an ea^ matter, in fact it is practically im- 
 possible in most instances, to have it so earmarked as to keep 
 it safely guarded from other merchandise for identification in 
 the event of default or other impediment arising. 
 
 'It is possible that the conditions of the credit, owing to 
 the financial and credit standing of the Argentme merchant, 
 may be broad enough to permit of the documents being for- 
 warded direct to the Argentine merchant by the shipper in the 
 States, in which casct such documents should be made out to 
 his order direct* 
 
 *'In the case of an acceptance credit, the draft drawn upon 
 the bank by the beneficiary (in this instance the merchant in 
 Chicago), will be accepted by the head office of the bank in 
 New York, under the Federal Reserve Act which grants to 
 national banks the privilege of accepting bills of exchange 
 growing out of transactions involving the importation and 
 exportation of goods. This acceptance usually takes the form 
 of a stamp across the face of the draft with the word "ac- 
 cepted' and the date, with the signature of a duly authorized 
 officer of the accepting bank, and will there upon be detached 
 from the other documents for return to the Chicago firm, to 
 be discounted by them immediately, if they prefer, or to be 
 bdd by them until maturity date tiiereof . 
 
 •Tfn tfie case of the acceptance credit the conditions at 
 Buenos Aires under which credit was originally opened quite 
 likely specify that payment is to be made some days prior to 
 the actual maturity date of acceptance at New York, through 
 the medium of a draft to be drawn by our Buenos Aires 
 branch upon the Argentine importer. This draft is given an 
 earlier maturity date than the Chicago draft in order to en- 
 able the Buenos Aires branch of the bank to cable ftmds to 
 New York in time for the New York office to meet its ao- 
 e^taace of the dnit ol the Chacago hom^ 
 
 d 
 
 HOW ORDERS ARE FINANCED it 287 
 
 Difference Between Confirmed 
 Documentary CredU and Acceptance Credit 
 
 "One of the points of difference between the ordinary con- 
 firmed documentary credit and the acceptance credit is that 
 under the former it is not always necessary for the American 
 shipper to draw drafts, the conditions of the credit usually 
 instructing the bank to pay cash i^inst receipt of documents, 
 the*bank taking simply the receipt of the shipper for payments 
 made thereunder. This receipt may consist of the simple en- 
 dorsement of beneficiary on the bank's check for the amount 
 involved. Under the acceptance credit, however, the instruc- 
 tions from the bank through which the credit was originally 
 opened to the bank through which it is to be made available, 
 would be to accept the draft of the American shipper, under 
 certain specified conditions, such acceptance by bank protect- 
 ing the maker of draft in the event of the Argentine merchant 
 becoming insolvent before maturity date, the recourse of the 
 New York bank under such a contingency to be had to the 
 foreign bank which originally opened the credit." 
 
 Partial Payment in 
 Advance Often Made 
 
 The manufacturer or exporter should beware of partial pay- 
 ments in advance. They may find themselves in considerable 
 trouble in attempting to collect the balance. American mer- 
 chants often find themselves in this predicament in dealii^ 
 with foreign customers. Before permitting merchandise to 
 leave the country on this basis the shipper should know some- 
 thing about the responsibility of the importer. The fact that 
 he has made a partial payment on the goods does not fully 
 protect the manufacturer. There have been histances where 
 partial payments have been made, the goods shipped, rejected 
 at the other end, and finally sold at auction, the original buyer 
 bidding in an eactremely low price for the consignment. When 
 ever a shipper is willing to permit his merchandise to leave 
 the country on a partial payment basis he should protect him- 
 self to the extent of demanding that the initial payment shall 
 cover enthre coats of getting the^goods back to the point 
 
288 EXPORTING TO THE WORl-D 
 
 of <»%iii in case the customer fciuses to accept them at the 
 port of destination. 
 
 The Acceptance Credit 
 m Foreign Cammeree 
 
 The Federal Reserve Act authorizes member banks to ac« 
 cept drafts drawn upon them arising out of commercial trans- 
 actions involving the importation or eaeportation of goods 
 having not more than six months to run. The establishment 
 of an open discount market in this country in which bills 
 of exchange may be bought and sold is the natural result of 
 this authority under the Act. 
 The acceptance system operates something like this: 
 A foreign buyer wishing to purchase goods in the United 
 States, and requested by the exporter to arrange a bank credit 
 against which he may draw when the shipment is made, may 
 arrange with his local bank for this credit. The local bank in 
 turn gets in touch with its American correspondent and asks 
 it to open a credit in favor of the American esqxnrter and to 
 be drawn i^^ainst under certain conditions. 
 
 The American exporter ships the goods and then goes to 
 the American bank with the bill of lading and other neces- 
 sary documents with draft attached, and presents the latter 
 to the bank for acceptance. The American bank stan^>s 
 ''accepted" <m the lace of the draft, returns it to the exporter, 
 and forwards the shipping documents by first mail to its for- 
 eign correspondent. The foreign bank may turn these docu- 
 ments over to its client against such security as the bank may 
 deem adequate. The foreign bank furnishes the funds to the 
 American bank to meet the draft wtnamtr it is due. 
 
 The American shipper who now has in his possession a 
 bank acceptance may do either of two things with this paper: 
 He may discount it with his own bank, or he may go into the 
 open discount market and obtain his money for it— which 
 will be the ruling rate for member bank accqitanees. 
 The advantages of the acceptance credit are: 
 j The American exporter is able to extend his customer 
 abroad "time" at the lowest cost possible. The exporter knows 
 that he can sell the acceptance from an American bank at the 
 
 HOW ORDERS. ARE FINANCED ^89 
 
 lowest possible rate, and acoordiiiglyy adds a small percent- 
 age to his selling price in order to cover himself for this 
 
 nominal discount 
 
 Acceptance credits may be empk^ed in anticipation of 
 actual exports. A merchant having a large cnrder from a 
 
 foreign customer may, upon making arrangements with his 
 bank, draw a long draft on the latter, and thereby use the 
 funds thus created for the purchase or preparation of the 
 shipment. After ^e shipment has been made, the draft on the 
 foreign purchaser or the foreign purchaser's bank, together 
 with the shipping documents, are turned over to the bank, 
 for discount or collection, the bank in turn using the pro- 
 ceeds of this draft in liquidation of the original acceptance. 
 
 The Draft, or Foreigm 
 BiU of Exckmge 
 
 The foreign bill of exchange or draft, as it is commonly 
 called, is an instrument very well known in foreign trade. It 
 is an unconditional order in writing addressed by one person 
 to another, sigrod by the person giving it and rpxivaxmg the 
 person to whom it is addressed to pay on demand or at a fixed 
 or determinable future time a sum in money to, or to the 
 order of a i^edfied person or bearer. 
 
 The financing of shipments by draft is briefly explained by 
 the National City Bank's Handbook as follows: 
 
 "Now let us consider the shipment from Chicago as one for 
 which a commercial credit had not been opened, the conditions 
 of the order as placed stating that draft is to be drawn by 
 shipper on the Argentine buyer either at sight, or say at 
 sixty, or nine^ days sight. 
 
 "As in the case of the acceptance or confirmed credit, tqpon 
 completion of the machinery and its shipment to New York, 
 the forwarding agent in the latter city, acting under instruc- 
 tions from the Chicago shipper, will have secured the neces- 
 sary documents. Draft, made pajrable to the National City 
 Bank of New York covering the invoice value of the shipment, 
 plus charges to be included, having likewise been forwarded 
 to the New York agenl* will be presented by him with the 
 
290 EXPORTING TO THE WORLD 
 
 complete set of docmnettts to the New York office d the 
 
 National City Bank. 
 
 "It is possible that the Chicago merchant has had a line of 
 credit established with this bank for the discount of his 
 foreign drafts, in which event, if draft is discounted, the ac- 
 count of the Chicago house with the bank will now be credited 
 with the proceeds, or, if we are so instructed, with its full face 
 value. This latter, however, is advisable only where an under- 
 handing has previously been had between the shipper and 
 foreign client whereby the latter understands that he is to 
 pAj the interest and charges involved in this procedure. 
 
 Documents Must 
 Accompany Draft 
 
 "Whether draft is for collection or discount it will be for- 
 warded with the complete set of documents to our Buenos 
 Aires branch for collection. Upon arrival of the documents 
 at Buenos Aires, our branch there will immediately advise the 
 Buenos Aires merchant. The documents in this case, as in 
 the case of the acceptance credit, are quite probably to *order' 
 and will be surrendered to foreign client only upon compliance 
 by him with whatever instmctkms we have received in this 
 respect from the Chicago shipper. If the draft be a sight 
 draft, documents will be surrendered upon payment. If, how- 
 ever, it be a time draft, the custom in South American coun- 
 tries is to surrender documents upon acceptance of the draft 
 by foreign dient. In the case of a 8%ht draft, drawn in 
 dollars, tiie New York funds paid against the surrender of 
 documents will be immediately forwarded to our New York 
 otHce, where, if draft was not originally discounted for the 
 Chicago firm, the proceeds will be placed to the credit of their 
 account. If, however, draft is a time draft, the accepted 
 draft will be hdd at ocnr Argentine branch until maturity, at 
 which time, upon pa3rmcnt being effected, remittance will be 
 made to New York by the Buenos Aires branch as in the case 
 of the sight draft." 
 
 Drafts Ckm or 
 Docwmmtmry 
 
 Drafts n lay be clean or th^ may be documentary. When 
 
 HOW ORDERS ARE FINANCED 291 
 
 documentary they are accompanied by bill of lading, insur- 
 ance certificates or any other instruments necessary to estab- 
 lish title to the merchandise. When clean they are unac- 
 companied by any papers except duplicates of original docu- 
 ments. These drafts are usually handled through third parties 
 the bankers almost always being the third parties. 
 
 Foreign drafts are always drawn in duplicate, known as 
 the First of Exchange and the Second of Exchange. When 
 one is honored the other becomes void. Drafts are drawn 
 in duplicate as a matter of safety in transmitting them 
 through the mails to foreign countries. If one is lost there 
 Is a chance that the second one will reach its destination. 
 It is customary for drafts to be drawn to "the order of our- 
 selves" instead of to some specified payee. This plan per- 
 mits greater freedom in the negotiability of these instru- 
 ments. When drafts are sent by shippers to foreign banks 
 for collection^ however, they are either made pa3rable to the 
 bankers or endorsed to them. It must be remembered that 
 all drafts payable to the order of the drawer must be endorsed 
 by him before they may be negotiated by anyone else. 
 
 Drafts may be drawn at sight or they may be drawn at 
 30, 80 or 90 days after sight A sight draft is <me payaUe 
 on sight, or upon presentation to the drawee. This is the 
 usual rule although in different countries varied regulations 
 are encountered as to the proper time to present sight drafts. 
 In some countries it is illegal to present sight drafts for col- 
 lection until the bankers have in their possession duplicate 
 s^t drafts and a complete set of all documents. Some 
 shippers having some consideration for their consignees 
 usually draw sight drafts at from three to fifteen days at 
 sight in order to give their customers ample time to pay 
 them. 
 
 Time drafts may be drawn anywhere from seven days to 
 
 ninety days or more, after sight. Evidence that the bill has 
 been presented to the drawee is obtained by notation of the 
 actual date when the bill is presented. The mere showing of 
 the bill to the consignee is not enough, according to the law. 
 
 The American manufacturer has two methods of collecting 
 his money by draft. He may present it to the banker at home 
 Avho in turn will send it together with the necessary docu- 
 ments to his correspondents abroad with instructions as to 
 
292 EXPORTING TO THE WORLD 
 
 collecti<Mi» or he may send the draft together with odier 
 docnments to some reputable banker in the foreign country 
 in which collection is to be made with instructions to th^ 
 foreign banker to collect. 
 
 Drafts may be Sold 
 Immediately to Bankers 
 
 A shipper who may not wish to tie up his capital untfl the 
 return of the money invohred in a foreign sale may sell his 
 draft directly to his local banker. This is often done in the 
 case of small manufacturers and exporters who are unable 
 to place their capital in such position. It is a common prac- 
 tice, however, with large manufacturers and exporters who 
 have sufficient funds to enable them to wait for several weeks 
 or possibly months for remittances from abroad. 
 
 The purchase and sale of foreign bills of exchange, or 
 drafts, is a function assumed by what are known as interna- 
 tional bankers, although the laiger American banking insti- 
 tutions at this date have r^^ukrly organized foreign depart- 
 ments in which this sort of business is carried on in large 
 volume. 
 
 Foreign departments in American banks— particularly in 
 national banks— are comparatively new things. They were 
 practically unknown a few years ago when our foreign trade 
 was not so interesting as it is at the present moment. It was 
 difficult a few years ago to n^tiate bills of exchange with 
 banks that did not take this kind of business, and naturally 
 many of these banks lost this kind of business to other institu- 
 tions that were more thoroughly equipped to handle all kinds 
 of foreign transactions in which the assistance of banks was 
 absolutely necessary. The importance of this branch of bank- 
 ing, however, was soon recognized and now we have all our 
 great financial institutions engaged in foreign banking, and 
 thoroughly competent to assist American manufacturers and 
 exporters in the business of financing their shipments to every 
 comer of the globe. 
 
 Haw Foreign Exchange 
 Bemker Operates 
 
 The foreign exchange banker thrives on the purchase and 
 
292 EXPORTING TO THE WORLD 
 
 coUectioii^ or he may send the drafl together with other 
 documents to some reputable banker in the foreign country 
 
 in which collection is to be made with instructions to thq 
 foreign banker to collect. 
 
 Drafts may be Sold 
 immediaiely ta Bankirs 
 
 A shipper who may not wish to tie op his capital until the 
 
 return of the money involved in a foreign sale may sell his 
 draft directly to his local banker. This is often done in the 
 case of small manufacturers and exporters who are unable 
 to place their capital in such position. It is a common prac- 
 tice, however, with large manufocturers and exporters who 
 have sufficient funds to enable them to wait for several weeks 
 or possibly months for remittances from abroad. 
 
 The purchase and sale of foreign bills of exchange, or 
 drafts, is a function assumed by what are known as interna- 
 tional bankers, although the larger American banking insti- 
 tutions at this date have r^fularly organized foreign depart- 
 ments in which this sort of business is carried on in laxge 
 volume. 
 
 Foreign departments in American banks — ^particularly in 
 national banks— are comparatively new things. They were 
 practically unknown a few years ago when our foreign trade 
 
 was not so interesting as it is at the present moment. It was 
 difficult a few years ago to negotiate bills of exchange with 
 banks that did not take this kind of business, and naturally 
 many of these banks lost this kind of business to other institu- 
 tions that were more thoroughly equipped to handle all kinds 
 of foreign transactions in which the assistance of banks was 
 absolutely necessary. The importance of this branch of bank- 
 ing, however, was soon rccoq^nized and now we have all our 
 great financial institutions engaged in foreign banking, and 
 thoroughly competent to assist American manufacturers and 
 exporters in the business of financing their shipments to every 
 comer of the globe. 
 
 How Foreign Exchange 
 Banker Operates 
 
 The foreign exchange banker thrives on the purchase and 
 
^P^n, g6th 
 
 SANTIAGO. CHILE. 
 
HOW ORDERS ARE FINANCED. 203 
 
 sale of drafts. If the customer's rating is satisfactory there 
 will be no trouble in selling a draft even though he may be 
 unknown to the banker. The latter must look into the cus- 
 itomer's financial standing, of course, to protect himself 
 in case the draft returns unhonored from a foreign country. 
 Recourse, it must be remembered, is had on the maker of the 
 draft. Not only must he refund the money obtained from 
 the bank but he must also pay the costs which may have 
 accrued in its attempted collection. 
 
 Another factor that determines the banker's decision in 
 the matter of buying a draft is the character of the merchan- 
 dise shipped under the bill of lading. Articles for which there 
 is a constant demand are safer from the standpoint of realizing 
 on their value than novelties or specialities. Drafts drawn 
 against grain, cotton or sugar are more acceptable to bankers 
 tlian drafts drawn against automobiles, typewriters or certain 
 kinds of machinery. Grain, cotton or sugar can be readily- 
 disposed of at a satisfactory price while there is always a risk 
 in holding automobiles or machineiy for sale. 
 
 How Foreign Drafts 
 Are Negotiated 
 
 The mechanics of n^tiating a draft are something like 
 this: 
 
 The shipper asks his foreign exchange bankers to quote on 
 his drafts just before the shipment is ready to be sent, and 
 when the value of the invoice is known. In asking for quota- 
 tions on these drafts the shipper gives full particulars as to 
 terms, the nature of the merchandise, the name of the con- 
 signee, and other information that the banker may require 
 If the draft is to be written in foreign money the shipper 
 usually asks the banker for the rate of exchange before writ- 
 ing out the instrument. He does this in order to write the 
 equivalent amount of American dollars in the foreign cur- 
 rency of the country to which he is sending the draft. If the 
 draft is to be drawn in dollars the shipper may desire to know 
 what the bank's charges as to commission, interest, etc., may 
 be so that he can add it to the invoice. The total is then 
 written into the draft 
 
 As has ah*eady been mentioned, when the draft is sold the 
 
A « 
 
 4ij ' 
 
 I 
 
 #1 
 
 EXPORTING TO THE WORLD 
 
 iinderstandii^ is that the responsibility for a refund hi case 
 
 the consignee refuses to honor it rests on the shoulders of 
 the maker. Sometimes the bank requires that this under- 
 standing be put down in writing but in recent years in view of 
 the tremendous voltime of business that is transacted daily 
 by the banks it is a sort of unwritten law that the drawer 
 shall be held responsible for the failure of the bank's cor- 
 respondents in foreign countries to make their coliections. 
 
 Bank Must Have 
 Title to Goods 
 
 Not only does the bank require that the signature on the 
 draft be entirely satisfactory or that the character of the 
 merchandise be acceptable but title to the goods must be prac- 
 tically turned over to it before a draft may be bought Title 
 to merchandise is transferred by the delivering to the bank 
 el the following documents: 
 
 (a) Draft in duplicate to be drawn to "ourselves," endorsed 
 in blank or with the banker in blank. 
 
 (b) A full set of all n^;otiable cofMes of the bin of lading 
 signed by the representative of the shipowner drawn to 
 ••order" and endorsed in blank. 
 
 (c) At least two copies of the invoice and an itemized state- 
 ment of charges which make up the toUl amount for which 
 the draft is drawn. 
 
 (d) Certificate of marine insurance in duplicate. 
 
 (e) G)nsular invoices when countries require such docu- 
 ments. 
 
 (f) Certificate of Origin if shipment is to countries requir- 
 ing such documents. 
 
 Having all these documents in its possession, and feeling in 
 every possible way that it is amply protected to advance the 
 money to the shipper the bank now wants to know how the 
 draft is to be handled or taken care of at the other end. 
 
 The following instructi<nis or terms are usual: 
 
 (a) Delivery of the bill of lading is to be made if a sight 
 draft is immediately paid. This procedure is commonly 
 known as "cash with documents." 
 
 (b) If the draft is drawn for a certain period after s^ 
 or date the banker may be instructed to deliver the biU of 
 
-0 
 
 ml 
 
 UNITCO STATES CUIIfieNCV 
 
 ninety day aa^# y sight 
 
 Oxirsolves 
 
 January 9th ^ 
 
 drawn under authorization o 
 
 he Japanese Bank #100 
 
 UNITED 
 
 CURRENCT 
 
 P^^ble with interest added at the rate I of 6^ per annum from date of 
 Relzo MatauolDa» -j^^^ .^^.^ . — 
 
 aft until approximate arrival 
 cover in Hew 7ork« 
 
 P,G> Supply Co. , 
 
 PRO FORMA 
 
 Vice President* 
 
 Draft Drawn under Banker's Authority to Negotiate. Ishould be endorsed by Drawer. 
 
HOW ORDERS ARE FINANCED &95 
 
 lading to the consignee either against pa3rment immediately, 
 
 or acceptance of draft. The latter procedure is commonly 
 known as "documents against acceptance." 
 
 In some parts of the world importers may be found who 
 desire to take up their drafts before the date of mattuity. In 
 instances like this bankers may ask for instructions as to 
 rates of discount or allowance for interest that such procedure 
 may justify. Shippers usually make certain discounts or al- 
 lowances with importers in advance although in The Far 
 East where this practice is common the local bankers publish 
 regularly, 'Vates of rebate" for such transactions. 
 
 IPliat Banks Charge 
 for Collecting Draft 
 
 The bank does not offer the service of making collections 
 
 of drafts for American shippers for nothing. It must charge 
 a small commission and include in the total bill such charges 
 as postage and revenue stamps. The bank's commission I 
 ranges from one-eighth of 1 per cent to 2^ per cent Then I 
 there is the interest charge which runs from the time the/ 
 draft is drawn to the time the proceeds are received by the 
 bank in this country. For instance, if the bank buys a draft 
 on Valparaiso, Chile, at 90 days sight, the interest will run 
 for ninety days plus the time it will take the draft to reach 
 Valparaiso and the time required for the remittance to reach 
 this country. This interest charge, together with commission, 
 and other minor charges, is included in the total of the draft. 
 
 Peculiarities of Drafts 
 
 in Certain Foreign Countries 
 
 Custom or local conditions in foreign countries sometimes 
 determine the method by which drafts are to be paid. The 
 Colonial clause known to all exporters doing business with 
 South African and Australian importers is familiar to these 
 merchants. It reads like this : 'Tayable with Exchange at the 
 current rate in London for negotiating bills on the Colonies." 
 This means that the draft must be paid at the ruling rate of 
 exchange between New York and London and is passed by 
 American bankers to London direct and not to Colonial banks. 
 
m EXPORTING TO THE WORLD 
 
 Drawees must pay interest, commissiou and other charges 
 between London and Colonial banks. 
 
 Drafts drawn cm certain countries of South America are 
 either drawn in dollars, U. S. currency, reading "payable in 
 legal currency at the bank's drawing rate on day of payment 
 for sight bills on New York," or drawn in pounds sterling 
 reading, "Payable in legal currency at the bank's drawing 
 rate on day of payment for ninety days sight bills on London.** 
 
 When drafts are drawn in dollars all charges such as in- 
 terest, commissions, etc., should be included on the face value 
 of the draft, although this should not be done until there is a 
 complete understanding with the customer at the other end 
 that this procedure will be followed. 
 
 When drafts are drawn in pounds sterling all minor charges 
 such as interest, commission, etc., are charged in on the rate 
 of exchange that bankers in this country quote. Drawees ar- 
 range to pay these bills on London through their local bankers. 
 
 Sometimes, in drafts to the Far East or other places wher^ 
 it is impossible to make exact calculations clauses like this are 
 usually inserted: 'Tayable with interest at 6 per cent per 
 annum from the date of draft to approximate date of receipt 
 of proceeds in United States." This clause is not inserted 
 however, unless there is some previous understanding with 
 the customer who often complains against paying anything 
 beyond what is itemized on the invoice. 
 
 How Exports Are 
 Fnumced to Paraguay 
 
 An interesting report on the methods of financing ship- 
 ments to Paraguay recently made by Consul Henry H. Balch, 
 of Asuncion, Paraguay, reflects the varying methods that may 
 be in force in various parts of the world in connection with 
 financing exports. This report appeared in an issue of '*Ex- 
 port Trade" and part of it is as follows: 
 
 'The usual fee chai^d by Asuncion banks for the collec- 
 tion of amounts held by foreign banks on all classes of drafts, 
 whether clean, documentary, or time, is one-fourth per cent 
 
 w^ith a minimum charge of 25 centavos, Argentine gold (about 
 23 cents) for drafts of small amounts. 
 
 **Each draft presented for collection must bear a Para- 
 guayan stamp. The stamps required are as follows: For sight 
 
 HOW ORDERS ARE FINANCED 
 
 297 
 
 drafts or up to six day«, 60 centavos; for drafts of nine days 
 up to six months, one peso per $1,000 or more; for drafts of 
 more than six months, 2 pesos per $1,000 or more. Such ex- 
 penses are usually charged against the drawer of the draft. 
 Checks or drafts remitted by Paraguayan banks in settlement 
 of collections for foreign banks do not require Paraguayan 
 stamps. 
 
 **The commercial code of Paraguay is the same as that of 
 Argentina. Items must be presented before 11 o'clock a. m. 
 on the day following due date. A notary draws up the act 
 and notifies the drawee who states his reasons for not pay- 
 ing. The note of protest is made by the notary on the back 
 of the draft, a copy of which may be obtained when re- 
 quired. 
 
 "The regular protest charge is 30 Paraguayan pesos for 
 each signature to draft. If the draft is not in Spanish, an ad- 
 ditional translation charge of 60 Paraguayan pesos for each 
 page is made. These charges are made whether the bill is 
 taken up or not 
 
 "Banks generally will accept goods on consignment for 
 transfer to the drawee according to the terms specified in 
 the bill, but only when the goods represent the value of 
 the bills sent for collection. Banks do not accept goods for 
 the sole purpose of selling or storing them. The only charges 
 for such services are those specified above. 
 
 "The usual banking phrase used in drafts drawn against 
 Paraguayan consignee in dollars to enable the remittance 
 of the face amount of such bills without deduction is: Tay- 
 able with exchange, commission, stamps, and aU costs for 
 sight drafts in dollars on New YorkV 
 
 The charge for coUectingr clean items on Genoa is 0.50 lira oer item t.1„c i 
 TfcL i}^- ^^^'^^ To this is added any actual e?nLres^ncu?re.L 
 
 Tlw commitwon for. collecting any documentary items is the same If for cl^ 
 plus an additional 1-2 per mille. the minimum charge bein| 2 li^ ^'i^ 
 commission for obtaining acceptance is the tune as for coUectii^ ThS 
 ■pplies to the principal cities of Italy. couecting. This tariff 
 
 m^^^JSaS JS*^^ *'^U^J^ Italy are 1 per mille. If the bills are stamped in the 
 COtmtnr of ongin, the charge is 1-2 per mille. It is customary to attempt to Collect 
 £S m.'^JfT' ^'•^'".^^ drawee, who usually pays. Deductions for sTamp charg^^ 
 •re made from remittances in case the drawee does not pay. No chjmnf i« 
 far stamps on checks remitted in payment of collections. " 
 nf S?^^* maturity must be made 48 hours after the dav 
 
 silf/T" f *t ^"V^ ^ay« after the due date in which to vll 
 
 protested at any time. Protest charges amotlSt tS abiSt^l? 
 
 to f«fMim to rollacliuii tad hatOaag chuici ob bilit dim is nolxed custom 
 
EXPORTING TO THE WORLD 
 
 th« ^Tk*^^' banks guarantee the payment of drafu accepted by approved Cms and 
 
 the charge for this is generally about one-fourth of 1 p^cent. ^ThT^hrasfs Jsed 
 in dralts to obtain reimburaaMat of aaeeial ehar«re« .miJiTo- V.^ u ,7 P""^**^* "S*^'* 
 interest. anH Kill— *.«^« ^uT^-T^ apwaai cnargcs, sucn as collection, comimssiou, 
 yA^S^%^AZ£^^K^f^''\^'^? fi"^ same as those used la the United States^ 
 aU^, in=^TH ^^'^^ d^^" remitted such phrases should 
 
 StI2?^^V, f^'^'hf ""^i^'^^ake to remit the proceeds of bills on the UniS 
 
 bUtes without loss of exchange provided the foUowing clauae is placed in the dSSSs 
 
 '^'^Ib^e^'i.'^no^J^SlSS" '^J sight dSSrt? irNew^^Yo'k.^' 
 
 eli.^ h£ iLft^ regarding the bank from which the drawee pur- 
 
 f . m'** amounts he usually inquires of several ban^s to see 
 J255B75lrI!.ol . "'^y obtained. When drafts are Srawn S 
 
 EST ^'i'^ ^'^"^^ accept the bank's aellinff rate for 
 
 S;f!i • a war decree still in force, the drawermay pay at iSe 
 
 5^ LtwLf^ Sr*!SL?L** "i** ^""^^ I^aly, which rate IS usually half- 
 
 S5ik«L «Bd telling rate. This privilege, however, is rarely 
 
 bofo?e**^tuHJ^ interest allowed to accepters for retiring drafU 
 
 a2?e as fhe rreH?f t ""i*' J" P^ctice, however, the rate U genenUy tlM 
 
 fto I per cent accouata, wlddt ia at pTMeat fiM 
 
 Wii ^l*"^ charges other than those already mentioned are for postage and 
 
 S.iLSF^" ^^^^^^ 
 
 Slr^C^i^^^ I^JlTb^^ficsl^o^J n^o ?I 
 
 „ '^f tax provided by law for drafts is 4 cenU per $100 bat this is 
 
 prenerally disregarded In the rare insUnces in which ■tampt are ulSd the dnwM 
 
 iLTo'^rv it^ f?^.*iSA2W^fil ri?*^ ^ object—as hJlSerYlly"dres-fhc* taS 
 
 Pro?^ ch-iL"? «?«t P«P«- bears no stamps. 
 
 . J^'o'*^ charges •!« approximately $3 for each protest— a charge winch tha 
 drawee has to assume if he later pays the draft. Protests are very seldom nuSf 
 and local banks in taking items for acceptance and collectioa%«Sie*X rfA? to 
 protest or not as they see fit, without responsibility on their oartTt^ I 
 protested either for failure to accept or to pai? md the^StH; k ^ 
 
 WMmty m case of failure or bankruptcy. All protests must be made hefnrl - 
 goto public and two witnesses. The holder of a protcSed item^s enrit ?H #2 
 i3P893!)"'"' P'^'^"' . ^Colombia ciniiSiw cSSJl Jf£ 
 
 mi *lISi*'^*»h«„„K°^A, generally object to paying collection charges on items drawn 
 T?«?^'* naturaUy pay interest on time drafts when so sDccifi^T 
 
 ii^*?lS{^e5*A*^'^*L*V*^"\*^^ „p^„3^ colle'tion and it U sui 
 mt^ that w*cn it is desired that the importer pay these ckarire. *W- tZ 
 inerted on the face of the draft the phrase, "with all bi<fii chiS« * * ^ 
 
 ^^^Local banks do not guarantee the payment ot dl^teiScoaptod by HHmmd 
 
 If the shij>pin|r papers contalo the drawee's name as consiirnee thore 
 SiSSlK ^^vrf *™ CoIomWa with document atUched to be de^ 
 
 i^^^t^ ^''i KT'^V merchandise arrives at the port it is delivered to the 
 
 fK?^JS!L" ^-^T transportation company, and bUls of lading are not JiSuired by 
 the customs oflficials as a condition of delivery to OOBSignee The onlv^o^»mer.^ 
 required to obtain the shipment is the Colombia invoice and t?; o«n 
 
 hS'mi'v'H ^ *"TO«ce attachSl tTSfdrafrheld by the baSk 
 
 tfi<Sl2^bfcS*;li,l*'*S;jK • ^ '"T"" <Hrect by the cn .^..Vhou^ frSm 
 
 orS^T^ ?^ consul, wbich IS issued to him on the payment of a smaU stamo fS 
 and which he can use for making the regular customs entry. This ttSwdureif «2 
 
 Tif b^rtWS^^oX^tr^^er^han«"u^^ AlJ-SSo^^ 
 
 CHAPTER XIX 
 
 AlfBRICAN BANKS IN FOREIGN TRADE AND 
 
 FOREIGN INVESTMENTS 
 
 An exporting nation that aims to obtain a reasonable share 
 of the world's commerce reqioires coordinatkm on the part 
 o£ thoee interests that may be dire^^y or indireetiy con- 
 nected with foreign trade. Obviously, there must be a desire 
 on the part of all concerned to work in harmony for the 
 development of business abroad; there must be tlie fullest 
 cooperation on all sides; there must be a natural willing- 
 ness to shouldeir a certain share of the common task. Work- 
 ing hand in hand., the building of business overseas will be 
 accomplished with facility ; working at cross purposes, prog- 
 ress will be retarded. 
 
 It is needless to say that from the Goyemment must come 
 the cooperation, and the authority to do business abroad 
 on a basis that will put us on an equality with our foreign 
 competitors. We have already seen how American manu- 
 facturers and exporters may combine for the purposes of 
 engaging in foreign trade on a basis that will insure economy 
 of operation as well as efficiency in merchandising. Before 
 the enactment of the Webb-Pomerene Act there was no 
 device available to American exporters that would enable 
 them to successfully compete with gigantic combinations ex- 
 isting in fore^ countries. While we were enjoying a tfe- 
 mendous business abroad in spite of this disadvantage, never- 
 theless, the addition of this device to our scheme of foreign 
 merchandising has resulted in the most gratifying results 
 within recent months. Our statistics of foreign Mde ^low this 
 to be true. 
 
 A similar situation has been created in connection with 
 our merchant marine. Whether an American merchant ma- 
 rine must exist under direct Government ownership or under 
 private ownership need not be argued here. What we 
 are most y/MOj concerned in at the pctsent moment is in 
 
 299 
 
too EXPORTING TO THE WORLD 
 
 having a merchant marine which is capable of carrying our 
 vast stores of supplies to foreign ooantries, and whidi is 
 capable of bearing up nnder the most severe strain. Onr 
 merchants must have some form of assurance that they are to 
 be extended all the necessary facilities to move their goods 
 to fmign coontries. Without cooperatloii in this respect il 
 WDold be difficnlt to compete with fofeign countries for the 
 world's trafde. 
 
 And then the machmery of financing our shipments to cus- 
 tomers abroad nnist be hi smooth running order. Before Hbe 
 enactment of the Federal Reserve Act our national banks 
 were denied the authority to establish branches in foreign 
 countries. The business of these banks that found it necessary to 
 do business abroad was transacted throqs^ affiUatkas in foieign 
 fields. But as our business grew it became apparent that 
 additional banking facilities would be necessary to take care 
 of the increasing wants of our manufacturers and exporters 
 whose business was growing tremendously in volume. The 
 banks were needed |o handle credit operations; to obtain 
 credit information, and to transact all other business peculiar 
 to banks engaged in foreign trade. 
 The Federal Reserve Act came to the rescue. It empow- 
 
 nee paper repre- 
 
 ered our national banks to discount ac 
 
 sodations organized for foreign trade under agreement with 
 the Federal Reserve Board, and to establish branches in 
 foreign countries. 
 
 With the loosening of the 1^ strings, American t^niAiy 
 corporations have been making remarkable progress hi for- 
 eign fiekls. The American exporter now has banking 
 facilities equal to those of any other foreign country. Inter- 
 national transactions are now handled by our banks with ease. 
 It is just as easy to transact business through a bank with a 
 merchant m Buenos Aves as it is with a mefchant in North 
 Dakota. These banks are also rendering remarkable service. 
 Tliey are gathering reliable credit data from all corners of the 
 globe for the use of their clients. Information regarding com- 
 mercial conditions is at the disposal of manufocturers and 
 exporters. For instance, the Natk)nal Qty Bank of New 
 York, which has the largest number of branches in foreiim 
 
 AMERICAN BANKS IN FOREIGN TRADE 301 
 
 countries of any American bank issues booklets on foreign 
 trade that are invaluable to American merchants. 
 
 F<M:eign trade experto connected with the bank from time 
 to time prepare papers on various phases of foreign trade that 
 should be in the hands of every exporter. 
 
 Another national bank rendering admirable service in for- 
 eign trade is the Irving National Bank of New York City. 
 Although it has no branches in foreign countries it has affilia- 
 tkms in all principal centers. A feature of the bank's services 
 to exporters is the information it gratuitously extends to ex- 
 porters. It has published two books on foreign trade — one 
 concerning Latin America and another the Far East that 
 should be in the library of every exporter. 
 
 TTie Guaranty Trust Company, of New York, a state insti- 
 tution, is another bank that is rendering great service to ex- 
 porters J The Guaranty Trust Company's publications in con- 
 nection with foreign trade are noteworthy. Having its own 
 branches, and correspondents in many parts of the world the 
 Guaranty Trust Company is in a position to render efficient 
 service to its clients. 
 
 Foreign Branches 
 
 of American Banks 
 
 There is given below a list of foreign branches of national 
 
 banks, and banks doing business under as^reement with the 
 Federal Reserve Board, which were open for business on 
 November 10, 191d: 
 
 National Banks. 
 
 1. National City Bank of New York Cityi 
 
 Buenos Aires, Argentina. Artemisa, Cuba. 
 
 Once, Buenos, Aires, Bayamo, Cuba. 
 
 Argentina. Caibarien, Cuba. 
 
 Rosario, Argentina. Camaguey, Cuba. 
 
 Bahia, Brazil. Cardenas, Cuba. 
 
 Pernambuco, Brazil. Ciego de Avila, Cuba. 
 
 Porto Alegre, Brazil. Cienfuegos, Cuba. 
 
 Rio de Janeiro, Brazil. Colon, Cuba. 
 
 Santos, Brazil. Cmces, Cuba. 
 
 Sao Paulo, Brazil , Cuatro Caminos, Habana, 
 Santiago, Chile. Cuba. 
 
EXPORTING TO THE WORLD 
 
 Valparaiso, Chile. 
 Guantanamo, Cuba. 
 Habana, Cuba. 
 ManzanillOy Cuba. 
 Matanzas, Cuba. 
 Pinar del Rio, Cuba. 
 Placetas del Norte, Cuba 
 Remedios, Cuba. 
 Sagua la Grande, Cuba. 
 Sancti Spiritus ,Cuba. 
 Santa Clara, Cuba. 
 Santiago, Cuba. 
 Union de Reyes, Cuba. 
 Yagnaijay, Cuba. 
 Genoa, Italy. 
 
 2. First National Bank of Boskm, 
 Buenos Aires, Argentina 
 
 Banks Doing Business Under Agbexmsiit with tbi 
 
 Fbdbral RiaES¥B Board. 
 
 1, American Foreign Banking Corporation, New York City: 
 
 Galiano, Habana, Cuba. 
 
 Barcelona, Spain. 
 
 San Juan, Porto Rico. 
 
 Vladivostok, Siberia. 
 
 Port of Spain, Trinidad. 
 
 Calle Rondeau, Monte- 
 video, Uruguay. 
 
 Montevideo, Uruguay. 
 
 Caracas, Venezuela. 
 
 Maracaibo, Venezuela. 
 
 Medellin, Colombia. 
 
 Temporarily closed — 
 Moscow, Russia. 
 Petrograd, Russia. 
 
 Matt, 
 
 « . 
 
 Panama City, Republic 
 of Panama. 
 
 Port au Prince, Haiti. 
 Rio de Janeiro, Brazil. 
 
 Brussels, Belgium. 
 CaUy Gambia. 
 Cristobal, Canal Zone. 
 
 Harbin, Manchuria. 
 Habana, Cuba. 
 Manila, Philippine 
 Islands. 
 
 2. Mercantile Bank of the Americas^ NiW York City: 
 
 Paris, France. 
 
 Barcelona, Spain. 
 
 Madrid, Spain. 
 
 Afl&liated Institutions — 
 Banco Mercantil Americano de Colombia; Bogata, 
 Barranquilla, Carti^itena, Medellin, Cali, Girardot, Man' 
 izales, Honda, Armenia, Bucaramanga, Colombia. 
 
 Banco Mercantil Americano del Peru: Lima, Arequipa, 
 Chiclayo, Callao, Trujillo, Peru. 
 
 Banco Mercantil Americano de Caracas: Caracas, La 
 Guayra, Veneiuela. 
 
 AMERICAN BANKS IN FOREIGN TRADE 303 
 
 American Mercantile Bank of Brazil: Para, Pemambuco, 
 Brazil. 
 
 National Bank of Nicaragua: Managua, Blueiields, Leon, 
 
 Granada, Nicaragua. 
 Banco Mercantil Americano de Cuba: Habana, Cuba. 
 Banco Atlantida : La Ceiba, Tegucigalpa, San Pedro Sula, 
 
 Puerto Cortez, Tela, Amapala, Honduras. 
 
 (A branch office is also maintained by the Mercantile 
 Bank of the Americas in New Orleans, La.) 
 
 8. Ana Banking Corporation of New York City: 
 
 Canton, China. Manila, P. I. 
 
 Changsha, Chuia. Peking, China. 
 
 Hankow, China. Shanghai, China. 
 
 Hongkong, China. Tientsin, China. 
 
 4. International Banking Corporation of New York City: 
 
 Bombay, India. Panama, Republic of Pan- 
 Canton, China. ama. 
 Calcutta, India. Rangoon, India. 
 Batavia, Java. Shanghai, China. 
 Cebu, P. I. Soerabaya, Java. 
 Colon, Republic of Singapore, Straits Settle- 
 Panama. 
 
 Hankow, China. Domingo, Domini- 
 
 „ , . ^, . can Republic 
 
 Harom. China. ^ 
 
 - . Sanchez, Domuucan Re- 
 
 Hongkong, Chma. ^^^^.^ 
 
 Kobe, Japan. ^ p^^^^ Uacotic. 
 London, England. Dominican Republic. 
 
 Lyons, France. Santiago, Dominican Re- 
 Manila, P. I. public. 
 
 Peking, China. Tientsin, China. 
 Puerto Plata, Dominioui Tsingtao, China. 
 
 Republic. Yokohama, Japan. 
 
 (A branch office is also maintained by tlie Intematicmal 
 
 Banking Corporation in San Francisco, Calif.) 
 
30i EXPORTING TO THE WORLD 
 
 «. Fmrk Union Foreign Banking CarforaHem, New York City : 
 
 Paris, France. Shanghai, China, 
 
 Yokohama, Japan* 
 
 (Branch offices are also maintained in San Francisco, 
 Califs and Seattle, Wash,, by the Park Unkm Banking 
 Cofpomtiofi,) 
 
 The First Naticmal G>rporation, Boston, Mass,, has opened 
 no foreign branches. A branch office of the corporation is 
 maintained at 14 Wall Street, New York City. 
 
 The Shawmut Corporation of Boston, Mass., the French 
 American Banking Corporation of New York City, and the 
 Foreign Credit Coiporatioa ci New York Ci^ have opened 
 no IcMreign branches. 
 
 There Is Limit to 
 
 Bank's Cooperation 
 
 With these banking institutions ready to cooperate with 
 American exporters in the develofmient of foreign tiade the 
 of^rtnnity is present for tremendous progress in foreign 
 fields. The difficnlties of financing fordgn shipments — which 
 have discouraged many an American exporter from engaging 
 in foreign commerce— have been reduced to a minimum by 
 the establishment of branches and other affiliations. The 
 ei^orter mnst not, however, place his entire faith in the aid 
 he is to receive from the banks. The banks can merely co- 
 operate, but it is not their mission to "drum" up trade for 
 their cHents. The success of the exporter's venture depends 
 upon himself and not upcm the banker. The banker has 
 difficulties of his own in maintaining a foreign Ofganiza** 
 tion. 
 
 In speaking about the mission of American banks having 
 branches abroad, John E. Gardine, Chairman of the Board of 
 the International Banking Corporation, before the Sixth Na- 
 tional Foreign Trade Convention m Chicago, in 1919 had this 
 to say: 
 
 *'We cannot expect to sell goods without placing the pur- 
 chaser in a position to buy them. Today the purchasers of 
 Europe have no money. Consequentiy whatever we sell must 
 be on a credit basis. South America, however, is in a better 
 
 AMERICAN BANKS IN FOREIGN TRADE 305 
 
 position to trade. In fact, we have been a debtor nation to 
 that country, so we know how it feels to owe money, where 
 the reverse should be the case. That, however, is the matter 
 of yesterday. We are not here to criticise what has been done, 
 nor to suggest what should be done tomorrow along political 
 lines. My purpose is to demonstrate to you the usefulness 
 of one branch of commercial life of this country, in doing 
 pioneer work in foreign lands, and that is to show you to 
 what extent the branch bank system, as authorized by the 
 Federal Reserve law, can be utilized to its fullest extent imd 
 can lend its aid to the furtherance of the foreign business of 
 the country, which will be so essential in the future. 
 
 Federal Reserve Law 
 FermUs Foreign Branches 
 
 "As you all know, this notable act of ours permits national 
 banks with a capital in excess of one millioa dollars, to es- 
 tablish iMranch banks in foreign countries, with the consent 
 of the Federal Reserve Board. That consent has never been 
 withheld, but the establishment of branch banks is not an 
 easy matter. It is not a question of money. It is a question 
 absolutely of personnel. 
 
