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 DISTURB— l 
 
 LECTURE No. 43 
 
 BY DR. CHARLES E. CHAPMAN 
 
 ADDRESS 
 
 MR. J. W. SANGER 
 
 HELD AT 237 MERCHANTS EXCHANGE BUILDING 
 SAN FRANCISCO. CALIFORNIA 
 
 1919 
 
 Delivered under Auspices of 
 
 The Foreign Trade Club of San Francisco 
 
 W. H. HAMMER, President WM. E. HAGUE, Sec.-Treas. 
 
 OFFICE : 
 
 Room 5, Monadnock Budding 
 
 San Francisco, Cal. 
 
 Price 50 Cents 
 
£ 
 
 A COMMERCIAL SURVEY OF SOUTH AMERICA 
 
 By J. W. SANGER 
 
 Trade Commissioner of the United ©twtes Department of Commerce 
 
 An address delivered before the Foreign Trade Club Wednesday evening. 
 
 September 11th, 1919. 
 
 Now that I have returned from South America, I wish that 
 I might come before you and assure you that our foreign trade 
 problems have been solved by virtue of our enormous increase 
 of trade with our Latin-American neighbors. Imposing arrays 
 of figures have been quoted, and we are told that last year we 
 sold the twenty Latin-American countries the enormous sum 
 of three-quarters of a billion dollars worth of goods, which rep- 
 resents considerably more than doubling of our business with 
 them before the war. It is true that today we are selling them 
 more than fifty per cent of their entire imports, which means 
 that our total is greater than that of all the other exporting 
 countries combined. This is an excellent showing and one on 
 which we are to be congratulated when one realizes the disad- 
 vantages under which we were and are laboring. However, 
 this increase should not lull us into the belief that we are going 
 to retain even a good share of this increase without the hardest 
 kind of intelligent work. The bald and uncomfortable fact is 
 that we secured this business very largely because the European 
 sources of supply were closed and the South American mer- 
 chants had their choice of buying from us or not at all. Before 
 we pass on to the advertising survey that took me to South 
 America, suppose we look into the advantages that the Euro- 
 pean countries possessed before the war and which gave them 
 
a predominating share of this trade. First of all were their 
 heavy investments in railroads and other enterprises. In Ar- 
 gentina, for example, English capital controls sixty-five per 
 cent of the railways, and French capital twenty-five per cent. 
 Their own people are in active charge, and it is only natural 
 that purchases of equipment should be made in the mother 
 country. Outside of mining investments on the west coast and 
 meat packing plants on the east coast, American investments in 
 South America are negligible. It is to be hoped that some of 
 the immense surplus capital we have at present will go into 
 South American enterprises, because trade follows investment 
 just as surely us water seeks its own level. 
 
 Secondly, we need fast and regular lines of ships to all im- 
 portant Latin-American ports. Before the war many of the 
 European lines ran almost on train schedule, so the importer 
 knew almost to a day when his goods would arrive. In banking 
 facilities we have improved more than in any other one thing 
 since 1914, and today three large American banks have 
 branches established in many of the most important Latin- 
 American countries. It is to be hoped that they will continue 
 to extend their facilities. 
 
 Another important feature is that of direct and aggressive 
 sales representation on the ground, to which the European 
 countries owe so much of their success. Branch houses are, of 
 course, the best if the amount of business justifies it. If not 
 that, then let us have American representation in all the im- 
 portant cities; or, if that is impossible, then native houses as 
 representatives. 
 
 We have been entirely too content with 'sending our cata- 
 logues to interested inquirers and appointing them as our 
 agents without finding out whether they represent competing 
 lines or handle such a diversity of lines as to make it impos- 
 sible for them to properly represent us at all. Many of such 
 houses are merely order takers and not sales representatives 
 at all. 
 
 Another advantage that the European countries had was 
 lower manufacturing costs and an industrial system better 
 adapted to manufacturing especially for export. If that ad- 
 vantage continues, and the relative manufacturing costs of 
 American and European goods remains the same, we can, in 
 the better class of goods, overcome partially this difficulty 
 through better salesmanship and through advertising. Gener- 
 ally speaking, American goods have the reputation abroad of 
 being good but high priced. 
 