 "It may seem strange that in this country of 107,000,000 
 inhabitants, one of the most difficult things to obtain is a 
 staff of competent men to engage in one of the most respect- 
 able, most lucrative businesses in foreign lands. But, sad to 
 relate, it is so, and the result has been that the banks of this 
 country are fcmed to establish their own educational insti- 
 tutions, so that these men can have the proper training. 
 
 **In the past we have been obliged to put our reliance upon 
 foreign institutions, in doing our foreign business. That 
 again, is a matter of yesterday. The foreign institutions that 
 are abroad resent the entrance of American institutions 
 into their field, and properly so. They, of course, are only 
 there in the interest of their nations, and to such an extent 
 do they carry out that policy that they do not hesitate to 
 resort to the most unfair methods in meeting and combatting 
 competition from other lands. It is no small wonder that the 
 German trader was so successful in foreign lands. But when 
 we now find out how that was done, we really shudder at the 
 
306 EXPORTING TO THE WORLD 
 
 lowness of their attitude. Never an invoice nor bill of lading 
 came into their hands but what it was copied and sent to their 
 liome office and there made use of to the fullest extent. Is 
 it any wonder that their trade progressed so well ? 
 
 "Another advantage that the American merchant can find 
 in the existence of branch banks is in the continuation of re- 
 sfKMisibility. Many of yoa have noted, when you have handed 
 your collections into the bank that you were told that the bank 
 would assume no responsibility for any act of its agents, over 
 whom it had no control. So that if a failure took place while 
 an item was in process of collection, and it just happened to 
 strike you and your check that was remitted was worthless, 
 you were the sufferer. Your bank assumed no responsibility. 
 Now that has been done away with. That is also a matter of 
 yesterday. Today responsibility is continuous. It is an item 
 that really is worth consideration when you take into account 
 the unknown quantity that you formerly had to employ in 
 foreign business. 
 
 Credit Information 
 Available to Client 
 
 **A further and more important advantage is the compila- 
 tion of credit information. Reports are on file in the office of 
 the American banks that are absolutely complete, and could 
 
 readily be compared with the files of any credit agency, and 
 the contents of these files are not public property, but the 
 property of the clients of the bank, and are absolutely con- 
 fidential, and as confidential communications, contain matter 
 that no credit agency was ever able to obtain. These files are 
 at all times subject to the inspection of the bank's clients, and 
 are always brought down to the latest date. 
 
 "Furthermore, the advantage that the American shipper has 
 in the protection of his property: You all know that %ht laws 
 of some of the countries to the south of us are rather lax in 
 the safeguarding of ocmmiercial interests, particularly bills 
 of lading. The foreign merchant can oftimes obtain his goods 
 by the mere statement at the custom house that they are his, 
 although draft might be drawn with bill of lading attached, 
 subject to payment. That means nothing, but here is where 
 the branch bank stqM in and knows just exactly how to pro- 
 
 AMERICAN BANKS IN FOREIGN TRADE 807 
 
 ceed in order to prevent any abuse of that practice. Since we 
 have had branch banks in South America I cannot recall a 
 single instance where merchants have lost anything through 
 the delivery of goods without proper authority. 
 
 "In the foraging remarks you will find the following ele- 
 mentary service referred to along general lines, which we will 
 summarize as follows: Continuity of responsibility, inviolabil- 
 ity of trade secrets, the care of merchandise, reliable credit 
 information. These are primary elements in the conduct of 
 all banking business and we will now enter upon a closer in- 
 vestigation of matters pertaining to individual clients ; par- 
 ticularly in matters of public utilities or ^e laying of water 
 pipes or other city or government undertakings, but in those 
 cases, for instance thf laying of water pipes or mains in the 
 city of Rio de Janiero : I know a great deal of care has to be 
 exercised to see that the contractors are not imposed upon. 
 The contractors, being Americans, the cases are generally re- 
 versed. Instead of the contractor imposing upon the city, the 
 authorities try to impose upon the contractor and he, not being 
 familiar with conditions, not knowing how to turn or twist, 
 appeals to the branch banks, but the men who are thoroughly 
 conversant with that kind of business are in touch with good 
 lawyers, and iu that way a great service is being rendered. 
 
 How Bank Advances 
 
 Money Against iShipments 
 
 good deal of doubt has been brought forward as to 
 whether American banks are in a position to advance money 
 against shipments of merchandise, as is being done with cer- 
 tain staples shipped, such as cotton, and on this subject the 
 mind of the manufacturer can be set at rest. This line of 
 business is carried on in different w^ays, either through a direct 
 purchase of the draft or through an advance of a certain per- 
 centage of the face value of the draft, or through direct loans 
 with drafts hypothecated as collateral, or through direct loans 
 regardless of any collateral \alue, and this latter line is em- 
 ployed mainly where large contracts are in question and 
 where it is not practicable or feasible to segregate any f»r- 
 ticular transactioo. These matters can be arranged under an 
 
308 EXPORTING TO THE WORLD 
 
 understandiog with the honie bank, and in tbe ftiak hm 
 worked ottt very satisfactorilj. 
 
 **So far we have spoken of the manufacturer only as grant- 
 ing credits, that is, he draws his draft and assumes the entire 
 responsibility for the transaction until he receives his money 
 in either one of the forms indicated above. This Sjrstem may 
 not suit the manufacturer, and he ak>ne, is the arbiter in that 
 respect* He might say, 1 haven't the capital to do business 
 that way," or the goods being of such a character that they 
 arc valueless in the hands of any general purchaser, he mi^t 
 call for payments before the goods are shipped. Here agam the 
 branch bank steps in and is of the greatest assistance. Being 
 acquainted with local conditions and with the merchants, the 
 prospective buyer readily enters into an arrangement with 
 the branch bank to make payments through the home office 
 under certain conditicms, either against the delivery of docu- 
 ments or otherwise, so tiiat the American manufacturer re- 
 ceives his money somethnes even before the order is executed, 
 where the problem is a risky one, but more often before the 
 goods leave the factory. 
 
 Bank Brmuh Do€s 
 Tmimidmu Bumi€u 
 
 "Business conducted along these lines in the past year 
 or so, in the case of one particukr bank I have in mind at 
 the present time has run into the hundreds of millions of 
 dollars, and the service rendered in this way extends all over 
 the world, east, west, north and south — in fact, branches of 
 that particular bank girdle the earth. The same service can 
 be rendered the importer as well as the exporter. The de- 
 velopment of the foreign busmess of the country is, generally 
 speaking, greater importance than is manifested by a casual 
 consideration. Gmimercial instruments arising out of the 
 import and export business of the country are the very es- 
 sence of the security underlying the note issue of the Federal 
 Reserve Banks, I refer to the bankers' MHlMice. That, as 
 a rulei results from fmign busmess. Internal trade brings 
 with it trade acceptances which are just as important, but car- 
 ries with it only the security of a commercial house; whereas 
 the banker's acceptance is recognized the world over and is 
 eagerly sought for as an investment at llie closest fates 
 eveiywhere» 
 
 AMERICAN BANKS IN FOREIGN TRADE 80» 
 
 *'Now for the present the bankers of this country are per- 
 fectly willing to render all assistance alo^ these lines that it 
 is possible to give, but it must be borne in mind that there are 
 limitations in this respect. These limitations are provided for 
 by law, beyond which a bank is not able to go. Thus you 
 will see that the foreign business of the country would be 
 severely drcumscribed if confined merely to this extent* 
 Therefore, the cooperation of manufacturers must be expected. 
 The business of the country would then assume proportions 
 commensurate with the resources, industrial and otherwise* 
 of our people, but this all requires education, and I have en- 
 deavored in my remarks to point out to what extent the 
 banks and bankers of the country will be helpful to you in 
 creating the necessary experience to simessf uUy conquer the 
 situatkm* 
 
 The Foreign Trade 
 Department of a Bank 
 
 **hk order to bring the buyer and seller togetiier, a new de- 
 partment has been organized by the banks of this country, 
 
 and this is known as the Foreign Trade Department. This is 
 an institution entirely distinct from the usual banking activi- 
 ties and is manned in its personnel by men familiar with every 
 line of business, whether commercial or industrial, and stands 
 ready at all time, in every way, to lend a helping hand to the 
 different manufacturers who first venture into the foreign 
 field. Service is the watchword. As all these questions arise 
 as to methods of manufacturing, marketing, financing and 
 other kindred points that seem to the uninitiated difficult of 
 solution or insurmounUble, thw is where the agencies of 
 the foreign trade departments of the various banking in- 
 stitutions throughout the country successfully contend with 
 any difficulties of that character. It must be further borne 
 in mind that the personal characteristics of the foreign na- 
 tions are not those of our own and that methods that are 
 necmary in apptoachmg them or in dealing with them or in 
 solving problems that arise out of continued intercourse, need 
 the greatest finesse in order to avoid friction ; in fact, friction 
 is the word that ought to be entirely abolished from any com- 
 mercial code. The American youth sent out to man these 
 
310 EXPORTING TO THE WORLD 
 
 brandies are men of tried character throughout, eonveiaaat 
 with business a&irs in this country and very readily adapt 
 
 themselves to foreign surroundings, and to the idiosyncrasies 
 of the inhabitants of foreign countries, and through the exer- 
 cise of a fine sense of discretion are able to smooth over rough 
 spots that migfat otfaenroe cause a cessation of all inter- 
 course." 
 
 Other Services 
 Rgndered by Branchis 
 
 Service is the principal feature of the American bank branch 
 in a foreign country. Without service the bank cannot expect 
 to thrive. Without cooperating with American manufac- 
 turers and eacporters it cannot eaq>ect to grow. It must give 
 service. Our larger banking institutions are so organized that 
 they undertake through their foreign trade departments to 
 keep their clients who are engaged in foreign commerce in 
 dose touch with conditions in foreign lands. Clients of such 
 banks r^^ularly recdve trade reports from all sections of the 
 globe. Credit reports on customers are at the disposal of 
 clients. These credit reports are complete and represent one 
 of the most important functions a bank engaged in foreign 
 trade can perform for the American exporter who would be 
 running around in circles unless he could obtain rdiable 
 credit information concerning a customer to whom he desires 
 to ship thousands of dollars worth of merchandise. 
 
 The traveler also receives the full benefit of this service 
 in touring in foreign countries where American branch banks 
 exist The home office is always ready to give lettera of in- 
 troduction to dients who wish to visit abroad. These letters 
 are presented to the manager of the foreign branch. The client 
 is made to feel at home on arrival in a foreign port. If he is 
 unacquainted with the methods of exchanging his American 
 dollars for the currency of the country in which he happens 
 to be the branch manager helps him. If he would li9ce to 
 obtain a list of reliable firms for the purpose of soliciting new 
 business the branch manager sees that he is given a reliable 
 list of names, and information r^arding their credit standing. 
 If he is unable to speak the language oi the country the brandi 
 manager will place at his disposal a member of the staff to 
 
 American banks are extending their activities to the world's markets 
 where there may be opportunities for the sale of American goods. For- 
 eian branches of American banks are needed in order to facilitate the 
 financing of shipments. This photograph shows the London office of the 
 6iiaranti» Trust Company of New York. 
 
INTENTIONAL SECOND EX POS URE 
 
 810 EXPORTING TO THE WORLD 
 
 branches are men of tried character throughout, COnirersant 
 with business affairs in this country and very readily adapt 
 themselves to foreign SttrrotuidiiigSy and to the idiosyncrasies 
 of the inhabitants of foreign countries, and through the exer- 
 cise of a fine sense of discretion are able to smooth over rough 
 spots that might otherwise cause a cessation of alJ inter- 
 course." 
 
 Other Services 
 
 Rendered by Branches 
 
 Service is the principal feature of the American bank branch 
 in a foreign country. Without service the bank cannot expect 
 to thrive. Without cooperating with American manufac- 
 turers and exporters it cannot expect to grow. It must give 
 service. Our larger banking institutions are so organized that 
 they undertake through their foreign trade departments to 
 keep their clients who are engaged in foreign commerce in 
 close touch with conditions in foreign lands. Clients of such 
 banks regularly receive trade reports from all sections of the 
 globe. Credit reports on customers are at the disposal of 
 clients. These credit reports are complete and represent one 
 of the most important functions a bank engaged in foreign 
 trade can perform for the American exporter who would be 
 running around in circles unless he could obtain reliable 
 credit information concerning a customer to whom he desires 
 to ship thousands of dollars worth of merchandise. 
 
 The traveler also receives the full benefit of this service 
 in touring in foreign countries where American branch banks 
 exist. The home office is always ready to give letters of in- 
 troduction to clients who wish to visit abroad. These letters 
 are presented to the manager of the foreign branch. The client 
 is made to feel at home on arrival in a foreign port. If he is 
 unacquainted with the methods of exchanging his American 
 dollars for the currency of the country in which he happens 
 to be the branch manager helps him. If he would like to 
 obtain a list of reliable firms for the purpose of soliciting new 
 business the branch manager sees that he is given a reliable 
 list of names, and information regarding their credit standing. 
 If he is unable to speak the languaj^^e of the country the branch 
 manager will place at his disposal a member of the staff to 
 
 American banks are extending their activities to the world's markets 
 where there may be opportunities for the sale of American goods. For- 
 eign branches of American banks are needed in order to facilitate the 
 financing of shipments. This photograph shows the London office of the 
 Guaranty Trust Company of New York. 
 
AMERICAN BANKS IN FOREIGN TRADE 311 
 
 act as interpreter and to introduce him to prospective cus- 
 tomers. If he has trouble in getting his trunks out of the 
 customs house or in planning his itineraiy the brancfi" manager 
 sees that he is given assistance. 
 
 Representative of 
 American Business 
 
 Above all, the service of the American bank in the foreign 
 field that is most important is that of acting as the representa- 
 tive of American business. In such capacity, it is needed. It 
 cannot get the business for American business men — ^it is 
 not supposed to assume that role, but it can help in develop- 
 ing trade. It can place the foreign customer in touch with 
 leliable American manufacturers or exporters. Once having 
 accomplished this the consummation of the transaction rests 
 with the American shipper. Hundreds of specific instances 
 could be cited where our American banks established in 
 foreign cities have directly fostered trade. The establish- 
 ment of an American bank in a foreign country means that 
 the United States is engaged in foreign business, and that it 
 is in a position to extend every facility in its power to bring 
 buyer and seller together. It acts as go-between. 
 
 American business men do business differently than foreign 
 competitors. The success of our foreign trade will rest laige- 
 ly not in the way we assimilate Ifie ideals and customs of 
 peoples across the seas but upon the way we extend the 
 typical American commercial methods to their shores. We 
 need not change our methods ; we need not lose our personal- 
 ity. We must remain peculiarly American. Foreigners (ex- 
 pect this of tts. It is a relief to know that American branches 
 In foreign countries are American in every way. They rep- 
 resent better than any foreign bank could possibly do it the 
 American idea as it develops in foreign merchandising. Take 
 the gathering of foreign credit information, for instance. 
 When American foreign branches were first established 
 in foreign countries it was said that importers could never 
 be induced to give the specific information that American 
 business men are accustomed to give in the United States. 
 Now this is not difficult. The typical foreign credit report is 
 a generalization of a business man's standing in the common- 
 
m EXPORTING TO THE WORLD 
 
 ity. Sometimes, such reports are sufficient, but good business 
 dictates that reports of this character be more specific now- 
 adays. Sckoie American banking institations have <yver 50,000 
 credit reports of foreign bnsiness men in their files. It is 
 hardly likely that a manufacturer could go wrong in shipping 
 merchandise to any importer named in this list which is pre- 
 pared by eaqpertsy and is ooosidered absolutely reliableii 
 
 Him BamkM 
 ExUnd CredU 
 
 The ability of American banks to give adequate assistance 
 to our manufacturers in f<Mreign credit extensions is told by 
 James H. Carter, vice president of the National City Bank 
 of New York City as follows : 
 
 •*A few years ago it was true that American export trade 
 was greatly handicapped by the lack of uniform banking 
 service. It is not true mm, mad still manufacturers sometimes 
 talk as if they thought the American banks would not do a ? 
 much for them as European banks did for their exporters. 
 The American banks that have built up international ma- 
 chinery are themselves extending to American export trade a 
 laige volume of discount in the aggregate and it can be said 
 no American manufacturer who established his responsi- 
 bility should lack credit in his foreign business. American 
 manufacturers must do foreign business upon a credit basis, 
 and the banks will surely meet them will a full share of co- 
 operation. 
 
 ''FcMreign credits seem to be frequently misunderstood by 
 manufacturers. We often hear of the question of insuring 
 foreign bills, or getting banks to buy foreign drafts without 
 recourse to the exporter in case of dishonesty being brought 
 up when groups of manufacturers talk together. I am sure 
 that any intelligent m anufacturer who goes into tiie subject 
 of discount without recourse, or credit insurance exhaustively 
 win decide for himself that the principle upon which British 
 and American bankers have agreed is correct: that both are 
 unsound, or uneconomic in the long run. England is the 
 home of the highest devek>pment of every kind of insurance 
 in the worid, but insurance of export drafts has never paid in 
 Eogland, because manufacturers after a trial of it have so in- 
 
 AM£RICAN BANKS IN FOREIGN TRADE 818 
 
 variably come to the conclusion that they have to pay more 
 for insurance than the service is worth that they do not sup- 
 port any volume of insurance worth considering. The manu- 
 facturer who desires to extend good lines of credit to foreign 
 customers may go today to American banks and negotiate 
 loans sufficient for safe business. The bank will advise him 
 of the credit responsiblity of his foreign customer but it will 
 not assume the risk of the credit The bank takes into oon^ 
 sideration the fact that it has in its possession the goods going 
 forward; it takes into consideration also the responsibility of 
 the foreign customers, and, on the average, it will allow the 
 exporter usually a much laiger line of discount than could 
 be obtained were the business domestic; always, of course 
 with recourse to the drawer in the event of dishonesty. Al- 
 most invariably it has been the supposed limitation upon the 
 foreign business done on credit that furnished the manufac- 
 turer's motive in asking for insurance on discount without re- 
 course. The larger volume of discount credit allowed by the 
 bank goes in the direction of meeting this want. It is pos- 
 sible that most manufacturers anticipate a larger opportunity 
 for sales than actually materializes ; in other words, the manu- 
 facturer actually finds that the British and American banks 
 give him as large a v(dume of discount as he really needs and 
 should consistently use in comparison to the capital he has 
 in his business. And while a manufacturer often says that he 
 would willingly pay a liberal commission or premium to be 
 relieved of the contingent liability in foreign collections, it 
 has worked out in British eiq>ort experience, and will surely 
 work out the same in our trade, that after trying insurance 
 at the rates now obtaining, manufacturers conclude that they 
 are paying more in premiums than the service of insurance 
 is worth." 
 
 Forfign Service Thai 
 Amerkam Bankers AdverHee 
 
 Typical of the services that American banking institutions 
 engaged in foreign trade render is this statement appearing 
 in a pamphlet recently issued by a well known bank in New 
 Yofk Oty. It reads: 
 
 **To manufactturers and merchants who are interested in 
 
814 EXPORTING TO THE WORLD 
 
 modern methods of financing their import and export trade, 
 we offer the advantage of our Foreign Department, and invite 
 the opportunity of caring for their needs with an intelligent 
 interest in the task. Supplementing our own facilities are 
 
 those of correspondent banking institutions in all the leading 
 trade centers, which provide direct and prompt service every- 
 where. 
 
 "Foreign Exchange — Foreign drafts, money orders, checks, 
 
 and bills of exchange are bought and sold at current rates. We 
 have remittances to all parts of the civilized world in dollars 
 or foreign currencses* 
 
 *'G)mmcrcial credits — ^To finance imports and exports we 
 open commercial credits and make payments in the United 
 States and abroad. 
 
 '^Collections— We accept bills for collection on all countries 
 and make advances while hills are in tibe process of collection. 
 
 **Direct Connections — Our direct and intimate connections 
 with many hundred correspondents in all parts of the civihzed 
 world enable us to perform special service, both for the in- 
 dividual importer and exporter, and for corporations whose 
 affairs extend over a wide territory. 
 
 "Acceptances — Dollar Acceptances, and acceptances in 
 other currencies are provided to finance the customers' con- 
 signments and purchases. Domestic shipment of goods, as 
 well as imports and exports, may be financed on liberal terms 
 by this bank's acceptances. 
 
 "Loans — ^Advances on security of warehouse receipts and 
 bills of lading are made at cimvenience of clients. We dis- 
 count approved bills of exchange. 
 
 "Letters of Credit — Our letters of credit, issued on banking 
 correspondents everywhere, are available throughout the 
 world. 
 
 Travellers' Checks— Our Travellers' diecks are readily 
 convertible into all foreign currencies without inconvenience 
 or delay, and form a safe method of carrying funds. 
 
 "Money Orders — For remittances to places too small to be 
 reached through banking channels we offer our money order 
 system. By this system remittances are made without diffi- 
 culty anjrwhere, money being delivered to redpients through 
 their local post offices, without extra expense. 
 
 AMERICAN BANKS IN FOREIGN TRADE 315 
 
 "Cable transfers — We make able transfers to every 
 country of the world with which America is in communication. 
 
 "Facilities for Banks — Of special interest to banks and 
 bankers in the United States is our system whereby arrange- 
 ments are made to enable them to issue their own drafts and 
 money orders, on forms printed in their own name. Such 
 remittances are payable through, the correspondents of this 
 bank, etc. 
 
 "Foreign Money — Various foreign currencies, whether gold, 
 silver, or bank notes, are received for credit at current rates 
 and are bought, 9tM or quoted. 
 
 "Foreign Securities — ^Wc buy and sell treasury notes, bills, 
 bonds and other foreign obligations. 
 
 "Financial agent — We act as fiscal agent for foreign govern- 
 ments, cities, banks, etc., and offer our services for collecting 
 or disbursing purposes. 
 
 "Credit information — ^The latest and most complete credit 
 information respecting foreign firms and corporations is con- 
 tained in our files. The service of these files has proved of 
 immeasurable advantage to importers and exporters and is 
 offered for the best accommodation of our customers. 
 
 "Intelligent Service — ^Knowledge of foreign trade condi- 
 tions, rates of exchange, etc., is of vital importance to the 
 American business man. We cheerfully furnish this informa- 
 tion which our experience and wide connections enables us to 
 obtain." 
 
 Another well known banking institutbn in New York City 
 maintains a Foreign Trade Bureau. This bureau has a corps 
 
 of investigators devoted to the study of foreign commercial 
 conditions and export trade, and its services are at the dis- 
 posal of those interested. 
 
 The bureau will investigate any concern outside of the 
 United States with regard to its credit standing and general 
 commercial probity. The records of this bureau include over 
 50,000 names of firms and corporations in foreign countries. 
 It also collects information on international trade, conditions 
 and opportunities making independent researches, using a 
 number of sources and checking back and verifying the results 
 of its labors. It strives to give its clients the latest and most 
 complete available information. 
 
 The Bureau keeps files of foreign and domestic busi- 
 
316 EXPORTING TO THE WORLD 
 
 ness houses classifying them according to their intemai- 
 tional trade interests, and watches the course of commeroe, 
 with particcilar r^^ard to the developing needs of other coun- 
 tries, and opportunities for the promotion of new lines. 
 
 An important feature of this bureau consists of the giving 
 of information concerning the import tari£^s of other ooimtrics, 
 trade refutations and restrictions, both import and export as 
 well as information r^farding business procedure in other 
 
 The Edge Act to 
 Ex tend Long CrediU 
 
 The iatest form of banking legislation in the United States 
 is the Edge Act, an amendment to the Federal Reserve Act, 
 which represents another step forward in the development 
 of international business relations and the restoration of 
 foreign exchange to normal omditions. 
 
 The principal purpose of the Edge Act is to permit other 
 naticms to purchase American goods on long-term credits. 
 This may be done without tying up the capital of American 
 manufacturers, exporters, or bankers b^nd a reasonable 
 time, yet it permits foreign buyeii to postpone payment for 
 goods until they are able to pay or until the foreign exchange 
 situation is more satisfactory. 
 
 To accomplish this end, the Edge Act permits tiie organi- 
 zation of corporations which wiU be permitted to extend 
 long4erm credits on notes and securities offered by foreign 
 btgrers. 
 
 This collateral will serve as a basis for the issuing of 
 debentures by these corporations, for sale to the American 
 investing public. 
 
 As one writer puts it; 'Ue Edge Act iwvidcs a species of 
 reserve system for long credits, somewhat like the system 
 provided by the Federal Reserve Act for short-term credits. 
 The Federal Reserve bank buys, or discounts the notes that 
 a member bank has received from merchants, giving currency 
 to the member bank or a balance subject to its draft, thus 
 unfreestng the funds wfiich the member bank had put be- 
 yond Its own use by lending to the merchant. The corpora- 
 tions created by the Edge Act wiU take tiie bonds or kmg- 
 
 AMERICAN BANKS IN FOREIGN TRADE 317 
 
 term notes which American exporters have received from 
 foreign corporations and business men, and will give the 
 exporter cash for them, unlocking frozen credits for him as 
 the reserve banks do for their members. TUie reserve bank 
 gets the cash for its purposes by the issue of circulating 
 notes or the creation of balances subject to the member 
 bank's draft. The Edge Act corporation will get its cash 
 by reselling the foreign notes or bonds to American invest- 
 ors or by selling the corporation's own debentures to the 
 public, using the foreign notes and bonds as collateral to 
 secure such debentures.** 
 
 How Corporations May Be 
 Farmed Under Edge Act 
 
 The following is a summary of the contents of the Edge 
 Act showing how corporations may be organized under its 
 provisions, and how they can conduct business: (the full 
 text of the Edge Act is given eUewhere in this cfai^ter) 
 
 CoipormtioQs may be formed by five or more ^'natural 
 persons.** 
 
 Articles of association must be filed with the Federal Re- 
 serve Board. 
 
 The principal powers <rf such a corporation are to deal in 
 or discount notes, drafts, bills of exchange and acceptances, 
 purchase or sell securities with or without its endorsement 
 or guarantee, accept bills or drafts drawn upon it under limi- 
 tations and restrictions imposed by the Reserve Board, issue 
 letters of credit, borrow and lend money and issue debentures, 
 bonds, and promissory notes under limitations prescribed by 
 the Reserve Board, but in no event having liabilities out- 
 standing at any one time exceeding tem times its capital and 
 surplus. 
 
 While it may receive deposit outside the United States 
 it may only receive such deposits within the United States 
 as may be incidental to or for the purpose of carrying on 
 transactions outside of the country. 
 
 It may establish agencies in the United States or branches 
 
 abroad. 
 
 It is forbidden to engage in any other business except such 
 as is incidental to international or foreign operations. 
 
m EXPORTING TO THE WORLD 
 
 It cannot engage in commerce or in trade in commodities 
 
 except as especially provided in the Act, nor shall it control 
 or fix prices of any such commodities under pain of forfeiting 
 its charter. 
 
 The corporation must have at least $2,000,000 capital, one 
 quarter of which must be paid in before beginning business. 
 National banking associations may invest in the stock of one 
 or more corporations oiganised under the Edge Act, but only 
 up to 10 per cent of their capital and surplus. 
 
 A majority of the shares of the capital stock must be held 
 and owned by citizens of the United States, or by corpora- 
 tions or firms chartered under the laws of the United States 
 or of a State in the Union, the controlling interests in which 
 are owned by citizens. 
 
 Banks or banking instttutkms now incorporated under 
 state laws may, by vote of shareholders, and with the ap- 
 proval of the Reserve Board, be converted into a Federal 
 corporation of the kind authorized by the Edge Act. 
 
 The success of the Edge Act will depend largely upon 
 the extent the corporatioiis organized under the act are able 
 to convince the American investing public as to the desira* 
 bility of the debentures oflFercd for sale. A campaign of 
 education; it seems, will be required to bring about the de- 
 sired results. It does not take much effort to induce an 
 American investor to place his money on a domestic security, 
 for besides its attractiveness, he feds a sense of security be- 
 cause it is purely an American enterprise. But when he is 
 asked to invest in a security he knows very little about, there 
 will likely be trouble unless a campaign of education aimed to 
 explain the desirability al these investments, is inaugurated 
 
 There should be no question as to the desirability of these 
 investments if the corporations offering them, extend to the 
 public the opportunity to carefully examine the collateral 
 bdiind them. 
 
 Herewith is the complete text of the Edge Act: 
 
 An act to amend the act approved Decent 23, 1918» 
 known as the Federal Reserve Act. 
 
 Be it enacted by the Senate and House of Representatives 
 of United States of America in Congress assembled. That 
 the Act approved December 83, 1913, known as the Federal 
 
 AMERICAN BANKS IN FOREIGN TRADE 319 
 
 Reserve Act, as amended, be further amended by adding a 
 new section as follows: 
 
 "Banking corporations to do foreign banking business. 
 
 ''Sec 96 (a) G>rporations to be organized for the purpose 
 of engaging in international or foreign banking or other inter- 
 national or foreign financial operations, or in banking or other 
 financial operations in a dependency or insular possession of 
 the United States, either directly or through the agency, own- 
 ership, or control of local institutions in foreign countries, or 
 in such dependencies or insular possessions as pro'dded by 
 this section, and to act when required by the Secretary of the 
 Treasury as fiscal agents of the United States, may be formed 
 by any number of natural persons, not less in any case than 
 five. 
 
 ''Such persons shall enter into articles of association which 
 shall specify in general terms the objects for which the asso- 
 ciation is formed, and may contain any other provisions not 
 
 inconsistent with law which the association may see fit to 
 adopt for the regulation of its business and the conduct of its 
 
 aflfairs. 
 
 "Such articles of association shall be signed by all of the 
 persons intending to participate in the organization of the cor- 
 poration and, thereafter, shall be forwarded to the Federal 
 Reserve Board, and shall be filed and preserved in its office. 
 The person signing the said articles of association shall, under 
 their hands, make an organization certificate which shall ^e* 
 dfically state: 
 
 '^First. The name assumed by such corporation, which shall 
 be subject to the approval of the Federal Reserve Board. 
 ''Second. The place or places where its operations are to 
 
 be carried on. 
 
 "Third. The place in the United States where its home 
 office is to be located. 
 
 "Fourth. The amount of its capital stock and the number 
 
 of shares into which the same shall be divided. 
 
 "Fifth. The names and places of business or residence of 
 the persons executing the certificate and the number of shares 
 to which each has subscribed. 
 
 "Sixth. The foct that the certificate is made to enable the 
 persons subscribing the same and all other persons, firms, 
 companies, and corporations, who or which may thereafter 
 subscribe to or purchase shares of the capital stock of sudU 
 
880 EXPORTING TO THE WORLD 
 
 corporation, to avail t^iemselves of the advantages of this 
 
 section. 
 
 'The person signing the Ofganizatimi certificate shall duly ac- 
 knowledge the oeecution thereof before a judge of some court 
 of record or notary public, who shall certify thereto under the 
 seal of such court or notary, and thereafter the certificate shall 
 be forwarded to the Federal Reserve Board to be filed and 
 preserved in this office. Upon duly making and filing articles 
 of assodatkm and an organization certificate, and after the 
 Federal Reserve Board has approved the same and issued a 
 permit to begin business the association shall become and be 
 a body corporate, and as such and by the name designated 
 therein shall have power to adopt and use a corporate seal, 
 which may be changed at the pleasure of its board of directors ; 
 to have successkm for a period of 80 years unless sooner dis- 
 solved by the act of the shareholders owning two-thirds of 
 the stock or by an Act of Congress or unless its franchises 
 become forfeited by some violation of the law; to make con-^ 
 tracts ; to sue and be sued, complain, and defend in any court 
 of law or equity; to elect or appoint dtrec|ors» all of whom 
 shall be citizens of the United Slates ; and» by its board of direc- 
 tors, to appoint such officers and employes as may be deemed 
 proper, define their authority and duties, require bonds of 
 them and fix the penalty thereof; dismiss such officers or em- 
 ployes or any thereof at pleasure, and appdnt others to fill 
 their places; to prescribe^by its board of durectors, by-laws not 
 inconsistent with law, or with the regulations of the Federal 
 Reserve Board regulating the manner in which its stock shall 
 be transferred, its directors elected or appointed, its officers 
 and employees appointed, its property transferred, and the 
 privileges granted to it by law exercised and enjoyed. 
 
 ''Each aMrporatkm so organized diall have power, under 
 such rules and r^^tbns as the Federal Reserve Board may 
 prescribe : 
 
 "(a) To purchase, sell, discount, and negotiate, with or 
 without its endorsement or guarantee, notes, drafts, checkSp 
 bills of exchange, acceptances, including bankers' acceptances, 
 cable transfers and otiier evidences of indebtedness; to pur- 
 ^ase and sdl with or without its endorsement or guarantee, 
 securities, including the obligations of the United States or 
 of any state thereof but not including shares of stock in any 
 corporation except as herein provided; to accept bills or drafts 
 
 AMERICAN BANKS IN FOREIGN TRADE 321 
 
 drawn upon it subject to such limitations and restrictions as 
 the Federal Reserve Board may impose; to issue letters of 
 credit; to purchase and sell coin, bullion, and exchange; to 
 
 borrow and to lend money; to issue debentures, bonds, and 
 promissory notes under such general conditions as to security 
 and such limitations as the Federal Reserve Board may pre- 
 scribe, but in no event having liabilities outstanding thereon 
 at any one time exceeding ten times its capital stock and sur- 
 plus; to receive deposits outside of the United States and to 
 receive only such deposits within the United States as may 
 be incidental to or for the purpose of carrying out transactions 
 in foreign countries or dependencies or insular possessions of 
 the United States ; and generally to exercise such powers as 
 are incidental to the powers conferred by this act or as may 
 be usual, in the determination of the Federal Reserve Board, 
 in connection with the transaction of the business of banking 
 or other financial operations in the countries, colonies, de- 
 pendencies, or possessions in which it shall transact business 
 and not inconsistent with the powers specifically granted 
 herein. Nothing contained in this section shall be construed 
 to prohibit the Federal Reserve Board, under its power to 
 prescribe rules and regulations, from limiting the aggregate 
 amount of liabilities of any or all classes incurred by the cor- 
 poration and outstanding at any one time. Whenever a cor- 
 poration organized under this section receives deposits in the 
 United States authorized by this secticm it shall carry reserves 
 in such amounts as the Federal Reserve Board may prescribe 
 but in no event less than ten per centum of its deposits. 
 
 "(b) To establish and maintain for the transaction of its 
 business and branches or agencies in foreign countries, their 
 dependencies or colonies, and in the dependencies or insular 
 possessions of the United States, at such places as may be 
 approved by the Federal Reserve Board and under such rules 
 and regulations as it may prescribe, including countries or 
 dependencies not specified in the original organization cer- 
 tificate. 
 
 ''(c) With the consent of the Federal Reserve Board to 
 purchase and hold stock or other certificates of ownership in 
 
 any other corporation organized under the provisions of this 
 section, or under the laws of any foreign country, or a colony 
 or dependency thereof, or under the laws of any state, de- 
 pendency or insular possession of the United States, but not 
 
323 EXPORTING lO THE WORLD 
 
 ciigaged in the general business of buying or selling goods, 
 wares, merchandise or commodities in the United States, and 
 not transacting business in the United Stages, except such as in 
 the judgment of the Federal Reserve Board may be incidental 
 to its international or foreign business: ProvMed, however, 
 that, except with the approval of the Federal Reserve Board, 
 no corporation organized hereunder shall invest in any one 
 corporation an amount in excess of 10 per centum of its own 
 capital and surplus, except in a corporation engaged in the 
 business of bankings when 15 per centum of its capital and 
 surplus may be so invested : Provided, further, that no corpo- 
 ration organized hereunder shall pmrchase, own, or hold stock 
 or certificates of ownership in any other corporation organized 
 hereunder or under the laws of any state which is in substan- 
 tial competition therewith, or which holds stock or certificates 
 of ownonship in corporations which are in substantial com- 
 petition with the pttrchssing corporatioii. 
 
 **Nothing contained herein shall prevent corporations or- 
 ganized hereunder from purchasing and holding stock in any 
 corporation where such purchase shall be necessary to prevent 
 a loss upon a debt previously contracted in good faith ; and 
 Stock 30 purchased or acquired in corporations organized under 
 this section shall within six months from such purchase be sold 
 or disposed of at public or private sale unless the time to so 
 dispose of same is extended by the Federal Reserve Board. 
 
 "No corporation organized under this section shall carry on 
 any part of its business in the United States except such as, 
 in the judgment of the Federal Reserve Board» shall be inci- 
 dental to its international or foreign business. And, provided 
 further, that except such as is incidental and preliminary to 
 Its organization no such corporation shall exercise any other 
 powers conferred by this section until it has been duly author- 
 ized by the Federal Reserve Board to commence business as 
 a corporation oiganized under the fnrovisions of this secticm. 
 
 ^No corporation organized under this section shall engage 
 in commerce or trade in commodities except as specifically 
 provided in this section, nor shall it either directly or indi- 
 rectly control or fix or attempt to control or fix the price of 
 any such commodities. The charter of any corporation vio- 
 lating this provision shall be subject to forfeiture in a manner 
 hereinafter provided in this section. It shall be unlawful for 
 any director, officer, agent, or employe of any loch corpora- 
 
 AMERICAN BANKS IN FOREIGN TRADE 383 
 
 tion to use or to conspire to use the credit, the funds, or the 
 power of the corporation to fix or control the price of any 
 such commodities, and any such person violating this pro- 
 vision shall be liable to a fine of not less dian $1,000 and not 
 exceeding $5,000 or imprisonment not less than one year and 
 not exceeding five years or both, in the discretion of the court. 
 
 "No corporation shall be organized under the provisions of 
 this section with a capital stock of less than $2,000,000, one 
 quarter of which must be paid in before the corporation may 
 be authorized to b^^in business, and the remainder of the 
 capital stock of such corporation shall be paid in instalhnents 
 of at least ten percentum on the whole amount to which the 
 corporation shall be limited as frequently as one installment 
 at the end of each succeeding two months from the time of 
 the commencement of its business operations, until the whole 
 of the capital stock shall be paid in. The capital stock of 
 any such corporation may be increased at any time, with the 
 approval of the Federal Reserve Board, by a vote of two- 
 thirds of its share holders or by unanimous consent in writing 
 of the share holders without a meeting and without a formsd 
 vote, but any such increase of capital shall be fully paid in 
 within ninety da3rs after such approval; and may be reduced 
 in like manner, provided that in no event shall it be less than 
 two million dollars. No corporation, except as herein pro- 
 vided, shall during the time it shall continue its operations, 
 withdraw or permit to be withdrawn, either in the form of 
 dividends or otherwise, any portion of its capital. Any na- 
 tional banking association may invest in the stock of any 
 corporation organized under the provisions of this section, 
 but the aggregate amount of stock held in all corporations 
 engaged in business of the kind described in this section and 
 in Section 25 of the Federal Reserve Act as amended shall 
 not exceed ten per centum of the subscribing bank's capital 
 and surplus. 
 
 **A majority of the shares of the capital stock of any such 
 corporation shall at all times be held and owned by citizens 
 of the United States, by corporations the controlling interest 
 in which is owned by citizens of the United States, chartered 
 under the laws of the United States or of a state of the United 
 States, or by firms or companies, the controlling interest in 
 which is owned by citizens of the United States. The pro- 
 visions of Section 8 of the Act approved October 15, 1914, 
 
324 EXPORTiNG TO THE WORLD 
 
 entitled "An Act to Supplement existing laws against unlaw- 
 ful restraints and monopolies and for other purposes," as 
 amended by the Acts of May 15, 1916, and September 7, 1916, 
 shall be construed to apply to the directors, other officers, 
 agents, or employes of corporations oiganized under the pro- 
 visions of this section : Provided, however, that nothing herein 
 contained shall (1) prohibit any director or other officer, 
 agent or employe of any member bank, who has procured the 
 approval of the Federal Reserve Board from serving at the 
 same time as a director or other officer, agent, or employe 
 of any corporation organized under the provisions of this 
 section in whose capital stock such member banks shall have 
 invested ; or (2) prohibit any director or other officer, agent, 
 or employe of any corporation organized under the provisions 
 of this section, who has procured the approval of the Federal 
 Reserve Board, from serving at the same time as a director 
 or other officer, agent or employe of any other corporation in 
 whose capital stock such first mentioned corporatioa shall 
 have invested under the provisions of this act 
 
 **No member of the Federal Reserve Board shall be an 
 officer or director of any corporation organized under the 
 provisions of this section, or of any corporation engaged in 
 similar business organized under the laws of any state, nor 
 hold stock in any such corporation, and before entering upon 
 his duties as a member of the Federal Reserve Board he shall 
 certify under oath to the Secretary of the Treasury that he 
 has complied with this requirement. 
 
 "Shareholders in any corporation organized under the pro- 
 visions of this section shall be liable for the amount of their 
 unpaid stock subscriptions. No such oorpormtion shall be- 
 come a member of any Federal Reserve Bank. 
 
 ••Should any corporation organized hereunder violate or 
 fail to comply with any of the provisions of this section, all 
 of its rights, privileges, and franchises derived herefrom, may 
 thereby be forfeited. Before any such corporation shall 
 be declared dissolved, or its rights, privil^^es, and franchises 
 forfeited, any noncompliance^ with, or violation of such laws, 
 shall, however, be determined and adjudged, by a court of the 
 United States of competent jurisdiction in a suit brought 
 for that purpose in the district or territory in which 
 the home office of such corporation is located, which suit shall 
 be brought by the United States at the instance of the Fed- 
 
 AMERICAN BANKS IN FOREIGN TRADE 325 
 
 eral Reserve Board or the Attorney Genend. Upon adjudica- 
 tion of such noncompliance or violation, each director and 
 
 officer w^ho participated in, or assented to, the illegal act or 
 acts, shall be liable in his personal or individual capacity for 
 all damages which the said corporation shall have sustained 
 in consequence thereof. No dissolution shall take away or 
 impair any remedy against the corporation, its stockholders, 
 or officers for any liability or penalty previously incurred. 
 
 ''Any such corporation may go into voluntary liquidation 
 and be closed by a vote of its shareholders owning two-thirds 
 of its stock. 
 
 ''Whenever the Federal Reserve Board shall become satis- 
 fied of the insolvency of any such corporatk>n, it may appoint 
 a receiver who shall take possession of all of the property and 
 
 assets of the corporation and exercise the same rights, privi-* 
 ieges, powers, and authority with respect thereto as are now 
 exercised by receivers of national banks appointed by the 
 Comptroller of the Currency of the United States. Provided, 
 however, that the assets of the corporation subject to the laws 
 of other countries or jurisdictions shall be dealt with in ac- 
 cordance with the terms of such laws. 
 
 "Every corporation organized under the provisions of this 
 section shall hold a meeting of its stockholders annually upon 
 a date fixed in its bylaws, such meeting to be held at its home 
 office in the United States. Every such corporation shall keep 
 at Its home office books containing the names of all stock- 
 holders thereof, and the names and addresses of all members 
 of its board of directors, together with copies of all reports 
 made by it to the Federal Reserve Board . Every such corpo- 
 ration shall make reports to the Federal Reserve Board at such 
 times and in such form as it may require; and shall be subj^ 
 to examination once a year and at such other times as may be 
 deemed necessary by the Federal Reserve Board by examiners 
 appointed by the Federal Reserve Board, the cost of such 
 ^*^ niina ty ?" ff , including the compensation of the examiners 
 to be fixed the Federal Reserve Board and to be paid by 
 the corporation examined. 
 
 '•The directors of any corporation organized under the pro- 
 visions of this section may, semiannually, declare a dividend 
 of so much of the net profits of the corporation as they shall 
 judge ei^edioit; but each corporation shall, before the dec- 
 linttkNi of a dhrUcnd iurj (me-tentfi ol its net profits of the 
 
m EXPORTING TO THE WORLD 
 
 pmeding half year to its sturplus fund until the same diall 
 amount to 20 per centum of its capital stock. 
 
 "Any corporation organized under the provisions of this 
 section shall be subject to tax by the State within which its 
 home office is located in the same manner and to the same 
 cadent as other corporations organized under the laws of that 
 State which are transacting a similar character of business. 
 The shares of stock in such corporation shall also be subject 
 to tax as the personal property of the owners or holders 
 thereof in the same manner and to the same extent as the 
 shares of stock in similar State corporations: Provided, how- 
 ever. That such shares owned by nonresidents of any State 
 shall be taxed only in the city or town in which the corpora- 
 tion's home office is located, and not elsewhere. 
 
 "Any corporation organized under the provisions of this 
 section may at any time within the two years next previous 
 to the date of the expiration of its corporate existence, by a 
 vote of the shareholders owning two-thirds of its stock, apply 
 to the Federal Reserve Board for its approval to extend the 
 period of its corporate existence for a term of not more than 
 twenty years, and upon certified approval of the Federal Re- 
 serve Board such corporation shall have its corporate exist- 
 ence for such extended period unless sooner dissolved by the 
 act of the shareholders owning two-thirds of its stock, or by 
 an act of Congress or unless its franchise becomes forfeited 
 by some violation of law. 
 
 "Any bank or banking institution principally engaged in a 
 foreign business incorporated by special law of any State or 
 of the United States or organized under the general laws of 
 any State or of the United States and having an unimpwed 
 capital sufficient to entitle it to become a corporation under 
 the provisions of this section may by the vote of the share- 
 holders owning not less than two-thirds of the capital stock 
 of such bank or banking association, with the approval of the 
 Federal Reserve Board, be converted into a Federal corpora* 
 tioii of the kind authorized by this section with any name 
 approved by the Federal Reafrve Board: Provided, however. 
 That said conversi<m shall not be in contravention of the 
 State law. In such case the articles of association and organi- 
 zation certificate may be executed by a majority of the direc- 
 tors of the bank or banking institution, and the certificate 
 shall declare that the owners of at least two-thirds of the 
 
 AMERICAN BANKS IN FOREIGN TRADE 887 
 
 capital stock have authorized the directors to make such certi- 
 ficate and to change or convert the bank or banking institution 
 into a Federal corporation. A majority of the directors, after 
 executing the articles of association and the organization 
 certificate, shall have power to execute all other papers and 
 to do whatever may be required to make its organization 
 perfect and complete as a Federal corporation. The shares 
 of any such corporation may continue to be for the same 
 amount each as they were before the conversion, and the 
 directors may continue to be dkectors of the corporation until 
 others are elected or appointed in accordance with the pro- 
 visions of this section. When the Federal Reserve Board has 
 given to such corporation a certificate that the provisions of 
 tills section have been complied with, such corporation and 
 all its stockholders, officers, and employes, shall have the 
 same powers and privileges, and shall be subject to the same 
 duties, liabilities, and regulations, in all respects, as shall 
 have been prescribed by this section for corporations origi- 
 nally organized hereunder. 
 
 "Every officer, director, clerk, employee, or agent of any 
 corporation organized under this section who embezzles, ab- 
 stracts, or willfully misapplies any of the moneys, funds, 
 credits, securities, evidences of indebtedness or assets of any 
 character of such corporation ; or who, without authority from 
 the directors, issues or puts forth any certificate of deposit, 
 draws any order or bill of exchange, makes any acceptance, 
 as^gns any note, bond, debenture, draft, bill of exchange, 
 mortgage, judgment, or decree; or who makes any i^se entry 
 in any book, report, or statement of such corporation with 
 intent, in either case, to injure or defraud such corporation or 
 any other company, body politic or corporate, or any indi- 
 vidual person, or to deceive any officer of such corporation, 
 the Federal Reserve Board, or any agent or examiner appoint- 
 ed to examine the affairs of any such corporation ; and every 
 receiver of any such corporation and every clerk or employee 
 of such receiver who shall embezzle, abstract, or willfully 
 misapply or wrongfully convert to his own use any moneys, 
 funds, credits, or assets of any character which may come 
 into his possession or under his control in the execution of 
 his trust or the performance of the duties of his employment; 
 and every such receiver or clerk or employee of such receiver 
 who shall, with intent to injure or defraud any person, body 
 
328 EXPORTING TO THE WORLD 
 
 politic or corporate, or to deceive or mislead the Federal 
 Reserve Board, or any agent or examiner appointed to eac 
 amine the a&irs of such receiver, shall make any false entry 
 in any book, report, or record of any matter connected with 
 the duties of such receiver; and every person who with like 
 intent aids or abets any officer, director, clerk, employee, or 
 agent of any corporation organized under this section, or re- 
 ceiver or clerk or employee of such receiver as aforesaid in 
 any viohition of this sectbn, shall upon conviction thereof be 
 imprisoned for not less than two 3rcars nor more than ten 
 years, and may also be fined not more than $5,000, in the 
 discretion of the court. 
 
 "Whoever being connected in any capacity with any cor- 
 pcmtion organized under this section represents in any way 
 that the United States is liable for the payment of any bond 
 or other obligation, or the interest thereon, issued or incurred 
 by any corporation organized hereunder, or that the United 
 States incurs any liability in respect of any act or omission 
 of the corporation, shall be punished by a fine of not more 
 than $10,000 and by imprisonment for not more than ive 
 years.** 
 
 Passed the Senate September 9, 1919. 
 
 Attest: GEORGE A. SANDERSON, Secretary. 
 
 Passed the House of Representatives, November 7, 1919. 
 
 Attest: WM. TYLER PAGE, Qerk. 
 
 Making Investments 
 In Fanigm ComUnn 
 
 f Our commercial relations with other foreign countries should 
 not cease with our mere desire to sell them what we have got 
 We must show a sincere interest in the devdopment of their own 
 countries as well. There are many countries in the world — par- 
 ticularly in South America — that are still in a primitive stage of 
 development. They need financial assistance for their internal 
 improvements. They need highways, railroads, drainage sys- 
 tems, water works, devek^mient of water power sites, and harbor 
 improvements. We haveiiecn urged to keep away from nu^di^ 
 these investments in foreign countries; we have been tdd that 
 the Germans tried it, and that the Germans failed. But they 
 failed because they tried unscrupulous methods. They tried to 
 jam "Made-in-Germany" goods down the throats of the people 
 they helped with thdr gokL Howcm» the poU^ of maldng 
 
 AMERICAN BANKS IN FOREIGN TRADE 329 
 
 investments seems to be a perfectly sound plan of coopera- 
 tion. England's investments in Argentina, alone, are over 
 two billion dollars, and yet witiiout following the German 
 method she has worked up the largest tirade with Argentina 
 of any other nation. 
 
 Treaties join us with other nations of the world politically. 
 They should join us commercially as well. Proof of our sin- 
 cerity in the f uldUment of our moral obligations should not be 
 given in words alone. It should be interpreted in deeds. There 
 are many countries today that need capital for bettering their 
 condition in life; for internal improvements that will make their 
 people more prosperous, and more independent of poverty. Pros- 
 perity at home dq^ends very much on the prosperity of all 
 classes. If the farmer has a poor crop, every other branch of 
 industry will feel it. It is the same way with countries. 
 
 if the nations with whom we wish to increase our business 
 remain tmdevebped, their buying power will remain undeveloped. 
 If we use our reserve gold tO'develop the forests and agricul- 
 ture of Chile, the mines of Peru, and Bolivia, and the minerals 
 of Ecuador a wave of prosperity would soon sweep that section 
 oi the gk>be and we would feel it The pec^e of those cotmtries 
 would have more money with which to buy our wares, and what 
 is more important, we would enjoy their friendship and confi- 
 dence which is necessary in our relations with small nations. 
 
 We must not go into the business of lending money to foreign 
 nations with reckless abandon, however. We must proceed cau- 
 tiously. 
 
 In connection with this point the ''New York Journal of 
 
 Commerce" in an editorial said: 
 
 "Almost every commercial nation in the world is today looking 
 to the United States as the source of its supply of necessary 
 capital f<Mr investment. East as well as West, the situation is 
 the same. It is pointed out by representatives of eadi country 
 that after-war conditions render self-dependence impossible and 
 that a surplus of imports over exports is practically necessary 
 if the national economic interest and well-being is to be preserved 
 and its progress is to continue. There are a few parts of the 
 earth where this demand is not felt and which expect and wish 
 to go on selling us more than they import Most of these regions 
 are in South America and tiiey rqiresent sections of trade whidi 
 are hardly mor^ fpr the greater part, than of secot^ry desira- 
 
I 
 
 m EXPORTING TO THE WORLD 
 
 bility. The opposite condition — ^that which calls for more im- 
 ports from Us than it can supply exports to us — is more generally 
 dbaiacteristk. It is a situation of first in^XNtance to our f uture 
 financial and investment policy as well as to our own trade. 
 
 ".What the present international position of affairs really sig- 
 nifies is that the United States is offered practically its chmce 
 of the ^investments of the world. GMmtries which cannot pay 
 us by return shipments of goods — as most cannot — would give 
 us securities, a share of their future prospects and development. 
 This is a natural outcome of the great exertions made by the 
 European countries .during the war. They cannot sup{dy the 
 fluid capital needed other by tiidr own dtizens or by Uie inhabi- 
 tants of the newer countries, and the latter accordingly turn to 
 us for direct shipments of goods which they will settle in securi- 
 ties since they cannot pay in return shipments of goods or money. 
 Not all these calls can, however, be heeded. We have not the 
 suri^us wealth to satisfy them if we would, and we would or 
 ought not to do so if we could, since such action would imply 
 still greater sacrifice on the part of our consuming public at 
 home, with higher prices and still greater industrial difficulties 
 than must now be met As things stand, we must pkk and 
 choose our fidds of acdvity abroad, and must not only select 
 desirable fields of investment in the several countries but must 
 also discriminate between the countries themselves. 
 
 "The problem of international investment now presented is 
 not, however, mmple or susceptible of sdution by ordinary 
 methods. What it involves is really the selection of spheres of 
 trade or commercial influence. We cannot control the trade of 
 the world and ought not to try to do so even if it were possible. 
 Foreign capital, in the future as in the past, will implant itself 
 beside our own and compete with it Our interest on invest- 
 ments and the eventual liquidation of our principal must be 
 paid largely in the products of the countries to which we now 
 cfttmst our surt^us funds. Wise chmce of fields of investments 
 win consider, therefore, not only the immediate safety, security 
 and productiveness of our funds, but also the probability that 
 future political conditions in the countries where we place such 
 funds will be stable, future commercial opportunities encourag- 
 ii^ and'future export trade likely to grow rather than to decline. 
 We can easily place our loans or advances where they encounter 
 
 AMERICAN BANKS IN FOREIGN TRADE 331 
 
 an unfriendly atmosphere, have to suffer from hostile or dis- 
 couraging conditions, or be considered merely a temporary helpj 
 instead of the foundation of a permanent business relationship.! 
 Investments of such a kind, even if scrupulously repaid, prind- 
 pal and interest, would be largely wasted. They would fail of 
 attaining their chief international significance since they would 
 not have laid the foundation for future business.'' 
 
 Foreign Investmenis 
 
 Create Permanent Market 
 
 The virtue of making foreign investments lies in the fact that 
 thipy lay the foundation for permanent and future business. If 
 some South American country, for instance, borrows money 
 
 with which to build a railroad, in all probability some American 
 factory will furnish the rails, another the cars and locomotives, 
 and still another the structural machinery. We make our in- 
 vestments in this form, and take in return tihe stocks and bcmds of 
 the railroad. Our home industries are influenced by the purchase 
 of these foreign securities by the creation of a market for their 
 products. 
 
 It is difficulty however, to induce American investors to place 
 their money in foreign securities unless they are assured of the 
 
 soundness of the loan. It is no easy matter to induce investors 
 to place their money in isolated districts within the United States 
 proper, let alone thousands of miles away in an unknown land 
 with strange customs, different laws and commercial habits. 
 Before Uie practice of making investments in foreign countries 
 becomes a popular mie, therefore, it will be necessary to show 
 the American investor that it is just as simple and safe to loan 
 out money in Argentina, or in South Africa as it is in any part 
 of the United States. He must, however, have complete infor- 
 mation from every angle so that the barrier of prejudice may 
 be completely reduced. He must know somediing about the 
 character of the people he is asked to do business with. He must 
 know something about their daily habits of life, whether they 
 are industrious, thrifty and honest. He must be fully informed 
 as to the stability of the government and the sincerity of those 
 who are at the head of it When he has been given all this in- 
 formation then it is time to interest him in the matter of making 
 proper hmitments k foreign countries. 
 
! 
 I 
 
 m EXPORTING TO THE WORLD 
 
 The American people must become active in foreign fields. 
 We are already leading the way in exportations. We should now 
 help oar customers financially if they need help. If we have the 
 capital which would make industry hum in a country which has 
 been apparently indifferent to industrial progress we should 
 place it at the disposal of that country as long as it complies with 
 Ae conditions. We can make our own country richer by making 
 our neighbors richer. If we increase the purchasing power of 
 the people about us, it will mean that the factories in the 
 United States will have more to da 
 
 CHAPTER XX 
 
 OUR MERCHANT MARINE 
 
 It has been said that a great merchant marine is not as neqes* 
 saiy toward the building of a foreign trade as many suspect it to 
 be. We hear people upon all sides declare that before the war 
 when oar merchant marine was practically a negligible quanti^ 
 in comparison to the merchant fleets of other nations we were able 
 to secure trade in foreign nations in spite of the handicap. There 
 is some txttHk in this, of course. It is true tiiat we sh^iped our 
 merchandise in foreign holds widiout suffering from such prac- 
 tice, and it is also sound to declare that our foreign trade can 
 keq> on thriving without the assistance of a great moxhant 
 marine to carry our goods. It has been done before; naturally » 
 it can be done again. 
 
 But times are dianging. We are no lm^;er a small nation 
 around the comer taking care of. occasaooal orders coming from 
 a foreign land. We are now expanding. Our sign is out on the 
 front door reading: "Uncle Sam, World Trader." We must ren- 
 der service to our new made customers. If we do not some other 
 trader will It was all very well tor vato permit a great bulk 
 of our merdiandise to be carried in the ships of our competitors 
 when our national policy did not justify greater activity in 
 world commerce. But the war woke up the American people. 
 Without a merchant fle^t we found oursdves in the throes of 
 the German submarine peril. For a time our business, without 
 the use of the ships that were at our disposal before the 
 war, was being shattered to pieces because we could no% get 
 tonnage in which to carry merchandise. We turned then to 
 the Ic^cal program: to build our own ships, and we have 
 been building them ever since. 
 
 The building up of a merchant marine is a step forward. 
 Failure to maintain our shipping policy in one form or another 
 —whether under private or Government direction — means a 
 
 833 
 
334 
 
 EXPORTING TO THE WORLD 
 
 step backward, regardless of what we were able to do without 
 a merciiaiit marine before the War broke out 
 
 Europe's Advantage 
 ill Ship lonnage 
 
 Belore the war Europe enjoyed a great advantage over the 
 United States in that she had direct steamship connections with 
 all section of the world. Peoples from other sections of the 
 
 globe chose to go to Europe because they received better trans- 
 portation accommodaticnis. There were faster steamers con- 
 necting European ports with those of other countries. Mail and 
 freight steamers sailed from one port to the other more fre- 
 quently. As a result the people from other continents pre- 
 ferred Europe rather than the United States. The frequency 
 of sufings made matters very easy for the Knglishman who 
 wished to visit his branch office in the East Indies or in South 
 America. The frequency of the mails made it possible for the 
 European merchant to keep in close touch with his customers 
 overseas. These advantages the American merchant did not en- 
 joy, and the lack of them isolated him from the rest of thd 
 world. 
 
 A merchant marine should have a definite object. If our only 
 reason for having a merchant marine is to carry our own mer- 
 chandise to foreign countries then a merchant marine is not a 
 necessary institution. We can revert back to the pre-war days, 
 and permit other nations to cany our wares, and we can continue 
 to develop our foreign business. Rut there is a definite object 
 in having an American merchant marine. It must render 
 service. America must establish fast lines between the prin- 
 cipal ports of the wc^d. She must send the mails to distant 
 ports faster than they were ever sent before. She must have 
 frequent sailings not only of freight steamers but mail and 
 passenger vessels as well. If we are to co-operate with our 
 enterprising foreign trade merchants we must be able to ex- 
 tend lliem the facilities of a modem up-to-date delivery and 
 transportation system just as we have done widiin the borders 
 of our own country. A merchant marine will do this. 
 
 Speaking before the Sixth National Foreign Trade Convention 
 Frederick J. Koster, President of the San Francisco Chamber of 
 Commerce said: 
 
 OUR MERCHANT MARINE 335 
 
 "We need in large measure our own national delivery system, 
 and definite trade routes must be established, with large com- 
 bination freight and passenger ships, with regular scheduled 
 sailings by direct routes between important American and foreign 
 ports in all directions, so that American shippers in any section 
 of our countiy may have the benefit of through transportation 
 to any unportant port in the world. This will mean that our rail- 
 road carriers will constitute a part of a transportation system 
 that does not end at coasts. The time must come when, at every 
 railroad station in our country, time-tables, schedules and inform- 
 ation will be obtainable by any shipper concerning the route and 
 the cost of carriage to every port in the world 
 
 "These things are not only posnble, but they are absolutely 
 necessary, and they mean as much to die people of the interior 
 of our country as to those who live nearer the coasts." 
 
 Spectacular Growth 
 of Merchant Marine 
 
 The United States in 1914 was represented in the trade of 
 ilhe world by fifteen seagoing vessels with registers ranging 
 above 1,000 tons. 
 
 According to figures of the United States Shipping Board 
 issued in August 29, 1919, the United SUtes boasted of 1,280 
 vessels. Befcm the war she was down at the bottom of the 
 column, so to speak. The merchandise of American manu- 
 facturers and exporters was carried in the holds of foreign 
 shipowners. Today it is being carried in holds owned by the 
 United States to a great extent 
 
 In June 1914^ the total gross tonnage of sh^s flying the Ameri- 
 can flag, including coastwise shipping and the fleet operating 
 on the Great Lakes, was 4,287,000 tons. 
 
 In June 1919, its gross tonnage was 11,983,000 tons, an in- 
 crease of 278 per cent, chiefly in oceangoing vessels. 
 
 The steam tonnage under the American flag is now 24.8 per 
 cent of the steam tonnage of tiie worid. The figures are shown 
 in the following tables: 
 
 The world steam tonnage of 100 gross tons and over on June 
 SO, 1919, as reported by Lloyds was: 
 
 Number of vessels 24,38*6 
 
 Gross tonnage 47397,000 
 
 Deadweight tomage 71,845,000 
 
/ 
 
 m EXPORTING TO THE WORLD 
 
 American tonnage of 100 gross tons and over on June 80, 
 1919, including tonnage on Great Lakes, was : 
 
 Number of vessels 3,G87 
 
 Gms tonnage U,983,000 
 
 Deadweight totmage V!J»7Ajm 
 
 Per cent of world steam tonnage of 100 grois tons and over 
 under United States flag, June 30, 1919 : 
 
 Percent of number • 15.1 
 
 Percent of tonnage 24.8 
 
 ( These percentage figures include txmnage on the Great Lakes ) . 
 
 How Other Ctmnfnes 
 
 Suffered During War 
 
 The forgoing figures show how the United States improvea 
 her positicm in shipping during the war, and practically out- 
 distanced all rivals in shipbuildiiig activities. Now let ns tnra 
 for a moment to see what happened to Great Britain. Great 
 Britain on August 1, 1914, possessed 18,691,000 gross tons of 
 shipping, lost during the war 8,785,000 gross tons. At the sign- 
 ing of the armistice, November 11, 1918, her total tonnage was 
 15,006,000 gross tons. 
 
 Germany in 1914, possessed 5,135,000 tons of shipping. Her 
 losses amounted to 9,700,000 tons. Her rqrfacement by new con- 
 struction and seizure of enemy ships was 950,000 tons. Her 
 fleet at the time of the armistice amounted to 3,385,000 tons. 
 
 In 1914 Japan's shipping totalled 1,708,000 tons. She lost 
 i275,000 tons. She built 885,000 tons and in November, 1913 
 possessed a total of 2,318,000 tons, showing a net gain of 610,000 
 tons. By the elimination of the German merchant fleet, Ji^pan 
 now stamis third in the list of maritime nations. 
 
 The British colonies lost 875,000 tons of shipping during the 
 war. They replaced 475,000 tons and increased their merchant 
 fleet from 1,632,000 tons to 1,832,000 tons, a net gain of 200,000 
 tons. 
 
 Holland showed at the dose of the war a net gain of 335,000 
 tcms. Her total fleet increased from 1,472,000 to 1,807,000 tons. 
 Her replacement was 560,000 tons. 
 
 Norway lost 176,000 tons out of 1,957,000 tons. Although 
 she made a replacement of 775,000 tons she showed at the end 
 of the war only 1,557,000 tons, incurring a net loss of 400 tons. 
 Mmvay is now in seventh jOaoe as a maritime nation. 
 
 OUR MERCHANT MARINE 
 
 337 
 
 France had 1,923,000 tons in 1914. She lost 905,000 tons, re- 
 placed 485,000 tons. With a net loss of 480,000 tons she showed 
 at tiie end of the war 1,143,000 tons of shipping. 
 
 Italy was a heavy loser. At the beginning of the war Italy 
 boasted of 1,430,000 tons for her foreign commerce. Of this 
 she lost 857,000 tons. Her replacement was 375,000 tons, and 
 after the war she had only 930,000 tons with which to do bun- 
 ness with foreign countries. Her total loss was 500,000 tons. « 
 
 The total worid tonnage in 1914 was 42,146,000 tons. 
 
 The total world losses during the war were 18,286,000 tons. 
 
 The total world replacement was 15,049,000 tons 
 
 The total world net loss was 3,237,000 tons. 
 
 Total tonnage of world, Nov., 1918, 28,309,000 tons. 
 
 The f<»i^gouig statistics very dosdy show how the United 
 States stands today m the shipping industry with respect to the 
 other nations of the world. 
 
 Ocean Routes That 
 Vessels Follow 
 
 The American merdiant marine is constantly adding new trade 
 nmtes to its schedule and it is said that American ships may 
 now be seen on 41 world routes. 
 
 The chief ones may be said to fall into the following divisions: 
 
 (A) From the northeastern ports of the United States to the 
 British ChanneL^Tlm route connects the leading commercial 
 nations of die globe, and over ft passes not far from twenty per 
 cent of the total tonnage of the world. Skirting the United 
 States seaboard to the Newfoundland Banks, it then curves 
 across the Atlantic. Branching off at various pomts of this 
 route, other hues touch ports of £urc^ from the Mediterranean 
 to the Balti<^ and ports of America from the Caribbean Sea to 
 Canada. 
 
 (B) Prom the eastern seaboard of the United States, and from 
 southern and western Europe, through the Mediterranean and 
 the Suez Canal to China, Japan and the East Indies. 
 
 (C) The South African roM^r.-^Ibnnectmg Athmtic ports of 
 America and Europe wiA the southern, eastern and western 
 coasts of Africa, and with New Zealand and Australia. Sailing 
 vessels also use this route for connections with the Orient and 
 the East Indies, their inability to navigate the £ed Sea barrii^ 
 the Suez Canal route to them. 
 
m EXPORTING TO THE WORLD 
 
 (D) The South American route, from North Atlantic to South 
 AmeiicaQ, east and west coast, ports. 
 
 (E) The route ammd Somih Amerka, comiectiiig Amerkan 
 
 and European Atlantic ports with the Pacific coast to the Americas. 
 
 (F) The Gulf and Caribbean route, affording access to the 
 p(Mts of the United States Gulf Coast, Mexico, Central America, 
 the nor& coast of South America, and the West Indies. 
 
 (G) The Pacifie route, connecting North America with Asia, 
 over which an extensive trade with China, Japan and the Phil- 
 hppines is carried on. 
 
 (H) From the North American Pacific coast to New Zealand, 
 Australia and the South Sea islands. 
 
 (I) The Pamama ComH route, the development of the use of 
 which promises to be rapid and extensive with the relief from 
 the abnormal conditions created by the war. European trade 
 with the west coast of North and South America, and America's 
 Atlantic and Gulf trade with the Pacific coast and the Orient, can 
 he cjqpctod to move to an increasing degree by way of Ptaama. 
 
 History of American 
 Merchant Marine 
 
 Briefly, we may trace the growth of our shipping back to 
 the cokmial period when Massachusetts owned about one sea- 
 going vessel for every hundred inhabitants. 
 
 During the Revolution, the colonies unable to build a navy, 
 through the lack of funds, commissioned hundreds of priva- 
 teers, which, manned by able seamen, furnished an enviable 
 chapter to Amerkan naval history. After the war, however, 
 the merchant marine had a difficult struggle to keep alive. 
 The situation became acute when a British order-in-council 
 prohibited the purchase of American-made vessels. This 
 order was issued in spite of the fact that America at that 
 thne could build ships at less cost than in England. 
 
 In 1789, the Constitutional Government immediately came 
 to the rescue of the merchant marine. Congress passed a law 
 providing for a reduction of 10 percent In the duties laid upon 
 imports when carried by American sh^ Another measure 
 laid a tax of 6 cents on American-built ships if owned by 
 Americans, 30 cents if owned by foreigners, and 50 cents i£ 
 foreign-built and foreign-owned. 
 
 OUR MERCHANT MARINE 889 
 
 This legislation had an almost immediate effect. The regis- 
 tered tonnage in the foreign trade increased from 123,893 tons 
 in 1789 to MBfiU in 1790, and m 1794 the registered tonnage 
 reached a total of 438, 863 tons. The effect on the transpor- 
 tation of imports in American vessels was also encouraging. 
 In 1789 the percentage of imports carried in American bot- 
 toms was 17.5 percent, 41 in 1790, 68 in 1791, 67 in 1792, 82 in 
 1793 and 91 in 1794. 
 
 Our merchant marine experienced a set-hack again at the 
 time of the French Revolution in 1800, when those in power 
 in France had difficulties with the Administration in- Wash- 
 ington. As a result French privateers broke loose in the 
 West Indies, and began a bitter campaign against American 
 vessels. For self protection, the Government established a 
 navy department, and naval warfare immediately began on 
 French ships that attacked our commerce. A series of Amer- 
 ican victories on the high seas aoon convinced the French 
 Government that it was a better policy to leave American 
 shipping alone« 
 
 During the 3rears preceding the War of 1812, there was no 
 letup on attacks on American shipping. France and England 
 established blockades aimed to injure American commerce. A 
 British order-in-council f<Mrbade neutrals to trade with France, 
 and France retaliated with orders of her own, ail of which 
 were aimed to cripple our growing merchant marine. Eng- 
 land's claim to the right of impresment caused the seizure 
 and confiscation of millions of dollars worth of American ves- 
 sels and cargoes, and thousands of captured American seamen 
 were forced to serve under the British flag against their wilL 
 
 As a measure of self protection, the famous Embargo Act 
 of December 22, 1807, was enacted. Instead of protecting and 
 saving American commerce the Embargo, after being in force 
 for 15 months, cost the United States more tiian $100,000,000, 
 and neariy wiped out of existence the shipping and shipbuild- 
 ing industries. Then the war came, and another series of 
 brilliant victories by American armed merchant-men over 
 British warships was recorded. 
 
/ 
 
 840 EXPORTING TO THE WORLD 
 
 American Shipping 
 Thrived in 1810 
 
 It is interesting to note that the tonnage of American ves- 
 - aels engaged in foreign trade in 1810—980,000 tons— -was 100,- 
 
 000 tons greater than the paper figures for 1910, and not more 
 than two-thirds of the total at this later date was engaged in 
 foreign commerce* 
 
 The size of ocir merchant marine at this period enconraged 
 Congress to the belief that it could he farther developed by 
 letting the bars down on some of the restrictions placed on 
 the importation of merchandise to this country. Consequent- 
 ly, in 1815, Congress passed the Reciprocity Act removing 
 tonnage and preferential duties laid upon imports, bnt it had 
 little effect at the time as the nations that ordinarily would 
 have taken advantage of this Act, were too busy developing 
 their own business at home. However, when the Act was 
 renewed in 1828, there was a general acceptance, as 
 Europe was now in a better positicm to pay attention to its 
 foreign ^ymmerce. Competition became very keen, and not 
 to the advantage of American shipping. 
 
 The Era of Steam 
 NiwigaHoK Arrive 
 
 In 1819, the Savannah, the first steam vessel to cioss the 
 Atlantic, inaugurated the era of the steamship, which has 
 
 played such an important part in the history and development 
 of commerce in these modern days. From that date the de- 
 velopment of the steamer was rapids Lines were established 
 in all parts of Europe; steam vesseb plyed along the Atlantic 
 coast of the United States; lines were inaugurated to the 
 West Indies. It was not until 1836, however, that the present 
 great trans-Atlantic service had its beginning. In that year, 
 Junius Smith, an American organized the British and Amer- 
 ican Steamship Navigation Company, and chartered a 700-ton 
 steamer, the Sirius, for the first trip across the Atlantic. Then 
 the Great Western Railroad, in the same year, sent the Great 
 Western (1,320 tons) across the Atlantic on her initial trip. 
 
 But steam navigation did not pay in those days, so Samuel 
 Cunaidy of Halifax, amcesved the idea of obtaining a subsidy 
 
 OUR MERCHANT MARINE Ul 
 
 of $425,000 annually from the British government, and founded 
 the Cunard Line which is operating to this day. The first 
 ship of the line crossed in 1840. The subsidy was later in- 
 creased to $860,000 and the western terminus was moved from 
 Boston to New York, where it is still located. The British 
 Government, recognizing almost instantly the value of aiding 
 and cooperating with the shipping industry, extended aid to 
 other lines running to the West Indies, South America, Aus- 
 tralia and India. 
 
 In the meantime, the United States remained idle in the 
 matter of assisting American shipping. The most encourag- 
 ing step taken at this time was the establishment of a mail 
 subsidy in 1845, resulting in the starting of two lines to Eur- 
 ope, on one of which was opmted the finest steamer on the 
 trans-Atlantic route. About the same time contracts were 
 made with other companies operating lines to the West Indies 
 and other points north of the Panama Canal. In 1855, Con- 
 gress repealed the mail subsidy, and the American merchant 
 marine again suffered a 8et4>ack. The trans-Atlantic lines 
 were suspended and their business was taken over by British 
 interests. 
 
 The final blow to American shipping was given during the 
 Civil War, when foreign commerce decreased, insurance rates 
 went up, wages soared, firemen and seamen went into the 
 navy, and American capital was used to develop enterprises 
 of a more assuring return. In the meantime, European na- 
 tions began a keen competition in the carrying trade, with 
 Great Britain in the lead. The leading maritime nations of 
 that time were Ghreat Britain, France, Germany, Belgium, 
 Holland, Austria, Italy, Spain, Norway and Sweden. Regis- 
 tered tonnage in the United States steadily decreased until 
 1898, when it was 726,213 tons— the. lowest for nearly 100 
 years* 
 
 Again Shipping 
 Industry Js Revive'^ 
 
 In 1910, it rose to 782,617 tons. The Panama Ax^ of 1912 
 
 providing for the registry of foreign-built vessels not more 
 than five years old, and the Shipping Act of 1914 removing 
 this age limit caused a gain of over 600,000 tons to American 
 shipping, and when the War broke out ^nerkan shipping 
 
m EXPORTING TO THE WORLD 
 
 once more had a splendid opportunity of leading the world. 
 In 1915, there was passed the Seaman's bill calling for in- 
 creased wages and other conditions on American vessels. 
 American shipowners, prottxlmg, declared that thejr conld 
 not sncceasltilly compete against foreign interests tinder these 
 conditions, and consequently a number of companies sold out 
 to foreign concerns. 
 
 However, the demands made npon shipping by the War 
 y ere too great to consider obstacles, and from this date rapid 
 I strides were made in American shipping. 
 
 In 1919 a new era in the history of the American merchant 
 marine was inaugurated with the creation of the Shipping 
 Board with wide powers to operate a corporation to build, buy 
 or lease vessels or merchant ships. In the language of the 
 Third Annual Report of the United States Shipping Board the 
 functions of that organization are described as follows: 
 
 **The United States Shipping Board served as the agency 
 through which the problems of shipping control were hand- 
 led, and the war powers of the United States in the field of 
 transportation were administored. It regulated all the ship- 
 ping of the country; repaired the seized German ships; re- 
 cruited and trained officers and seamen for merchant vessels; 
 supervised the chartering of all ships (foreign and domestic) 
 from American ports; developed port facilities; handled large 
 problems of labor control; and operated, directly or through 
 private shipping agencies, a vast merchant marine." 
 
 The Shipping Board's activities in the movement of troops 
 are described as follows: 
 
 "One of the accomj^ishments of America's participation 
 in the Worid War was the movement of 8,000,000 troops 
 overseas, with the elaborate supply of munitions, material, 
 and food necessary for maintaining these troops at a -high 
 point of efficiency. 
 
 "In all its efforts for the acquisition and the creation of 
 new tonni^, the Board's uppermost thought was needs of 
 the Army. German vessels were taken over by the Board, 
 and the huge task of repairing and putting them into Army 
 service was quickly done ; Dutch ships in our ports were 
 acquired; 'many neutral vessels were chartered from Norway, 
 Sweden, and Denmark; Japanese steamers were acquired 
 in considerable number by purchase; all American steamers 
 
 Before the Civil War America led the maritime nations of the world. 
 American clipper ships outsailed all others. The quantity and quality 
 of the output of American shipyards was unexcelled. Before the Great 
 War^ however, American sea-going tonnage represented barely two per 
 
 cent, of the world's totaL 
 
INTENTIONAL SECOND EXPOSURE 
 
 m EXPORTING TO THE WORLD 
 
 once more had a splendid opportunity of leading the world. 
 In 1915, there was passed the Seaman's bill calling for in- 
 creased wages and other conditions on American vessels. 
 American shipowners, protesting, declared that they could 
 not successfully compete against foreign interests under these 
 conditions, and consequently a number of companies sold out 
 to foreign concerns. 
 
 However, the demands made upon shipping by the War 
 were too great to consider obstacles, and from this date rapid 
 'strides were made in American shipping. 
 
 In 1916 a new era in the history of the American merchant 
 marine was inaugurated with the creation of the Shipping 
 Board with wide powers to operate a corporation to build, buy 
 or lease vessels or merchant ships. In the language of the 
 Third Annual Report of the United States Shipping Board the 
 functions of that organization are described as follows: 
 
 "The United States Shipping Board served as the agency 
 through which the problems of shipping control were hand- 
 led, and the war powers of the United States in the field of 
 transportation were administered. It regulated all the ship- 
 ping of the country; repaired the seized German ships; re- 
 cruited and trained officers and seamen for merchant vessels ; 
 supervised the chartering of all ships (foreign and domestic) 
 from American ports ; developed port f adlities ; handled lai^ 
 problems of labor control; and operated, directly or through 
 private shipping agencies, a vast merchant marine." 
 
 The Shipping Board's activities in the movement of troops 
 are described as follows: 
 
 "One of the accomplishments of America's participation 
 in the Worid War was the movement of 2,000,000 troops 
 overseas, with the elaborate supply of munitions, material, 
 and food necessary for maintaining these troops at a -high 
 point of efficiency. 
 
 "In all its efforts for the acquisition and the creation of 
 new tonnage, the Board's uppermost thought was needs of 
 the Army. German vessels were taken over by the Board, 
 and the huge task of repairing and putting them into Army 
 service was quickly done; Dutch ships in our ports were 
 acquired; many neutral vessels were chartered from Norway, 
 Sweden, and Denmark; Japanese steamers were acquired 
 in considerable number by purchase; all American steamers 
 
 Before the Civil War America led the maritime nations of the world. 
 American cHpper ships outsailed all others. The quantity and quality 
 of the output of American shipyards was unexcelled. Before the Great 
 War, however, American sea-going: tonnagre represented barely two per 
 
 cent, of the world's totaL 
 
OUR MERCHANT MARINE 
 
 available for the Nation's use were requisitioned; Lake ships 
 were reconstructed and brought to the seaboard, and a very 
 extensive shipbuilding program was launched. 
 
 *'0n November 1, 1918, the total tonnage in active service 
 controlled by the United States Shipping Board, amounted to 
 1,196 vessels of 6,540,205 deadweight tons. This included 
 requisitioned tonnage, time chartered, neutral, and seized Ger- 
 man vessels. Of this total, 598 vessels of 4,269,838 dead- 
 weight tonnage were in the direct service of the Army and 
 Navy. These carried troops and supplies to European ports. 
 This was the situation at the signing of the armistice on No- 
 vember 11, 1918." 
 
 The Shipping Board's authority to even restrict the trans- 
 fer of American vessels to foreign registery without permis- 
 sion is contained in Section 9 of the Shipping Act of 1916, 
 providing that when (he United States is at war or during 
 any national emergency, the existence of which is declared 
 by proclamation of the President, it shall be unlawful, without 
 first obtaining the approval of the Board, to sell, mortgage, 
 or lease any vessel documented under the laws of the United 
 States or to transfer any such vessel to a foreign r^istry or 
 flag. On June 4, 1918, the measure was made more difficult 
 by entirely withholding permission to American vessels of 
 more than 100 tons gross registry to pass to any foreign flag. 
 
 On December 12, 1918, it was decided to authorize the sale 
 of wooden vessels .then under construction in American ship- 
 yards to foreign-owned American corporations and to for- 
 dgners without restriction, excepting to enemy ownership, 
 and the transfer of all such documented tonnage to foreign- 
 owned American corporations, providing such transfers w^ere 
 not inconsistent with national interests; also the sale of aU 
 documented wooden vessels to foreigners with the privily to 
 transfer to buyer's flag in exceptional cases only, after care- 
 fully considering each case on its merits. This policy was 
 modified gradually until wooden vessels were permitted to 
 pass to foreign registeries unless there appeared to be some 
 good reason why the transfers should not be approved. 
 
 The Board's policy toward the disposal of American iron 
 and steel tonnage to foreign flags was somewhat different. It 
 says in the annual report: 
 
 "This marked relaxation of poUcy did not apply to the 
 
Z4A EXPORTING TO THE WORLD 
 
 transfer of American iron or steel tonnage to foreig^n flag^, 
 as to uncertainty of the international situation generally, the 
 duty of the United States to provide proper transportation 
 facilities lor the retara ci American soldiers from overseas, 
 and its moral obligation to carry food to the starving peoples 
 of Europe made it manifestly unwise to part with the control 
 of such desirable shipping.** 
 
 The Shipping Board was authorized on July IS, 1918, by 
 an amendment to the Shipping Act, to assume control over 
 construction for foreign account. The amendment provided 
 that when the United States is at war or when a national 
 ^emergency has been proclaimed by the President, the con- 
 struction or transfer of a vessel to foreign register was pro- 
 hibited unless under approval oi the Shipping Board. This 
 amendment was rigidly enforced until the signing of the ar- 
 mistice, but on November 11, 1918, the Board lifted this ban 
 and permitted unlimited construction of wooden tonnage for 
 American or foreign account and steel tonnage for American 
 account. On June 14, 1919, all restrictions were lifted when 
 Chairman Hurley advised all 8hip3rard8 in the United States 
 that construction of steel ships for foreign account would be 
 permitted upon presentation of all contracts to the Board. 
 
 Future of Ameriem 
 
 As to a bright future for the American merchant marine 
 there seems to be no doubt. The entire country is united in 
 its opinion that there must be an American-owned merchant 
 marine to carry the increased tonnage of merchandise, to 
 bbze new water trails to all parts of the worid, and to re- 
 awaken the enthusiasm of the old days for a commercial fleet 
 flying the American flag. At this writing as the United States 
 Shipping Board has discontinued its shipbuilding activities, 
 and has cancelled its contracts with private shipbuilding 
 yards, an encouraging feature of our shipbuilding industry 
 is seen in the renewed vigor with which these private yards 
 have gone after business. At the end of the year 1919, a 
 most encouraging report of the activities of private shipyards 
 was issued by the Atlantic Coast Shipbuilders' Association 
 which said in part: 
 
 OUR MERCHANT MARINE a4l» 
 
 ^American shipyards, instead of falling back as govern- 
 ment contracts are suspended, cancelled or completed, are 
 lofging steadily ahead. Work for private accounts is replac- 
 ing diat which was being done for the Shipping Board and 
 although a number of orders for American industries have 
 been completed or withdrawn, the shipyards today are build- 
 ing over a quarter of a million gross tons more than they 
 were a month ago and nearly half a million tons more than 
 in October. The total now under construction, exclusive of all 
 government work, is 805,000 gross tons, the equivalent of 
 more than 1,800,000 deadweight tons of sea-going vessels. 
 
 "This steady advance is only one of the encouraging fea- 
 tures in the development of the American shipbuilding in- 
 dustry. The shipbuilders, themselves, continue to show faith 
 in the future of the American merchant marine by taking over 
 contracts given up by the Shipping Board and will com- 
 plete the partially constructed vessels in the expectation of 
 finding a market for them. Omditions indicate that they 
 are justified in the belief that there will be a oontinticd de- 
 mand for American tonnage. 
 
 America Capable of 
 QuimiUy ProducHoa 
 
 ••As matters stand today, the United States is the only 
 
 nation in the world in a position to supply merchant vessels 
 quickly and in quantity. The British shipyards are tied up 
 with orders ior two years to come. Other foreign countries 
 are unable to supply the home demand and are seeking ton%« 
 nage elsewhere. There is nowhere to place orders for prompt 
 delivery but in the United States, and only the unfavorable 
 position of the exchange and in the insistence upon long- 
 temf credits are keeping back a flood of foreign orders. 
 
 **The factor of speedy delivery is a powerful asset for 
 American shipyards. Leading British shipbuilders who have 
 visited the principal plants in the United States frankly admit 
 that the output here is at the rate of two to three times that 
 of the Britii^ yards. This means that, shipway for shipway, 
 this country can produce double to treble the tonnage that 
 Great Britain can. Furthermore, with the great rapidity of 
 
346 EXPORTING TO THE WORLD 
 
 tnniovery the American shipbtiildiiig industry is getting^ so 
 much more service out of its i>lants that this factor will result 
 in a marked lessening of production costs that will enable 
 the United States to meet England's prices^ which are at 
 present lower because of cheaper labor. 
 
 *That speed of production, due largely to the employment 
 of more modern methods and the greater use of labor-saving 
 devices than in Britain, has not lessened the quality of Ameri* 
 can-built ships, is plainly manifest Smce the Armistice, 
 Lloyd's Register of Shipping, a British institution, has super- 
 vised the complete construction of nearly 600 steel steamers 
 « an United States yards and has rated every one of them 100- 
 Al, the highest class given. 
 
 **The showing of the American yards is the more remark* 
 able in that of 152 ships now being constructed for private 
 account only one is on foreign order. At present, therefofe, 
 American industry fs providing practically 100 per cent of 
 the work being done, in spite of the fact that the Shipping 
 Board is trying to dispose of hundreds ol compleled ships 
 cm liberal credit terms." 
 
 Government ActknUes 
 
 in Shipping Industry 
 
 Thus, we have seen how American shipping is progressing 
 by private enterprise, while at the same time there seems 
 to be much uncertamty as to what the United States Ship- 
 ignskg Board will do with the immense tonnage it has under 
 its control. When the war ended the Board returned certain 
 ships to their original owners; allocated others to different 
 routes to be operated by private interests under certain co»-> 
 ditions prescribed by the Board, and at the present writing 
 an outright sale to American concerns, and to foreign inter- 
 ests under certain restrictions is in progress. What the 
 future activities of the Shipping Board shall be rests with 
 Gnigfess. Measures are now under discussion in Wash- 
 ington tor the preservation in some form or other of a vig- 
 orous government shipping policy. There appears to be con- 
 siderable opposition to a government-owned and operated 
 merchant marine. But while there is a wide divergence of 
 
 OUR MERCHANT MARINE 
 
 347 
 
 opinion in this regard, nevertheless, in justice to the G>n- 
 gress, it must be said that there is an evident determination 
 in that body to develop our opportunities on the sea to the 
 utmost in the future. It seems evident, therefore, that the 
 bulk of our commerce will probably be carried in ships priv- 
 ately owned and operated as opposed to government owner- 
 ship. The only thing that private interests ask of the 
 government is the removal of certain restrictions that prevent 
 them from successfully competing with foreign countries, and 
 the enactment of legislation that will not only encourage the 
 industry but to help it phu^e itself on a permanent basis. 
 