The question of credits is another important feature. The 
 whole business fabric of South America is built on a basis of 
 longer terms than we are accustomed to. All the European 
 countries recognized this and adjusted themselves accordingly, 
 but Germany more than any other extended it until it some- 
 times reached the point of being little better than money lend- 
 ing and not merchandising at all. No one can safely predict 
 exactly what credit extension Latin- America will require in the 
 future, but certainly we shall have to be more liberal than we 
 have been during the past four years. This is a matter that 
 will very largely have to be left to our sales representative in 
 South America, which is all the more reason for using only 
 fully equipped and high class men for this purpose. 
 
 We are thinking in terms of foreign trade now as never be- 
 fore, but we don't always remember that it is not merely an 
 opportunity but an obligation as well. 
 
 The huge industrial equipment which we have built up dur- 
 ing the war will either be scrapped and become an economic 
 loss, or turned to the uses of manufacturing for export. 
 
 We have doubled our manufacturing capacity so that today 
 it totals annually seventy billion dollars. While we have in- 
 creased our export trade, even today it represents something 
 less than ten per cent of this total, whereas other exporting 
 nations send abroad from twenty to forty per cent of their 
 total production. Other countries, notably Great Britain, 
 largely through necessity, were compelled to regard their for- 
 eign trade as no less important than their domestic business, 
 whereas with us it has always been a mere incident and a side 
 issue. While necessity may have been the compelling force 
 with them, in learning to meet its needs they came to have an 
 international outlook on things. It is said that it was the Eng- 
 lish boy's love of running away to sea that at bottom was re- 
 sponsible for building up the British merchant marine. It was 
 the need for going to the far corners of the earth, and buying 
 the raw materials that they could not produce at home, that 
 gave these people their world-wide viewpoint. 
 
 Most of us Americans are still somewhat in the position of 
 Bobby, whose teacher asked him, "Who was the first man?" 
 and Bobby promptly answered, "George Washington." "You 
 know better than that," said the teacher, "you know it was 
 Adam," "Oh, well." was Bobby's answer, "I wasn't countin' 
 foreigners. ' ' 
 
 A good many of us, unfortunately, still feel like Bobby, and 
 that attitude does not build foreign business which is, in its 
 fundamentals, no different from domestic business. It re- 
 
quires its own forms of specialized knowledge, the same as for 
 business at home, and what we Americans need to give to it 
 more than anything else is the same degree of intelligence that 
 we apply to the solution of domestic marketing problems. Now 
 that we have set ourselves to the job of grappling with these 
 problems, I believe we will solve them, because if there is one 
 tiling we have developed to a greater degree than anybody else, 
 it is the genius for adaptability. 
 
 When one is abroad, I think it is a pretty good policy to de- 
 fend his own countrymen and explain their mistakes, but when 
 lie comes back home then is the time for him to tell the plain 
 unvarnished facts when the foreign neighbors are not around to 
 hear the gossip. 
 
 ADVERTISING S 
 
 Now to come to the advertising phase of the problem, be- 
 cause it was that that took me to South America. It is only 
 after you get out of your own country that you realize that 
 modern advertising as we have developed it is largely an Amer- 
 ican idea. Not but that it is used everywhere, and in South 
 America very generously, but that no other country than our 
 own has given to it and to the larger problem of merchandising 
 the same degree of care and skill. It is to our ability in mar- 
 keting, in adapting these things we have learned to do so well 
 at home to the conditions as we find them abroad, that we must 
 turn, to offset, at least temporarily, our other disadvantages. 
 
 Only time will furnish us with the advantages of huge for- 
 eign investments, adequate shipping facilities, full and com- 
 plete American foreign representation, and such changes in 
 manufacturing as may become necessary. These are perma- 
 nent factors for which there is no complete substitute. But, 
 in the meantime, our skill as merchandisers and in advertising 
 will pave the way, and will enable us to develop our own pecu- 
 liarly effective means of holding our own in these markets. We 
 have spent many years and many millions of dollars learning 
 how to do it at home, and it now remains for us to fit this abil- 
 ity to foreign markets. 
 