 As a vmter recently said : "It is sreneralJy recognized that the 
 permanent development of our merchant marine can be best 
 accomplished through private ownership and operatkm. Com- 
 petition in tiie field of over-seas trade, in normal times on the 
 economic basis of profit, from services rendered, demands a 
 measure of individual initiative, freedom of judgment and 
 breadth of experience that cannot be had under government 
 control. It would seem clear that the only basis on which 
 new capital may be made avaikble for the development our 
 merchant marine is the prospect of earning reasonable returns 
 on the investment. Before a broad field of investment can 
 be made available to the shipping industry, however, the 
 ^l iality and security of ship mortgages, which are now sub- 
 ject to a variety of prior liens, must be improved and stand- 
 ardized. Furthermore, to assure American shipping a more 
 neariy equal basis of competitbn with foreign shipping, some 
 modification of restrictions imposed by our navigation laws, 
 which tend to increase unduly the relative cost of operation, 
 may well be considered.'' 
 
 With government assistance and cooperation, a privately 
 owned and operated American merchant marine seems to be 
 the logical poHcy at the present time. With changing con- 
 ditions the worid over, this is a time for individual initiative 
 and enterprise and in which a cumbersome Government 
 organization lacking the qualities requured in such efforts 
 as the present time demands, would be out of place. 
 
m EXPORTING TO THE WORLD 
 
 How Vessels 
 
 are Measured 
 
 The methods of measuriiig the capacity of a ship are con- 
 fusing to many. In concluding this chapter it seems 
 appropriate to give a brief explanation of these methods. 
 
 Ships are measured by three different methods. 
 
 (a) Displacement tonnage. 
 
 (b) Dead-weight tonnage. 
 (c> Raster tonnage. 
 
 Displacement tonnage : The weight of the volume of water 
 which the ship will displace when fully loaded with crew, 
 coal for steaming purposes, supplies, etc, on board. This 
 method is in use by the navies of the world, and assures 
 accuracy and uniformity. 
 
 Dead-weight tannage: The actual weight of the cargo 
 which a merchant ship can transport. This method is adap- 
 ted only to vessels that carry homogeneous bulk cargoes, 
 and not to passenger vessels or vessels carrying miscdla- 
 neous cargoes. 
 
 Register tonnage: Expressed in terms of gross tonnage 
 and net tonnage. Gross register tonnage represents the 
 entire cubical space of a merchant vessel. It is obtamed by 
 dividing the total interior capacity of a ship by 100. Net 
 register tonnage represents the remainder of the tonnage 
 after the sum of exempted spaces is deducted from the gross 
 tonnage. Exempted space includes officers' and crew 
 quarters, engines, boilers, and machinery, etc. The net ton- 
 nage may be said to be the portion of the ship which pro- 
 duces income by its capacity to carry cargo and passengers. 
 
 CHAPTER XXI 
 
 HOW GOVERNMENT HELPS EXPORTER 
 
 The object of the Bureau of Foreign and Domestic Commerce 
 of the United States Department of Commerce is to assist Amer- 
 ican manufacturers and exporters in the extension of their for- 
 eign trade. It has been said by American merchants that the 
 British and the German governments do more for their manu- 
 facturers and exporters in the matter of co-operating to obtain 
 foreign busmess than any other nations m the world; it is in- 
 teresting to note, however, that the same complaints have been 
 made by German and British interests against their own govern- 
 ments in which the United States has been held up as an 
 to the governing authorities. 
 
 There is no question diat the United States government has 
 made a commendable start in extending its activities to foreign 
 countries where competent officials may gather data and informa- 
 tion for American industry that is beginning to realize more and 
 more than ever before the necessity of extending operations to 
 all comers of the globe. The service that the government 
 offers is extensive. It compiles reports from all sections of the 
 world. It sends out special trade commissioners to obtam specific 
 information regarding commerdal conditions and opportuni- 
 ties for American merchants. It maintains commercial at- 
 taches in the principal trade centers of the world. . Through 
 the Qmsular service it is able to supply American manufac- 
 turers with constant reports of commercial conditions and 
 other important information for the use of American shippers. 
 
 Perhaps, the most important service rendered by the Bureau 
 of Foreign and Domestic Commerce is that through Commerce 
 Reports, a small daily bulletin compiled from reports sent in from 
 all sections of the world by consular agents and special investi- 
 gators. Names and addresses of foreign concerns desiring to 
 make connections witii American manufacturers and exporters 
 may be obtained through Commerce Reports. This buUetin is 
 
m EXPORTING TO TH£ WORLD 
 
 very complete in the infonnatiofi that it gives to those interested. 
 
 The latest news regarding the developments in industry and for- 
 eign trade may be found here. Many articles appearing in this 
 bulletin are general in character, bnt <^ten valuable con- 
 tributions dealing with specific lines of goods may be found 
 therein. ' 
 
 Tht bureau also issues annual reports compiled by consular 
 officers, which are supplements to Commerce Reports and 
 which contain reviews of the trade and industry of the con- 
 sular districts during the year. Manufacturers and exporters 
 who subscribe to tiiis branch of the government service value 
 these supplements highly as they show the general commer- 
 cial conditions as well as the statistics of imports and exports 
 of the particular articles that enter into the foreign commerce 
 of the districts discussed. These statistics often serve as a 
 basis for American shippers in arriving at a decision to enter 
 a certain field with a certain line of merchandise. 
 
 iUparis of Specified 
 ProdMCis Vah§Me 
 
 A very valuable service is rendered in the distribution of 
 monographs on foreign markets for sped tied products showing 
 tiie trade conditions, the extent of foreign competition, and the 
 methods of entering the market These reports are prepared by 
 experts in their fine who devote months of study to the subject in 
 hand. Upon publication these reports are placed on sale at 
 nominal cost and are very much sought by those interested in 
 the specific lines in which they deal. An idea of the subject cov^ 
 ered in these reports may be obtained by the following titles of 
 a number of monograms now ready for distribution : "Cotton 
 Goods in Latin-America," "Shoe and Leather Trade in the United 
 KtQgdonii" "Shoe and Leather Trade in Germany," "Cottm 
 Goods in Russia," ''Philippine Market for American Lumber," 
 '"Co m mer ci al Organizatikms in Switzerland," "Central America 
 as an Export Field," etc. 
 
 Concerning the methods of obtaining trade information a bul- 
 letin of the bureau has this to say : "The greater part of the ift- 
 formation is obtained from three sources: the Consular Service^ 
 wliidi indndes more tiian 300 consuls and many consular agcnti; 
 
 HOW GOVERNMENT HELPS EXPORTER 861 
 
 the Trade Commissioners, who study special industries in spec- 
 ific countries; and the Commercial Attaches, who are stationed 
 in the principal countries and give all their time to commercial 
 investigations. In addition, the statistics of American trade with 
 foreign countries are collected at American customhouses in co- 
 operation with the Treasury Department. 
 
 "Information from all these sources is forwarded to Wash- 
 ington and is distributed chiefly through the Bureau's publica- 
 tions, which may be classified as r«!gular, or periodical, publi- 
 cations and as special bulletins or monographs. These are for 
 sale by the District and Cooperative Offices of the Bureau and 
 by the Superintendent of Documents, Government Printing 
 Office, Washington, D. C" 
 
 Regular PfMeaikm 
 of the Bureau 
 
 The regular publications of the Bureau are the Commerce 
 Reports which are mailed daily; the quarterly volume with index 
 aad the quarteriy index. 
 
 The Moo^y Summaiy of Co mm erce and Finance is sold lor 
 m nominal yearly subscription. 
 
 The Quarterly statement contains statistics of imported mer- 
 chandise entered for consumption and is sold for a nominal 
 yearly subscription. 
 
 The Statistical Abstract is an annual publication. 
 
 Gmuneroe and Navigatioii is an annaal puMication containing 
 such information as imports of merchandise by articles and 
 countries ; exports of domestic merchandise by articles and coun- 
 tries ; imports entered for consumption, etc. 
 
 The Chief of the Bureau of Foreign and Domestic Commerce 
 issues a valuable annual report 
 
 Among the free publicaticms is one called Exports of Domestic 
 breadstnffs, cottonseed oil, etc., a mondily bulletin as well as a 
 monthly report of total values of imports and exports. 
 
 Special Bulletins 
 of the Bureau 
 
 The spedd bulletins of die Burean are ffivided into five 
 
 groups : (a) Special Agent Series, which comprise monographs 
 on special industries and special phases of commerce, prepared 
 
m EXPORTING TO THE WORLD 
 
 by the commercial agents or trade commissioners ; (b) Special 
 Consular Reports ; (c) Miscellaneous Series; (d) Foreign Tar- 
 iff Series; and (e) Indttstnal Standards. 
 
 The last named is a new series recently undertaken by tlie 
 Bnreati. It consists of standard specifications for industrial 
 materials that have been prepared by the Government and by 
 technical societies and other organizations, and accurate and 
 leliable translations of them into foreign languages. The pur- 
 pose of these puUicatiotts is to facilitate commerce between the 
 United States and forngn countries by translating and making 
 available standard specifications for material of various kinds, 
 commercially acceptable and representing practice. Sixty-two 
 standard specifications of the American Society for Testing 
 Materials have been translated into Spanish and are printed with 
 tiie Snanish and Enriish texts on fechisr nasKs. 
 
 Bureau Serves as 
 Information Depot 
 
 Additional inf onnatioo of iralue to die American manufacturer 
 or exporter on subjects of general importance may be obtained 
 
 by applying to the branches of the Bureau located in some of 
 the principal cities of the United States. With respect to this 
 service a recent pamphlet of the Bureau has this to say: 
 
 "By applying to the Bureau you can get Jati^L^tesJ^loGDa--. 
 in foreign countries which, in conjunction with rates, 
 win enable you to detem^ the price at which your goods can 
 be sold. It is particularly important to know this if you are com- 
 peting with a native product, or if you are shipping to countries 
 which give preferential rates of duties to the goods of other coun- 
 tries. It is also important that you know the basis on which 
 duties are levied, as tariff rates have a direct and vital bearing 
 upon problems of paddng and shipping. In some countries, if 
 several articles are padced in one container, the entire shipment 
 will carry the highest rate that applies to any one article in the 
 lot. In other countries the duties are levied on the gross weight, 
 and it is important to make the packing as light as is consistent 
 with safe transit. In still other countries duties are levied on 
 tiie net weight, which inchides the article itsdf and the unme* 
 ^te container in which the artide is phced, but not the weight 
 of the outside case or crate. 
 
 ''In writing for information in regard to foi«|gn rates of duty* 
 
 HOW GOVERNMENT HELPS EXPORTER 853 
 
 it is necessary to give a detailed descr^ytion of the artide in^ 
 volved and to specify the particular country or countries for 
 which tariff information is desired. It is advisable to confine in- 
 quiries to information needed immediately rather than to ask 
 for comprehensive statements for future reference, which may 
 be out of date by the time they are used. 
 
 "You may obtain information regarding license fees for com- 
 mercial travelers and customs treatment of their samples. These 
 topics should be carefully considered if you contemplate sending 
 a traveling representative to foreign countries. 
 
 ''You can get consular regulations which prescribe the number 
 of copies of the bill of kding that must be transmitted for the 
 use of the customs, the number of consular invoices that must be 
 prepared, and the way in which they must be prepared. 
 
 "You can get information regarding international revenue 
 taxes that are imposed in foreign countries, so that you may 
 know whether your product will be subject to an additional tax 
 after it enters the country. 
 
 "Infonnation is available on foreign trade-marks and patents, 
 so that you may protect your patents and trade-marks in foreign 
 countries. 
 
 "You can obtain information on foreign expcMt embargoes, 
 import prohibitions and restrictions, and black lists. Knowledge 
 of these r^;ulatkin8 is especially important at present (This r^ 
 fers to waivtinie conditions.)" 
 
 How District Offices 
 May Help Exporter 
 
 The Bureau also cscplains in a pamphlet how tiie district of- 
 fices may help those desiring information on foreign trade. It 
 says: 
 
 "District offices of the Bureau of Foreign and Domestic Com- 
 merce were established to expedite the distribution of commercial 
 information to ascertain the needs of the buriness men of the 
 country, and to estaUish doser co-operation between govern- 
 ment and private agencies interested in the extension of foreign 
 trade. 
 
 "Each district office has on file confidential information rt- 
 garding trade opportunities, lists of importers in foreign coun- 
 tries, trade dtrectoiks, etc. 
 
 "Each district office receives specifications, samples, exhibits. 
 
354 
 
 EXPORTING TO THE WORLD 
 
 etc., for a limited time, and these may be inspected by inteictled 
 
 persons. 
 
 "Each district office anranges conferences between exporters 
 •nd ccwis a la r officers and commercial agents when the latter visit 
 district offices during leave absence in this country. 
 
 "Each district office makes a special study of the needs of the 
 district in which it is located, and the Bureao endeavors to equip 
 each of its district c^fices to meet the demands peculiar to their 
 fields. 
 
 "Each district office keeps on file all publications of the Bureau, 
 as well as publications of other branches of the government that 
 will be of assistance to American exporters. Eadi office acts as 
 sales agent for the Superintendent of Documents, Washington, 
 D. C, for the sale of the Bureau's publications.'* 
 
 How to Use Trade 
 
 Mention has already been made of the Trade Opportunity 
 Service that the Bureau offers to exporters. It should be noted 
 that the names and addresses of the foreign importers desiring 
 the goods are not given in the Commerce Reports but ar« fur- 
 nished to bona fide American firms upon application to the 
 Bureau at Wasliington or any of the district offices. 
 
 In applying for such names and addresses the inquirer need 
 refer only to the number of the announcement as published in 
 the Commerce Reports. A separate applicationn on the firm's 
 letterhead shcmld be made for etch "opportunity" desired. 
 
 Whoi the confidential information furnished regarding an op- 
 portiinity for sales in foreign countries is too detailed to be given 
 in a "trade opportunity" announcement, it is embodied m a con- 
 fidential bulletin or circular, which is sent to &tns that are listed 
 in the E^qxMters' Index maintained fay tlie Bimm and its dis- 
 trict offices. 
 
 Those listed on the Exporters' Index receive the following 
 service: 
 
 "Confidential circulars and bulletins of various sorts relating 
 to inquirers' particular lines. 
 
 "The calling of firm's attention to fecial articles in Com- 
 merce Reports containing requests for special catalogues of 
 firm's line, or relating to markets for firm's product 
 
 HOW GOVERNMENT HELPS EXPORTER 365 
 
 Firm is advised regarding trade opportunities for the sale 
 
 of its product. 
 
 Firm's name is furnished to foreign inquirers asking for Amer- 
 ican sources of merchandise and suppUes. 
 
 Firms are given ptompt notice of every special buU^in pub- 
 lished by Ibe BureatL 
 
 Firms desiring to be recorded on the Exporters' Index must 
 
 fill out a form, stating the nature of its business and the kinds 
 of goods manufactured or exported. These forms to be received 
 at the district offices. 
 
 Branch officts 
 of the burem 
 
 The bureau operates branch offices fot the convenience of 
 exporters in the following cities: 
 
 New York, 734 Custom House ; Chicago, 504 Federal Building ; 
 Boston, 1801 Custom House; St. Louis, 402 Third National 
 Bank Building; New Orleans, 1020 Hibemia Bank Building; 
 San Francisco, 307 Custom House; Seattle^ 848 Henry Building. 
 
 Besides these brandies ^tut Bureau maintains co-operative 
 offices in the following places: 
 
 Cleveland Chamber of Commerce; Philadelphia Chamber of 
 Commerce; Cincinnati Chamber of Commerce; Los Angeles 
 Chamber of Commerce ; Chattanooga, Southern Railway System, 
 South American Agent ; Portland (Or^n) Chamber of Com- 
 merce; Daylon, Ohio, Greater Dayton Assodation, and the Soudir 
 em Railway, Gndnnati, 96 Ingalls Building. 
 
 Amenem Consul§ as 
 Trade Representatives 
 
 American Consuls are government officials serving for the 
 benefit of American commerce primarily. They are not sup- 
 posed to serve any particular mdividual or set of individuals. 
 The information they obtain as to commerce and trade in foreign 
 countries is for all the people that are interested in it It has 
 already been stated how American consuls s«id in regular reports 
 to the Bureau of Foreign and Domestic Commerce which are 
 later published in Commerce Reports and other publications of 
 the department. This is an invaluable service which private 
 enterprise would find difficult to dupUcate. 
 
 Consuls are supposed to remain in certain fields for a term 
 
3oe EXPORTING TO THE WORLD 
 
 tlie length of wliich is detennined by the authorities in Washing- 
 ton. Sometimes consuls are moved about from one country to 
 the other with reckless abandon. The writer knows of one 
 veteran in the Consular Service who has been in seven different 
 countries within the last seven years. The moment he became 
 acquainted with tiie customs and practices of the people of one 
 country he was transferred to another country where he had to 
 begin all over. The language he had learned in the former 
 country was of no use to him in the latter. Why these constant 
 transfers are made is a question which the authorities in Wash- 
 ington alone can answer. There is no question that it cripples the 
 service and that it reduces efficiency. It takes time to learn 
 the customs, language, the laws and the modes of living of 
 the people of a foreign country, and this is essential when 
 consuls are expected to be thoroughly capable of rendering 
 comprehensive and authentic reports on business conditions 
 for the study of American business men. 
 
 Another thing that has been the subject of considerable com- 
 plaint is the poor pay that is given the members of our Consular 
 service. Poor pay naturally attracts applicants of an undesirable 
 standard as a rule, but it must be said in justice to our present 
 consular staff that the majority of them are men of the highest 
 type who have perfoimed adnuraUe service in spite of the handi- 
 caps they have been put to because of the inadequate pay they 
 receive. This important point was touched upon by Edward 
 Prizer, President of the Vacuum Oil Company in an address 
 before the Sixth National Foreign Trade Convention when he 
 said: 
 
 ''Another demand business should make on ^e government 
 is that our consular service should become a real and definite 
 annex of foreign trade effort. 
 
 **When I first came in contact with our foreign consuls some 
 thirty years ago, I found they r^;arded themselves as the favorites 
 of pohtical circumstance; they knew their positions were not 
 peni^ient and took more mterest in social than in business 
 activities. Some of them really seemed to regard insistence on 
 help m solving commercial problems as an interruption o£ their 
 leisure. 
 
 'There has been a great unprovement smoe then, for daring 
 the past fifteen years the penmmd of our oonsukr service has 
 been mainly comprised of substantial, educated and well-informed 
 men, who take a great interest in their work, and I take pleasure 
 
 HOW GOVERNMENT HELPS EXPORTER 367 
 
 in stating that our company's organizations throughout the 
 
 world have found these men willing and useful. 
 
 ''We should insistently demand that our consular service should 
 be in every particular so <Mganized as relates to permanence of 
 employment, compensadon mid promotion, that entrance into it 
 
 will be zealously sought by our young men of greatest capability 
 and promise. 
 
 "One of the real deterents to young men of this type seeking 
 consularships is the financial coosiderationr-the pay is entirdy 
 inadequate. 
 
 American consuls cannot be effective in a foreign country un- 
 less they can meet influential people on an equality, instead of 
 being compelled, as is now frequently the case because of finan- 
 cial reasons, to live as an outsider from social Uf e and merely a 
 sojourner in the land where they are supposed to be eflkient r^ 
 resentatives of a rich and powerful nation. 
 
 '*They should not be required to meet unavoidable living ex^ 
 penses out of personal income, but should be so paid that they 
 are in a position to meet on an equality influential government 
 oflicials and the heads of industrial and merchandising firms and 
 rqiresentative citizens in the country to which they are accredited. 
 
 ^The British government is fully alive to the need of proper 
 and well-paid consular representation, for it has just announced 
 that it proposes to expend annually 1,000,000 pounds for consuls 
 and an additional quarter of a million pounds for commercial 
 attaches. 
 
 "Our consular sendee ^uld be safeguarded from the blight- 
 ing shadow of political control or preference, and there should 
 run through it to the remotest sections of the world the certainty 
 
 that capability is prized and that merit will be recognized and re- 
 warded. It should be trained in business conditions and methods, 
 and encouraged to be constantly alert to business opportunities 
 for American industry. Periodical consular reports of a general 
 character, whUe interesting and helpful, are not akme sufficient 
 There nmst be concreteness of information and directness of 
 support 
 
 "A gentleman told me that at a certain South American port he 
 found great difficulty in obtaining any really useful information 
 to assist his sales effort ; so almost in despain he appealed to the 
 German consul ,who courteously aided him in his dilemma. He 
 found tins consul had prepared a complete card index of com- 
 mercial conditions. It covered not only tiie usual statistics of 
 
358 EXPORTING TO THE WORLD 
 
 iiiqx>rt8, consumptioii, etc» but went into such intunate details as 
 to the standing and credit of individiial merchants, fines of 
 
 products they already handled, or might be induced to carry. It 
 was his practice to send to his government at home all this in- 
 formation which was available for the German exporter. What 
 was being done by him at this port was doubtless being dupli- 
 cated at hundreds of other centres of commercial opportunity. 
 
 •*We should demand that our consular service be run on busi- 
 ness lines and principles, and controlled by executives of business 
 vision and grasp ; and then that the politicians be forced to keep 
 their hands off whether an administration diaoges or continues." 
 
 How to Make Use of 
 Consular Service 
 
 Don't write to the consul in a foreign country for information 
 unless you have made inquiry at the Bureau of Foreign and Do- 
 mestic Commerce in any one of its branches in this country. 
 Perh^ the information you may deare is already gathered for 
 you. The Bureau has thousands of reports on business and com- 
 mercial conditions in foreign countries of a general character ; it 
 has also a great number of reports of a specific nature which 
 have been prepared by trade commissioners who are experts in 
 the lines they were sent out to make rqKnrts on. Periiaps one 
 of these rtpom is just Ae thhig you may need, so do not write 
 to the consul until you have first tried the Bureau. 
 
 Letters should not be addressed to consuls personally. The 
 address should be the American Consul or the American Consul 
 General. This is necessary in cwrder to avoid deUy in receiving 
 replies to inquiries. The consul may be away on his vacation 
 and the letter, if addressed to him personally, will not be opened 
 until he returns. Also, when communicating with consuls the 
 writer should be sure that sufficient postage is placed on the en- 
 velope otherwise the consul must pay double the amount due for 
 such negligence. No return postage is necessary for letters re- 
 quiring answers as all answers are made through tiie DqMut- 
 ment of State. 
 
 Emphasis must also be onde on ^ fact that consuls are not 
 in the employ of private individuals but in the service of the 
 United States Government. In this capacity they cannot be ex- 
 pected to make sales for manufacturers or to show samples to 
 prospective custcmiers m an effort to obtain orders. Th^ are 
 
 HOW GOVERNMENT HELPS E2tPORTER 369 
 
 prohibited from ddng this. Gmsuls, however, may distribute 
 catalogues for manufacturers without prejudicing their official 
 
 position. This is a form of co-operation that they are only too 
 willing to extend, but very few manufacturers take advantage 
 cf the opportunity to advertise their merchandise by this method. 
 
 Above all it most be remembered that consuls are very busy 
 men. They have a great many duties to perform; ^ey have re- 
 ports to make; they have a routine to follow almost every day, 
 and they must not be disturbed by needless inquiries or requests. 
 The consular service is a great machinery for the development 
 of American business abroad. Its proper ba"4ll"g will bring 
 the desired results. 
 
 Other sources of 
 Export Information 
 
 It must be remembered that there are other sources of 
 information besides the Bureau of Foreign and Domestic Com- 
 merce, where American manufacturers and exporters may- 
 obtain data in connection with foreign trade. These sources 
 are gradually growing. There arc at present in the United 
 States many organizations directly aind exclusively inter- 
 ested in the development of trade in foreign countries. Their 
 chief functions are to obtain reliable information as to oppor- 
 tunities, conditions, credits, legislation, etc. Other organi- 
 zations, more directly interested in domestic affairs, have 
 estaUished foreign trade departments whose functions are 
 to keep their members in close touch with conditions abroad. 
 
 The following organizations are of invaluable service to 
 ihose interested in foreign trade: 
 
 The National Foreign Trade Council, New York Qty. 
 
 The American Manvfacturers' Export Association, New 
 York City. 
 
 The Philadelphia Commercial Museum, Philadelphia. 
 The United States Chamber of Commerce, Washington, 
 D. C 
 
 The Pan-American Union, Washington, D. C. 
 
 Chambers of Commerce in the various cities of the United 
 States added foreign trade departments to enable their mem- 
 bers to obtain infcmnation from foreign fields. Some of 
 these organisations are: 
 
oGO 
 
 EXPORTING TO THE WORLD 
 
 < * 
 
 f 
 
 The Chamber of Commerce of New York; the Chambers 
 <^ Commerce of San Frandsco, Los Angeles, and San Di^;o» 
 California ; Portland, Or^n ; Seattle, Washington ; St. Louis,. 
 Missouri; Detroit, Michigan; Cleveland, Ohio; New Orleans, 
 Louisiana; Atlanta, Georgia, etc. 
 
 Then there are the Merchant's Association of New York 
 City, the Pittsburgh Foreign Trade Commission, the Mass- 
 achusetts State Industrial Commission, Boston, the Chicago 
 Association of Commerce, and numerous other organizations 
 of a similar character that devote considerable attention to for- 
 eign trade. The growing number of combination Chambers of 
 Commerce and associaticms in this country should not be 
 overlooked. For instance, there is an Argentine-American 
 Chamber of Commerce in New York City; a Chilian- Ameri- 
 can commercial association in the same city. Similar org- 
 anizations interested in trade with various European and 
 Far Eastern countries are rapidly taking shape. 
 
 Certain foreign countries are following the example of the 
 United States in sending commercial attaches to foreign 
 fields. In New York City there may be found commercial 
 representatives from European and Latin American countries 
 from whom valuable information may be obtained. 
 
 Trade Jowrmds Musi 
 Not Be Overiaoked 
 
 # 
 
 Manufacturers and exporters should subscribe to all reliable 
 
 trade publications. In these may be found invaluable infor- 
 mation dealing with methods, changes, markets, conditions, 
 etc* 
 
 Among these journals may be mentioned 
 
 The Worid's Markets The American Export 
 
 Export Trade Monthly. 
 Exporters and Importers Pstt-Pscific. 
 
 Journal 
 me isxporters ncview 
 The Americas. 
 Pacific VattM. 
 
 There are a few magazines whose functions are not to 
 exclusively cover the foreign field, but who occasionally pub- 
 
 Commercial America 
 
 Asia. 
 
 The Nation's Business 
 Weekly Export Bulletin 
 Commerce and Finance 
 
 HOW GOVERNMENT HELPS EXPORTER 361 
 
 lish articles of importance to exporters. Among these may 
 be mentioned "Printers' Ink," "The World's Work," "Sys- 
 tem," etc 
 
 Book Exporters 
 Should Have 
 
 An exporter should have a well equipped library. There 
 are many directories and encyclopedias now on the market 
 that should be on the shelves ctf a well regulated export 
 office. Among these are: 
 
 ^*^The Stateman's Year Book, Macmillan Co. Annual. New 
 York. 
 
 ^ Exporters' Encyclopedia . Exporters' Encyclopedia Co. 
 AnnuaL New York. 
 
 American Export Trade Directory. Johnson Export Pub- 
 
 lishing Co., New York. 
 
 i^Customs Tari£Es of the World. Kelly Publishing Ca, New 
 Ifork. 
 
 A few choice books on Foreign Trade like the following 
 
 should also be included: 
 ^Practical Exporting. Hough. i 
 
 £3q[K>rting to Latin America. Filsinger. 
 
 Principles of Foreign Trade. Savay. 
 
 American Methods in Foreign Trade. Vedder. 
 ' Business Training Corporation (Set 10 volumes). 
 " Selling Latin America. Aughinbaugh. 
 ^ Ocean Traffic and Trade. Hough. 
 
 History of Foreign and Domestic Commerce of United 
 States. Johnson. 
 
 Commerce and Industry. Smith. 
 
 Trade of the Wwld. Whelpley. 
 
 T«he Theory and Practice of International Commerce. Wolfe. 
 
 Official Report of National Foreign Trade Council. 
 
 Nor should a good atlas be overlooked for the library. 
 
 Some of these ate: 
 
 Atlas of the World's Commerce. Bartholomew. 
 Geographical Manual and Atlas. Mawson. 
 To complete the list, all the publications of the Bureau of 
 Foreign and Domestic Commerce siiould be included. 
 
CbaptksXXII 
 
 THE WORUyS MARKETS 
 
 The world is preparing for peace. The Great War hardly 
 over, the nations of the world are hastening as fast as possible 
 the readjustment that amts after the conflict. They are taking 
 stodc of the fotnre. The adjusters have not yet finished their 
 estimates of the losses that the great catastrophe produced. The 
 money cost alone has been over $100,000,000,000. The human 
 cost has been enormous. MilUoos of men have been slain; 
 women and children have lost their lives by the thousands. 
 Entire countries have been laid waste. Pxoduction has been 
 stopped. Old nations have lost their former positions; new 
 naticms have sprung up; old trade routes have been aban- 
 doned, and new ones have grown up in their stead. 
 
 In this period of readjustment the United States is taking 
 an important part. This country is helping Europe get back 
 on her feet We are finan dng big enterprises over there ; 
 we arc sending foodstuffs and other materials of absolute 
 necessity. Those nations, for years to come, will require 
 material assistance in one form or another. 
 
 As our trade has expanded to other sections of the globe, 
 we have learned that Europe is not alone in her need of 
 foodstuffs and manufactured materials as well as capital from 
 outside sources. There is stiU considerable development 
 work to be undertaken in other continents. Mineral resources 
 of unlimited value are yet to be tapped ; transportation facili- 
 ties such as the building of railroads, highways, canals, etc., 
 are needed in the backward countries. Where American 
 concerns are to participate in this kind of work, the develop- 
 ment of trade is sure to follow. We are capable of manu- 
 facturing all the tools necessary for such enterprises, and 
 one can readily see the importance of participating in these 
 vast improvements. 
 The use of modem metiiods of farming, of busmess, and 
 
 THE WORLD'S MARKETS 
 
 363 
 
 of industry, is also helping to improve the markets in foreign 
 countries for American manufactured articles. We are now 
 selling farm tractors in places where only the most primitive 
 methods had been used in the past. We are selling type- 
 writers to countries where such an instrument has not been 
 as generally adopted for business purposes as in the United 
 States. We are also furnishing machinery for various in- 
 dustries to replace the old and antequated processes of man- 
 ufacture. We are sending to the four comers of the earth 
 articles aimed to increase the comfort of those who buy from 
 us. We are introducing American-made automobiles in every 
 country. The popularity of American manufactures is ap- 
 parent. 
 
 The aim of this chapter is to review as briefly as possi- 
 ble, the markets in foreign countries available to manufac- 
 turers and exporters. Obviously, a detailed description of 
 ocmditions in foreign countries is impossible in a chapter, but, 
 perhaps, a brief summary of the available markets will be 
 sufficient to enable the reader to obtain a general idea of tiie 
 immensity of the field in which the manufacturer and exporter 
 can operate. 
 
 A study of the market divisions follows. For the purposes 
 of this study Latin-America will be grouped in the following 
 
 manner : 
 
 LatmAmefiea 
 
 Groupe I. (b) Peru. 
 
 (a) Mexioo. (c) Bolivia. 
 
 (b) The West Indies. (d) Chile. 
 
 (c) Central America. GrOttO III. 
 
 (d) Colombia. Argentina. 
 
 (b) Uruguay. 
 
 (e) Venezuela. 
 
 (f ) The Guianas. . ^ _ 
 
 (g) Panama. 
 
 Group II. Group IV. 
 
 (a) Ecuador. (a) Brazil. 
 
 Mexico 
 
 Mexko ranks fifth among the natfons of the western hem- 
 isphere in size. It follows Canada, the United States, BrazU 
 and Argentina. In population it ranks third, following the 
 
364 EXPORTING TO THE WORLD 
 
 •«« of the country is 
 ''^ population in 1910 was 
 16.088,807. Of these 20 per cent are white, 37 per cent Indian, 
 and 43 per cent of mixed blood. There are over lOOfiW fm- 
 
 "IfZ^"" °* •« Spaniards and 
 
 <»0,000 Americans. 
 
 The climate of the country may be divided into three zones 
 whKh cover three ascending geographical regions. The low- 
 est is comprised of the coast region embracing the eastern 
 and western coastal plains which reach an altitude of 3,000 
 Above this altitude and np to 6,000 feet the second 
 or middle zone is located. The climate here is mild. Above 
 tte 6,000-foot altitude is found the tierra fria, or cold land. 
 Dunng the summer in the lower zone the heat is intense and 
 unhealthful, and the only measure of relief may be found 
 near the coasts where the ocean breezes are encountered The 
 mean annual temperature in this zone is from 75 to 85 degrees. 
 
 Themost delightful region of all is the middle zone which en- 
 loys a temperate climate. There is very little humidity here- 
 the atf IS dry, and cool, and the climate is healthful. The mean 
 annual tempmture ranges from «0 to 77 degrees. The cold 
 z«ie covering altitudes from 6,000 to 9,000 feet has a wide 
 nnge of temperature. In the higher regions there is a wet 
 and dry season. The wet season begins in June and lasts 
 until October, although it is not continuous. 
 
 Mexico is one of the richest countries in minerals in the 
 woiM. For the last four centuries she has produced nearly 
 one-half of the world's silver, and now she is producing about 
 one-third of the worid's total output ^ 
 
 Metals found in Mexico are platinum, gold, snver, copper, 
 zmc. l«Ml. mm, mercury, manganese, antimony, tin, bismuth, 
 and tenunum. An idea of Mexico's mineral production may 
 be gamed from the following table showing the value of the 
 most important metals expressed in terms of pesos (about 
 50 cents) ; 
 
 Pesos. 
 
 48,488341 
 
 Silver 76,406,754 
 
 Copper 26.172,214 
 
 ^^^^ 6,808,465 
 
 Coal (estimate) 4,400,000 
 
 THE WORLD'S MAR|grrS 
 
 866 
 
 Pesos. 
 
 Petroleum (estimate) 2,800,000 
 
 Iron (estimate) 1,200,000 
 
 Zinc (estimate) 1,150,000 
 
 Mexico's agricultural resoorces are far from being fully 
 developed. Over 600,000 square miles of the entire country 
 are capable of being turned into great producing regions. 
 Lack of transportation, antique methods of farming, and the 
 .scarcity of farm machinery have kept Mexico back in 3Lgnr 
 culture, but the outlook is encouraging as the government is 
 now lending its aid to the industry, and the importation of 
 farm machinery from the United States is increasing. With 
 the development of transportation, Mexico's agricultural riches 
 should be enormous. Mexico's principal agricultural products 
 are maize, cotton, henequen, wheat, sugar and molasses, spir- 
 its, coffee, and beans. Encouragement is offered by the gov- 
 ernment for the growing of tobacco, rubber, cacao, chicle and 
 vanilla. . The vanilla of Mexio is of a very high quality and 
 has a large demand in foreign countries. 
 
 The most important industries of the country are the manu- 
 facture of textiles, sugar, alcohol, and cigars and curettes. 
 Ten years ago there were 142 cotton factories in the country. 
 
 The oil industry in the Tampico district is by far one of 
 the most important of all Mexico's resources. Mexico is 
 next to the United States in the production of crude 
 petroleum. 
 
 Principal exports from the United States to Mexico are 
 coal, lumber, cotton, boots and shoes, automobiles, electrical 
 madiinery, steel rails, structural steel, electrical instruments, 
 pipes and fittings, meat products, cottonseed oil. 
 
 Statistics of Mexico's foreign commerce for a period oi nine 
 
 years follow: 
 
 Year. Imports. Exports. 
 
 1910 $ 97,433,000 $130,023,000 
 
 1911 102,937,000 146,877,000 
 
 1912 91,331,000 148,994,000 
 
 1913 97,886,000 150,203,000 
 
 1914 78.000,000 aiM),000,000 
 
 1816 68,000,000 186,000,000 
 
 1916 83,000,000 168,000,000 
 
366 
 
 EXPORTING TO THE WORLD 
 
 Y««r. Imports. Exports. 
 
 138,000,000 182,000,000 
 
 1918 192,000,000 »8,000,000 
 
 Wh«, peace is oompfetely rertoied in Mexico she will resume 
 to old place as one of Unde Sam's biggest customers. Mil- 
 aooi of dcllan of American capital are invested in the Southern 
 Kqmblic, thousands of American citizens are Uving in the cotmtrr 
 and only because of the unsettled state of her poUtics has W 
 ICQ failed to resume her old position as a great buyer of Ameri- 
 can goods. In ^te of troubled conditions statistics show that 
 
 Wl^fiWfiOO worth of merchandise from the United States 
 
 The West Indies 
 
 The total area of the West Indies is estimated at 100000 
 square miles; it has a population of about 9.000,000. The West 
 Indies consist of the great archipelago extending from Flor- 
 
 tXT^!^ ^ °' ^ ^•""'•^^ The islands in- 
 dude the Bahamas, Greater Antilles, Lesser Antilles, includ- 
 
 Tnf. H ^^^It""^' ^"^ Windward and Caribee Isl- 
 ands the Trinidad-Tobago group, and the Key, or coral reef..' 
 
 to^rlntdal" ^"^^"^ ^ ^ 
 
 Matr I" ^"t""*- hurricanes risit 
 
 the islands. The inhabitants are chiefly negroes and mnlat- 
 toes. except .n Cuba and Porto Rico where the Spaniards and 
 Americans predominate. 
 
 PoB&ally. ti» West Indies may be divided into the Repub- 
 lH» Of Cuba. Santo Domingo and Haiti, the American pW 
 sion of Porto Rico. the British West Indies, French wS^ 
 Indies, Dutch West Indies, and the Knu^L "^n west 
 the Virgin Islands. Amencan possession of 
 
 The British are in possession of Jamaica and dependemries. 
 
EXPORTS 
 10 HMMitlis ended 
 ApriU 1920 
 
 «1J74,«33.483 
 !• months ended 
 Apfil, 1919 
 flj069.497^5 
 
 VANCOUVO* 
 SEATTLE 
 
 EXPORTS 
 10 months ended April, r'20 
 To Cuba 
 
 1296,911,311 
 10 months cndrd April, 1919 
 
 SXVORTS 
 
 10 months ended 
 A|>ri1. 1920 
 To Europe 
 |448^>91 1.418 
 10 BMMiths ended 
 April, 1919 
 *|3.601.929,910 
 
 EXPORTS 
 
 
 10 months ended 
 
 April, 
 
 1920 
 
 
 To Mexico 
 
 
 9117.004,878 
 
 April, 
 
 10 months ended 
 
 1919 
 
 
 $97 ,U 11, 332 
 
 
 EXPORTS 
 
 10 flMMitha ended April, 192a 
 To Sontli AflMrka 
 
 1386,454.623 
 
 10 months ended April, 1919 
 $324,664,399 
 
 CAf»C TOWk 
 
 
 EXPORTS 
 
 
 10 
 
 months ended 
 
 A pril, 
 
 
 1920 
 
 
 
 To Africa 
 
 
 
 $93,174,904 
 
 
 10 
 
 mt>nths ended 
 
 April, 
 
 
 1919 
 
 
 
 $65,815,264 
 
 
 
 
 
 EXPORTS 
 10 months ended ^prii, 
 1920 
 To Asia 
 $651,600,924 
 10 months ended April, 
 1919 
 $471,421,596 
 
 EXPORTS 
 
 10 months ended 
 April, 1920 
 
 To British India 
 $62,044,3(7 
 
 10 montiis ended 
 April, 1919 
 $35,676,933 
 
 EXPORTS " 
 10 months ended April, 1920 
 To Ocesnia 
 $145,011,197 
 10 months ended April, 1919 
 $167,123,752 
 
 EXPORTS 
 
 
 10 months ended 
 
 April, 
 
 1920 
 
 
 To Australia 
 
 
 $63,813,849 
 
 
 10 months ended 
 
 April, 
 
 1919 
 
 
 $88,933,161 
 
 
 aucklan£i 
 
 0UNC|t^^ 
 
 It. 
 
EXPORTS 
 10 aioiitlis ended April, 1920 
 To Cuba 
 1296,911,311 
 10 months ended April. I'^l^ 
 1188,790,633 
 
 EXPORTS 
 
 10 numths ended 
 April. 1920 
 To Borope 
 |4,181»91U418 
 10 months ended 
 April, 1919 
 * $3,601,929^10 
 
 EXTORTS 
 
 10 awntlM ended April, 192U 
 TW looili AflMffka 
 |3SM54yi23 
 10 months ended April, 1919 
 ^324,664,399 
 
 
 EXPORTS 
 
 10 
 
 months ended -April, 
 
 
 1920 
 
 
 To Asia 
 
 
 $651,600,924 
 
 10 
 
 months ended April, 
 
 
 1919 
 
 
 $471,421,596 
 
 EXPORTS 
 
 
 10 months ended 
 
 April, 
 
 1920 
 
 
 To Aftrta 
 
 
 $9^,174»904 
 
 
 10 months eadad 
 
 April, 
 
 1919 
 
 
 $65,815,264 
 
 
 • 
 
 
 EXPORTS 
 10 months ended April, 
 1920 
 To AMMIn 
 $63,813,849 
 10 months ended April, 
 1919 
 $88,933,161 
 
THE WORLD'S MARKETS 
 
 367 
 
 the Bahamas, Leewaixl Islands of St. Christopher, Nevis, 
 
 Montserrat, Antigua, and Dominica, the Windward Islands of 
 St. Vincent, St. Lucia, Grenada and the Gi^nadines, Barbados, 
 and Trinidad and Tobago. 
 
 The French West Indies include St Bartholomew, Guade- 
 loupe, Martinique, and one-half of St. Martin. Fo«( de France 
 is a naval station. 
 
 The Dutch West Indies include one-half of St Matti^, St 
 Eustache, and Saba, near Porto Rico, and a group off the 
 Venezuelan coast including Curacao, Bonaire, and Aruba. 
 
 The Virgin Islands, now belonging to the United States in- 
 clude St Thomas, St. Croix, St John, Crab, and Culebra. St. 
 Thomas is the principal island with an area of 140 square 
 miles. 
 
 The West Indies serve as a great market for the United 
 States. In the fiscal year of 1916 they purchased $191,195,791 
 worth of goods, as against $177,6^8,611 for South America. 
 Cuba, of course, was the heaviest purchaser. During this 
 same fiscal year the Islands purchased two-thirds as much as 
 Asia and the East Indies, and four and one-half times as 
 much as all of Africa. 
 
 Located within easy shipping distance of American ports, 
 the West Indies serve as a logical customer for American 
 manufacturers and exporters. 
 
 The growth of exports to this region is reflected in the 
 following table: 
 
 
 1915. 
 
 1918. 
 
 
 $95,750,004 
 
 $227,156,047 
 
 
 44,318,161 
 
 54,043,349 
 
 British West Indies. 
 
 13,948,820 
 
 21,432,437 
 
 Dominican Republic* . 
 
 7,447,182 
 
 16,156,443 
 
 Haiti 
 
 4,899,856 
 
 9,069,275 
 
 French West Indies. 
 
 2,698,050 
 
 5,357,451 
 
 Dutch West Indies., 
 
 1,269,808 
 
 1,361,434 
 
 
 882,442 
 
 1,640^30 
 
 $170,914,333 
 
 $336,216,539 
 
 The total for 1918 represents an increase of 97 per cent over 
 that of 1915. 
 