 Latin- America is made up of twenty different countries, no 
 two of which are precisely alike, and many of them are widely 
 different, the only thing they have in common being their Latin 
 blood. South America alone is made up of ten different coun- 
 tries. One of these countries alone, Brazil, is as large as the 
 entire United States. Another of them, Argentina, is as large as 
 all of our states east of the Mississippi River, with Texas thrown 
 in for good measure. 
 
The language common to them all is Spanish, except in Brazil, 
 where Portuguese is the language, and Spanish will not serve 
 there, no matter if people do tell you so and even if the two 
 languages look and are alike. French is the second best lan- 
 guage to use in Brazil. 
 
 Then take the question of patriotism. Each of these coun- 
 tries has its own highly developed feeling of patriotism, and 
 whether right or wrong, thinks that the sun rises and sets 
 within the boundaries of his country. We must not blame them 
 for that because that is what we honestly think of our own 
 country. They don't call us "Americans." but "North Amer- 
 icans," or sometimes "Yankees." And it would be well for 
 us to get into the habit of thinking of them, not under the term 
 of South Americans, but as Chileans, Argentines, Brazilians, 
 etc. I can assure you that you never forget that when you are 
 in their countries. 
 
 Another thing to remember is that their customs and tradi- 
 tions are quite as important to them as ours are to us, and that 
 they are radically different from ours. They are not a mechan- 
 ical or inventive people and they are not as a rule business 
 men if they can avoid it. They prefer to be doctors, lawyers, 
 in politics or to be gentlemen farmers. 
 
 Advertising is widely used throughout South America, but 
 its development is rather primitive and is about where ours was 
 just after the Civil War. Differences in customs in the differ- 
 ent countries, poor transportation facilities, two languages 
 (Spanish and Portuguese), make very wide circulations of 
 newspapers and magazines impossible. Generally speaking the 
 publications of each country do not go outside of it. and in 
 some cases, as in Brazil, there is little or no circulation of a 
 newspaper outside of the city or state where it appears. 
 
 Buenos Aires publications circulate more widely throughout 
 Argentina than do other South American publications in their 
 respective countries. 
 
 South America is primarily a newspaper rather than a maga- 
 zine field, and most of its best papers are morning rather than 
 evening papers. Outside of the newspapers there are no widely 
 circulating media except the illustrated weeklies. Their trade 
 journals are not important, and our export trade papers printed 
 in New York in Spanish and Portuguese, together with catalogs 
 and other means that have been found successful, will be used 
 to reinforce direct salesmanship among the trade. 
 
 The best of the daily newspapers are very good, and some of 
 them, particularly those of Buenos Aires, would rank as great 
 newspapers. The individual circulations are not as large as 
 
ours. For example, Buenos Aires has about the same popula- 
 tion as Philadelphia and its largest daily has an average cir- 
 culation of 165,000. 
 
 However, there are more newspapers published than with us, 
 and what is more important to advertisers, they are much more 
 thoroughly read. Instead of buying: four papers, a man will 
 buy one and read it from the first page to the last. The habit 
 of skimming through a paper is not common there, and their 
 leisurely habits are extended to their reading as to everything 
 else. 
 
 Outside of the newspapers, the weekly reviews are widely 
 read, particularly by women. They are rather cheaply gotten 
 up. being printed usually on news stock and not on calendared 
 paper, so that the fine effects seen in our magazines are not to 
 be found in these "re vistas" or weekly reviews. They cost only 
 from five to ten cents, and one of them has a circulation of over 
 100,000. 
 
 There are no audited circulations, and except for the leading 
 publications, the publishers' statements must be discounted on 
 the ground of enthusiasm, or suspicion of his fellow publishers. 
 My own estimates of their actual circulations will appear in my 
 reports, and are based upon a very careful checking and re- 
 ehecking secured from a great many unusual sources to which 
 I had access. 
 
 Local advertising rates are usually much lower than foreign 
 rates. The South American publisher's experience with Amer- 
 ican advertisers has been that so many either do not pay their 
 bills or pay them slowly, that lie simply tacked on enough so 
 that we would pay for the losses and delays. During my calls 
 on hundreds of these publishers, I realized that their viewpoint 
 could not be changed unless some better arrangement for 
 prompt payment could be affected. 
 