868 EXPORTING TO THE WORLD 
 
 Of all these regions, Cuba, of course, is the most promising- 
 market. Her imports are more than equal to that of all of 
 the other islands put together. Coha's pofchasmg power 
 has been greatly increased by the immense wealth derived 
 from the sugar industry. The state of this industry has never 
 been better in its history. The growii^ demand for foreign 
 made goods in Cuba is reflected in her unports for the follow- 
 
 ing years: 
 
 1914 $118;a02,000 
 
 1916 140384,000 
 
 1016 216,961,000 
 
 1917 266,085,000 
 
 The percent of the total imports of Cuba imported from the 
 United States is shown in the following table: 
 
 1914 58.23% 
 
 1915 67.36% 
 
 1916 72.00% 
 
 1917 74.00% 
 
 Since tiie b^;inntng oi the Republic in 1902 the foreign 
 commerce of Cuba has increased more than 200 per cent. 
 
 Of the total foreign trade of Porto Rico, $137,683,304, that 
 with the United States amounted to $124,460,747 in the fiscal 
 year 1917-1918. Porto Rico's needs are for iron and steel 
 manufactures, wheat flour, cotton cloths, shoes, automobiles, 
 paper, etc. 
 
 The Dominican Republic was taken over by the United 
 States military authorities in 1916. Under military rule the 
 
 country has made rapid progress in commerce, the total for 
 1917 amounting to $40,026,394, an increase of 182.68 per cent 
 over 1908. 
 
 The Dcnninican Republic's principal imports from the 
 United States are cotton cloths, shoes, iron and steel manu- 
 factures, machinery, automobiles, oils, chemical products, 
 wheat flour, nieatSi canned and preserved meats. 
 
 The governments of Haiti and the United States signed a 
 convention on July 1, 1916, authorizing the latter government 
 to take charge ol the collection of costoni% the supervision 
 
 THE WORLD'S MARKETS 
 
 369 
 
 of the monetary system, and the administration of the finances 
 of the Republic for a term of years. This action was taken 
 on account of the unsettled political situation which had been 
 retardmg progress m the island. With the United States in 
 virtual control there is an opportunity for developing the 
 resources of the island, and the development of trade with 
 the United States. For the fiscal year ended June 30, 1918, 
 cjq>orts from the United States to Haiti were $8,369,922 as 
 against $5,540,706 for 1914. 
 
 Jamaica's trade with the United States is growing. Im- 
 ports from the United States increased from 48 per cent of 
 the total m 1914 to 70 per cent in 1917. Jamaica's principal 
 imports from the United States are manufactured articles 
 and foodstuffs. 
 
 The United States has shown marked gains in trade with 
 Trinidad and Tobago, increasing its exports to the Islands 
 from 88 per cent of tfie total in 1914, to 36 per cent in 1916. 
 
 For the fiscal year ended June 30, 1918, exports from the 
 United States amounted to $6,997,946 as against $3,465,610 
 for 1914. 
 
 EiqH>rt8 from the United States to Barbados for the fiscal 
 year ended June 80, 1918, were $2,701,156, compared with 
 $1,412,934 for 1914. 
 
 Those desiring to do business in Cuba will naturally es- 
 tablish their headquarters in Havana, the principal city of the 
 Island, and one of the most prosperous in Latin-America. 
 Business in Haiti can be kx^ced after from Port Au Prince. 
 
 Central America 
 
 The little republics oi Central America are potentially rich 
 in natural wealth. Not until stable governments are estab- 
 lished in the majority of these little countries will it be ex- 
 pedient for American business men to enlarge their activities 
 in that region, however. Central America consists of Guate- 
 mala, Honduras, Salvador, British Honduras Nicaragua, 
 Costa Rica and Panama. 
 
 The present population of Central America is estimated at 
 between 6,000,000 and 7,000,000. 
 
 The United States is the principal buyer of Central Amerl- 
 
870 EXPORTING TO THE WORLD 
 
 can products as well as the principal source of supply. Ameri- 
 can capital, also, is heavily invested in those countries, with 
 the excq^tion of British Hoodnnui where British capital is in 
 control of the Inmber industry and in Guatemala where the 
 Germans control the coffee industry. 
 
 The principal exports by countries are as follows: Costa 
 Rica and Honduras, bananas; Salvador and Guatemala, cof- 
 fee; British Honduras, timber; Nicaragua, coffee and ba- 
 nanas; Panama, bananas. 
 
 South America as a Field 
 for American Merchandise 
 
 South America proper has been a lucrative field for American 
 business for a good many years. There is a mistaken impres- 
 sion in this country that South America only recently h^r^m^ ^ 
 splendid market for American •y^^rphiindiifa This is not so. 
 Statistics before the war— lor many jrears before the war— show 
 tiiat the American busmess man has been very successful in the 
 countries making up that great continent. Although encounter- 
 ing the competition of German, British and French, merchan- 
 dise produced in this country has been successfully sold m that 
 vast region. The big boom in busmess with South America 
 QM^ang up, however, iriien the busmess men of Europe closed 
 their doors to engage in war. The South Americans then began 
 to shop in the United States. Thousands of new customers were 
 placed on the books of American manufacturers and exporters, 
 and a great majority of these have become permanent clients. 
 
 For the seven months ending in July, 1919, we sold tm 
 South America $26d»6d8,000 wOTth of merchandise as compaied 
 to $171,610,000 during the same period m 1918. This shows 
 the rapidity vrith which the United States is developing trade 
 relations v^rith that continent. Argentina, Brazil and Chile are 
 our biggest customers in that continent 
 
 The followii^ is a summary of conditions in eadi country: 
 
 CoUmbm 
 
 Colombia occupies the northwest oomer of the South 
 American continent The area of this country is about 440,- 
 846 square miles. Its climate is varied owing to its geo- 
 graphic characteristics. Thus, in the lowlands the tempera- 
 ture is from 74 to 86 dqg;rees, while in the temperate zone the 
 
 THE WORLD'S MARKETS 
 
 371 
 
 annual mean varies from 62 to 72 deg^rees, and the climate 
 is healthful The valleys are hot, and rainfall is heavy on 
 
 the coast. 
 
 Colombia's mineral wealth is extensive. Gold forms a 
 great part of her wealth. Practically all the emeralds of the 
 world come from G>lombia. The country is second to Rus- 
 sia in the production of platinum which is in so much demand 
 at the present time. Colombia has also copper, silver, lead, 
 iron, mercury, coal and manganese while recent investigations 
 have shown that the country has tremendous possibilities 
 in the petroleum industry. 
 
 The country's foreign trade for a period of eight years is 
 reflected in the following table: 
 
 Year. Imports. Exports. 
 
 1910 $17,383,000 $17,625,000 
 
 1911 18,109,000 22,376,000 
 
 1912... 23,965,000 32,2^2,000 
 
 1913 28,635,000 34,315,000 
 
 1914 20,979,000 32,633,000 
 
 1915 17,840,000 31,579,000 
 
 1916 28,922,000 40,000,000 
 
 1917 23,334,000 40,531,000 
 
 Principal exports from the United States are lard, flour, 
 
 cotton goods, iron and steel manufactures, etc. 
 
 The principal port is Cartagena which is an important com- 
 mercial center. 
 
 Veneguela 
 
 Venezuela, lying along the north coast of South America, 
 has a total area of about 393,976 square mUes. Like Colombia, 
 Its variation of altitudes give it a wide range of climate. 
 
 Gold, copper and iron supply Venezuela with most of its 
 mineral wealth. Venezuela is also a fine agricultural country, 
 practically one-fifth of the population being engaged in this, 
 industry. The principal product is coffee which grows in 
 nearly every section of the Republic. In 1917 there were 
 33,000 coffee plantations which had over 200^000 acres of land 
 under cultivation. Cacoa, also, is extensively grown. Other 
 agricultural products are sugar, tobacco, cotton and rubber, 
 lliere is very little manu^icturing in the country. 
 
87S EXPORTING TO THE WORLD 
 
 The foreign trade of Venezuela is rapidly growing, and the 
 United States is leading all other countries in the value of 
 teports and exports with that eonntry. 
 
 The following table shows Venesoela's foreign trade for 
 
 eight years : 
 
 Year. Imports. BaqMMts. 
 
 1910 $12,388,000 $17,949,000 
 
 1911 18,395,000 22,684,000 
 
 f^fi^floo fui;^ijm 
 
 19ia 18,030,000 $9,484,000 
 
 1914 13,987,000 21,520,000 
 
 1915 13,470,000 23,404,000 
 
 1916 81,388,000 85,530,000 
 
 1917 84,593,000 84,006,000 
 
 The chief port of Venezuela is La Guayra. 
 The Guiancis 
 
 The Guianas arc British, Dutch and French Guiana. 
 
 British Guiana has an area of 90,277 square miles and is 
 situated on the north coast of Soi^th America^ having Dutch 
 Guiana, Brazil, and Venesuela on the east, aonth and west, 
 respectively. 
 
 British Guiana's mineral wealth is derived principally from 
 foU which is washed in all the river valleys. Sugar canei 
 and rice is grown extensively, and sugar, mm and molasses 
 are manufactured. 
 
 The inhabitants are chiefly Portuguese, negroes, Hindu 
 coolies, and Chinese. The aborigines number aboat 8,000. 
 The total population of the colony is about 350,000. 
 
 The area of French Cruiana is about 30,500 square miles. 
 The capital and port is Cayenne. The principal industry is 
 the growing of coffee and cacoa. 
 
 Exports from the principal town of Dutch Guiana are bal- 
 ata, sugar, gold, cacoa, bananas, ^ffee, timber and rum. Im- 
 ports consist of manufactured articles, oils, drugs, chemicals, 
 wines and liquors, and animals. 
 
 The area is 46,142 square miles and the population, con- 
 sisting of Portuguese and negroes, is about 98,000 of whom 
 less than 1,000 are Europeans. 
 
 THE WORLD'S MARKETS 
 
 373 
 
 Ecuador 
 
 The approximate area of the republic is 116,000 square 
 miles, including the Galapagos Islands in the Pacific. 
 
 The most important industry of the country is agriculture. 
 Cacoa is ^e chief product while rubber is gaining fast. The 
 yearly production amounts to 1,000,000 pounds. The low- 
 lands of the country produce coffee, sugar, bananas, cotton, 
 tobacco and vegetable ivory and in the upper regions cereals 
 are grown. The country is making a start at cattle raising 
 and sheep farming. 
 
 While Ecuador is known to be rich in minerals little has 
 been done to develop the mining industry. 
 
 Ecuador's principal trade is with the United States, France 
 and Great Britain, and since the opening of the Panama Omal 
 trade between the United States and Ecuador has greatly 
 increased. Ecuador is in need of manufactured articles, food- 
 stuffs and woven goods. In 1916 imports from the United 
 States amounted to $5,33^71. Guayaquil is the only im- 
 portant port of the cotmtry. 
 
 The population of the country is estimated at 2,000,000. 
 
 Ecuador's foreign trade for a period of eight years is as 
 follows: 
 
 Vear. Imports. E^qwrts. 
 
 1910 $11,489,000 $18,698,000 
 
 1911 10,354,000 13,690,000 
 
 1912 8,837,000 15,789,000 
 
 1913 8,403,000 13,061,000 ' 
 
 1914 8,408,000 18,896,000 
 
 1915 9,330,000 17,570,000 
 
 1916 9,346,000 17,600,000 
 
 1917 10,196,000 16,338,000 
 
 Peru 
 
 Peru is one of the richest ooimtries on the west coast of 
 South America, and pre s e n ts the most favorable possibilities 
 for the development of trade with the United States. 
 
 The area of Peru is 695,733 square miles, and the popu- 
 lation is about 6,000,000 inhabitants. 
 
 Peru is rich in forestry, mining and agriculture. The most 
 valuable of the Peruvian forests is rubber. 
 
 Gold, silver, copper, petroleum, nitrates, vanadium, tung- 
 
874 
 
 EXPORTING TO THE WORLD 
 
 stcn, nickel, iron, sulphur, borax and peat furnish the min- 
 eral wealth of the country. Among agricoltiina products 
 sugar and cotton take the lead. 
 
 The chief manufactures of the Country are cotton and 
 woolen goods. The textile factories of Peru consume about 
 5,000,000 pounds of cotton annually. 
 
 Peru's principal imports are textiles of aU kinds, wheat, 
 lumber, cool, ofls, wearing ai^>arel, medicines and machinery. 
 
 The United States leads in exports to that country, and the 
 opportunity for further increasing our commerce is growing 
 better- 
 
 Peru's foreign trade for a period of years is: 
 
 Year. Imports. Exports. 
 
 1 WO $24,206 ,000 $34,380,000 
 
 1911 26,430,000 36,042,000 
 
 1912 24,982,000 46^17,000 
 
 89,591,000 44,410,000 
 
 W14 88,404,000 42,611,000 
 
 15,044,000 68,638,000 
 
 1916 42,256,000 80,497,000 
 
 1917 65,712,000 90,728,000 
 
 CaUao is the principal port but the biggest volume of busi- 
 ness is tnuisacted m Lima, the capital. 
 
 The area of Bolivia is about 708,195 square miles, and popu- 
 lation about 2,900,000 of which about 50 per cent are Indians, 
 25 per cent mixed Spanish and Indian, and 18 per cent white. 
 
 The principal mineral products of Bolivia ate tin, ^ver, 
 gold, copper, iron, lead, sine cobalt, pktinum, antimony, bis- 
 muth, and quicksilver. 
 Bolivia's foreign trade from 1910 to 1917, inclusive, was: 
 
 Year. Imports. Exports. 
 
 1^10 $19,088,000 189,493,000 
 
 IMl 22,765,000 88,226,000 
 
 1912 19,308,000 35,148,000 
 
 1913 21,357,000 36,661,000 
 
 16,607,000 85,668,000 
 
 1W5 8,804,000 87,132,000 
 
 W16 12,128,000 39,360,000 
 
 1917 13,067,000 61,622,000 
 
 THE WORLD'S MARKETS 
 
 876 
 
 Bolivia has no seaport, and the only way to reach La Paz, 
 
 the capital, is by rail from MoUendo, Peru, or from Antofa- 
 gasta, Chile. 
 
 CkiU 
 
 Chile is a promising market for American manufacturers 
 and exporters. The most progressive country on the west 
 coast of South America this republic is rapidly developing its 
 resources, and is in constant need of manufactured wares 
 which the United States is in a position to supply. Chile was 
 a fine customer for British and German goods before the 
 war broke out, but when those sources of supply were cut off 
 she turned to this country where she found an ample supply 
 of merchandise for her needs. 
 
 The area of Chile is 307,620 square miles and population 
 
 5,000,000. 
 
 The world famous nitrate deposits in the northern part of 
 Chile, and from the export duties on this product the repub- 
 lic derives its principal income. 
 
 The country is rich in agricultural lands, and the stock 
 raising industry is growing rapidly^ As a manufacturing 
 country, Chile ranks among the first countries of South 
 America. Her principal manufacturing industries are flour 
 milling, tanning, smelting, brewing and distilling. Shoes, har- 
 ness, textiles, clothing, furniture, cars and carriages, pottery 
 and soap are also manufactured in the country. Chile, also, 
 is one of the largest wine growing countries in the world. 
 About 80,000,000 gallons of wine and spirits are produced 
 annually. 
 
 Trade with the United States has increased rapidly. In 
 1908 imports from the United States amounted to $8,000,000 
 as compared with $169,000,000 in 1917. 
 
 Chile is one of the finest markets for American merchan- 
 dise in South America. 
 
 The importance of the country in foreign trade is reflected 
 in the following statistics of her commerce: 
 
 Year. Imports. Exports. 
 
 1910 $108,582,000 $120,022,000 
 
 1911 127,381,000 123,884,000 
 
 1012 122,076,000 139,878,000 
 
 1913 Id0,d74,000 144^658,000 
 
376 EXPORTING TO THE WORLD 
 
 Year. Imports. ExpcMts. 
 
 98,461,000 109,381,000 
 
 1915 55,922,000 119,530,000 
 
 1916 81,220,000 187,468,000 
 
 1917 129,603,000 269,983,000 
 
 WIS 799,626,000 
 
 Valparaiso is the principal port of Chile, and while many 
 importers maintain offices in this city, there arc branches in 
 Santiago, the capital 
 
 Argentina 
 
 Next to Brazil, Argfcntina is the largest Republic in South 
 America, having an area of 1,135,840 square miles. 
 The population is about 7,900,000. 
 
 The country derives its riches from its agricoltnre and 
 stock raising. The principal ciops are wheat, maize, and 
 linseed. The sugar and wine industry are also extensive. 
 There is very little mining in the country. The principal 
 mineral product is petroleum which has been discovered in 
 the southern part of the country. 
 
 Of the 728,680,000 acres in Argentina, 268,196,000 acres are 
 snitahle for agriculture or stockraising. In 1917 the acreage 
 and production of the four leading agricultural products were 
 as follows: Wheat, 16,088,967 acres; com, 8,968,861 acres; lin- 
 seed, 3,207,414 acres; oats, 2,526,406 aciea. 
 
 Stock raising is second in importance to agriculture. The 
 country is one ci the greatest cattle regions of the world. 
 In 1917, meat to the value of $132,400,000 was exported. 
 Railroad development in Argentina has progressed rap- 
 idly. In 1918 there were 21,858 miles of railway in operation, 
 6,772 of which were state property. 
 
 Buenos Aires, the lai^ city in South America, is the 
 capital. Argentina is not a manufacturing region, although 
 the industry is developing and opportunities for the sale of 
 manufacturing machinery are growing. The principal indu»- 
 trial plants are sugar factories, wine depots, flour mills, brew- 
 eries, and neat freezing d^ts. There is very little fuel to 
 be had for manufacturing purposes; most of the coal comes 
 from Great Britain and the United States. 
 
 Argentina's conunerce for a period of nine years was as 
 follows: 
 
 THE WORLD'S MARIQBTS 
 
 Year. Imports. Exports. 
 
 1910 351,771,000 372,626,000 
 
 1911 366,811,000 324,697,000 
 
 1912 364,853,000 480,391,000 ^ 
 
 1913 421,852,000 483,504,000 
 
 1914 271,818,000 349,254,000 
 
 1915 220,086,000 641,532,000 
 
 1916 226387,000 627,045,000 
 
 1917 380,321,000 559,170,000 
 
 1918 464,065,000 m,569,000 
 
 BfoMa 
 
 Brazil is the largest country in South America, and the 
 third largest in the world. An estimate of the total popula- 
 tion in 1916 was 26,642,402, of which 45 per cent is European, 
 82 per cent Indian half breeds, 15 per cent negroes, and 8 per 
 
 cent pure Indians. 
 
 The possibilities for developing trade with Brazil are un- 
 limited. The country is being devdoped rapidly. Her for- 
 eign trade is flourishing. The total imports in 1917 were 
 valued at $222,550,000 and the exports at $299,375,000. 
 
 Brazil's commerce is principally carried on with the United 
 States, Great Britain, France, Argentina, Portugal and Italy. 
 
 Bnudl's natural resources are vast. Hor forest regions 
 along the Amazon cover 2,000,000 square miles, and it sup- 
 plies several hundred miles in the country with timber. 
 
 Brazil's mineral wealth is rapidly being developed. In her 
 chief mining regions diamonds, gold, iron, manganese, and 
 coal are produced in substantial quantity. Manganese in par- 
 ticular, in recent 3rears has been mined with considerable suc- 
 cess. It is estimated that the visible deposits of iron total 
 2,000,000,000 tons. 
 
 Agriculture, however, is the principal source of wealth. 
 Bradl supplies 50 per cent of the world's demand for rubber 
 which is found in abundance in the Upper Amazon. The 
 total annual crop amounts to more than forty thousand tons. 
 Coffee is the chief product ; 4,500,000 acres are devoted to its 
 culture. The annual crop is about 12,000,000 sacks. Cacao 
 is also an important product. Other crops grown in Brazil 
 sudcessfully are sugar, tolMcco, cotton, rice, com, beans 
 and mate. 
 
m EXPORTING TO THE WORLD 
 
 Census figures for 1916 showing that Brazil had in that 
 year nearly 29,000,000 head of cattle, over 17,000,000 swine. 
 7,000,000 sheep, and 6,000,000 horses, reflect the wealth of the 
 country in the stock raising industry. 
 
 The textile industry is the most important manufacturing 
 industry. Capital invested is about $80,000,000. There Is 
 considerai>le development going on m the preparation and 
 manufacture of hides and leather. About 20,000,000 pairs of 
 shoes are made annually. 
 
 The foreign commerce of BrazU is shown in the fellowhig 
 figures of imports and exports for a period of nine years: 
 
 Year. Imports. Eaqknts. 
 
 IWO $881,292,000 $304,370,000 
 
 IWl 257,163,000 325,272,000 
 
 1913 307,934,000 362,796,000 
 
 1913 826,100,000 813,628,000 
 
 1W4 172,223,000 221,639,000 
 
 1915 140,082,000 255,659,000 
 
 1916 196,998,000 266,802,000 
 
 1»1^^ 209,484,000 284,114,000 
 
 247,352,000 284,276,000 
 
 The principal cities of Brazil are Rio de Janiero, Sao Paulo, 
 an d Bahia. 
 
 Paraguay 
 
 With the exception of Uruguay, Paraguay is the smaUest 
 of the South Ameriean republics, having a total area of 
 171,815 square miles. Yet it is larger in area than the state 
 of Arizona and Alabama combined. While it is the most 
 backward country m South America, it has, nevertheless, 
 wonderful possibilities for development. At present 
 tobacco, cotton, and mate are grown extensively. Stock 
 raising is growing in importance. Piraguay's commerce is 
 improvmg. Its principal exports are hides, quebracho extract, 
 mate, hardwoods, and tobacco. 
 
 The principal city is Asuncion. 
 
 The population of Paraguay is about 800,000. 
 
 The following table shows the extent of its foreign trade : 
 
 THE WORLD'S MARKETS 
 
 379 
 
 Year. Imports. Exerts. 
 
 IWO $6,017,000 $4,769,000 
 
 Mil 6,494,000 6,593,000 
 
 1912 5,190,000 4,109,000 
 
 1913 7,876,000 5,402,000 
 
 1914 4,996,000 4,447,000 
 
 19U 8,834,000 8,624,000 
 
 1816 4,492,000 4,667,000 
 
 1917 4,667,000 11,237,000 
 
 Uruguay 
 
 Uraguay is the smallest republic in South America, contain- 
 ing only 72,210 square miles. The country is about the size 
 of North Dakota. It enjoys a mild and healthful cHmate 
 which attracts thousands of people annually. Its population 
 according to the latest census, was 1,378,000, or a population 
 of about 19.1 persons per square mile. Italians, Spaniards, 
 Brazilians, Argentinos, French, Swiss, English, and Germans 
 predominate. There are very few Americans in the country. 
 Montevideo with a population of 376,000 is the largest city, 
 and the capital. 
 
 Cattle raising is a very important industry in Uruguay. 
 American interests have established packing plants in the 
 country and this has given considerable encouragement to 
 Ae raising of cattle. Uruguay's vast grazing territory also 
 is an advantage in the development of this industry. Sheep 
 raising is also important. There are about 25,000,000 sheep 
 in the country. 
 
 The government is lending considerable assistance to the 
 agricultural interests. Agricultural colleges with experimental 
 stations similar to those conducted in the United States have 
 been established. The principal crops are wheat, oats, lin- 
 seed, and barley. 
 
 Uruguay's foreign commerce is gradually growing. The 
 country serves as a good market for coal, foodstuffs, machin- 
 ery, office appliances, etc. The following table on her foreign 
 commerce indicates the country's growing importance: 
 
 Year. Imports. Expjprts. 
 
 1910 $46,590,000 $44,200,000 
 
 1911 51,355,000 50,753,000 
 
 1812 60,^,000 66448,000 
 
t 
 
 380 EXPORTING TO THE WORLD 
 
 Exports. 
 89;M)1,000 
 59403,000 
 73,300,000 
 71,050,000 
 96;B17,000 
 
 The Near East 
 
 Owing to changed conditions in Europe there has been 
 some confusion as to geographical boundaries in that conti- 
 nent Nations have been dismembered; new states have hpm 
 created and boondary lines have been redrawn. It is there- 
 fore necessary to make a study of the modern geography of 
 Europe in order that the reader may get his bearings. 
 
 The Near East, also known as the Levant, has perhi^ 
 suffered as many changes at the hands of the map makers 
 as any other region in the old world as the result of the Great 
 War. According to the Department of Commerce the Near 
 East is understood to mean the Balkan States, Turkey in 
 Asia, and Egjrpt, as well as Arabia and Persia, and parts of 
 Armenia. 
 
 The Balkans include the following states: 
 
 Roumania, Bulgaria, Servia, a part of Croatia-Slavonia, Bos- 
 nia and Herzegovina, Dalmatia, Montenegro, Albania, Greece, 
 and the remnants of European Turkey. 
 
 The Balkan Peninsula includes all the above named rc^^ions 
 with the escception of Roumania. 
 
 Since the end of the war, and the subsequent opening of 
 these countries to foreign commerce great markets for Ameri- 
 can wares have been revealed. The majority of these r^ons 
 need foodstuffs, doth, clothing, electrical plants and mate- 
 rials, farming products, agricultural madhmery and imple- 
 ments, motor transportation, railway material and rolling 
 stock, and bridge construction materials. Countries like 
 Greece, Roumania and Turkey have been large purchasers of 
 American goods in the past, and latest reports from that 
 r^on are very encouraging. As soon as conditkms are set- 
 tled in the new states the United States may rest assured of a 
 substantial share of the trade from that part of the world. 
 
 Year. Imports. 
 
 1913 50,501,000 
 
 1W4 87,879,000 
 
 1015 35,000,000 
 
 1916 35,155,000 
 
 1917 38,700^)00 
 
 THE WORLD'S MARKETS 
 
 881 
 
 The Far East 
 
 The Far East includes Japan, Chosen, Formosa ; the Philip- 
 pine Islands; China, Manchuria, Mongolia, Tibet, Hong 
 Kong; Siberia; French Indo-China; Siam; the Malay Penin- 
 sola; India, Btirma, Ceylon, Afghanistan and Baluchistan; 
 and the Dutch East Indies, including Java, Sumatra, Celebes, 
 Borneo, and New Guinea. 
 
 America's business with the Far East has been making 
 rapid strides. Our total sales for 1914 were $113,425,616 while 
 in 191S they were increased to $458,937,775. Japan is one of our 
 best customers in that region. With the betterment of trans- 
 portation facilities the Far East should develop into one of 
 America's finest maricets. 
 
 In 1918 we exported goods to Japan valued at nearly $274,- 
 000,000 while our imports were over $300,000,000. 
 
 Our exports to China in 1918 were over $52,000/)00 while 
 our imports were nearly $111,000,000. 
 
 A great potential market for American wares lies in India, 
 containing a population of over 300,000,000 people. Tarift 
 duties present no obstacle to any country. India needs cot- 
 ton piece goods, automobiles, electrical apparatus, and hard- 
 ware in general, grains, rugs, dyes, typewriters, oils, tools, 
 explosives, glassware, etc. 
 
 Ceylon is a good market for cotton goods, automobiles, k«r- 
 osine, haberdashery, leather goods, sewing machines, type- 
 writers, hardware and textiles. 
 
 Colombo is the principal city and ranks seventh in tonnage 
 among all ports. 
 
 A comparative table of foreign trade statistics showing the 
 commerce of the United States with principal regions of the 
 Far East gives an idea of the importance of those markets. 
 The following tables disclose the magnitude of trade with 
 the Far East for a period of yearsi 
 
 Japan 
 
 
 Exports. 
 
 Imports. 
 
 1913 
 
 $61,204,180 
 
 $92,236,691 
 
 1914 
 
 48,385,538 
 
 98,269,504 
 
 1916 
 
 101,733,000 
 
 169,126,000 
 
 1917 
 
 186,340,304 
 
 863,669,709 
 
 1918 
 
 273,819,586 
 
 301,919,771 
 
301 EXPORTING TO THE WORLD 
 
 
 
 Exports. 
 
 Imports. 
 
 
 
 $85,384,793 
 
 $21,010,248 
 
 
 1914 
 
 87,304,275 
 
 18,162,312 
 
 
 1916 
 
 88^8,678 
 
 86,648433 
 
 
 1917 
 
 88440488 
 
 68,384,641 
 
 
 1918 
 
 58,976,178 
 
 85,935,220 
 
 
 
 21,326,834 
 
 39,010,800 
 
 
 1914 
 
 24,698,734 
 
 39,382,978 
 
 
 1916 
 
 86431,469 
 
 71,666,046 
 
 
 1917 
 
 40;B98,059 
 
 186406,080 
 
 
 1918 
 
 68,570,579 
 
 110,970,969 
 
 
 
 15,108,956 
 
 116,220,591 
 
 
 1914 
 1916 
 
 15,625,195 
 
 111,903,527 
 
 
 88^7,000 
 
 68,609,000 
 
 
 1917 
 
 86,000,000 
 
 101,067,067 
 
 Stfiits Scttletngnte 
 
 ...1918 
 
 8,606,901 
 
 85,718,185 
 
 
 1914 
 
 4,184,674 
 
 26,307,860 
 
 
 1916 
 
 4,585,231 
 
 82,114,598 
 
 
 1917 
 
 7,734,439 
 
 187,668,633 
 
 
 ...1918 
 
 8461,698 
 
 6,881,964 
 
 
 1914 
 
 8,676,896 
 
 6,334,361 
 
 
 1916 
 
 7,401,026 
 
 27,716,589 
 
 
 1917 
 
 81,139,305 
 
 62,011,236 
 
 
 
 485,058 
 
 116,666 
 
 
 1914 
 
 886370 
 
 146^ 
 
 
 1916 
 
 774,956 
 
 837,250 
 
 
 1917 
 
 1,051,586 
 
 149,162 
 
 The Commonzveidth 
 of Australia 
 
 Lying to the southeast of the continent of Asia is the G>ni- 
 monwealth of Atistralia, comprising tlie states of New South 
 Wales, Queensland, South Australia. Victoria, Western Aus- 
 tralia, and two territories, the northern territory and certain 
 possessions in the South Sea Islands. The total area of 
 Australia proper is 8,946,691 square miles; of the ''Commoii- 
 wealth" 8,974,681 square miles. 
 
 Australia is rich in a variety of industries. Not only is it 
 a great sheep and cattle country but it produces minerals 
 such as gold, coal, silver, copper and iron, in great quantities. 
 As a tn an uf ac tu ring country Australia is developing rapidly 
 
 THE WORLD'S MARKETS 
 
 383 
 
 owing to the liberal policy of the Commonwealth government 
 to encourage local industries by means of protected duties 
 and the payment of bounties. New Soutii Wales and Victoria 
 are the leading manufacturing states. 
 
 The following table of imports and exports indicate the im- 
 portance of the Commonwealth's foreign commerce; 
 
 Year. Imports. Exfbrts. 
 
 1910 $280,027,000 $347,576,000 
 
 1911 312,470,000 370,864,000 
 
 1912.. 364,688,000 369,062,000 
 
 1W3 SnMfijm 366,616,000 
 
 1914 185,60®,000 176,982,000 
 
 1915 300,639,000 282,725,000 
 
 1916 361,713,000 348,916,000 
 
 1917 355,683,000 457,060,000 
 
 1918 888,796,000 350,114,000 
 
 New Zealand is 1,200 miles southeast of Australia. The 
 total area is 104,751 square miles. It consists of two long, 
 narrow main islands separated by Cook Strait. The popu- 
 hitiott is about 1,000,000, 98 per cent of which are of British 
 burth. The principal cities of New Zealand are Auckland, 
 Wellington, Christ Church, and Bunedin. New Zealand as 
 a market for American wares is a fertile one. Its foreign 
 trade is reflected in the following figures: 
 
 Year. Imports. Expl^rts. 
 
 1910 $75,179,000 $93,590,000 
 
 1911 ; . 92,871 ,000 106,649,000 
 
 1912 94,993,000 90,280,000 
 
 1913 101,946,000 103,384,000 
 
 1914 108,321,000 110,728,000 
 
 1915 105,221,000 136,286,000 
 
 1916 104,608,000 150,845,000 
 
 1917 128,180,000 161,991,000 
 
 1918 101304,000 163,769,000 
 
 Africa as a Market 
 for American Goods 
 
 Africa is little known to the average American trader. We 
 have paud hot little attention to this part of the world. We speak, 
 of course, of the South African Union with a great white pop- 
 
984 EXPORTING TO THE WORLD 
 
 ulation. The Transvaal with its rich mines furnishes the wealth 
 of that region and upon these riches depends the prosperity of 
 the Union. 
 
 While the populatiofi of this aectkm oi Africa is growiii|^ 
 akmly neverthekit h has splendid prospects and American man- 
 
 nlacttirers and exporters are making creditable gains in the 
 establishment of a permanent trade with the merchants of that 
 r^ion. 
 
 The area of the Union of South Africa is 473^00 square miles 
 which figures illustrate the immensity of the coontiy. It is nearly 
 as laise as Alaska. Its popnlatkin is orar 7»000,000. 
 
 O^ coimtries In Alrka sodi as Morocca Algeria, Tunis and 
 Tripdi have not yet reached Aat commercial position where they 
 demand serious attention for big business. 
 
 During the years 1917 and 1918 the exports of the United 
 States to Africa which in this Instance includes Egypt and 
 other colonies oi Enropean coontries were valued at $61^,- 
 <m and $59499^19, respectively. The exports to the Union 
 of South Africa in 1917 totaled $39,084,607 as compared with 
 $43,760,697 in 1918. 
 
 While we have included Egypt in the diviskm called the 
 Near East it nmf be proper to give passn^ notice to that 
 country In speaking about Afnca owing to the fact that next 
 to the Union of South Africa it is the most important coun- 
 try in that continent from the standpoint of its potential poa> 
 sibilities for American wares. Egypt has several trade cen- 
 ters k whidi businesa can be devetoped. Thero aro no exact- 
 ing tiade laws to hinder conuneroe as the country is under 
 British control. 
 
 Ema^ 
 
 Europe has been America's greatest customer. Althoei^ 
 composed of great m a mif a crur i ng nations^ Europe before tlie 
 war bougbt tremendous quantities oi American-made goods, as 
 
 statistics furnished by the Bureau of Foreign and Domestic 
 Commerce indicate. The records of manufactured articles sold 
 to Europe for 12 years is as follows: 1900, $145,000,000; 1901, 
 
 $135,000,000; 1902, $130,000,000 ;1904,|tia7.000,00a; 1906, $185r 
 CWO,000; 1906, $151,000^; 1907, |16ff4KN),000; 1908, $178,000,* 
 000; 1909, $16(VO0O,00O; 1910, $168,000,000; 1911, $186,000,000; 
 
 1912, $206,000,000. 
 
 Before the war we sold to Germany manufactured articles that 
 
 -x,:."i»«.. 
 
 THE WORLD'S MARKETS m 
 
 she could manufacture cheaper in her own factories. England 
 has been a great buyer of American manufactured articles. Some 
 of the purchases by some of the countries of Europe of certain 
 manufactured articles such as sewing machines, watches, ctc^ 
 have been greater than the purchases of aU the countries of 
 Soatli America put together. France, the country in which 
 the automobile originated, purchased more automobiles from 
 the United States before the war than our neighbor, Mexico. 
 Other nations will become big buyers as their needs in this 
 reconstruction period justify— and their needs are great 
 
 It is needless to glo into d^il as to the market require- 
 ment of each individual country in Europe. It is enough to 
 say that practically every nation in that continent is a poten- 
 tial field for increased business with the United States. The 
 foUowmg table of exports and imports with the principal 
 countries of Europe r^ects the importance of that field: 
 
 Imports from— 
 
 Principal Countries. I9i8. 1917. 
 
 Austria-Hungary 97,823 64,937 
 
 Belgium 168,022 
 
 ^""CC 69,509,742 98,G39,653 
 
 Germany 317,706 159,352 
 
 ^^^^y 24,340,022 36,480,807 
 
 Netherlands 8,824,419 22,744,504 
 
 2,015,851 6,280,233 
 
 Russia in Europe 6,784,603 12,350,179 
 
 Spain 18,488,289 36,881,630 
 
 Sweden 5,935,490 18,069,487 
 
 Switzerland 16,882,854 19,834,668 
 
 United Kingdom 148,614,816 280,080475 
 
 Exports to^ 
 
 Principal Countries. 1918. 1917. 
 
 Austria-Hungary 
 
 Belgium 154,649,338 56,080,886 
 
 Denmark 11,353,845 32,408^30 
 
 France 931,199,774 940,791,381 
 
 ^^^fvamy 2,275 
 
386 EXPORTING TO THE WORLD 
 
 Princtpal Countries. 1918. 1917. 
 
 Greece 4,346,471 8,636,163 
 
 Italy 492,145,797 419,034,43*3 
 
 Netherlands * 11,369,269 57,540,570 
 
 Norway 36^37,464 62^47^57 
 
 Russia in Europe 8,902,449 816,250,020 
 
 Spain 69,188,733 91,584,080 
 
 Sweden 15,674,108 20,467,923 
 
 United Kingdom 2^61^00»680 2,008,669,641 
 
 Cmiaia 
 
 We r^rd Canada as a domestic rather than as a 
 foreign field. Canada is growing in importance as a mar- 
 ket for American goods. Her trade practices are similar to 
 
 ours and there is no difficulty in establishing relations with 
 the business men of the Dominion. We sold goods to the 
 ¥alue of over $800,000,000 in 1917 to Canada. In 1918 the 
 total value was $886/ 
 
 CHAPTER XXIII 
 
 FOREIGN TRADEMARK REQUIREMENTS 
 
 American manufacturers who have seriously committed them- 
 selves to the policy of developing business for their products in 
 foreign countries on a permanent basis, should not neglect the 
 matter of roistering their trademarks in the markets where such 
 procedure may be deemed justifiable. Unless this precaution is 
 tajsHfTniany of our eaqwrting manufacturers will someday wake 
 up to tiie fact that before they are able to do business in certain 
 foreign countries they must dicker for the privilege with certain 
 persons in those countries commonly known as ''trademark 
 pirates" who, taking advantage of the thoughtlessness of our 
 American business men, r^^istered these valuable trademarks 
 in their own name. 
 
 In order to protect himself from these "pirates" the first thing 
 an American manufacturer should do before beginning busi- 
 ness in a foreign country is to register his trademark. This 
 should be done even before app<unting an agent or a repre- 
 sentative, for the very simple reason that agents or repre- 
 sentatives are sometimes known to register trademarks in 
 their own names, and thereby deprive the American principal 
 of his property rights. Neither should our American manu- 
 facturer depend on foreign agencies to handle this trademark 
 matter. They, also, are sometimes known to raster trade- 
 marks in their own name. The safest plan is to fiind a solicitor 
 of patents and trademarks in the United States — there are 
 many of these officials in this country, who have facilities for 
 registering trademarks in foreign countries through reliable 
 and competent associates.^ 
 
 1 Since it is not feasible in any Latin American country, any more than it is in 
 the United States, for any one not a trained specialist to attempt to secure hit 
 own patent or registered trade mark, any publication attempting to give directions 
 •s to the methods of aeettriiig patents and trade-marks would serve no adequate 
 murpote and would be, in a grut majority of caaes, misleading in the highest degree 
 No manufacturer in the Umted States would for an instant consider a proposition 
 of securing a patent or trade-mark except through regular patent and fntdf-fwiirk 
 solicitors. The identical procedure is necessary in Latin America. 
 
 If the owner of an United States trade-mark (already r^ristered in the United 
 States Patent Office) wishes to secure protection under the laws of the Latin 
 American countries, this trade-mark must be filed in the proper office of the 
 c«>untrjr wherein registration is desired. The registration offices of the several 
 countries are called by different names. In order to register the U. S. or anjr other 
 
 887 
 
388 
 
 EXPORTING TO THE WORLD 
 
 Dmggrs RamUmg 
 From Tkit Neglect 
 
 The dangers resttltiiig from the failtire to register tnide- 
 iiiaiks in loiejgii countries where ma Americsn manoiactarer 
 My have a potential market for his goods may be seen from a 
 recent exposure of a wholesale effort on the part of a Portu- 
 guese to corner a large number of trademarks belonging to 
 American manufacturers in Eurtc^ean cowitriei and South 
 America. By taking advantage ci international trademark 
 and patent laws, and filing a few papers in Portugal at the 
 cost of a few hundred dollars this Portuguese is said to have 
 obtained control of the principal markets of continental Em:- 
 ope and South America for American automobiles and tract- 
 ors. R^iisterittg these trademarks in his own name in Portu- 
 gal this man was within his rights under the Berne Trademark 
 Convention to extend the control of these trademarks to the 
 twelve other countries parties to the convention, unless the 
 American owner had previously obtained r^;istration in those 
 GountrMs. 
 
 In the countries where this man obtained tihc trademarks he' is 
 the only man entitled to sell these cars or tractors. He has the 
 legal right to have confiscated in his favor all cars bearing those 
 trademarks which are shipped to those countries. This places 
 him in a position where he can lofce tfie manu^Kturers of tfiese 
 cars to make him tibeir agent on his own ifllMI^ to stop doing 
 business there. It cost this man only $20 to procure the registra- 
 tion of each trademark at Berne after he obtained registration 
 
 foreign trade-mark, it it usual for a power of attorney for that purpose, (certified 
 by the consular representative oi the country where it is desired to register the 
 trade«iark), to be sent to some person residing in tfie city where the registrmtioB 
 WDce IS situated. /. certified copy of the trade-mark as issued by the United States 
 Patent Office, vised by the consul, must also be sent. In addition, it is aJvisable 
 to send at least a dozen copies of the trade-mark, the ordinary printed copies used 
 by the Patent Office being sufficient. An application for the registering of the 
 trade-mark is then made out in Spanish (Portuguese if in Brazil, French if in 
 Haiti) signed by the person holding the power of attorney, and filed in the regis* 
 tration office, together with the power of attorney, the certified copy of the trade- 
 mark, and some of the plain copies with certified translation into Spanish. In due 
 course of time the Office will issue a certificate certifying the registering of the 
 trade-mark in that office. The foreign trade-mark is given the HHM yrffttftitH I and 
 enjoys the same advantages as the trade-mark of the country. 
 
 Filing a trade-mark grants exchisive right to oae of die same, and both criminal 
 aad civil proceedings may be instituted against a person infringing that right. 
 
 ^ Each country of Latin America has special laws and regulations concerning the 
 registering of trade-maifcs. la gcaeral, however, they correspond to those abore. 
 
 In law it is not necessary that the filing of the application be done bjr a lawyer 
 as any one has a right to apply for a registration of a trade-mark, but m practice 
 a patent and trade-mark solicitor is always employed and this practice is strongly 
 recommended. The names of suitable persons can be obtained from the United 
 States Consuls in each country. There are also firms in the larger cities of the 
 United States who make a momaahsi of this fu»*a— ««— ^ Kw the Paa«AflMBriean 
 
 FOREIGN TRADEMARK REQUIREMENTS m 
 
 in Portugal. By reason of the fact that the United States is not a 
 party to the Berne Convention, it is necessary for manufactur- 
 ers to procure registratk» teparatcly in cadi eomitry ia which 
 ibity wiih to do Htirinttt, 
 
 In speaking of the dangers of trademark piracy in foreign 
 countries, Mr. Albert E. Parker, New York patent lawyer, who 
 discovered the pk>t just mentioned made the following state- 
 ment: 
 
 The most sifliister and difficult problem which American ex- 
 porters are constantly having to face is the policy, which has so 
 enormously increased in recent years, of the pirating by for- 
 cjgneis of well-known American trademarks. Anierican manufao- 
 turerSy wbSkt ooaoqiiatnttd with the ajslem under which trade- 
 marks are protected abroad, due to tiie fair and equitable ar- 
 rangement common in the United States, whereby a trade- 
 mark becomes the property of a manufacturer by actual use 
 upon the goods themselves, are so frequently meeting with 
 handicaps in the development of then* trade abroad that it 
 becomes important to keep before tiie American exporter llie 
 exact situation in connection with the protection of his trade- 
 marks and commerce in foreign countries. 
 
 "In practically all Latin countries, the registration of trade- 
 maris is the only way ia which an American trader can 
 acquire property rights in his brand or trademark 
 and it is the common experience of those who are handling 
 the goods of American manufacturers in foreign markets 
 to find that the trade in a certain country is barred by reason 
 of the unauthorised registration of the manufacturer's trade- 
 mark by what are commonly classed as trade-mark pirates. 
 