 I therefore made arrangements with all the important pub- 
 lishers whereby American advertisers can secure local rates by 
 paying their bills promptly through the local branches of Amer- 
 ican banks in South America. 
 
 As regards other forms of advertising such as street cars, 
 painted walls, bill boards, etc., which are widely used in many 
 of the large South American cities, in their present shape I 
 doubt if they are readily usable by an American advertiser. In 
 the principal Brazilian cities the street car advertising is con- 
 trolled by an American and is consequently better handled 
 than elsewhere. In Buenos Aires all forms of outdoor adver- 
 tising are better developed than in other cities. However, all 
 in all, the uncertain prices, the loosely organized methods of 
 
handling them, and, above all, the very bad display methods in 
 vogue, render them of very much less consequence there "than 
 here, where they are properly handled. 
 
 There is need for more activity on the part of American ad- 
 vertising agencies in South America. None of our agencies have 
 more than the barest nominal representation there, and while 
 they have done some good work and are well thought of by the 
 publishers, they have not regarded the field as sufficiently prom- 
 ising or profitable to establish capable local points of contact. 
 However, the last two 3 r ears have produced a tremendously 
 greater interest in all foreign sales problems, and with it the 
 manufacturer is asking his advertising agency for specific 
 marketing and merchandising information about South Amer- 
 ica. As a result of this, the American advertising agent is set- 
 ting about the task of securing information that will eventually 
 enable him to render somewhat the same service abroad as at 
 home. 
 
 At present there are no advertising agencies anywhere in 
 South America except in Buenos Aires, where their work is 
 purely local in character. They have neither the training nor 
 the ability to render the intensive and highly complex services 
 required of a modern American advertising agency. They have 
 partially met the demands that have been made on them but 
 these demands were very simple ones. We have passed the point 
 for employing advertising in a perfunctory way in Latin-Amer- 
 ica, and the advertising agency that will render a foreign ser- 
 vice at all commensurate with his domestic service will be a 
 highly important factor. He will be one of the indispensable 
 links in the merchandising chain that will uncover the markets, 
 determine the media, and devise the copy appeal to use. 
 
 What kind of copy shall we use in reaching the Latin-Amer- 
 icans? is a common question. It seems to me that we have been 
 floundering between two extremes. On the one hand are the 
 advertisers who attempt to transmit or translate their Ameri- 
 can copy literally by merely putting it into Spanish or Portu- 
 guese. On the other hand are those who tell us that South 
 Americans have no point in common with us and that therefore 
 an entirely new type of advertising must He devised for them, 
 just as though they came from .Mars and saw everything up- 
 side down. Personally, T don't think the job is either as simple 
 or as difficult as these two extremes make it out to be. A 
 literal translation of American advertising into Spanish or Por- 
 tuguese is nearly always ineffective and sometimes actually mis- 
 leading, because it is impossible to render our idioms exactly 
 into another language and make them understood as the writer 
 

 understood then]. Even if idioms are not used to any great ex- 
 tent, an exact translation is unfortunate, because all the flavor 
 of the original is lost and in translation it becomes weak and 
 unnatural. Taking the other extremist — -the one who thinks 
 Latin-Americans walk on their heads instead of their feet — the 
 "bogey" he uses is the phrase "they are different." He is 
 right, they are different. But, how different, and in what way? 
 That's what we want to know. 
 