 Tatin-American lawyers and commercial firms resent the 
 suggestion that the practice of registering American trade- 
 marks in the name of a native of the country is rightly de- 
 scribed as an act of commercial piracy, as in many, cases the 
 Latin agent, knowing fnll well the laxiQr <^ American manu- 
 faeturers in sodi matters, frequently files an apptodon to 
 register the trademark in his own name, avowedly for the pro- 
 tection of the trade which he hopes and. expects to build up 
 under that brand or trademark. 
 
 ^nlortanaldy, many sock refi^tratbns, while at the outset 
 eflfeeted in good faith, are used by the agent abroad for 
 securing better terms from the American manufacturer in case 
 
390 EXPORTING TO THE WORLD 
 
 of a ^sputt betiroefi tiie paitieft, and in many instances tiie 
 agent refuses to assign the registration when the manufacturer 
 or export house, through the development of its business or 
 from other conditions, desires to change its agen^ relations 
 abroad* 
 
 "The situation in Bnal is extremely difBcnlt for the Ameri- 
 can manufacturers in that while it allows American traders to 
 register their marks at the Junta Commercial in Rio, such a 
 registration does not prevent a Brazilian tnuier fiom himself 
 nifistering the same trademark in the separate states, twenty 
 in number, forming the Republic of Brazil, and a mark so regis- 
 tered by the Brazilian trader can be used on the same or similar 
 goods for which the American owner of the mark has obtained 
 registration, and this without any possibility of redress. 
 
 "The situation in the Argentine Rq>ublac has been acute in 
 these matters for many years past and without exaggeration 
 it can be stated that many hundreds of well-known American 
 trademarks have been wrongfully registered in the Argen- 
 tine and large sums have been paid to Argentine cittaens 
 lor the recovery of the right to nse trade maika po ttffiatmd. 
 One of the leading export houses in New York recently re- 
 ported that it had paid large sums to two Argentine traders 
 for the right to export the goods of one of its clients to that 
 country. 
 
 "Govenmient departments and oonsnhur r^retentattves abroad 
 are constantiy urging on American traders the need for taking 
 the simple and safe course, which in the end is also the econo- 
 mical course, of registering their trademarks abroad before 
 actually beginning trading operations in foreign countries. The 
 small outlay involved in so registering, seeing that a registra- 
 tion, once ^ected, extends for a period of from ten to fifteen 
 years or more, is trivial compared with die amount which 
 might be, and frequently is demanded for the assignment of 
 rights in a single country by a pirate who has registered the 
 American trademark. 
 
 ''A step forward has beoi taken through the passage of a new 
 trademark measnre in Great Britain which provides that any 
 trademark which has been actually used in trading operations 
 in Great Britain for a period of two years may be registered 
 by the user thereof, and this, no matter what may be the nature 
 fd the mark. Thus^ geographical terms, surnames, and even 
 
 FOREIGN TRADEMARK REQUIREMENTS 391 
 
 descriptive words, if bona fide used as trademarks by the 
 
 manufacturer for a period of two years may be registered. 
 
 *This will entitle British manufacturers to extend their regis- 
 trations abroad in those countries where a certified copy of the 
 home registration is demanded, and some l^^lation of this 
 character is sorely needed in tiie United Suites, to enable Ameri- 
 can manufacturers to obtain similar advantages abroad. Many 
 well-known American trademarks are debarred registration 
 at the United States Patent Office under the present trade- 
 mark law by reason of the nature of the trademarks, bnt 
 they could readily be registered and protected under the laws of 
 the foreign countries ; and foreign trademark pirates, knowing 
 the disadvantage in which American manufacturers are placed 
 by the above situation, are constantly registering such trade- 
 marks in their own names, to the serious detriment of the 
 American trader and with the express object of obtaining sub- 
 stantial payments from the rightful owner of the trademarks 
 in diis country." 
 
 Trademark regulations 
 
 Vary in all countries 
 
 The American manufacturer takes little trouble in endeavor- 
 ing to obtain information regarding the r^;istratioa of his trade- 
 mark in foreign countries. To him, a little matter like raster- 
 
 ing his mark overseas is of little consequence. Perhaps, he isn't 
 thinking about venturing into foreign countries to sell his wares. 
 Why, then, should he take the trouble of protecting the mark for 
 which he has probably wgitxA tiiousands of dollars to devebp and 
 to advertise at home? It is because he b not interested. In 
 spite of all that has been said and written about the necessity 
 of registering trademarks in overseas markets, the American 
 manufacturer has been negligent, and the foreign trade pirate 
 has been profiting as the result of this negligence. The matter of 
 registering trademarks is not as complicated as it might seem. 
 It is possible to obtain ample protection in practically every 
 country where it is desirable to develop a market, if the manu- 
 facturer will only take the trouble to do it. 
 
 The countries of the world in which trademarks may be regis- 
 tered may be divided into two groups— the commcmrlaw 
 group and the code-law group. 
 
m EXPORTING TO THE WORLD 
 
 The common-law gnmp compmcs tlioie coantries in which 
 ownership of tfademtrics is based on the common-law property 
 m trademarks; that is, a trademark is protected under 
 the common law whether or not the mark haa been registerad. 
 In this group may be included such nations as Great Britain 
 tlie colonies* and the United States, etc. 
 ^ ITie code-law group comprises those countries where property 
 nghts m trademarks are acquired under statutes alone, and 
 only upon complying with the provisions of the statute. 
 Under this code are embraced moat Emopean or Latin Ameri- 
 can cottntries. 
 
 Rfqmrementsim 
 
 Code'in4aw Countries 
 
 Intiie code-law coantries tndemafk registration is necessary 
 m ofdcr to acqmre the cxdnsire rigrhts to its use in those 
 coantries. If the owner of the trademark does not take the 
 trouble to register it any oUier person may do so, and acquire 
 the exclusive right to use it notwithstand^g the fact that file 
 real owner may have used the mark for many years. 
 
 l^theoiy of the trademark in these code-law countries is 
 aomradiat different tiian in the United States where a person 
 most make use of it before making a registration. In the code- 
 law countries, however, the theory is reversed RcgistiatKMi 
 
 jurisdiction of the Czechos ovale State. Three rnniiianf ift i I P'^y^yO" 
 il ^^ich^should^be certified by the^c^-i^ of 
 
 ifth*^!?^i..**K**** •PP>««»**«> appHcants whose trade Lrka wSe 
 S^2SjI^#*rt.l ^^^^'""vS'? in fo'-mer Austria-Ilangary, oatoid7%f 
 
 tefTitpnr of the Ciechoslovak Republic, thoold addttionftlly attach a M«rtliL2i 
 abstract from the trade-mark regUlKr Hm «BpM |MVkNr«m SS^Sa^JF^S 
 the 10 years' period of protection. wnu WW M MOCtCd from 
 
 Trade-marks of aliens which had been reffistefcd obIt with Vt^n^ ru^^u 
 of Commerce or ogjjr with the BodapSTchaSbeTTf Commerce ^11 brS?ot^^.d^iJ 
 ferjJiorijf^ ^ i«ri«Mction of the Czechoslovak Rlp^ubirwith^tfi 
 
 .«bie^crtrti;J%i»tSrpa'^^^^^^^^ ^Je^^or^^^Si 
 Ihl lJ!fl^ll'A °' ^*PJ?'^"*' « P«~?»» who hive lJerJ?lr?It*ser;": to 
 
 2 SuJlJ ^ J!Llffi!lSyj. ^ ^5*7"' ancf coat, of aniJ 
 
 SLM^LJSb*£?^^*'^u! naedals, can be registered only if on the basuS 
 
 ^A^rSSSrS^ 1?,* ^^c"*^ 'P**^'?' "V^*"*** been established. 
 
 rt ^ person who has not a fixed residence in the territory of the CzechniSaMW 
 Republic can file an application if the laws of his home gu?i cSrtend 5h? siS 
 privileges to the subjects of^ Czechoslovakia, provided also he ap^nts a SuW 
 authonxed represenutive in the CxechotlovalT Kepablic. The period of nrolecHnn 
 
 SriSbSS?^ hjS^r^'^ I?* FR""^ newTrade-marks ?nd of thos^'L^rread? 
 
 «opaer Austna-Hunmry had been presented for recording in the centnS 
 
 FOREIGN TRADEMARK REQUIREMENTS 398 
 
 mtttt first be made, after which the person making the registra- 
 tion has full legal authority to use it for his own purposes. 
 Ignorance of this point has been the chief soturce of trouble for 
 American manufacturers who have taken the step to register 
 tiieir maiics in foreign coantries a nmtBt too late. 
 
 How the Trademark 
 PiraU operates 
 
 Trademark pirates have received considerable encouragement 
 to ply their trade through the ignorance of American manu- 
 facturers with reQ>ect to the procedure necessary to obtain pn>- 
 lection in foreign oonntxies. This ignorance has cost many 
 American manufacturers large sums of money, for the trade- 
 mark pirate in the real sense of the word is an unscrupulous 
 being. Blackmail is not beneath his dignity. Sometimes a 
 milder method is taken as for instance where a trademark is 
 pirated merely to obtain a better bargain in negotiating for 
 an exdttsive agency. 
 
 Cases are also known where agents in foreign countries in 
 order to insure for themselves a permanent contract as repre- 
 sentatives of manufacturers, register the trademark of their 
 prindpals. The latter in order to protect his interests per- 
 mits the agent to oontintte as his representative under the 
 circumstances. He can do nothing else. He cannot change 
 his agency. 
 
 MarH capable of 
 
 Registration 
 
 The following general observations apply to ^ kind of marks 
 that are possible of registration in foreign countries: 
 
 No mark that is impossible of distinguishing the goods 
 of one person from the goods of another can be registered. 
 
 No person can register a mark which every person should 
 have tfie right to use in carrying on his business. 
 
 Tliere are certain types of marks favored In the United 
 States which cannot be registered in many countries, and for 
 this reason it is important that conditions in foreign coun- 
 tries be considered. 
 
 On tttbttantially the tame bMb patterns, designs, drawings, and representations, 
 showing fomu, shapea, and As outward appearance of specimens and models of 
 goods and manufactures are prelec te d under the law of Joly 24, 1919, which confirms 
 otherwise the provisions of the old Austrian law relating to the subject. In this 
 case, however, two samples of the article or its picture along with a certificate of 
 its identity shall hr j i r^mted with the application. Protection is grranted far OM^ 
 tWb or at mott tbree years. — ^Tnde Commiiioncr Vlademer A. Gennger. 
 
 I 
 
394 EXPORTING TO THE WORLD 
 
 A name should not be used ; any other person with the same 
 name may have the right to use it. 
 
 Initials cannot be registered in Great Britain nor in the 
 Colonies; they should not be used* 
 
 The use of an invented word in connection with a patented 
 article is objectionable because it becomes common property 
 after the patent runs out 
 
 Designs are very much in favor. 
 
 An invented word is discouraged because if the article be 
 comes known by that name all rights in the trademark are lost. 
 
 Generally speaking, all marks possible of being registered in 
 the United States can be registered ahrotd, with certain ex- 
 ceptioos. 
 
 In many countries an American concern cannot register its 
 trade-mark unless the mark is already registered in the United 
 States. The most important of these countries in which this 
 rule prevails are Germany, Austria, Russia, Spain, Sweden, 
 Guatemala, Honduras, Cuba and Uruguay. 
 
 In countries like Great Britain and Colonies, Germany, Hol- 
 land, Sweden, Peru, and Uruguay opposition may be made to 
 the r^gistratioi of a tiade^naik by others* «• in Oie United 
 States. 
 
 dt«ri^iSS2rtS?il^*Vt5Jf^^ not forget a trade-mark and the 
 
 ««• w wi mmt HI M,Huu n HM HOOd tof. In this connection it mav \v««ll *n m^ntin^ 
 
 •'trade-marks in general. The newcomer Jui find stron^l^S 
 iTJif^.^^^tt""'?* '^ather difficult to supplant. The Chmcse purchMer will cLo^L 
 an article w.th a lamiliar trade-mark rather than take a chaucS wSTu new irSC 
 that might seem superior to a foreisn buyer And whiU XxT . ^ 
 
 fi?'Vtr cheaper.'^Jere?. Ic^^known.^S pe'rhaps "iSSS? 
 
 i^LtJVil" <=on"^ction the manufacturer is urged to have his rade-mark reiiSSnS 
 «.Jli^- ^"'^ J°^^° -^^^"r^ goods, as the piratinE Sf Side. 
 
 •"o'^'ty. « ■eeantj ta case legal action is necessary. ' 
 
 fc^-i?* ♦C""u*° manufacturer, however, irrespective of whether he doe> him 
 
 5^rc'ov|jirthf ^^^^^^^^^ hV t?'Mt^ &Wop%H^£-? 
 
 "^i^J*" iel~«* " imderT^ain^hS?'h£Toumr f'avor wIt'hTi'm 21 
 
 wdl CMtttM to porehue articles of that "chop''^ wXm a XinJ any Cu^J? 
 
 ^fX^rfh 5 hiSll^fis'fir^i"^'!?"" ^^'S >ts heating stoves^info W^'SSkS 
 
 ♦ ^nma.rhis firm made no effort whatever to orotect ito trade- mark so that 
 today tens of thousands of nat ve-maa«foctiir«d ■toi^BarbSifuTt^ Arnl^^^fa^ ♦ Va 
 mark ar«» artM in Phi'na . — "w'^ i»c»nn» tne American trade- 
 
 looay yu per cent of the goods bearing his trade-mark are imitations 
 
 seeking" mlrke"t^^ere!"buT I'.gS^SS^^in'^i^ ^^il"" h^'^.^^'^if .of^nroduct. 
 registration of trade-mark, in JaSnTSI? I? J^ff^ w "^S® ^'^^'Z advisable. The 
 of the applicant. furnishS %tf? pi^er of So™i5"*"^h * representative 
 times a oommercial housT «^rn^Hrn« T T J «t*o™ey. The representative is some- 
 a-Ti^-M^XAU sometimes a trade mark attorney, who tnakea mwJM»>m^Zl 
 
 m bdialf of the applicant abroad and, upon receipt of the rririTS*5Sf If ■£pHcaHon 
 to represent the applicant in a leeal' process for^ the protcctiS^^S^^.SE^'^TK'' 
 
 FOREIGN TRADEMARK REQUIREMENTS m 
 
 Importance of 
 
 Registration 
 
 'The apparent increase in the number of unauthorized ap- 
 pUcations for the registration of American trademarks abroad 
 calls for an emphatic reminder of the necessity of early regis- 
 tratioii of valuable trademarks, especially in those countries 
 where the ownership of marks is based ui>on r^;istration/' 
 says Commerce Reports for June 1, 1918. 
 
 "The countries of Latin America have furnished a particularly 
 
 profitable field for the registration of trademarks for speculative 
 purposes, as most of those countries grant the exclusive rig^t to 
 use a mark to the first applicant witiiout regard to its prior use 
 by another. Nearly every issue of the official bulletins of some 
 
 Latin American countries contain applications for trademark 
 registration that are evidently fraudulent or at least unauthor- 
 ized. The names of automobiles, motor trucks, pharmaceutical 
 pieparattonSy and odier articles, the sale of which depends largdy 
 iqxn advertising and good will have been particularly subject to 
 misappropriation, and recently a single firm applied for the 
 registration of the trademarks of six among the best-known 
 American cars. If registration had been granted, it would have 
 been practically equivalent to the acquisition of an exclusive 
 agency for the importation of each of these six cars in one of 
 the most important foreign markets for automolMles unless the 
 manufacturers were willing to adopt a new trademark for that 
 particular market. 
 
 *Td another case the designation 'Ford American products' 
 was sought to be r^;istered in a South American country for 
 all classes of goods. The effect of this registration would prob- 
 ably have been to give to the local registrant absolute control 
 over the use of the word 'Ford' on all goods sold in that 
 country. This latter case is illustrative of the difficulties that 
 may arise when a trademark used in the United States by vari- 
 ous manufacturers for different classes of goods is registered 
 abioad in such a way as to cover several of these classes. 
 Even if the maik is registered in good faith by one entitled to 
 its use, the form of registration may nevertheless prevent the 
 use of the mark on a distinct kind of goods by another manu- 
 facture except with the consent of the prior registrant. 
 
 "A somewhat different but none the less embarrassing ^tua- 
 tkm may be presented when a mark is registered in the name 
 
m 
 
 EXPORTING TO THE WORLD 
 
 of the local agent of the American manufacturer or caqKvter. As 
 long as the exclusive agency continues there m usually no 
 difficulties, hut should the principal desire to make a change in 
 the agency arrangements he may find that the agent has it in 
 his power to prevent the importation of the trademarked goods 
 except when consigned to him cmt under such terms as he 
 dictates. 
 
 The only safe course to follow is to register trademarks 
 promptly in the name of the manufacturer in countries where 
 any conaiderable business is carried on or anticipated. Even if 
 aqwirtation at the present time is limited by war condi- 
 tions the registration of the mark abroad may well be re- 
 garded as one of the fundamental steps of preparatton for 
 trade after the war. It is, perhaps, of even greater import- 
 aoce now than under normal conditions, in view of the 
 reported activity of enemy agents and others in appropriating 
 American trade marks. The expense of registration usually 
 represents only a reasonable outlay for the protection of 
 good will, and it is suggested that any article which is worth 
 advertising abroad is worth protecting by means of tfide- 
 mark rqpstration. 
 
 "Steps are now bdi^ taken toward the immediate establish- 
 ment of the International Bureau for Trade-Mark Registration 
 at Habana. On March 14, 1918, the President of Cuba trans- 
 mitted to the National Congress a message reviewing the'actkm 
 taken and requesting the af^mypdatkm of $10,000 as the con- 
 tributkm of the Cuban Government toward the initial expenses 
 of the bureau. The expenses are to be borne by the various 
 governments in the same proportion as that tff taMinhfd by ttut 
 Pan-American Union at Washington. When the necessary 
 arrangements have been completed the payment of a single fee 
 of pO will secure registration for a trademark in all the 
 countries rq>resented in the Bureau, including Costa Rka, Cuba, 
 Dominican Republic, Guatemala, Honduras, JRcaragua and Pan- 
 ama, and such others as may later be added, as well as in the 
 countries of South America when the second V^yf au hav« 
 been established at Rio de Janeiro. 
 
 "The Goftnunent of the United States has smce made an 
 appropriatkxn of $56,980 toward the expenses of operation, and 
 
 FOREIGN TRADEMARK REQUIREMENTS 397 
 
 the new bureau is reported to be accepting applications for the 
 international r^stration of American trademarks. Appli- 
 cations should be sent to the United States Patent Office at 
 Washingtcm.'' 
 
CHAPTER XXIV 
 
 PUBLICITY IN FOREIGN COUNTRIES 
 
 Americm uidtistry should have a publicity agent in fei^ 
 mga countries. 
 
 The functions of this publicity agent should be to dissemi- 
 nate American intelligence in every foreign country in the 
 world. He should keep the foreign world in close touch wMi 
 the progress and develofMnent of this country. He should 
 be prepared to combat the evil propaganda our trade rivals 
 are sure to spread wherever American business interferes 
 with their interests. 
 
 The necessity of publicity in foreign countries was fvXty 
 demonstrated during America's fNuticipation in the World 
 War. When the vicious German propaganda began to spread 
 to all countries of the globe, attacking America's motives in 
 entering the struggle, it became evident in this country that 
 this campaign <^ untruth had to be stopped. The government 
 at once oiganized a foreign publicity service that reached 
 every comer of the globe where people could read and under- 
 stand — and the result of this campaign was most gratifying. 
 When the war came to an end this publicity service was 
 dropped, and American interests engaged in foreign trade 
 abroad Instantly recognized the necessity of keeping up in one 
 form or another a publicity program that would place us in 
 the true light in regard to our motives and aims in connection 
 with foreign matters. Efforts have been made from time to 
 time to revive Ae work that the government had dropped at 
 condttsico of the war but it seems that thQr have been 
 made in vain. 
 
 American Press Associations 
 Now Active «» Foreign Field 
 
 A redeeming feature of the situation, however, lies in the 
 extension of the service of the great American press ^ trnrr ia- 
 
 398 
 
 PUBLiaTY IN FOREIGN COUNTRIES m 
 
 tions to foreign countries. These organizations are respon- 
 sible for the presentation of more American news in foreign 
 newspapers than ever before in their history. Particularly 
 in South America, where in the past the greater percentage 
 of iht news came from Europe before the war, there has been 
 a great improvement in the use of American news in the press 
 of that continent. Today in the great newspapers of South 
 America one may hnd a reasonable share of the space devoted 
 to American cable dispatches sent out by the American press 
 associations. Before the entrance of the American concoms 
 in the southern field, whatever little American news did creep 
 into the South American newspapers came by way of Europe, 
 and as a consequence much of it was richly colored. 
 
 The American press associations, however, cannot be ex- 
 pected to carry on a publicity campaign for American inter- 
 ests abroad. Their chief function is to distribute news, and 
 the moment they deviate from this function their efficiency in 
 this detail is likely to suffer. Nor must any organization or 
 set of organizations that may be inclined to take up this 
 tremendous task attempt to compete with these press asso- 
 ciations. Instead, their work should supplement the efforts 
 of these quasi-public concerns without encroaching upon their 
 basic functions. 
 
 There is no question that there is a field for this sort of 
 work in foreign countries where so often misunderstandings 
 arise concerning the motives of the American people in their 
 activities in connection with international affairs. These mis- 
 understandings are partly due to misinformation, partly due 
 to inaccuracy of statements, and partly due to vicious propa- 
 ganda on the part of our enemies. This situation had much 
 to do with the organization of the government's publicity 
 work abroad during the war. It was essential in this case 
 to fully explain our aims and ideals in connection with the 
 war in order that the foreign people, who had in a measure 
 succumbed to the perverted German propaganda, could under- 
 stand our true position in the great struggle. 
 
 With peace at hand and competition among nations inten- 
 sified more than ever in their struggle for commercial 
 supremacy, it is more than certain that there will be a re- 
 currence of this propaganda against the United States in 
 some form or another, and this country must be prepared 
 
400 EXPORTING TO THE WORLD 
 
 to meet it. As a matter of fact immediately alter tlie war 
 attadcs upon America had already begun. An instance in 
 
 point may be given to illustrate the ruthlessness with which 
 our competitors have already begun to fight American inter- 
 ests: The Webb-Pomerene law was apparently enacted to 
 permit manufacturers to combine for txpoft trade for the 
 purpose ci economizing in overhead expenses, and expediting 
 the sale <^ goods abroad. However, the aims of our manu- 
 facturers and exporters were questioned in certain sections of 
 South America when a partial text of the law had been re- 
 ceived there Our competitors spread reports to the effect 
 that the Webb law was purdy a device by American capital- 
 ists to monopolize foreign markets, and to tighten their grip 
 on foreign customers to such a degree that they could sell 
 at their own prices. Without entering into the merits of the 
 Webb Act, it is apparent that those who are opposed to 
 American advances in foreign fields, are willing to grab any 
 straw within reach to use as a bads for attacking our mo- 
 tives. It is doubtful if these attacks were ever answered. 
 
 Instances such as this are occurring in all parts of the world 
 right along. American travelers returning home after months 
 on the road in foreign countries have related similar instances 
 in which American interests have been the subject of vicious 
 attacks. 
 
 Publicity Machine % 
 Should Be Organised 
 
 It scans that, in view of these underhand methods of 
 combatting American competition, our manufacturers and ex- 
 porters who are most vitally interested in the establishment 
 of our good lyill and confidence in foreign countries where 
 we are desirous of building up trade^ and where these un- 
 frien^y activities are manifest, should take the initiative in 
 ofganizing a gigantic publicity machine along the lines fol- 
 lowed by the defunct Committee on Public Information of 
 the United States Government for the purposes of dissemin- 
 ating information in foreign lands. This machine or bureau 
 should be established in the principal American port, and 
 should have cable connections with all the principal markets 
 of the world. It should be in charge of competent and intelli- 
 
 PUBLICITY IN FOREIGN COUNTRIES 401 
 
 gent newspaper men who understand how to prepare and to 
 distribute news matter. There ^uld be representatives in 
 foreign countries to receive these cables or any other mate- 
 ria! that may be sent from the home office, and to see that 
 intelligent distribution to the press of the country in which 
 they are located, is effected. 
 
 Not only should the publicity bureau confine its activities 
 to the despatching of cable stcnies to foreign countries but 
 it should also conduct a mail service composed of material 
 intelligently collected in this country for the use of the press 
 abroad. There is a wealth of material in this country of tre- 
 mendous value for this kind of publicity work that the for- 
 eign' newspapers, generally speaking, would be only too glad 
 to use, if someone would mail it to ihem. 
 
 The publicity bureau should also perform the functions of 
 an information bureau. It should keep foreign countries in 
 close touch with legislation directly or indirectly connected 
 with international trade. It shouki see to it that where there 
 ts some doubt as to the interpretation of certain American ac- 
 tivities, a full explanation is given out to the foreign press 
 without delay. 
 
 Articles describing our various industries, showing how 
 American ptodocts are made; articles explaining the advan- 
 tages of highways, safety-first devices, systems san it a t i mi, 
 
 central heating plants, modem plumbing, etc. — all these are 
 of vital interest to people living in foreign countries and 
 whose standard of caadoft is not as high as that which we 
 enjoy in this country. 
 
 Supplementing this cable and mail service the motion pic- 
 ture could be brought into play. In fact, a publicity cam- 
 paign would not be complete without the motion picture. As 
 a device to interpret American enterprise, and to visualize the 
 immensity <^ our industrial machine the motion picture is un- 
 equalled. It tells the story better dian the words of any 
 writer. Already, individual American industries are turning 
 to the motion picture to demonstrate their products abroad 
 with most gratifying results. With the number of motion 
 picture theaters growing in all parts of the world the use of 
 the "movies" for publicity work is practical. 
 
 A publicity bureau of this sort, using the printed word and 
 the motion picture for the dissemination of information 
 
408 EXPORTING TO THE WORLD 
 
 abroad would be of inestimable value to American interests. 
 It would seem that such worthy organizations as the Foreign 
 Tilde Coimcil or the American Manufacturers Eiport A8M>- 
 elation, or some other competent organization closely con- 
 nected with foreign commerce should take the lead to plan 
 some form of organization to handle American publicity 
 abroad in the interests of American business along some 
 such tines as have been suggested in this chapter. 
 The results would be worth the effort 
 
 APPENDIX 
 
 UMITSD tTATBS SZPOSTa BY CmAMD DmSIOIfS 
 
 Fiscal 
 
 
 
 Exports to— 
 
 
 
 Year 
 
 Europe No. America So. America 
 
 A at A 
 AalSL 
 
 
 Ulrica* 
 
 1870. . . 
 
 .$420,184,014 
 
 $68,962,006 
 
 $^1,651,459 
 
 $10,972,064 
 
 $4,334,991 
 
 $3,414,768 
 
 1871... 
 
 . 479.738.693 
 
 77,348,184 
 
 19,599.581 
 
 7.781,138 
 
 3.307341 
 
 3.203,113 
 
 1872... 
 
 
 73,2301648 
 
 37,006,890 
 
 13,965,166 
 
 3,613,788 
 
 4305,140 
 
 1873... 
 
 . 539.061,328 
 
 81.689,759 
 
 29,661,967 
 
 18,727,094 
 
 4,677,457 
 
 3,524.474 
 
 1874... 
 
 . 572,511,479 
 
 94,942,138 
 
 26.747,020 
 
 15,087,695 
 
 4,493,916 
 
 3,037,144 
 
 1875... 
 
 . 533,544.921 
 
 86,166,454 
 
 24.096.950 
 
 13,972.305 
 
 4,276.305 
 
 3.470.782 
 
 1876... 
 
 . 538.322.83S 
 
 79,926,699 
 
 22,862,746 
 
 15.528.567 
 
 4371312 
 
 4.814.382 
 
 1877.... SiJ^MS 
 
 83,058.656 
 
 32,577,154 
 
 27,14^5 
 
 7345.929 
 
 4371,788 
 
 U78.... 597,774,9S» 
 
 78,762,184 
 
 24,690,478 
 
 28,998,343 
 
 8,607,644 
 
 4,770,729 
 
 1879... 
 
 . 594,189,272 
 
 67,598,525 
 
 23,437,376 
 
 11,752,969 
 
 9,900.550 
 
 4,758,701 
 
 1880... 
 
 . 719.433.788 
 
 69,437,783 
 
 23.190.220 
 
 11.645,703 
 
 6.846.698 
 
 5,084,466 
 
 1881.... 7<M13Jf8 
 
 83,156399 
 
 85,304346 
 
 12317348 
 
 9,506377 
 
 5,377,878 
 
 1888.... 600,100^98 
 
 85,793,255 
 
 27324350 
 
 18.393.67r 
 
 12,4601664 
 
 6369.319 
 
 1883... 
 
 . 659,867,396 
 
 99,428,476 
 
 29,570,659 
 
 16,348.742 
 
 13,571,721 
 
 5,052,480 
 
 1884... 
 
 . 583,795.462 
 
 92,217,190 
 
 31,226.934 
 
 16,913,978 
 
 13,105.604 
 
 3,254,441 
 
 1885... 
 
 . 599,240.748 
 
 76,764.748 
 
 27.734.857 
 
 20.739.972 
 
 13.605.468 
 
 4.103.962 
 
 1886. « « 
 
 . S41J73,«89 
 
 71.980,400 
 
 26.131.991 
 
 31,980,999 
 
 14377,407 
 
 3380.994 
 
 1887... 
 
 . 575.300,338 
 
 73.425,948 
 
 30,744,497 
 
 19,322,172 
 
 13,867.552 
 
 3,552,716 
 
 1888. . . 
 
 . 549,092,503 
 
 79,995,497 
 
 29,579,227 
 
 18,929.152 
 
 14.746.065 
 
 3,612,063 
 
 1889... 
 
 . 578,902,520 
 
 89.550,476 
 
 35.021,017 
 
 18,439,626 
 
 16.239,403 
 
 4,248,333 
 
 1890... 
 
 . 683.736.397 
 
 94,100,410 
 
 38.752,648 
 
 19.696,820 
 
 16.460.269 
 
 5.082.140 
 
 1891... 
 
 . 704.798,047 
 
 96,549.129 
 
 33,708,290 
 
 25353,308 
 
 18321301 
 
 53S033S 
 
 1892... 
 
 . 850,623.150 
 
 105,566.184 
 
 33,147,614 
 
 19.590,350 
 
 15,572,767 
 
 5.778.083 
 
 1893... 
 
 . 661.976.910 
 
 119,788,889 
 
 32,639,077 
 
 16,222,354 
 
 11.199.477 
 
 5,838,487 
 
 1894... 
 
 . 700.870.822 
 
 119,693.212 
 
 33.212.310 
 
 20.872,761 
 
 11,914.182 
 
 5377.285 
 
 189S... 
 
 . 637.927,693 
 
 108,575,594 
 
 33,535.935 
 
 17325,057 
 
 13.109331 
 
 7,074.656 
 
 1896... 
 
 . 673.043.753 
 
 116.567.496 
 
 36,297,671 
 
 25,630,029 
 
 17,197.229 
 
 13,870.760 
 
 1897... 
 
 . 813.385,644 
 
 124.958.461 
 
 33.768.646 
 
 39,274,905 
 
 22,652,773 
 
 16,953,127 
 
 1898. . . 
 
 . 973.806.245 
 
 139.627,841 
 
 33.821.701 
 
 44,707.791 
 
 22,003.022 
 
 17,515,730 
 
 1889. • • 
 
 . 936,602,093 
 
 157.931.707 
 
 35.659.903 
 
 48,360,161 
 
 29,875,015 
 
 18.594.424 
 
 1900... 
 
 .1.840.167.763 
 
 187.594.625 
 
 38^945363 
 
 64*913307 
 
 43391375 
 
 19369,849 
 
 1901 . . . 
 
 .1.136.504.605 
 
 196.534,460 
 
 44,400.195 
 
 49,390,712 
 
 35.392,401 
 
 25,542,613 
 
 1902... 
 
 .1.008,033,981 
 
 203.971.080 
 
 38.043.617 
 
 63,944.077 
 
 34,258.041 
 
 33,468.605 
 
 1903... 
 
 .1.029.256,657 
 
 215,482.769 
 
 41.137,872 
 
 58359,016 
 
 37,468,512 
 
 38,436,863 
 
 J^0^» • • 
 
 .1,057,930.131 
 
 834.909.999 
 
 50.755.027 
 
 60.151.347 
 
 32,850,681 
 
 24330.126 
 
 1^908* • • 
 
 .1,020,972.641 
 
 260.570.235 
 
 56,894,131 
 
 128,504.610 
 
 33379.446 
 
 18,540303 
 
 1906... 
 
 .1.200.166,036 
 
 308,382.982 
 
 75,159,781 
 
 105,451.610 
 
 35,141,751 
 
 19,562.340 
 
 1907... 
 
 .1.298,452.380 
 
 349,840,641 
 
 82,157,174 
 
 92,703.664 
 
 41,186,193 
 
 16.511,026 
 
 1908... 
 
 .1,283,600,155 
 
 324.674.719 
 
 83,583,874 
 
 101.784,832 
 
 46,789.201 
 
 20,340.565 
 
 1909... 
 
 .1,146,755.321 
 
 309.476.694 
 
 76361.680 
 
 71.798.187 
 
 41389.788 
 
 17.035334 
 
 1910... 
 
 .1,135.914.551 
 
 385,520,069 
 
 93.246,820 
 
 60.861,813 
 
 50,890,087 
 
 18,551,380 
 
 1911. . . 
 
 .1,308.275.778 
 
 457,950,179 
 
 108.894.894 
 
 85,422,428 
 
 66,060,813 
 
 23,607.107 
 
 1912... 
 
 .1,341,732,789 
 
 516.837.597 
 
 132.310.451 
 
 117,461,635 
 
 71,936,513 
 
 24,043.424 
 
 IflS... 
 
 .1.479.074^761 
 
 817,413.813 
 
 146.147.993 
 
 115,056,620 
 
 79,102.845 
 
 29.088.917 
 
 1914... 
 
 .1.486.498.729 
 
 528.644,962 
 
 124339.909 
 
 113.425,616 
 
 83.568.417 
 
 27.901,515 
 
 1915... 
 
 .1,971,434,687 
 
 477,075.727 
 
 99,323.957 
 
 114,470,493 
 
 77.764,725 
 
 28.519,751 
 
 1916... 
 
 .2.999,305.097 
 
 733.024,674 
 
 180.175.374 
 
 278.610.881 
 
 98,775.828 
 
 43.591.031 
 
 1917.... 4*324,512.661 
 
 1.163.758.100 
 
 259.480.371 
 
 380,249,708 
 
 109 314.490 
 
 52.733.064 
 
 
 
 3143iMSt 
 
 44735^15 
 
 134389300 
 
 55,423368 
 
 408 
 
APPENDIX 
 
 
 
 
 Pet. from 
 
 
 
 Pot. to 
 
 Fiscal 
 
 Total 
 
 From Latin 
 
 I Latin 
 
 
 To Latin 
 
 Latin 
 
 Tear 
 
 
 America 
 
 America 
 
 
 America America 
 
 1893 . 
 
 1866^400,922 
 
 1225,906.702 
 
 26.08 
 
 1847,665.194 
 
 $88,503,514 
 
 10.44 
 
 19H . 
 
 iH99«4ta 
 
 21MC2^1 
 
 33.34 
 
 •92,140,572 
 
 78,924,298 
 
 8.85 
 
 1895 . 
 
 731.969.965 
 
 196,516.050 
 
 26.8S 
 
 •07M1CS 
 
 
 9.22 
 
 1896 . 
 
 779,724,674 
 
 180,022,806 
 
 23.09 
 
 882.606,938 
 
 76.611,305 
 
 8.68 
 
 1897 . 
 
 764,730,412 
 
 156.661,864 
 
 20.49 
 
 1,050,993,556 
 
 78.320.416 
 
 7.45 
 
 
 €16,049,654 
 
 136»854,235 
 
 22.21 
 
 1,231,482,330 
 
 74,030,291 
 
 6.01 
 
 1»9 . 
 
 697,148^4« 
 
 i4a»iso,a97 
 
 21.2S 
 
 1,227,023,302 
 
 n;307,it7 
 
 7.20 
 
 1900 . 
 
 849.941.184 
 
 167,180,295 
 
 19.67 
 
 1.394.483.082 
 
 110,674^490 
 
 7.96 
 
 1901 . 
 
 823.172.165 
 
 198,233,744 
 
 24.08 
 
 1,487.764,991 
 
 118,772.158 
 
 7.9t 
 
 1902 . 
 
 903.320,948 
 
 208,510,497 
 
 23.08 
 
 1.381,719.401 
 
 115,132.413 
 
 8.33 
 
 IMS . 
 
 1,023,719,237 
 
 22S,923,09« 
 
 22.M 
 
 1,420,141,679 
 
 115,053,595 
 
 8.10 
 
 1904 . 
 
 991,087,371 
 
 256,227,244 
 
 2S.8S 
 
 
 lJMlS,3tl 
 
 9.2S 
 
 1905 . 
 
 1.117,513,071 
 
 302.266.593 
 
 27.05 
 
 1,518,561,666 
 
 159.,156.657 
 
 i0.4t 
 
 1S06 . 
 
 1.226.562,446 
 
 294,049,326 
 
 23.97 
 
 1,743,864.500 
 
 209,043,359 
 
 11.99 
 
 im . 
 
 1,434,421,42S 
 
 334,572,126 
 
 23.33 
 
 1,880,851,078 
 
 229,966.603 
 
 12.23 
 
 1908 . 
 
 1.194.341,792 
 
 273,17Mn 
 
 22.t7 
 
 1,S60,773,34« 
 
 219,968,513 
 
 11.82 
 
 1909 . 
 
 1,311,9J'J.224 
 
 324,154,136 
 
 24.71 
 
 1,663,012,204 
 
 JM,912,t74 
 
 12.14 
 
 1910 . 
 
 1,556.947,430 
 
 392,955,257 
 
 25.24 
 
 1,744.984,720 
 
 242,123,502 
 
 13.87 
 
 1911 . 
 
 1,527,226,105 
 
 371,300,234 
 
 24.31 
 
 2,049,320.199 
 
 273,525.344 
 
 13.35 
 
 1912 . 
 
 i-iiiiiiLtM 
 
 423,037,2i8 
 
 SS.S9 
 
 2,204,322,409 
 
 196,141.651 
 
 13.43 
 
 1913 . 
 
 1,813,008.234 
 
 442,419,973 
 
 24.40 
 
 MCS,at4,149 
 
 123,775,883 
 
 13.13 
 
 1914 . 
 
 1,893,925.657 
 
 469,082,667 
 
 24.77 
 
 2,364,579,148 
 
 282,070,153 
 
 11.92 
 
 1915 . 
 
 1,674,169,740 
 
 557.413,053 
 
 33.29 
 
 2.768.589,340 
 
 251,469,431 
 
 9.08 
 
 191C ,i 
 
 i,i97,iSMie 
 
 760,132,729 
 
 34.58 
 
 4,333,482,885 
 
 411,193.859 
 
 9.40 
 
 1917 . 
 
 2.659.355,185 
 
 962,860,611 
 
 jf.ai 
 
 ik290,048^394 
 
 581,954,695 
 
 9.25 
 
 191S 
 
 2,946,059,403 
 
 9tMiM71 
 
 Jt.44 
 
 
 
 12.24 
 
 i^A^^^?! CtmM iUBortaa. Sovtli Amoriea, and the Weit 
 
 ladies, with exception of Brttlsh. Danish, Dnteh, aad Vreaoh. 
 
 ■«, i^ ?ri'M^ ^^^^^^ ^'^^ exports of United States to tho 
 
 ■•Parato lAtla American countriee in year ended June 30. 1918 were* 
 
 « 437'809.'^r"^ Ouatemala. |7.822.9(i; ^^^^1^ 
 
 15,437,809; Nicaragua. |4.590,037; Panama. S7.ia290« MvaAa^ ocmi^ 
 
 Mexico, 1140,801.097: Cuba. I264.i24.006?^mln-^;T8:06TS^^ 
 
 ^^f^43f^^J^^£Si^ 110,887.968; Paramiay, $69,797 
 «^ru. .»4i.43!? 218, Umffway, f l 2 , i l MP ; ▼•■oaaOla, $13,287,728. 
 
 Exports from United State* to CoaU Rtea. MtMraiAt Om.*^.!. 
 
 ♦M»2.760: Honduras. ,4.6,..72,; mc.r^TTt^^SSn^^^J'ffSS^. 
 
 4M 
 
 APPENDUL 
 
 PRINCIPAL POSTS OP THK WORLD 
 
 COooipiloa by tlM Ualtod 8tat« 
 
 Ml I>0PI 
 
 WtBDIOBt Of O 
 
 onunovoo. 
 
 .000 omlttod.) 
 
 
 
 
 
 Total 
 
 CoaaitrF wnA Fort 
 
 Tr. 
 
 Import! 
 
 BkpMts 
 
 Oommoroe 
 
 BUROPB 
 
 
 Dollars 
 
 Dollars 
 
 Dollars 
 
 
 iy*o 
 
 1 ■I/IO 044 
 
 l,/4o,933 
 
 917,060 
 
 2f665|9yJ 
 
 
 1910 
 
 l,2o2,73> 
 
 954,624 
 
 2,317,359 
 
 TY.. 11 
 
 101 4C 
 
 Zo3,547 
 
 158,702 
 
 j/)0 ^AA 
 
 
 1 Q1 £ 
 
 ^03,4J5 
 
 1 AT A C A 
 
 107,950 
 
 341,385 
 
 
 1910 
 
 164,508 
 
 204.759 
 
 369.267 
 
 
 
 
 23,102 
 
 81,926 
 
 _ ^ J t JMI 
 
 
 
 65,711 
 
 109,702 
 
 
 
 4/,yyu 
 
 4 A^ 
 
 1,996 
 
 49,986 
 
 
 1 Q1 1 
 
 1 AO^ IOC 
 
 1,084,3^5 
 
 817,275 
 
 < AAI i^AA 
 
 1.901,600 
 
 
 V9\9 
 
 
 211,#Z1 
 
 9oZ,OZ9 
 
 ^^9.A ■^^•••«Mn • A ttk^^HVASMBk 
 
 lyu 
 
 0M,104 
 
 coo 1 oi 
 588,181 
 
 1,211,345 
 
 
 
 389,639 
 
 ^^C 
 
 365,733 
 
 /o5,3/i; 
 
 
 
 357.924 
 
 258.795 
 
 £1 71 A 
 
 
 
 lo7,53o 
 
 30,201 
 
 
 
 vat* 
 
 89,163 
 
 78^606 
 
 lo7,7o9 
 
 
 1 oi c 
 
 387,600 
 
 120.934 
 
 CAO C*>>^ 
 
 508,534 
 
 
 1916 
 
 90.945 
 
 31,768 
 
 122,713 
 
 
 1912 
 
 74.360 
 
 28,600 
 
 102.960 
 
 A MBAiA OiM«B AHA flSav • M^Mftjua^ja 
 
 1919 
 
 175,997 
 
 Iel,430 
 
 33/,4«o 
 
 
 1 At 1 
 
 1912 
 
 43,833 
 
 53,923 
 
 97,750 
 
 
 Iyl5 
 
 14^675 
 
 16,841 
 
 31,416 
 
 
 1915 
 
 
 4 A9 
 
 103 
 
 566 
 
 
 4avc 
 1919 
 
 721 
 
 51 
 
 772 
 
 v% j9 a 44 
 
 lOI A 
 
 iyi4 
 
 4.061 
 
 27.852 
 
 31,913 
 
 T.ihmt 
 
 1 Q 1 A 
 
 4 TA'9 
 
 15,703 
 
 1 A con 
 
 
 
 1 0I X 
 
 9,573 
 
 35,858 
 
 45 .4 J I 
 
 MiVn1a.l«w 
 
 IMA 
 
 9*9 
 
 18,442 
 
 ly.aio 
 
 
 1914 
 
 4»4i9 
 
 14,593 
 
 • A A/r<) 
 
 iy,uoJ 
 
 
 
 26,481 
 
 1,752 
 
 J33 
 
 fi v\o \ n * LJ n A 1 A «% A 
 
 
 79,428 
 
 A A 0)0 
 
 1 no o/;7 
 
 
 1913 
 
 14.342 
 
 19,162 
 
 33,5U4 
 
 
 1912 
 
 22,273 
 
 9,n9 
 
 33,201 
 
 OCEANIA 
 
 
 
 
 
 
 10K 
 
 
 loi £7/; 
 lV3,6/6 
 
 33U. /^o 
 
 ICelbourne 
 
 1916 
 
 a ^ a w 
 
 129 430 
 
 67 034 
 
 196 464 
 
 AMERICA 
 
 
 Dollars 
 
 Dollars 
 
 Dollars 
 
 Unit. States: New York 
 
 1917 
 
 1,338.199 
 
 3,053,120 
 
 4.391,319 
 
 
 1917 
 
 8.505 
 
 266.279 
 
 274,784 
 
 
 1917 
 
 mS17 
 
 303,510 
 
 408,027 
 
 
 1917 
 
 217,905 
 
 225.678 
 
 443,483 
 
 
 1917 
 
 109,486 
 
 464,471 
 
 573,957 
 
 
 1917 
 
 43.973 
 
 374,033 
 
 418,006 
 
 
 1917 
 
 144,027 
 
 142,890 
 
 286,917 
 
 
 1917 
 
 198,321 
 
 177,650 
 
 376,971 
 
 Virginia 
 
 1917 
 
 19,330 
 
 137,012 
 
 1S6.342 
 
 
 1917 
 
 67.715 
 
 217,120 
 
 284335 
 
 MIehiffan 
 
 1917 
 
 41,749 
 
 290.376 
 
 232,125 
 
 
 1917 
 
 92»ii0 
 
 103,939 
 
 202,599 
 
 Canada: Montreal 
 
 1917 
 
 222,119 
 
 384,314 
 
 606,432 
 
 Mexico: Vera Cruz 
 
 1913 
 
 40,733 
 
 42,118 
 
 82,851 
 
 
 1913 
 
 22,825 
 
 40,379 
 
 32,204 
 
 
 1916 
 
 183,1M 
 
 89,006 
 
 272,159 
 
 <ArCMittea: Baoaoa aIm .... 
 