 Here are a few suggestions I would make with the idea that 
 on them we can adapt and modify our American copy appeals 
 so as to be effective with Latin- Americans. Their language is 
 different, and whether we use Spanish or Portuguese, it should, 
 if possible, be written by one of their own people. By that, I 
 mean that a Brazilian should write for Brazilians, an Argentine 
 for Argentines, a Cuban for Cubans, and so on. He should be 
 given as much latitude as the man who conceived the original 
 idea in English, because his is the task of adapting that idea 
 into the language of his own people so as to have it reach them 
 in the easiest and most effective way. He should have a suffi- 
 cient knowledge of the English language, and of our habits of 
 thought, to be able to grasp the basic idea that lies behind the 
 advertising as it is originally presented in English, and then he 
 should be left as free as possible to "put it over" with his own 
 people. He knows the customs, the habits of thought, and the 
 little every-day habits of his own people just as we know ours. 
 He knows the little-big differences that climate produces in 
 people, and he knows these things automatically and without 
 consciously thinking about them at all. If he is writing to an 
 Argentine, he will know that neither languid senoritas nor 
 moth-eaten bull fighters will make any personal appeal to them, 
 while if he is writing to Peruvians he is aware that the toreador 
 and the bull ring are still national features. He will never un- 
 der any circumstances encourage a campaign to sell overcoats* 
 along the coast of Brazil, nor breakfast foods in Peru, lawn 
 mowers in Chile, or Palm Beach clothes in Buenos Aires in 
 July, which is the middle of the winter there. 
 
 We need to educate the dealer more, and supply him with 
 helps which are not provided by European exporters. This is 
 an American idea also, just as are practical demonstrations of 
 merchandise, and showing a dealer how to conduct his store 
 along more modern and profitable lines. The South American 
 retailer won't take to these things over night because his train- 
 ing and traditions are all against it, but if he can see that these 
 things will bring him more business, the idea will win with him, 
 provided it is presented persistently and tactfully. The South 
 
American importer and merchant, by the way, is seldom if 
 ever a native South American, but nearly always a Spaniard, 
 Italian, Englishman, German or other European. 
 
 Regarding trademarks, register your trademark before you 
 enter South American markets, not afterwards, and have it reg- 
 istered in your own name and not in the name of your agent or 
 representative. Long continued use of a mark has nothing 
 whatever to do with the ownership of it anywhere in South 
 America. The man who registers it first, owns it, and can pre- 
 vent you from using your own mark. In some Latin-American 
 countries it is not even necessary for the one registering it to 
 ever make any use of it, and it is not an uncommon practice to 
 make a business of registering foreign trade marks with the 
 sole purpose of "holding up" the owner later on. Even if you 
 have no representation, and think you never will have, if you 
 send any goods there through commission houses, register your 
 mark just the same. The day may come when you will need it, 
 and when it may cost you $50,000 to buy it back, instead of the 
 $50 it may cost you today. 
 
 Just a word about the attitude of South America toward us, 
 and I'm through. All in all, it is one of distinct friendliness 
 toward us, and in certain countries, notably Brazil and Uru- 
 guay, the feeling of friendliness toward us is particularly 
 marked. There is no suspicion of us as the great Colossus of 
 the north ready to take advantage of them and gobble them up 
 when opportunity offers. Generally speaking their people are 
 not any better acquainted with, us and our country than we are 
 with them. However, the last five years has seen increased 
 travel between the two continents, and the better acquaintance 
 that travel provokes will have its results in better trade rela- 
 tions and better understanding between the two peoples. Our 
 entrance into the war was something that brought us to their 
 notice as something more than a geographical spot, and the sec- 
 ' ond event of significance was the coming into the South Ameri- 
 can field of the Associated Press and the United Press.. Pre- 
 vious to their arrival we were best known as the country that 
 had lynchings, train robberies, scandals in high life, and mu- 
 nicipal graft. Bad news travels fast, and that was all they 
 heard about us. 
 
 When these two great press associations arrived in the field, 
 they proceeded to put us on the front pages every day with the 
 real news, and not merely the sensational occurrences of the 
 day. 
 
 All this has happened in two years, and today an American 
 can pick up his paper nearly anywhere in South America, and 
 
if he can read Spanish or Portuguese, he will find there all the 
 important news items of his own country, side by side with 
 those of England, France, Spain and Italy. 
 
 It isn't until one has been in strange countries speaking 
 strange tongues that one realizes what splendid makers of good 
 will these two press associations have been. They deserve the 
 gratitude of every American who is proud of his country and 
 wants to have the truth about it known. 
 
Louis Roesch Co., Lith. and Print., S. F. 
 
Pamphlet 
 
 Binder 
 
 Gaylord Bros. 
 
 Makers 
 Stockton, Calif. 
 
 PAT. JAN 21 
 
 $-•