 19l« 
 
 mm 
 
 
 440^168 
 
 405 
 
APPENDIX 
 
 PUNCIPAI* POSTS OF THB WORLD friwitimwiP 
 iCmm^n^dhwU^Vnm^mM^JH^MmmttotComM^ .000 omitted) 
 
 
 
 
 
 Total 
 
 OMtttrj Mid Fort 
 
 
 
 JBiXpOFui 
 
 Commerce 
 
 BUROPB 
 
 
 Dollars 
 
 VoUmn 
 
 Dollars 
 
 
 1916 
 
 52,093 
 
 118,229 
 
 17042S 
 
 
 1916 
 
 86.597 
 
 47,604 
 
 134.201 
 
 
 IflS 
 
 364M 
 
 11.929 
 
 38.235 
 
 
 1915 
 
 8,5J9 
 
 
 30.596 
 
 Peru: Callao 
 
 1916 
 
 29,277 
 
 
 
 Uruguay: Montevideo 
 
 1911 
 
 42,627 
 
 
 7V»4 
 
 ASIA 
 
 
 
 
 
 China: Shaai^uU 
 
 m§ 
 
 m,49$ 
 
 
 348,701 
 
 
 1916 
 
 21.487 
 
 
 
 Tientsin 
 
 1916 
 
 36,718 
 
 
 54.4M 
 
 Jbpmi: Tokohaina 
 
 1916 
 
 104,554 
 
 248.080 
 
 352,634 
 
 Kobe 
 
 im 
 
 186,488 
 
 165.056 
 
 351,544 
 
 Osaka 
 
 1916 
 
 40.867 
 
 f%$99 
 
 
 Brit. Colonies: Singapore 
 
 1916 
 
 244,589 
 
 214,600 
 
 111.557 
 
 
 1916 
 
 167.667 
 
 285,859 
 
 453,525 
 
 
 IM 
 
 143.422 
 
 143.846 
 
 
 AFRICA 
 
 
 
 
 
 
 m§ 
 
 mm 
 
 
 
 miPBK4TIIRS AND RAINFALL OF FOKfilQN CITISg 
 
 Mean Annual 
 Annual Aver- 
 
 catjr or Plaos 
 
 
 • mgm 
 
 
 pera 
 
 • Rain- 
 
 
 ture 
 
 fall 
 
 
 
 Inches 
 
 
 
 8 
 
 
 
 M 
 
 
 
 16 
 
 
 
 16 
 
 
 
 9 
 
 
 
 SI 
 
 Bermuda 
 
 
 65 
 
 
 
 46 
 
 Bombay 
 
 
 75 
 
 
 
 29 
 
 
 
 
 
 
 65 
 
 
 
 25 
 
 Caiorraposffeo ... 
 
 • • • • • . • 
 
 458 
 
 
 
 33 
 
 Constantinoplo . 
 
 •••• 57.7 
 
 29 
 
 
 
 22 
 
 Dolhl 
 
 
 28 
 
 
 
 3t 
 
 
 
 29 
 
 
 
 82 
 
 
 
 44 
 
 
 
 52 
 
 
 
 39 
 
 
 
 3S 
 
 Mian Annual 
 
 Annual Aver- 
 
 CItsr or Plaoo 
 
 Tern- 
 
 age 
 
 
 pora- 
 
 - Rain- 
 
 
 taro 
 
 
 
 
 3 
 
 Lisbon 
 
 
 39 
 
 
 
 3S 
 
 Madrid 
 
 
 9 
 
 Melboume 
 
 
 29 
 
 
 
 23 
 
 MoatovMoo . 
 
 
 44 
 
 McM^rsal 
 
 ... 41.9 
 
 41 
 
 
 
 as 
 
 Nice , 
 
 
 29 
 
 
 
 76 
 
 
 
 22 
 
 
 
 3S 
 
 
 
 17 
 
 
 
 40 
 
 Rio de Janeiro 
 
 
 43 
 
 
 
 3t 
 
 
 
 If 
 
 
 
 26 
 
 
 
 58 
 
 
 
 30 
 
 
 
 M 
 
 
 
 ItO 
 
 
 
 3S 
 
 i06 
 
 APPENDIX 
 
 TABLE FOR CONVERSION OP POUNDS AVOIRDUPOIS 
 
 INTO KILOGRAMS 
 
 To find the weight in kilos of a shipmont of merchandise weighing 
 sajr, 1M71 ItMn And tbo nvmbor ot pounds la tho oolvmn markod lbs." 
 Tho ovdvmloat avmbor of kilos is in tho toUowinv eolnma tlins: 
 
 Lbs. 10.000 = Kilos 4536.00 
 
 400 = 181.44 
 71 =r " 32.206 
 
 Lbs. 10.471 = KUOS 4749.646 
 
 To find tbo wolsht in kilos of Lbs. 100,000, take the kilo oqnlTalont 
 
 of Lbs. 10.000, i. e.. Kilos 4536.00, and move the decimal point one flCWa 
 to the riffht, thus: libs. 100,000.:=KUos 4M60.00. 
 
 bs. 
 
 itnnel 
 
 Belles 
 
 MBO. 
 
 oQwai 
 
 Kilos 
 
 • 
 1 
 
 M 
 
 • 0.453O 
 
 48 
 
 M 
 
 21.773 
 
 m 
 
 m 
 
 M 
 
 t 0.9072 
 
 49 
 
 M 
 
 22.226 
 
 3 
 
 tt 
 
 1.3608 
 
 SO 
 
 •i 
 
 22.680 
 
 
 M 
 
 1.8144 
 
 51 
 
 
 23.134 
 
 • 
 • 
 
 M 
 
 3.«Hw 
 
 53 
 
 M 
 
 33.587 
 
 O 
 
 M 
 
 . 2.7216 
 
 53 
 
 ii 
 
 24.041 
 
 • 
 
 7 
 
 t$ 
 
 3.1752 
 
 64 
 
 M 
 
 24.494 
 
 9 
 
 0t 
 
 3.6288 
 
 55 
 
 
 24.948 
 
 m 
 W 
 
 M 
 
 4.0834 
 
 5e 
 
 
 25.4Q2 
 
 10 
 
 M 
 
 • 4.5JOO 
 
 57 
 
 A. 
 
 25.855 
 
 11 
 
 M 
 
 
 58 
 
 
 26.309 
 
 t9 
 
 M 
 
 M 
 
 
 59 
 
 0g 
 
 26.762 
 
 11 
 
 M 
 
 
 OO 
 
 M 
 
 27.216 
 
 %A, 
 19 
 
 M 
 
 
 Dl 
 
 M 
 
 4IMO JIUl. 
 
 2¥,6lr0 
 
 la 
 
 M 
 
 
 62 
 
 
 28.123 
 
 IS 
 
 M 
 
 7 2S8 
 
 
 M 
 
 28.577 
 
 17 
 
 M 
 
 7.711 
 
 64 
 
 M 
 
 29.030 
 
 IS 
 
 M 
 
 t.ldS 
 
 65 
 
 M 
 
 29.484 
 
 19 
 
 M 
 
 8.618 
 
 66 
 
 M 
 
 29.938 
 
 20 
 
 M 
 
 9.072 
 
 67 
 
 M 
 
 30.391 
 
 31 
 
 « 
 
 9.526 
 
 68 
 
 M 
 
 30.845 
 
 33 
 
 M 
 
 9.979 
 
 69 
 
 M 
 
 31.2M 
 
 33 
 
 M 
 
 10.433 
 
 70 
 
 M 
 
 31.752 
 
 24 
 
 M 
 
 10.886 
 
 71 
 
 M 
 
 32.206 
 
 3S 
 
 M 
 
 11.340 
 
 72 
 
 M 
 
 # 32.659 
 
 3i 
 
 M 
 
 11.794 
 
 73 
 
 M 
 
 33.113 
 
 27 
 
 M 
 
 12.247 
 
 74 
 
 M 
 
 33.566 
 
 28 
 
 M 
 
 12.701 
 
 75 
 
 M 
 
 34.020 
 
 39 
 
 M 
 
 13.154 
 
 76 
 
 M 
 
 34.474 
 
 30 
 
 M 
 
 13.600 
 
 77 
 
 M 
 
 34.937 
 
 31 
 
 M 
 
 14.062 
 
 78 
 
 M 
 
 35.381 
 
 33 
 
 M 
 
 14.515 
 
 79 
 
 M 
 
 35.834 
 
 33 
 
 M 
 
 14.969 
 
 80 
 
 M 
 
 36.288 
 
 34 
 
 M 
 
 1S.433 
 
 81 
 
 M 
 
 36.742 
 
 31 
 
 M 
 
 1S.S76 
 
 83 
 
 M 
 
 37.195 
 
 36 
 
 M 
 
 16.330 
 
 83 
 
 M 
 
 37.049 
 
 37 
 
 M 
 
 16.783 
 
 84 
 
 W 
 
 38.102 
 
 33 
 
 M 
 
 17.237 
 
 85 
 
 M 
 
 38.556 
 
 39 
 
 M 
 
 17.490 
 
 86 
 
 M 
 
 39.010 
 
 40 
 
 M 
 
 18.144 
 
 87 
 
 « 
 
 39.463 
 
 41 
 
 M 
 
 18.598 
 
 88 
 
 W 
 
 39.917 
 
 43 
 
 M 
 
 19.051 
 
 89 
 
 M 
 
 40.370 
 
 43 
 
 M 
 
 19.S0S 
 
 90 
 
 M 
 
 40.824 
 
 44 
 
 M 
 
 19.958 
 
 91 
 
 «i 
 
 41.278 
 
 45 
 
 M 
 
 20.412 
 
 92 
 
 M 
 
 41.731 
 
 4$ 
 
 M 
 
 20.886 
 
 93 
 
 M 
 
 42.185 
 
 47 
 
 M 
 
 SM19 
 
 M 
 
 M 
 
 42.638 
 
 407 
 
TABU FOR CONVBKSION 
 
 XHTO 
 
 OP POUND AVOIRDUPOIS 
 AMI (ContlmMd) 
 
 Lbs. 
 
 equal 
 
 Kilos 
 
 Lbs. 
 
 equal 
 
 Kilofl 
 
 9S 
 
 M 
 
 43.092 
 
 8000 
 
 M 
 
 • • > <90ao.oU 
 
 9€ 
 
 M 
 
 43.544 
 
 9000 
 
 M 
 
 ... 4082 40 
 
 97 
 
 M 
 
 43.999 
 
 10000 
 
 M 
 
 . . . 4S34.00 
 
 98 
 
 M 
 
 44.453 
 
 11000 
 
 M 
 
 ... 4990.00 
 
 99 
 
 M 
 
 44.906 
 
 12000 
 
 M 
 
 . . . 5443.00 
 
 IM 
 
 «• 
 
 4S.36 
 
 11000 
 
 M 
 
 . . . 5897.00 
 
 200 
 
 . •* . , , , 
 
 90.72 
 
 14000 
 
 M 
 
 ... 0150.00 
 
 300 
 
 M 
 
 136.08 
 
 15000 
 
 M 
 
 ... 4004.00 
 
 400 
 
 M 
 
 181.44 
 
 16000 
 
 M 
 
 . . . 7258.00 
 
 SM 
 
 ' m 
 
 22S.80 
 
 17000 
 
 M 
 
 ... 7711.00 
 
 600 
 
 M 
 
 272.16 
 
 liooo 
 
 M 
 
 . . . 0165.00 
 
 700 
 
 M 
 
 317.52 
 
 19000 
 
 M 
 
 ... 8618.00 
 
 800 
 
 M 
 
 362.88 
 
 20000 
 
 M 
 
 . . . 9072.00 
 
 990 
 
 loeo 
 
 M 
 
 408.24 
 
 25000 
 
 M 
 
 . . . 11340.00 
 
 M 
 
 45$M 
 
 30000 
 
 M 
 
 ... 13608.00 
 
 2000 
 
 M 
 
 mM 
 
 40000 
 
 M 
 
 ... 18144.00 
 
 3000 
 
 M 
 
 1360.80 
 
 SOOOO 
 
 M 
 
 ... 22600.00 
 
 4000 
 
 M 
 
 1814.40 
 
 60000 
 
 M 
 
 ... 27216.00 
 
 5000 
 
 M 
 
 2268.00 
 
 70000 
 
 M 
 
 ... 31752.00 
 
 6000 
 
 «i 
 
 2721.60 
 
 80000 
 
 M 
 
 . . . 36288.00 
 
 
 M 
 
 • ••• 
 
 917190 
 
 00000 
 
 « 
 
 ... 40824.00 
 
 ?3 
 
 •• • - trt " .2 
 
 ^ ^ ^ ^ ^ ^ 
 
 J' 
 
 APPENDIX 
 
 I 
 
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APPENDIX 
 
 .J 
 
 APPENDIX 
 
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 On O ro eg O VO 
 
 O ^ »^ ^ ^ 10 
 
 t-l V4 P4 p4 
 
 60 • . ••!•»>«•• 
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APPENDIX 
 
 PANAMA CANAL TKAmC 
 
 -Atlantic to Paciflo- 
 
 CVIa* 
 
 1915 . 
 
 1916 . 
 
 1917 . 
 ]«!• . 
 1919 . 
 
 Veg- Cargo 
 
 530 
 411 
 905 
 921 
 921 
 
 2.657,865 
 
 1,912,846 
 4,170,733 
 3.938.042 
 
 Net 
 
 1^.72t 
 
 1,308.231 
 2,925,414 
 2.750,378 
 
 Carso Ves- 
 
 -Paciflc 
 OroM 
 
 2,12S.7SS SSt 
 
 1,434,236 376 
 3,076,843 971 
 2.639,466 1,209 
 
 %mfi6§ i,iM 
 
 3,7SI^9t9 
 
 1.683.683 
 4,360.088 
 5,433.297 
 4.418,]M 
 
 to Atlantic- 
 Net 
 Tons 
 
 l,95a^ 
 
 I.I7IM 
 3,083,944 
 3.908,480 
 3.443.006 
 
 Cargo 
 Tons 
 
 2.844.057 
 I.705.8IO 
 4,152,412 
 4.922,647 
 4,029,742 
 
 Total 3,688 1^139,903 11^61^ 12^54^5 4,300 13»5«iM U^iHM 
 
 TOKAIt 
 
 1,088 
 787 
 1,876 
 2,130 
 ^107 
 
 7,988 
 
 5,416,787 
 3,596.529 
 8,530,821 
 9,371,339 
 7,t747«l 
 
 34,794,079 
 
 N«t Tons 
 
 
 3.843.03S 
 
 4,9«f,793 
 
 2.479.762 
 
 3.140.046 
 
 6,009,358 
 
 7,229.255 
 
 
 7,562,113 
 
 <4J1.S7S 
 
 26,11^98 
 
 29^09,013 
 
 Distance to nearest Canal terminal by usual routes, in navtlMl 
 mllea^ from following ports (length of " 
 
 Montreal. Can 3,160 
 
 Halifax, N. S. 2,317 
 
 PiurtUuUU ]f«. 2;m 
 
 Boston, Mass j;iS7 
 
 New York, N. Y tjff4 
 
 Philadelphia. Pa. 
 
 Bftlttnore, Md. 
 
 Norfolk. Va. i,|7f 
 
 Wilmington,, N. C. 1,730 
 
 Charleston, a G. 1,564 
 
 fltoVMUUth, Ga. 1,607 
 
 JMksoiiTiUe, Fla. i,SfS 
 
 X«J West, Plm, .\. 1,065 
 
 Mobile, Ala. 1,393 
 
 New Orleans, La. i,403 
 
 GAlTeStOB, TtK. 1,493 
 
 Tampico, Mexico i,485 
 
 Tuxpam, Mexico 1,455 
 
 Vera Crus, Mexico 1,420 
 
 Bellse, British Honduras . . 816 
 Puerto Barrios, 
 Truxlllo, Honduras . 
 
 Blueflelds, Nicaragua 27C 
 
 Port Limon, Costa Rica .. 191 
 
 Boeas M Tvn, Vmammm 144 
 
 Havana, Cuba •••••••••••• 1,003 
 
 Bermuda Islands 1,643 
 
 Kingston, Jamaica 851 
 
 Port ma Priaes, BattI 774 
 
 San Jnaa. Porto Rloo 
 
 St. Thomas, Virgin 
 Barbados, West Indies . 
 Port of Spain, Trinidad 
 
 993 
 
 1.029 
 1,237 
 1,159 
 
 Canal, 34 nautical milss): 
 
 La Guayra, Venezuela .... 841 
 
 Georgetown. British Guiana 1,535 
 
 Paramaribo* Dutch Guiana 1,648 
 
 Pwru* BnMH 2.374 
 
 Pmambuoo, Brusn i,4» 
 
 Rio de Janeiro, Brasil 4,349 
 
 Buenos Ay res, Argentina.. 5.450 
 
 Ascension Island 4^12 
 
 St. Beleaa Mtm€ ••• 4^ 
 
 Cape Town. Africa 6374 
 
 Monrovia, Liberia 4,148 
 
 Vfe«etown. Sierra Leone . . . 3,983 
 
 «t VlBosnt, a T. 1. 3,268 
 
 Funchal, Ma4slfS 3JS9 
 
 Fayal, Azores 3^88 
 
 Gibraltar (Strait) 4,343 
 
 Mansillsfl, Vtaace 5.036 
 
 Genoa, Italy §jo» 
 
 Naples, Italy 5,325 
 
 Constantinople, Turkey .. 6,166 
 
 O d essa, Russia 6,509 
 
 Pwrt Said, mmt CMS 
 
 Lisbon, Portugal 4,205 
 
 Bordeaux. Francs ......... 4,598 
 
 Havre France 4,610 
 
 B»a^99m RsdK, 80UI7 Island 4,356 
 
 Liverpool. England 4kS4S 
 
 Glasgow, Scotland 4,492 
 
 Plymouth. England 4,455 
 
 t^ftudon. Bnirlsad 4,763 
 
 Aatwerp Belgium ...« 4J98 
 
 Amsterdam, Holland 4,832 
 
 Hamburg, Germany 5,070 
 
 Denmark .... 5.350 
 
 »•••••• Sis87 
 
 418 
 
 APPENDIX 
 
 PANAMA CANAL TRAFFIC (Contfamad) 
 nmAVOM nuNB pamma. OATtAii TO cHnar ports of thb 
 
 WVMUJI 
 
 Distances to nearest Canal terminal by usual routes* in nautical 
 miles, from following ports (Isafftli of Caaal* J4 nautical milss): 
 
 Stockholm, Sweden 5397 
 
 Petrograd, Russia 6,282 
 
 Bergen, Norway 5,295 
 
 Archangel, Russia 6.900 
 
 Sitka, Alaska 4,547 
 
 Vancouver, B. CS, 4,032 
 
 Seattle, Wash 4.021 
 
 Port Townsend, Wash. 3.985 
 
 Astoria, Ore. 3,77s 
 
 Portland, Ore 3,869 
 
 San Francisco, Cal 3,245 
 
 Los Angeles, CaL 2,913 
 
 ■sa Dievo, CaL 2,843 
 
 Magdalena Bay, Mexico .. 2,265 
 
 Mazatan, Mexico 2,006 
 
 Acapulco, Mexico 1,426 
 
 Salina Cms, Mexico 1,170 
 
 San Jose, Guatemala tt6 
 
 La Union, Salvador 748 
 
 Amapala, Honduras ...... 745 
 
 Corinto, Nicaragua 683 
 
 Puntarenas, Oosta Rica .. 471 
 
 Pedregal, Panama 243 
 
 Buenaventura, Colombia .. 356 
 
 Guayaquil. Ecuador 793 
 
 Callao, Peru l,34« 
 
 Iquiqas, dOto un 
 
 Antofasasta. Chile 2,140 
 
 Valparaiso. Chile 2,616 
 
 Coronel, Cliile 2,822 
 
 Punta Arenas, Chile 3,943 
 
 Gape Horn, Chile 4,260 
 
 Galapagos Islands 864 
 
 Marquesas Islands 3,826 
 
 Christmas Islands 4,752 
 
 HoBolvltt, Hawaii 4.685 
 
 Midway Islands 5,707 
 
 Yokohama, Japan 7,682 
 
 Vladivostok, Siberia 7,833 
 
 Shanghai, China 8,556 
 
 Hongkong. China 9,19S 
 
 Manila P. 1 9,347 
 
 Singapore, S. S 10.505 
 
 Batavia, Java 10,610 
 
 Port Apra, Guam 7,98? 
 
 Caroline Islands (Ponape) 7,321 
 
 Marshall Islands 7,041 
 
 Fiji Islands (Levuka) 6»288 
 
 Samoa (Apia) 5,710 
 
 Tahiti, Society Islands .... 4,486 
 
 Sydney, Australia 7,674 
 
 Melboanis» Australia a^lSS 
 
 WslimgtOB. msaland . 6i»S0S 
 
 413 
 
APPENDIX 
 
 FOREICN WEIGHTS AND MBA8USB8 
 
 Almud« 
 
 Arobe 
 
 Arratel or libra 
 Arroba (dry) .. 
 
 Arroba (liquid) 
 
 AnhlM (■«.) 
 Altai 
 
 • •••••••••••••• 
 
 Berkovets 
 
 Boll, or Bole 
 
 •••••••••••••« 
 
 Where Used 
 Portugal 
 finrpt 
 
 ••••«• «• • • • < 
 
 Metris 
 
 Portugral 
 
 Argentine Republic 
 
 Brazil 
 
 Cuba 
 
 Fwtasml 
 
 Spain 
 
 Venezuela 
 
 Cuba, Spain and 
 Venezuela 
 
 Bu 
 
 Butt (wine) 
 
 Cantar 
 
 ••••■•••(•••••••I 
 
 > • • • • 
 
 • ••• • 
 
 Cantaro (cantar) 
 Carga 
 
 Centaro 
 
 •••••••••••••••••I 
 
 ••••••••••••• ••• 
 
 •••••••••••••• 
 
 >■••••••••••••• 
 
 •••••••••••••< 
 
 • •••••••• • • • • 
 
 • •••••••• • • • « ••• 
 
 • ••••••••••••••• 
 
 • • • • • I 
 
 ••••••••••••••• 
 
 ••••••••• ••••• 
 
 •••••••«• ••• •! 
 
 • ••••••••••••• 
 
 Chetvert 
 Cbih 
 
 Comb 
 Coyan 
 
 Morocco 
 Argrentino Republlo and 
 
 Mexico 
 
 Malte (enatoms) .. 
 Spain (rmlaina) .... 
 
 Russia 
 
 Scotland, Ireland . 
 India . 
 Sumatra 
 Japan 
 
 Spain 
 
 Malta 
 
 India (Bombay) 
 India (Madras) 
 
 Egypt 
 
 Morocco 
 
 Syria (Damasevs) 
 Turkey .»«»»»»,,..,,,,,, 
 
 Malta 
 
 Mexico. Salvador 
 
 >••■••• 
 
 • • ••• • • » » • 
 
 China 
 Japan 
 
 Java. Siam. Malacca . . . . 
 
 ••••••••••••••••• 
 
 • • • • I 
 
 • •••••• 
 
 Central America 
 Bremen, Bmaawick 
 
 Darmstadt 
 
 Danmark. Norway . 
 Nvrombary 
 Prussia ... 
 Sweden . . . 
 Vienna 
 ZollTarain 
 
 Doubla or BMtrlo 
 
 Russia 
 
 China 
 
 Japan •••••••••••••.•«« 
 
 Engrland 
 
 Sarawak 
 
 Siam (Koyon) 
 
 Amarioan ManimlMitt 
 
 4,422 gals. 
 
 7.6907 bu.; and, at Cairo, 
 it equals 4.92 Imp. bu^ 
 or S.07 Winch'r bu. 
 
 0.03471 aera. 
 
 25 lbs. 
 
 1.011 lbs. 
 
 25.3175 lbs. 
 
 32.38 lbs. 
 
 25.3664 lbs. 
 
 32Jt Iba. 
 
 aiMlba. 
 
 3S.4034 Iba. 
 
 4.263 gala. 
 28 in. 
 
 S.44a«. ft 
 i.ia Iba. 
 
 20.0787 gals. 
 
 11.4 gals. 
 100 Iba. 
 J61.12 Iba. 
 
 4 Winchr bn. 
 832 grains 
 7.0M.f ao. matara 
 0.1 inch 
 
 140 gals. 
 5.4 gals. 
 
 sat Iba. 
 
 500 lbs. 
 
 99.05 Iba. mw, 
 113 lbs. 
 m Iba. 
 
 124.7036 Iba 
 
 175 lbs. 
 300 lbs. 
 
 1.1331 lbs.; at treaty 
 Portap l.JHlba. 
 1.31 Iba. 
 1.35 lbs. 
 2.12 lbs. 
 4L3631 sala. 
 117.5 lbs. 
 110.24 lbs. 
 110.11 lbs. 
 111.41 Iba. 
 113.44 Iba. 
 
 93.7 lbs. 
 123.5 lbs. 
 110.24 Iba. 
 220.46 Iba. 
 5.7748 bn. 
 14 inches 
 2.4507 acres 
 4 bo. 
 3.098 lbs. 
 
 414 
 
 APPENDIX 
 
 FOREIGN WBIQHT8 AND MEASURES (Continued) 
 
 Cnadra 
 
 Cabio meter 
 
 Cart, (hondredweiglit) 
 Deaaittifia 
 
 Drachme . . . 
 Fanega (dry) 
 
 Wlim Uaaa 
 
 Arsantina RapnbUe . . 
 
 . Paraguay 
 
 Paraguay (aii.) 
 
 Uruguay 
 
 Metric 
 
 Brttiah 
 
 Russia 
 
 Spain 
 
 Greece 
 
 Central America , 
 
 Chill 
 
 (Tuba 
 
 (Uaaid) 
 
 Feddan 
 
 Frail (raisins) . 
 
 • •••••• 
 
 Frasila 
 Fuder . 
 
 )....... 
 
 • •••••••«•••• . < 
 
 Gamioa 
 
 Oram .. 
 Hectare 
 
 Haetoliter: Dry 
 
 Liquid 
 
 Joch 
 
 Ken 
 
 Kilogram (kilo) ... 
 Kilomatar 
 
 Klafter 
 
 Koku , 
 Korree 
 
 Uruguay (double) 
 Uruguay (single) 
 
 Spain 
 
 Egypt ][ 
 
 Spain V.'.l 
 
 Argentina Republic . . . 
 Mexico . 
 Zanzibar 
 Luxemburg .... 
 
 Ruaaia 
 
 Russian Poland 
 
 Metric , 
 
 Metric 
 
 Last 
 
 M 
 
 .«•••. ....I 
 ••••••••»••... 
 
 ••••••••.....a. 
 
 e (land) 
 
 LI 
 
 Libra (lb.) 
 
 >••••. •■• • . • 
 
 Austria 
 Japan 
 Metric 
 
 M 
 
 ••••••••••.< 
 
 • ..aa.aaa...,,,,. , 
 
 . ■ 
 
 .............. 
 
 '•••••••aa...a..4 
 
 Rnaaia 
 
 Japan 
 Russia 
 
 ''I'an 
 
 Belgium. Holland 
 
 England (dry auat) ... 
 
 ^rmAuy 
 
 
 
 RttMian Poland . a . 
 
 Scotland, Ireland . 
 Spain (salt) 
 Paraguay .. 
 
 ••• 
 
 Argentine Repablio .... 
 
 Central America 
 
 Chili 
 
 Cnba 
 
 MeZiOO aa.. 
 
 Peru 
 
 Portugal . . 
 
 Spain 
 
 Uruguay 
 
 .....i.... 
 
 •••........a 
 
 I. ......a.... 
 
 ...aa....a.i 
 
 •..•....aa.< 
 
 *.•......... 
 
 »••••••. aaa.... 
 
 ••••••••••••*... 
 
 ••••....«...« 
 
 A warie a n Xquivalaats 
 . 4.2 aoraa 
 78.9 yaida 
 8.077 aq, ft. 
 Nearly 2 acraa 
 35.3 cu. ft. 
 112 lbs. 
 2.6997 acraa 
 1.599 bu. 
 Half ounce 
 1.5745 bu. 
 2.575 bu. 
 1.599 bu. 
 1.S4728 bu. 
 
 Strlka fanega, 70 Ib&s 
 full fanega. US iba^ 
 
 . ..... 7.776 bu. 
 
 3.888 bu. 
 1.599 bu. 
 16 gala. 
 1.03 acraa 
 50 lbs. 
 2.5096 qte. 
 2.5 qts. 
 35 lbs. 
 264.17 gals. 
 0.9028 lbs. 
 0.88 gal. 
 15.432 grains 
 2.471 acres 
 2,838 bu. 
 26,417 gals. 
 1.422 aorea 
 6 feet 
 2.2046 lbs. 
 0.621376 mile 
 216 en. ft 
 
 4.9629 Imp. bu. 
 3.5 bu. 
 8.28 lbs. 
 86.134 bUa 
 
 82.52 bu. 
 
 2 metric tona (4480 Iba.) 
 
 112.29 bu. 
 Hi bu. 
 10 Quartwa 
 4,760 lbs. 
 4.633 acres 
 2,115 ft. 
 1.0127 Iba. 
 1.043 lbs. 
 1.014 lbs. 
 1.0161 lbs. 
 1.0146S Iba. 
 
 1.0143 Iba. 
 1.011 lbs. 
 
 1.0144 lbs. 
 t.0143 lbs.. 
 tMU Iba. 
 
 415 
 
APPENDIX 
 
 FORBION WBIQHT8 AND MBASURBS (Comiinwd) 
 
 lAtmr 
 
 lilm (11>.> 
 
 Load 
 
 Jklarc . 
 Maund 
 Mmtw 
 
 Mil 
 
 Milla .... 
 
 »«....«•••< 
 >•••••••••• 
 
 Ocque 
 Oke . 
 
 Pio .. 
 
 M 
 
 Pik 
 
 (lb> 
 
 Quintal 
 
 Salm 
 
 Se 
 
 Seer 
 
 nuilra 
 
 Sho 
 
 Standard (Petroffrad) 
 
 Stone 
 
 8tt«rt« 
 
 Sun 
 
 SiMl • ••••••••••• 
 
 Metric 
 
 Greece 
 
 Guiana 
 
 England (timber) 
 
 Costa Blea 
 
 Nicaracva» Salvador .... 
 
 Boliva 
 
 India 
 
 Matrte 
 
 Denmark 
 
 Denmark (greogrraphical 
 Nicaragua and Honduraf 
 Oraaoa 
 
 Greece 
 
 Bffypt 
 
 Oraaca 
 
 Turkey .... 
 Hungary and Wallachia 
 
 Egypt 
 
 Borneo and Oelabas 
 China, Japaa and 
 
 Sumatra 
 
 Java 
 
 Phllippiaa lalaiid .. 
 Arerentlaa Bayabllo 
 
 Spain 
 
 Turkey 
 
 Rvaala 
 
 Denmark and 
 
 Great Britain 
 
 London (coal) . ^ . 
 Arsaatlne Rairabllc 
 
 Brazil 
 
 Gaatile, Chill, Maxlcoj 
 
 and Peru 
 
 Oreece 
 
 Nawf mmdlaad (M) 
 
 Paragraar ••••• 
 
 Syria 
 
 Metric 
 
 Syria ... 
 BniUaad 
 
 Malta 
 Japan 
 India 
 
 Lumber 
 Britiih . 
 Vrugxtrnj 
 
 Japan . . 
 
 Amerieaa BqalialMits 
 
 1.0567 qaaria 
 1.1 iba. 
 1.0791 IbB. 
 
 Sq. 50 cu. fL; unhewn, 
 40 aa. its iatfh plaaka, 
 60t aaparMal ft 
 
 1 5-6 acres 
 1.727 acrea 
 9.507 lb. 
 83 3-7 Iba. 
 39.37 Inchea. 
 4.68 miles 
 .61 miles 
 1.14ft auiaa 
 
 3.3069 Ika. aT. 
 0.63 acre 
 2.84 lb. av. 
 3.1053 Iba. 
 2.84 Iba. 
 3.0817 lbs. 
 2.82838 lbs. 
 2.5 pints 
 211 
 
 133i lbs. 
 13S.1 lbs. 
 
 137.9 lbs 
 0.91407 foot 
 0.9479 foot 
 
 37.9 iaehsa 
 36.112 Iba. 
 1.102 lbs. 
 8.252 bu. 
 36 bu. 
 101.43 Iba. 
 
 101.41 Iba. 
 133 J Iba. 
 112 lbs. 
 100 lbs. 
 125 lbs. 
 22a46 Iba. 
 
 6 Iba. 
 51 lbs. 
 
 4 bu. of flour, it is 480 
 lbs. 
 
 7 feat 
 
 490 lbs. 
 0.02451 acre 
 1 lb. 13 OSS. 
 
 11.9I0S taabaa 
 
 1.6 quarts 
 165 cu. ft. 
 14 lbs. 
 
 3,700 cuad. (see cuadra) 
 1.193 iaebes 
 
 41$ 
 
UNITED STATES EXPORTS— DOMESTIC AND FOREIGN 
 
 1810.. 42,366,675 24.791,295 66,757,970 
 
 1820.. 51,683.640 18,008,029 69.691,669 
 
 1830.. 58,524.878 13,145,857 71,670,735 
 
 lt40.. 111,660,561 12,00M71 123,668.932 
 
 Um.. lJ4k900,233 9,475,493 144.375,726 
 
 ltSI«« 192,751,135 26,158,368 218,909,503 
 
 I860.. 316.242,423 17.333,634 333,576,057 
 
 1861.. 204,899,616 14,654,217 219,553,833 
 
 laO.. m<44,iM 11,MC477 IfM^MOl 
 
 1863.. 186,003,912 17,960,535 203.964,447 
 
 1864.. 143,504.027 15,333.961 158.837.988 
 
 186S.. 136,940,248 29,089,055 166,029,303 
 
 laii.. SS741S4a2 11.341.420 I4M59,522 
 
 IMI.. 279,784m 14,719,332 294»506,141 
 
 1868.. 269.389.900 12.562,999 281.952,899 
 
 1869.. 275,166,697 10.951,000 286.117,697 
 
 1870.. 376.616,473 16^155,295 392,771.768 
 
 Un.« 4lt,39M0t 14,421,27t 442,M17t 
 
 1872.. 428.487,131 15,690.455 444.177.586 
 
 1873.. 505,033,439 17.446.483 522,479.922 
 
 1874.. 569,433,421 16,489,619 586.283.040 
 
 mS.. 499,284,100 14.158,611 513,442,711 
 
 1876.. 525.582,247 14.802.424 540,384.671 
 
 1877.. 589.670.224 12,804.996 602,475.220 
 
 1878.. 680.709.268 14.156.498 694.865,766 
 
 1879.. 898,340,790 12.098,651 710,439.441 
 
 1888.. 183,f48,3S» lMi2,38S 88S4I8.858 
 
 1881.. 883,925,947 18,451.399 902.377.346 
 
 1882.. 733,239,732 17.302,525 750.542,257 
 
 1883.. 804,223,632 19.615.770 823,839.402 
 
 18B8.. m9i4,8S2 15,548,787 y48iS13,609 
 
 IM8.. laMHiMi 1M88JB» MM88.7SS 
 
 Fiscal 
 
 T«ur. PoBwrtle. FMIga. Tvtid. 
 
 1888.. 889,964329 13^888,381 879,524^818 
 
 1887.. .703,022.923 13.160.288 716.183,211 
 1888.. 683,862,104 12,092,403 695.954.507 
 1889.. 730.282,600 12,118.766 742,401,375 
 1890.. 845,293,828 12,534358 857,828,084 
 1891.. 872,270288 12,210,527 884,480.810 
 1892.. 1,015,732.011 14,546.137 1.030.278,148 
 1893.. 831,030,785 16,634,409 847,665,194 
 1894.. 869,204.937 22,935,635 892.140.572 
 1895.. 993,392499 14^145,588 807438,165 
 1896.. 863,200.487 19.406,451 882.606.938 
 1897.. 1,032.007.603 18.985,953 1,050,993,556 
 1898.. 1,210,291,913 21,190,417 1,231,482,330 
 1899.. 1483481422 83482,080 1427423489 
 1900.. 1470,763,571 23,719,511 1,394,483.082 
 1901.. 1,460,462.806 27,302.185 1,487,764,991 
 1902.. 1.355.481.861 26.237.540 1.381.719,401 
 1903.. 1,392,231,302 27,910,377 1,420.141,679 
 1904.. 1,435,179^017 21448454 1,460,827471 
 1905.. 1,491.744.641 26.817,025 1.518,561,666 
 1906.. 1.717,953.382 25,911.118 1.743,864,500 
 1907.. 1,853,7 18,034 27,133.044 1,880,851,078 
 1908.. 1434,786,357 25486,989 1480473448 
 1909.. 1.638.355, 593 24.655.511 1.663,011.104 
 1910.. 1,710.083.998 34,900,722 1,744,984,720 
 1911.. 2.013,549.025 35.771.174 2.049,320,199 
 
 1912. .2,170419,828 34,002,581 2404,322.409 
 
 1913. .8,428406458 87477,791 8485484.149 
 1914.. 2.329,684.025 34.895,123 2,364,579,148 
 1915.. 2,716,178,465 52.410,875 2,768.589,340 
 
 1916. .4472.177.579 61,305.306 4.333,482.885 
 
 1917. .8427.164450 62484,344 6490^048494 
 1918..S4l74S»47t 8U3S4il Iit8^88i44l 
 
 Figrurea f jr exports include grold and silver prior to 1830 
 Total exports per capita of population— >( 1800), |13.37; (1810), $9.22; 
 C1820), 8742; (1830), 81S7; (1848>, 8725; (1850), $848; (1888>, |t8L8l; (toyo), 
 89.77; (1880). $16.43; (188t>, tUM; (t888K 81748; C1918>. 81848s 
 (1916). 814.33; (1917). $54.82. 
 
 The relative percentage of the variow WmiB of doOMstic exports in 
 th« ymt eaded l«a« 88^ nu, wtm M fello'wt: Oititf* mtttortals tor wm te 
 manufacturlnir, 15.35; foodstuffs la crude condition, asd food «^«iTpftit^ 
 6.42; foodstuffs, partly or wholly manufactured. 19.73; manufactures for 
 further use in manufacturini^ 20^9; manufactureo ready for d^ntumpttoiy 
 8747; misoellaneous, 0.44. 
 
 418 
 
 APPENDIX 
 
 THBPURCHA8INQ POPULATION OF VARIOUS COUMTRIBS 
 
 The estimates of the urban population in South America, Central 
 America, and some of the other important markets tabulated with the 
 idea that to the averaco Amortean manqf8ot«rer those llsures giw a 
 hotter ladleatioa of the oztont of the purehasinv market than aay other 
 sinslo olaas of popvlatioii ficvros. Tho fl8:«roo hero gtwmk for urban pop- 
 ulation are only approximate. They were prepared by Dr. BL IL Pratt 
 for the Department of Foreisa and Domestic Commerce. 
 
 
 
 Urban 
 
 
 Imports 
 
 
 Total 
 
 (purchasing) Total 
 
 from United 
 
 Ck>nn tries 
 
 population 
 
 population 
 
 imports 
 
 Mates 
 
 Bovfli Amorloa: 
 
 
 
 
 
 
 
 3.880,000 
 
 |40M0S,000 
 
 889^882,099 
 
 
 
 214,000 
 
 21.358,000 
 
 1,900.000 
 
 
 
 2,953,000 
 
 326,865.000 
 
 51.358,000 
 
 Chile 
 
 
 986,000 
 
 120,274.000 
 
 20.089.000 
 
 
 5,473,000 
 
 545.000 
 
 26,987,000 
 
 7.630.000 
 
 
 
 81S.000 
 
 11,653,000 
 
 2,764,000 
 
 
 
 201,000 
 
 8,120^000 
 
 488^011 
 
 
 
 881,000 
 
 29,631,000 
 
 8^542,000 
 
 
 
 442.000 
 
 50,666,000 
 
 6.300.001 
 
 
 
 343,000 
 
 17,005,000 
 
 6.158,000 
 
 
 
 8,880,000 
 
 1,018,364,000 
 
 166,091.000 
 
 OsBtral Amorloa: 
 
 
 
 
 
 57tHrta Bloa •••••• 
 
 
 88,000 
 
 8,885,008 
 
 4.488»080 
 
 
 
 204,000 
 
 10,062,000 
 
 5,053,000 
 
 
 
 107,000 
 
 5,133,000 
 
 3.464.000 
 
 
 690,000 
 
 240,000 
 
 5,768,000 
 
 3,244.000 
 
 
 
 81,000 
 
 9,872,000 
 
 5,413,000 
 
 
 
 198.000 
 
 6,167,000 
 
 2.490,000 
 
 3 
 
 
 
 89^008 
 
 48487,800 
 
 34,132,000 
 
 
 liatin America, other: 
 
 
 
 • • 
 
 
 
 
 2,474.000 
 
 1,026.000 
 
 133,975.000 
 
 71.380,000 
 
 y 
 
 Haiti 
 
 2,500,000 
 
 165,000 
 
 10,935,000 
 
 6.499,000 
 
 
 
 16,446,000 
 
 1,693,000 
 
 93,020.000 
 
 44.510,000 
 
 S 
 
 Donlnlean Rep. ... 
 
 735,000 
 
 72,000 
 
 9,272,000 
 
 5,769,000 
 
 
 
 31,145,800 
 
 3,958^000 
 
 247,302,000 
 
 138^158.000 
 
 
 
 336,042.000 
 
 o7,774,300 
 
 427.406,000 
 
 25.826,000 
 
 1 
 
 
 52,985,000 
 
 8,300,000 
 
 363,257,000 
 
 60,959,000 
 
 
 
 315,133,000 
 
 29,748,000 
 
 594.521.000 
 
 15,544,000 
 
 
 
 5,044.000 
 
 2,417,000 
 
 388,102,000 
 
 46,342,000 
 
 British Sovth Africa .. 
 
 5,973,000 
 
 c33 1.000 
 
 187.489.000 
 
 17.851.000 
 
 
 
 167,920.000 
 
 24.157,000 
 
 603.463,000 
 
 45,026,000 
 
 L 
 
 
 20,600.000 
 
 3.507,000 
 
 193,024,000 
 
 5,280,000 
 
 
 
 1,152.000 
 
 426,000 
 
 108,466,000 
 
 10,259.000 
 
 
 
 11,887,000 
 
 1,540,000 
 
 187,738.000 
 
 2,596,000 
 
 
 a Estimated population of 45 treaty ports in 1912. The total foreign 
 population of China in 1912 was 145,000. 
 8 Total population. 1914; pnrehaainoT population. 1908. 
 e White popnlatioa in otttos. Tottf popviatloa of niropoaaa, I478j888i 
 
 419 
 
APPENDIX 
 
 LASOEtT CmX8 OF THB BARTH 
 
 ladlcate th« 
 
 d«t« of th* oMMiw or ollletaa 
 
 Cities Population 
 
 Now York (1917) 5,737,492 
 
 London 4,522,964 
 
 BMrl% VnuMO (1911) MtMOO 
 
 Toklo, Japan (1908) 2,186,000 
 
 Chicagro, U. S. A. (1910).. 2,185,000 
 Berlin, Prussia (1910).... 2,071,000 
 VloBiia, A«atrt» (1910).... 2,031,000 
 Petrogrrad, Russia (1910). 1,908,000 
 Phila. U. S. A. (1910).... 1,550.000 
 Moscow, Russia (1909)... 1,481,000 
 
 CSantoB, Chintk 1,250,000 
 
 Osaka, Japan (1906) 1^07,000 
 
 Rio De JaBoli% BrssU 
 
 (1910) 1,130,000 
 
 BaoBoo Ayroa (1905) 1,026,000 
 
 Calcutta, Indlaaa (1911). l;m,000 
 
 Peking, China .1,000,000 
 
 Bombay, India (1911) 980,000 
 
 Btemburff, Ger. (1910).... 931,000 
 
 Btokow, (3iliia ^,000 
 
 Budapest, Hun». (1910) 880,000 
 
 Tientsin, China 550,000 
 
 BUminsham, Kng. (1911) 840,000 
 Glaasow, SeoOaad (1911) 786,000 
 Warsaw, Poland (1909) 781,000 
 Liverpool. Engr. (1911) ... 748,000 
 
 Naples, Italy (1911) 723,000 
 
 It aaoh — l o r . Wag. (I9ii> . 716,000 
 
 St. a A. (itii) mjm 
 
 Cities Population 
 
 Boston, U. S. A. (1910).,, <71,000 
 
 Cairo, Barypt (1907) 654,000 
 
 MratTMO, Canada 650,000 
 
 Fnehow, China iSIMNO 
 
 Sydney, N.S.Wales (1911) ^l/NO 
 
 Shanghai, China 4S9,00t 
 
 Bangkok, Siam (1909).... OQ^OOO 
 
 CnimiffklBv, C^iaa 600,000 
 
 Milan, Italy (1911) 3^,000 
 
 Madrid, Spain (1910) .... 598,000 
 
 Munich, Bavaria (1910).. 596,000 
 
 MUhovnM. Via (1911)... 594,000 
 
 Leipzig, fluoBF (1910).. 190,000 
 
 Barcelona, Spain (1910).. 587,000 
 
 Amsterdam, Neth. (1909) 568,000 
 
 Cleveland U. S. A. (1910) 561,000 
 
 Copohaam, Don. (1911). SS9,000 
 
 Baltimore, U.. S. A. (1910) 558,000 
 
 Marseilles. France (1911) 551,000 
 
 Droadon, Saxony (1910).. 548,000 
 
 Bomo, Italy, (1911) 519,000 
 
 Pittsburgh, U.S.A. (1910) 134,000 
 
 Lyons, Prance (1911) 524,000 
 
 Madraa, India (1911) 520,000 
 
 (Solocno, PniMla (1910).. 517.000 
 
 Breslin, Prussia (1910) .. S13,000 
 
 Hyderabad, India (1911>.. 500,000 
 
 Suchow, China •••,«•••••• 50(^000 
 
 490 
 
 APPENDIX 
 
 FOBEIQK COMMBBCB OF THB UNITSD 8TATB8 
 
 A QBNBRAL SUMMARY 
 
 Fiscal 
 Tear 
 
 Tot. Imports 
 and £!xporta 
 DoUan 
 
 ia,3M,S4t 
 
 1810 152.157,970 
 
 1820 144,141,669 
 
 1830 134,391,691 
 
 1840 a21,927,Mt 
 
 INO 31630S,2S2 
 
 1855 476.718,211 
 
 1860 687,192,176 
 
 1861 506,864,375 
 
 1060 J00W.178 
 
 1863 447.300.262 
 
 1864 475,285,291 
 
 1865 404,774,883 
 
 1066 m,671,i80 
 
 1867 690,267,237 
 
 1868 639,389,339 
 
 1869 703.624,076 
 
 1870 028,730,176 
 
 1871 963,043.862 
 
 1872 1,070,772,663 
 
 1873 ••. 1,164,616,132 
 
 1074 M. >....*• 1,153,689,382 
 
 1875 1,046,448,147 
 
 1876 1,001,125.861 
 
 1877 1,053,798.346 
 
 1878 •.......*.«•••<••• 1,131,917,298 
 
 1079 1,156,317,216 
 
 1880 1,503,593,404 
 
 1881 1,545,041,974 
 
 1882 ......•..•*•••.•*. 1(475,181,831 
 
 lOOS • 1,547,030,316 
 
 1884 1.408,211,302 
 
 1881 « M19.717,084 
 
 Fiscal 
 Year 
 
 Tot. Imports 
 and £«xporta 
 Dollars 
 
 1806 1.314.960,966 
 
 1887 1.408,502,979 
 
 1888 1,419,911,621 
 
 1889 1,487,533,027 
 
 1890 1,647,139,093 
 
 1891 1.729.397.006 
 
 1892 1.857,680,610 
 
 1893 1,714,066,116 
 
 1094 ....••....*.. .. « .. 1,547,135,194 
 1196 1,539.508,130 
 
 1896 1,662,331,612 
 
 1897 1,815.723.968 
 
 1898 1,847,531,984 
 
 1899 .............. . « * 1.924,171,791 
 
 1900 ; 2.244.424.266 
 
 1901 2,310,937,156 
 
 1902 2,285,040,349 
 
 1903 2.445.860.916 
 
 1904 2,451.914.642 
 
 1905 2.636,074.737 
 
 1906 2,970,426,946 
 
 1907 3.315,272.503 
 
 1908 3,055,115,130 
 
 1909 2.974.931,328 
 
 1910 3.301,932,150 
 
 1911 3.576.546,304 
 
 1912 .................. 3,857, 58T, 343 
 
 1913 4.278.892,383 
 
 1914 4,258,504,805 
 
 1915 .......M*. ........ 4,442,759,085 
 
 1916 6,531,366^ 
 
 1917 8,949,403,579 
 
 1918 0,874.345,044 
 
 m 
 
APPENDIX 
 
 CABLE SATES FROM NEW YORK TO WORLD'S PRINCIPAL 
 
 CITIES 
 
 Ber Word 
 
 AbFMiittia 10.64 
 
 Algeria 32 
 
 Alexandria (Snrpt) 50 
 
 Antigua 35 
 
 Arsrentina so 
 
 Attvtria 32 
 
 Barbados 35 
 
 Balgium 25 
 
 Bermuda 42 
 
 Bolivia 50 
 
 BraaU 7© to U6 
 
 Bulgaria ^ m 
 
 Burmah , .55 
 
 Callao (Peru) 50 
 
 diro (Enrpt) ^ [so 
 
 Colony (a AL) M 
 
 CStrlon 66 
 
 CihllO 50 
 
 -ChitUk 1.22 
 
 CochiB, China , j99 
 
 Colon j0 
 
 Cyprus 50 
 
 Demerara 35 
 
 ]>«iiiiiark 35 I 
 
 Xcuador .so 
 
 England 2S 
 
 France 25 
 
 Gloimaiiy 25 
 
 Gibraltar ^ .43 
 
 Greece 35 
 
 Guatemala 49 
 
 Bavana is I 
 
 Hayti M to fUO 
 
 Holland .25 I 
 
 Honolulu ,,,, .37 I 
 
 Hungary 32 I 
 
 ^Efl^^i^llftfli^ft V##VV9##t##CW4) #0##t0##9 I 
 
 Ml* M 
 
 Ireland 25 ' 
 
 Italy 31 
 
 Jamaica ,36 
 
 '•P«i UJ 
 
 JRWIk ••^••••••••a •••••••••«••»,» 1*00 
 
 Btr Word 
 
 Korea (Sooul) 1.33 
 
 Malta 35 
 
 Martinque ^5 
 
 I Mataaaas iiili!!!! Ji 
 
 j Melbourne, Vic , ^ 
 
 I Natal (So. Africa) ....!!!*!* M 
 
 I New South Wales m 
 
 New ft— land j$ 
 
 Norway jj 
 
 Orange River Colony M 
 
 j Panama 30 
 
 I PMmvnay 50 
 
 I Penanc •••••• 34 
 
 I Peru 50 
 
 I Philippine Islands, Manila... l!i2 
 
 I Other olBoea 1.17 to l.JO 
 
 I Porto Rico 4f 
 
 I Portugal ^ 
 
 1 Queensland .,|* 
 
 I Bonmania ,U 
 
 Bnairia (Surone) ,4$ 
 
 Russia (Asia) , ,43 
 
 Santo Domingo ,,,, *Jo 
 
 Scotland ^5 
 
 .34 
 
 Slaa 
 
 Sicily ^ 
 
 Singapore ]]] .94 
 
 8P»*n 38 
 
 St. Thmaaa j§ 
 
 Sweden ^ 
 
 Switzerland 30 
 
 Sydney (N. a W.) , \^ 
 
 Tander j$ 
 
 Tasmania j§ 
 
 Transvaal %§ 
 
 Trinidad ], .35 
 
 Twrkey (Borope) 36 
 
 Turkey (Jjrta) ,4$ 
 
 Uruguay 50 
 
 Venesuela 1.00 
 
 Vera Cms $1.75. 10 wds. 
 
 ▼letoria (▲ttatralla) ^ $$ 
 
 Tk&m imtM are subject to oh»ikgt. 
 
 INDEX 
 
 ABROAD^Finaneiiigf salM^ 188; 
 
 Work of selling 140. 
 Acceptance — Discounting, 300; 
 
 DiwoiiDtiiig bftnk, 288. 
 AooODHT^CQllection of, 196; 
 
 Guariirtwiiic 187; Ingarmg^ 
 
 181. 
 
 Address— Legibility of, 67. 
 
 Advertising — American use of, 
 74; Amomit of, 75; Ddeting 
 of, 81; Experience in, 75; Ex- 
 tension of, 74; Good judgment 
 in foreign, 79; Increased re- 
 ceipts for, 79; Importance of, 
 18; Knowledge of, 74; Meth- 
 ods of foaraign, 74; Necessi^ 
 of consumer, 78; Planning, 
 75; Policy of, 75; Power of, 
 83; Purposes of, 74; Rate for, 
 79; Rides in foreign, 83; 
 Sharing charges of, 117; Uae 
 of, 27 ; Use of stnet eur and 
 outdoor, 80. 
 
 Agency, advebtisincs— As ad- 
 visor, 77. 
 ^AfflWGTy SlLMiro— Serrioe of. 
 
 ^AoBfor, ranraai— SorvicM of, 
 
 94. 
 
 Agencies, credit, 109. 
 acsencies, joint selun6, 123. 
 Aamcm, wmcMHrnm — Snb- 
 SCTiliing to, 188. 
 
 Agent, manufacturer's ex- 
 port, 22; As middleman, 21. 
 
 Agent, del credebg — Commis- 
 sion of, 109. 
 
 Agent, Local Foreign Sales — 
 Contract with, 107, 108, 111. 
 
 Agent, foreign fbsusht — 
 \ Duty of, 229. 
 HUgint, merchant — Fimetions 
 of, lie. 
 
 AflBNT, MANUFACTDHK'S — 
 
 Functions of, 97. 
 iAgent, PUBLICITY — Functions 
 of, 898. 
 
 Agent, RonNBiT— AppotntaMnt 
 
 Agent, «if Ussfginiw «C 
 
 107. 
 
 American Audit Bureau <v 
 
 GteCULATION, 76. 
 
 AMBNiiNA---Conmiercial travel- 
 ers in, 46; Duties in, 224; 
 ^Registering trade marin in, 
 
 390. 
 
 Associations — Extension of 
 American Press, 398; Func- 
 tions of American Press, 399; 
 Types of export, 141. 
 
 Australia— Comnierdal tmfd. 
 
 ers in, 48. 
 
 ^ANKS— Advantages of branch, 
 806; Co-operation of, 127; 
 Credit extended by, 312; Es- 
 tablishing branch, 305; For- 
 eign departments in Amer- 
 lean, 292; List of foreign 
 Djanches of American, 301: 
 Metliods of German, 126; 
 Money advanced by, 807; 
 Services of branch, 310. 
 
 Beixjium — Commercial travel- 
 ers in, 45 J Duties in, 226. 
 
 otus OP Exchange (see 
 5«apts) — Accepting, 286; 
 Discounting of insurance o£ 
 182; Payment of, 182. 
 
 Bills of Lading— Clauses in, 
 234; Copies of, 247; Date of, 
 
 52^L?^. 102; Forms 
 of, 234; Indorsement of, 284: 
 Issuing, 246; Making out, 
 285; Negotiability of, 233: 
 Provisions in, 264. 
 
 BOUVIA— Duties in, 224; Taxes 
 on conuaercial traveUers, 46. 
 
 Branches— Establishment of. 
 27.58; Executive in diarge oL 
 
 J8| Locatioii of. 98; goeesM of, 
 
 Brazil— Duties in, 224; Mer- 
 chants of, 64; Registering 
 teade marks in, 390. 
 
 ftOTisH PooriL Gans— stu4y 
 
 of, 69. 
 
 423 
 
424 
 
 INDEX 
 
 BuBKAU OF Foreign and Do- 
 mestic Commerce— Branches 
 of, 355; District offleei of, 
 853; Information supplied by, 
 352; Object of, 349; Re^lar 
 publications of, 351; Services 
 rendered by, 349; Special 
 boUetins of, 8S1; Trade ofH 
 povtnnily mi flee oINnd nTt 
 354. 
 
 Bureaus, Foreign Cridit— Es. 
 tablishing, 167. 
 
 Bmuv m WMtL Bisk Inmm^ 
 ANOl— EstftUiahment of, Ml. 
 BusiNBffg Beiic prindplet of, 
 
 160. 
 
 Business, Export— Co-opera- 
 tion for, 130-131: Creating, 
 177, 148, 201, 887, 899; Es- 
 tablishing, 203; Financing, 
 178; Foundations for, 331; 
 Loss of, 198; Methods in, 204; 
 
 _ Prom otion of, 129. 
 
 Bum — ^Dntj of commission 
 hofom, 101; B^vtatkn of; 
 179. 
 
 Cable— Use of, 30, 143, 146. 
 
 Capital — Accessible, 24 ; De- 
 mand for, 829; Extent of ac- 
 tivities of, 6; Need for, 889; 
 Supplying, 330. 
 
 Cargo (Marine Insurance)— 
 Insurance of, 190; Soace for. 
 168. 
 
 GAHnLS— Aethrities of, 127; 
 
 Character of, 127; Classes of, 
 127; Creation of, 123; Growth 
 of, 126; Importance of, 123; 
 Information obtained by, 128. 
 
 CataX4»dm — Appearance of, 
 84; Appreciation of, 84; Ar- 
 ticles from, 85; As essential 
 media, 75; As interest creat- 
 ing medium, 84; Careful 
 naiUng of, 88; Confidence in, 
 85; Cost of, 88; Destination 
 of export, 83 ; Discount sheets 
 in, 86; Discriminate sending 
 of, 88; Display by, 84; Dis- 
 tributioii of, 86; Duty of, 88; 
 fisq^nations with, 86; Fnc- 
 tions of, 86; Half tone cuts 
 in, 85; Importance of, 84; 
 Information in, 86; Language 
 of, 88, 84; MaUnflr np foreign 
 84; Packing, 89; Preparation 
 of, 83 Quotations in. 87. 
 
 Cbntral Officis EataUiab" 
 ment of« 116. 
 
 Certificate of Origin — Ad- 
 vantages of, 239. y 
 
 Chambm or CoMMMPi -^Hlm^ 
 information, 29. 
 
 Checks— ConvmltBot of tniT. 
 ellers, 43. 
 
 Chile — Duties in, 224; No 
 Ueenaes regoired 47. 
 
 Cbima— Duties in, 887; Tnda 
 marks in, 394. 
 
 C. I. F. — ^Modern quotation, 
 93, 97. 
 
 OLAimk— GoOoetinf, 199; Col- 
 lectins marine insurance, 270; 
 Filing of» 199; Handling; 
 
 199. 
 
 Clerk, Shipping — Duty of, 102. 
 Clerk, Order— Must have good / 
 
 ■dMWling, 38. ^ 
 Colombia — Commercial travoH 
 
 lers in, 47; Duties in, ^M. 
 
 Combinations — Agreements of, 
 141; Dealing with, 129; De- 
 velopment of, 124; Drawbacks 
 of, 128; Economies of, 140; 
 Entering into, 116; Meeting 
 128; Necessity of, 122; Pur- 
 poses of, 115; Policy of or- 
 ganizing, 124. . ^ 
 
 OomoKai— Statistics of fdK 
 eign, 115; Stady of nwH 
 
 177. J 
 
 Commerce Repobto— Snpi^kir^ 
 ments to, 350. i 
 
 Commission — Protection of^ 
 Federal Trade, 141; Sales 
 
 agents, 112. 
 
 Commission House— Activities 
 of export, 91; Advantages of 
 azport, 105; As indent mer- 
 diant, 21; As niddleBBan, 21; 
 Buyers of, 28; Buyer for, 98; 
 Confidence in, 95; Distinction 
 of, 91; Equipment of, 96; 
 Functions of, 21, 91; Handl- 
 ing order in, 101; History of, 
 21; In foraign conunerce, 21; 
 Limitations of, 103; Lines 
 handled by, 99; Location of, 
 21, 97; Orders executed by, 
 95, 21, 88; Operation of, 95; 
 Organization of, 100; Pay- 
 ments to, 96; Profits of, 97, 
 132; Publications of, 80; Quo- 
 tations of, 97; Salesmen of, 
 100; ShipoMnti by, 
 Strength of. 90. 
 
 Company, 
 of, 23. 
 
 INDEX 
 
 495 
 
 Company, Instjbaiiob— Fmie- 
 
 tions of, 186. 
 
 Company, Alued — Type, 23. 
 
 Competition — Combating, 114, 
 lie, 117, 806, 180; StilUng, 
 128; Unfair metboda ot 118; 
 Wastes of, 140. 
 
 Conditions, Cumatic — How 
 they affect market, 4. 7. 
 
 Conditions, Socl/li^ — Dete r- 
 wiBaa diaractap pf advaf Us- 
 ing copy, 82. 
 
 OoNDiTioNs, Market — Knowl- 
 edge of, 25, 41. 
 
 Consignee — Symbol of, 227. 
 
 CoNSiGNMiNi^--Contraetiiig for, 
 246. 
 
 QgeNSULAR Service (See Con- 
 suls) — Pay of, 356; Person- 
 nel of, 356; Principles of, 
 358; Safeguarding, 357; Use 
 
 ^ of , 858. 
 
 ^ OONSULS, AMflnCAN— Catalog- 
 ues for, 88; Complaints of, 
 67, 83; Directories in offices 
 of, 80; Duties of, 49, 359; 
 EifeetiTeness of, 357; Serriees 
 of, lis, 866. 
 
 OoNVENTioN — Sixth National 
 Foreign Trade, 29. 
 
 Copy, Advertising (See Adver- 
 tising) — Keynote of, 82; 
 Kind of, 81; Use of, 81. 
 
 OonMiOlflNDfO^ FOHDCnf — - 
 Blunders in, 61; Care exer- 
 cised in translations in, 83, 
 84; Courtesy, 59; Decreasing 
 difficulties of, 59 ; Economy of, 
 58; Exporting through, 59; 
 Handling of, 58; Importance 
 otf 58; Trade built up 1qr» 
 58. 
 
 Costa Rica — Commercial trav- 
 eler in, 47; Duties in, 225. 
 
 CODMwni— Aoeoonts in for- 
 •ign, 200; Cmnmon law group 
 in trade mark, 892; Invest- 
 ments in 328; Markets in, 
 128; Trade mark registrations 
 in codeJaw, 888: With wbkh 
 U. S. has p«PM post agfoa- 
 ments, 71. 
 
 Cuba— Duties in, 225; No 
 license required in, 47. 
 
 Cubrency— Equivalents of for- 
 eign, 87; Knowledge of intar- 
 national, 87; MoM 111 
 ica, 87. 
 
 Customers — Credits to foreign, 
 133; Data regarding, 170; 
 Dealing with foreign, 171, 
 287; Insolvency of, 184; 
 Standing o^ 198. 
 
 OBmnuLg-Snhaiitting, 277. 
 
 Qnofp— Adfantages of aooept- 
 
 ance, 288; Amounts of, 192; 
 Asking for, 186; Conditions 
 of, 280, 286, 287; Credit, con- 
 firmed, 278, 279. , — 
 
 ^^^^^ # r ^ 
 
 Cum, Onof — Confidence in, 
 177. 
 
 p, Revolvino — 
 ience of, 282. 
 
 Credit— Extending, 131, 165, 
 171, 174, 177, 186; Form of, 
 281; Insurance of, 186; In- 
 Testigating, 187; Length of, 
 172; Necessity of, 174; Open- 
 ing of, 278, 281, 283; Prob- 
 lem of, 163; Refusing, 161, 
 171, Safe-guarding, 189; Use 
 of aeoeptance, 288; Use of 
 commercial letter of, 280. 
 
 Credit, Information — Method 
 of obtaining, 165, 60, 101, 
 178; Sources of, 167. 
 
 Credit Insurance — Demand for 
 188; Establishing, 196; Forms 
 of, 192, 189. 
 
 Data— Difficulty of obtaining, 
 
 45; Method of obtaining credit 
 169; Need of official, 28. 
 
 Dates — Information as to sail- 
 ing, 42. 
 
 jyBJrnBBtas — ^Problems of, 207. 
 
 Denmark— Consmereial travel- 
 lers in, 45j Duties in, 226. 
 
 Directory— Use of trade, 68; 
 Aim of, 80; Destination of, 
 80; Distribution of, 80; 
 Forms of trade; 80; Names 
 from trade, 88. 
 
 Directosy— Value of tal^bone, 
 
 68. 
 
 Discounts— System of, 142. 
 
 Distances— From New York 
 City, 71; TaUe of, 52. 
 
 DiSTRiBUTiow — Economies in, 
 122; Expense in, 125; MaUi. 
 ods of, 78. 
 
 Documents — Handling of ex- 
 port, 102; Requirements of 
 eonanlar, 289. 
 
 Dominican Repubuc — Commer- 
 cial tra^eUem in, 47. 
 
426 
 
 INDEX 
 
 Drafts (see Bill of Ex- 
 change— Acceptance of, 288, 
 890; Bank takes p oeBe e ri on of 
 102; Buying, 293; Charge for 
 collecting, 291, 295, 296; 
 Clauses in, 296; Discounting 
 of foreign, 290; Drawing, 
 291, 293; Finandng, 28; 
 Kinds of, 290; Meeting, 288; 
 Methods of pajring, 295; Ne- 
 gotiating, 293; Quoting on, 
 298; Payment of, 105; Pur- 
 chase and sale of, 292, 293; 
 Stgnatm on, 894; DavpiBi; 
 5. 
 
 Duty — On samples, 44; Agree, 
 ing to preference, 117. 
 
 Ecuador — Commerdal trai- 
 lers in, 47; Duties in, 225. 
 
 Edge Act— Contents of, 317; 
 Principal purposes of, 316; 
 TVcrt od^ 818. 
 
 ENTERnaaw — InfialiiMiit in, 
 
 127. 
 
 Europe— Combination in, 123. 
 
 Exchange — Expense involved 
 in, 149; Rate of, 143, 197. 
 
 Exporting — Careful haw^Wng 
 of, 196; Selling methods in- 
 volved in direct, 17; Subjed' 
 
 ^<rf, 28. 
 
 B»«r DWiamwHT— Author- 
 ity of, 27; Building an, 103; 
 Establishment of, 20, 28, 27; 
 Executive in charge of, 29; 
 Mailing list in, 68; Manager 
 of, 31; Qrganiiation of, 24. 
 
 Exporter— Intereat of America, 
 177; Library of, 361; Necess- 
 ities of, 104; Penaliring, 104; 
 Privilege of, 114. 
 
 BaamummB — IcKomatic^ 66; 
 Use of, idiomatic, 66. 
 
 Factory— Readjnstmenta neeea- 
 
 sary, 10. 
 
 Pae East Department— Indi- 
 ▼idual condiiet of , 98. 
 
 Fees— Data on license, 45; De- 
 termining consular, 238; P*iy« 
 ment of license, 46. 
 
 FcncN Branch Office— Ad- 
 }wwitoigeB of, 99; Gondnct of, 
 99; Funcfcleii iO, 99; Smr^km 
 of, 94. 
 
 Foreign Fields— Activities in, 
 «82; Progress in, 300; Suc- 
 een in, 188. 
 
 Finance— PrdUcBM in, Uitw 
 
 national, 44, 
 
 F. 0. B.— Shipments, 96. 
 
 Foreign Branch — Establish- 
 ment of, 19, 112; Expenses of, 
 113; Regulations of, 113; 
 Selling agency as, 112; Stock 
 of, 113. 
 
 Foreign Freight Fokitard- 
 
 ER— Charges of, 248. 
 Foreign Trade Bureau— In- 
 vestigations made by, 115. 
 Forwarder— As middleman, 21. 
 Forwarding Agent — Capital 
 invested by, 245; Clients of, 
 249; Expenses borne by, 246; 
 Fimctiona of, 22, 230, 248. 
 244. 245, 249, 261. 
 Foreign Exchange — Fluctua- 
 ^na oft 31; Knowledge of; 
 
 ^ Francs— Commercial trayeOers 
 
 in, 45; Duties in, 226. 
 Freight— Charges of, 218; Quo. 
 
 tations on outward, 148. 
 ^'8^' ^ ^^■'"•"^issuance of. 
 
 Goods— Arrival of, 159; Care 
 of, 245; Character of, 145, 
 308; Condition of, 235; Con- 
 signing, 229; Damaged, 265: 
 Delivery of, 146;; Donble 
 checking of. 221; Dumping 
 of, 239; Paying for, 163, 179; 
 Price of, 147; Quality of, 202; 
 Sample of, 202; SeUing, 304; 
 Shipment of, 166, 197, 205. 
 222; Terms of selling, 161: 
 Title to, 233, 294; Transpor- 
 ^ Weight of, 221, 
 
 Go?irnment Departunt— To 
 
 teach foreign trade, 36. 
 Great Britain — Trade marks 
 used in, 390. 
 
 CteUDCB— Commercial travellers 
 
 in, 45. 
 
 Guatemala— Duties in, 225; No 
 license required in, 47. 
 
 Ham -— Commercial travellers 
 in, 48. 
 
 History— Knowledge of, 41. 
 
 Honduras— Commercial trani- 
 lers in, 48; Duties in, 225. 
 
 *^'P*^^S^^n"»ercial travellers 
 m, 46. 
 
 iMPORTHi — Advantage to, 98; 
 
 93; Confidence in, 163; In- 
 structions from, 215; Orders 
 
 ^jrom, 96; Settlement by, 163. 
 
 IlM»«HT— Order received by com- 
 MMdoB jMNn^ 81; RepreMots 
 order, 81. 
 
 IND£X 
 
 427 
 
 Industry — Export trade in Am- 
 erica, 133; Organization of, 
 129; Over production in, 133. 
 
 iNsmxrnoNS — Difficulties of 
 ibippiiig, 28. 
 
 Insurance — Cost of, 97; Ef- 
 fecting, 190; Increasing, 190; 
 Placing, 244; Prepayment of, 
 147; Safeguard of, 191; Sys- 
 tem of domestic credit, 198; 
 Terms of, 179. 
 
 Investment — Interest in, 113; 
 Problem of international, 330. 
 
 Invoice — Completeness of, 49; 
 Difference in consular, 287; 
 Expenses enumerated in, 210 ; 
 Features of, 208 ; Necessity of 
 consular, 33; Obtaining con- 
 sular, 236; Preparing consular 
 239; Supplementing, 809; 
 Value of, 143. 
 
 Invoicing Department — ^Func- 
 tion of, 102. 
 
 ITALT—- Duties in, 226; Regula- 
 tions of doty on samples in, 
 45. 
 
 Itinerary — Flexibility of, 42; 
 Importance of, 42. 
 
 Journal — Character of export 
 trade, 76; Circulation of 
 trade, 76; Subaeribsft to ex- 
 port trade, 76. 
 
 Journals — Activities in Cuba, 
 76; Advertisements in export 
 trade, 96; Articles in export 
 trade, 76; Circulation of ex- 
 port trade, 80; Foreign local 
 periodical, 75; Importance of, 
 76; Leaders among trade, 77; 
 Merits of export trade, 77; 
 Status of export trade, 80; 
 Study of American foreign 
 trade, 19; Types of trade, 
 76. 
 
 LanGUAOI — Employment of, 
 proper, 64; Courtesy in, 62; 
 Expert in foreign, 39; Fam- 
 iliarity with foreign, 34; 
 Knowledge of, 30, 41; Use of, 
 288; Use of commercial, 62; 
 Use of customer's own, 83. 
 
 Latin-America — Spanish in, 
 64; Trade mark registration 
 in, 896; Trade prcoleras in, 
 89. 
 
 Litters— Copies of, 67; Import, 
 ance of, 43. 
 
 Letterheads — In Domestic cor- 
 respondence, 68; Offensive, 
 •8. 
 
 Letter of Cbsdit — Lesser cost 
 
 of, 43. 
 
 Letter of Introduction — Ne- 
 cessity of, 43; Use of, 49. 
 
 Ldraby — Necessity of, 28. 
 
 Loans — Placing, 330; Sound- 
 ness of, 331. 
 
 Machinery — Packing, 220. 
 
 Magazines — Subscribing to ex- 
 port, 28. 
 
 Maiuno Lists — ^Foreign pros- 
 pects on, 68; Trade Journals 
 
 distributed to, 76. 
 Mails — Frequency of, 334; Use 
 of, 167. 
 
 Manager — Application of do- 
 mestic sales, 26; Authority of 
 
 branch, 98; Competency of 
 branch, 93; Duties of foreign 
 branch, 99; Employing ex- 
 port, 26; Instructions to gen- 
 eral, 116; Opportunity of ex- 
 port, 28. 
 
 Manufacturer — Charges 
 against American, 170; Con- 
 fidence in exporting, 207; 
 Foresight of, 202; Responsi^ 
 bility of, 231. 
 
 Manufacturers —Combination 
 of, 51; Co-operation with, 
 131; Criticism of American, 
 165; Quotations from, 143; 
 Beinresenting American, 116. 
 
 Marine Insurance — Clauses in 
 254, 258; Contract in, 259; 
 Cost of, 93; Declaring values 
 under, 266; Fluctuations of 
 rates in, 145; General aver- 
 age in, 263; Kinds of, 145; 
 Obtaining, 96 ; Particular 
 average in, 264 ; Principles of, 
 253; Profit of, 267; Protection 
 offered by, 861; Taking out, 
 261, 102. 
 
 Markets — Agencies in foreign, 
 132; American merchants in 
 foreign, 275; Character of, 
 77, 78; Combinations in de- 
 veloping foreign, 122; Com- 
 peting in alien, 129; Condi- 
 tions in foreign, 133; Con- 
 quering, 202; Control of, 114; 
 Creating, 125, 132; Demand 
 in, 133; Developing, 124, 
 128; Experimentations in, 
 27; Locations in, 111; Prob- 
 lems in, 114; Review of, 363; 
 Seaidl for» 168; Studying, 
 164. 
 
488 
 
 INDEX 
 
 Iteli^Anaylsis of, 76; Value 
 <tf Adv«rlisii||rf 77. 
 
 Merchandise — Loading, 243 ; 
 Quality of, 122; Titk to^ 286; 
 Weight of, 223. 
 Merchant Marine — Assistance 
 of, 333; Dmlopment of, S47; 
 Efficiency of, 124; Firtm of 
 American, 344;; Government 
 owned, 346; Growth of, 335; 
 Hktory of, 338; Need for, 
 SM; Objeet of, 884: Drlmto. 
 ly owned, 347; «^J>^ iit «f 
 American, 337. 
 
 MERCHANTS—Activity of ex- 
 port, 91. 
 Mercbants, ExFORi^—Afl mid- 
 dlemen, 21, 22; Bona fide, 
 93; Branch offices of, 93; 
 Business of, 92, 97; Location 
 of, 82; Original policy of, 
 91; Proilti 0f, 188; PnrdiMe 
 of, 94. 
 
 Metric System — Familiarity 
 
 with, 33. 
 
 li^DOOO— Ckimmerdal travelers 
 in, 48; Dn^ in, 288. 
 
 UnmuatMH — VwMmm 0L 
 
 90. 
 
 Motio n Pi ctures ^ American 
 industry viaualized by, 81: 
 As essential media, 75; Fiela 
 for, 81; Successful, 81. 
 -^National Foreign Tradb 
 
 Council— Reports of, 28. 
 ^ Netherlands — Commercial 
 trainiin in, 45; Duties in, 
 226. 
 
 Newspapers — Kinds of, Ws 
 Use 0^ 78; Use of ta«%n. 
 
 New &UL41ID — Commercial 
 travelen in, i9. 
 
 V NlCARAGUA^-Commercial trav- 
 elers in, 48; Duties in, 225. 
 
 Norway— Duties in, 226; Trad- 
 fng lieenee zequired in, 45. 
 
 OmoUL FoiTAL Qotdb I»- 
 
 feirmation in, 67; Vahmlile in- 
 formation in, 69. 
 
 Order Department— Sends or- 
 ders to factories, 32; Passes 
 
 _ upon orders, 88. 
 
 C^WBS— Filling, 204; Receiv- 
 ing, 160, 278; Accepting, 205; 
 AUoting, 137, 141; Handling 
 •o^ort, 205, 206; Interpreta- 
 gpn ef, 8 06; Loss of, 215; 
 BnipMiil ^ 108. 
 
 Organizations — Joint aeUinr. 
 
 141; Trade, 169. * 
 P^KMW — Damaged, 235; 
 
 Handling, 228; Measurement. 
 
 of, 149; Sise of, 888; Weiglii 
 
 of, 69, 149. 
 
 Packing— Character of, 218; 
 Charge for, 12, 86; Contents 
 listed in, 800; Directing of, 
 28; Economy in, 218; Effic- 
 iency in, 216; Factors in, 215^ 
 221, False economy in, 212; 
 Inioranee of, 218; Kinds of, 
 822; Methods of, 81, 216, 222, 
 212, 217; Negligence in, 211; 
 Poor, 214] Regulations in, 
 224; Requirements of, 213: 
 Weight of , 828. 
 Panama — Commercial trindm 
 
 in, 48; Duties in, 225. 
 Pan-American Union 
 Paraguay— Commercial travel- 
 en in, 48; Duties in, 225. 
 Parcel Post— Advantages en- 
 joyed by British through, 
 69; Advantages of, 69; 
 Agreement on, 70; Confer- 
 ence on, 69; Countries open 
 to ddpment by, 89; DiiBeulO- 
 ies in exporting by, 70; Ex- 
 tension of, 70; Foreign trade 
 through, 69; Markets reach- 
 ed by, 69; Packing for, 69; 
 Use of, 69. • » . 
 
 Passports— Importance of, 48. 
 Permit— dauM in AitmW 
 
 231. 
 
 PraiJ — Commercial travelers in. 
 
 48; DutiMi hi, 885b 
 PiLFESAOi— Oomfaiir ifak of, 
 
 33« 
 
 PopuLATKHf — Iniportanee of; 
 
 POWW — Cbaracter of, 221: 
 Charges at, 145; Delivery at 
 foreign, 147; Lociili«iii ef, 
 
 16. 
 
 Portugal— Duties in, 226. 
 PoBTACai — Cost of underpaid. 
 67. ^ ^ 
 
 Prices— Determinlnr policy of, 
 
 4; Intelligent way to quote, 
 38; Meeting cut, 122; Method 
 of quoting, 40; ObUining low- 
 ff^ ■ Quoting, 133, 142, 
 150; Schedule of, 188. 
 Production — Economies in, 
 122; Improvement oL 187: 
 Surplus, 176, 
 
 INDEX 
 
 PUBUCAnoNS — Information 
 from foreign, 77; Leading 
 trade, 360; Standards of 
 trade, 79. 
 
 PUBUdTT— Necessity of, 898; 
 Sdenet of, 74. 
 
 Quotations — Avoiding c.a.f., 
 
 149; Efficiency of ci.f., 146; 
 Explanation of ci.f., 93; 
 Risks of f.Q.b, 146; Steam- 
 ship, 148; InteUigent, 150; 
 Limiting; 145; New MeOiods 
 of making, 152; Reforms on 
 making, 152 ; Use of language 
 in, 63; Liability in, 146. 
 
 BATB&— Changing freight, 93; 
 Filietaation in fiei|^ 145; 
 Infomiation regarding postal 
 67; Knowledge of insurance, 
 148; Stability in exchange, 
 163; Advertising, 77. 
 
 RBdlPTU — C(mtents of dock, 
 888; FeatOM of parcel, 886. 
 
 BwGSn-— InconpleisnMs of for- 
 eign credit, 169; Intemation 
 in credit, 169; Canpetenee of 
 
 credit, 168. 
 
 Repubucs of Czechoslovakia 
 — Trademark law in, 898. 
 
 B18K8— Advantages of credit, 
 80; AToiding credit, 110; 
 Character of, 191; Covering, 
 262; Judging mercantile, 195. 
 
 Routes — Information as to, 42. 
 
 Sailings — Frequency of, 334. 
 
 Salesman — Advantages of 
 eombination, 51 ; Authority 
 of traveling. 111; Character 
 of traveling, 111; Credentials 
 of, 42; Employing, 131; Ex- 
 pense of traveling, 44, 95; 
 Bapevlencsa of conbination, 
 50; Functions of traveling, 
 86 ; Lines carried by combina- 
 tion, 51; Operations of, 100; 
 Operations of combination, 
 48; Opportunities of, 108; 
 Plans of combination, 51; 
 Preliminary work of, 41, 42; 
 Propositions of combination, 
 50; Qualifications of combina- 
 tioii, 60; RespomdMlity of 
 fncwtMng, 36; Services of, 
 49; Use of traveling, 18; 
 Where to pend, 80; Training 
 of, 132. 
 
 8ALTAIM»---C|nim«relal traveler 
 ia» 48; ThOm fa, 888. 
 
 Samples — ^Data on duties on, 
 45; Expenses increased by, 
 44. 
 
 Schemes — Questionable adver- 
 
 tiah^ 78. 
 Selling— Me^ioda in, 140; Sfi- 
 
 tem of, 130. 
 SETTLEMEN^^— Demanding, 198, 
 199. 
 
 Ships — ^Measuring capacity of, 
 
 348. 
 
 Shipments — Controlling, 285; 
 Destination of, 229; Econ- 
 omies in, 122; Methods of. 
 144; Retnm of, 208; Settie- 
 ment for, 137; Clearance of, 
 237; Delayed, 277. 130. Fi- 
 nancing, 289, 296. 300; Handl- 
 ing, 230; Methods of financ- 
 ing, 278; Packing for, 888; 
 Surtax on, 238. 
 
 Shippers Export Declara- 
 tion— Presentation of, 232; 
 Preparation of, 282; Attest- 
 ing, 232. 
 
 Shipping — Advantages in, 129; 
 Dependence on foreign, 130; 
 Difficulty in, 229; Experience 
 in, 30; Method of, 229; Prog- 
 gress of American, 846; 
 Sharing charges of, 117. 
 
 Ships— Condition of, 235; Qual- 
 ity of American-buill^ 346; 
 Use of, 888. 
 
 SmFVARDS — Output of Amer- 
 ican, 845; Work in American, 
 845. 
 
 Signature — Importance of writ- 
 ten, 68; Rubber stamp, 63; 
 Typewritten, 63. 
 
 Spain — Commercial travelem in 
 46; Duties in, 227. 
 
 SnciAL EzPOKT Edition— Ad- 
 vantages of, 79; Use of, 79; 
 Waning popularity of, 79. 
 
 Specialties — Field for, 131. 
 
 Standing Credit — Investiga- 
 tion of, 24, 101; Judging of, 
 168. 
 
 Stationery — Good taate in, 
 68; Quality of, 68. 
 
 Symbols — Qualifying, 144; 
 Use of, 144, 227. 
 
 Sweden — Commercial travelers 
 46; Duties in, 227. 
 
 Switzerland — Commercial trav- 
 elers in, 46; Duties in, 227. 
 
 Tariff— Preferential, 116; Par- 
 agraghs of, 33; Requirements 
 
430 i:^ 
 
 Technique— Export, 29; Study 
 
 of export, 150. 
 Terms— Cash, 175; Necessity of 
 
 set, 158. 
 
 TkncET€BT--Limited, 112. 
 
 Tbai» — AutKorities on, 87; 
 Bnildiiig Anmiaui fovdgn. 
 114; Cash terms in export, 
 276; Character of export, 
 180; Combination in foreign, 
 114, 117; Competing for, 117; 
 Damage to American foreign, 
 215; Demands of, 132; Der 
 velopment of, 128, 132, 148, 
 164; Engaging in foreign, 
 299; Expansion of, 362; Fac- 
 ilitating, 159; Financing, 
 274; Growth of American ex- 
 port, 164, 95; Handicaps of 
 American export, 312; Mid- 
 dlemen in export, 90; Organ- 
 iwtioii for export, 130, 179; 
 Permanency, 201; Policy of, 
 124; Problems of foreign, 80; 
 Quotations in export, 144. 
 
 TkADEMARKS — Establishment of 
 international, 395; Bureau of, 
 8M; Plra^ of, 888, S89; 
 Pratoctkm of, 889, 898; 
 timmf ef; 89l» 89S» 
 
 Translations — Purpose of, 66; 
 Style of, $7: Efficiency in 
 making, 84; Obtaining pnq^ 
 er, 64; Perfection of, 84. 
 
 Translators — Qualifications of 
 competent, 65; Views of pro- 
 fessional, 65; Classes of, 66; 
 Need of eompetent, 66. 
 
 TRANsraffAtiON— Gooditioiia in 
 
 216. 
 
 Underwriters — History of 253. 
 
 UNmD KiNCDMM— Ckmunerdal 
 Travelers in, 46. 
 
 United States Bureau op For- 
 eign AND Domestic Com- 
 merce — Publication of, 28. 
 
 UMinD STATW DVAKnONT OP 
 COMMERCEr:-68. 
 
 Uruguay — Commercial travel- 
 ers in, 48; Duties in, 226. 
 
 Vbnbzusla — Commercial trav- 
 elen in, 48; Duties in, 228. 
 
 Warmbouam — - ISalabliilimcnt 
 of, 131. 
 
 Webb-Pomerene Law— Concern 
 caused by, 114; Criticism of, 
 114; Defense of, 114; Effect 
 of, 115; Power conferred by, 
 124; Provisions of, 114; Re- 
 sults of, 122; Summarized ad- 
 vantages Qf, 121; Teeth in. 
 
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