PRINCIPLES 
 
 OF 
 
 FOREIGN TRADE 
 
 By 
 
 NORBERT SAVAY, M.A., LL.B. 
 
 Member of the New York Bar ; Formerly Special Lecturer on 
 
 Foreign Trade, Notre Dame University; Formerly Counsel for 
 
 Russian Consulate General. 
 
 THE RONALD PRESS COMPANY 
 NEW YORK 
 
 
 9 1 S 3
 
 Copyright, 191 9, by 
 The Ronald Press Company 
 
 
 ♦.• N : • • • 

 
 
 o 
 
 This book is respectfully dedicated to 
 The Chairman and Members of The 
 National Foreign Trade Council 
 and to The Officers and Members of 
 The American Manufacturers Ex- 
 port Association in recognition of 
 the admirable work done by both 
 these organizations in promoting our 
 foreign trade.
 
 PREFACE 
 
 Assuming that an educational book is authoritative and that 
 
 V its author by training, experience, and study is quaHfied to in- 
 
 J struct or is entitled to express his opinions, the value of the 
 
 book then depends upon its timeliness and the thoroughness 
 
 with which it discusses or teaches the particular subject matter. 
 
 Regarding the timeliness of this book, little need be said. 
 
 The growing interest in foreign trade among even the smaller 
 
 manufacturers and producers of the United States is largely 
 
 ,. the natural effect of two causes: first, the unprecedented de- 
 
 ^ mands of the war which led to an increase of facilities to fill 
 
 ^ these demands ; and second, now that the war is over, the neces- 
 
 sity of finding outlets for the increased production brought 
 
 about by the creation of these facilities. 
 
 The author recognizes the possibility of the criticism that 
 much of his advice on the conduct of foreign trade is too 
 ^ . "ideal" in its tone, and that to carry out all the plans and sug- 
 gestions in the ideal way outlined here is impracticable for the 
 business with limited resources. This is perfectly true. In 
 the smaller business, the "rule of thumb" method must of 
 .^ necessity obtain and the existing mechanism be expanded with 
 r but little special preparation to embrace the foreign exploita- 
 tion. Nevertheless, it is always well to have a model, accord- 
 ing to which action should be adjusted as nearly as possible. 
 It may also be said that the aim of the book is not primarily 
 to teach the exporter how to sell abroad his particular goods. 
 This he can readily learn after he has mastered the general 
 principles and grasped the mechanism of the subject, adopting 
 so far as applicable the same methods abroad that have proved 
 successful at home.
 
 VI 
 
 PREFACE 
 
 The primary aim of the book is to set forth those general 
 principles which unclerhe the building up of foreign trade, 
 not merely of such trade as is a convenient outlet for a few 
 superfluous home products, but as a part of a permanent and 
 national foreign trade policy. It should not be understood 
 from this that practical details are entirely omitted. 
 
 The volume is not a "how book," but nevertheless a con- 
 siderable portion of it is devoted to a description of the mecha- 
 nism used in the handling of imports and exports. Every care 
 has been taken to indicate the source whence the informa- 
 tion which the exporter is likely to require may be derived. 
 Given this information and also knowledge of the essential 
 mechanism and of fundamental principles, the exporter is then 
 equipped to make profitable use abroad of the executive and 
 sales ability which has brought him success at home. 
 
 There Is no mystery and little intricacy attached to the 
 methods of foreign trade development. Human nature is 
 much the same the world over. Human needs can be devel- 
 oped anywhere by sound salesmanship and proper advertising. 
 The Chinese can as readily be "educated" to the advantages of 
 cash registers as the Japanese to the superiority of the auto- 
 matic screw machine ; and doubtless many a perspiring Hotten- 
 tot swears by the special features of American agricultural 
 machinery when he becomes acquainted with the ease and 
 comfort of a National Harvester "sitting" plow. The biggest 
 exporting firms in the world are the pre-eminently successful 
 American concerns. Distinctive American goods, from raw 
 steel to typewriters, are sold the world over by distinctively 
 American selling methods. 
 
 Methods, of course, must when necessary be adapted to 
 idiosyncrasy and circumstance. But given a knowledge of, 
 or the right point of view on, the fundamental matters dis- 
 cussed in this book, there should then be no difficulty in adapt- 
 ing" means to the ends desired. Possibly the point of view
 
 PREFACE vii 
 
 or the opinion of the author will not always coincide with that 
 of the reader. If so, all that the writer can state is that his 
 opinion has been formed after fifteen years of experience as 
 an international salesman and sales investigator and as counsel 
 for consulates and international traders. 
 
 The author wishes to express his warm appreciation of the 
 many suggestions and criticisms which have helped so materi- 
 ally in the preparation of the present volume. He especially 
 wishes to extend his thanks to Frank G. Conway of Street and 
 Finney; Frederick Nash of the General Chemical Company; 
 Alba B. Johnson, formerly with the Baldwin Locomotive 
 Works; James H. Carter of the National City Bank; Harry 
 A. Wheeler, President of United States Chamber of Com- 
 merce; and to the Guaranty Trust Company and the Discount 
 Corporation, both of New York City. 
 
 In conclusion, it may not be improper to observe that 
 nations as well as individuals need special knowledge in order 
 to gain and retain foreign trade. If America is to retain even 
 her relative position in international commerce she must 
 continually add to her present knowledge of foreign trade, and 
 to the methods by which it is conducted. The author hopes 
 that in some small measure this volume may contribute to 
 this end. 
 
 NORBERT SaVAY. 
 
 New York City, 
 May 8, 19 19.
 
 CONTENTS 
 
 Part I — General Considerations 
 Chapter Page 
 
 I The Opportunities of Foreign Trade .... 3 
 Advantages of Foreign Trade 
 Requisites to Success 
 Foreign Trade as a Career 
 Foreign Trade and National Welfare 
 The New Spirit of Foreign Trade 
 
 II Six Fundamentals of Foreign Trade .... 8 
 Fundamental Factors 
 Capital 
 Information 
 
 Method of Distribution 
 Organization 
 The Terms of Sale 
 Miscellaneous Export Policies 
 
 III Foreign Trade Strategy and Its Essentials . . 15 
 
 Strategy in Foreign Trade 
 
 Definite Study Essential 
 
 The Collection of Information 
 
 Investigation on the Spot 
 
 What May Be Learned at Home 
 
 Study of the Psychology and the Structure of the 
 
 Market 
 Charting the Results of Investigation 
 The Formulation of Plans 
 Recapitulation 
 
 IV Sources of Foreign Trade Information ... 23 
 
 Statistical Information 
 Defects of Governmental Statistics 
 Miscellaneous Sources of Information 
 Consular Information 
 Trade Discussions 
 Governmental Trade Investigation 
 Trade Representatives' Investigations 
 Miscellaneous Printed Alatter 
 Original Information 
 ix
 
 X CONTENTS 
 
 Chapter Page 
 
 V Demand and Supply in the Foreign Market . . 29 
 The Principles of Demand 
 Tests of Demand 
 Quantitative Tests 
 Qualitative Tests 
 Potential Demand 
 How to Study Demand 
 The Relation of Demand and Supply 
 Tests of Supply- 
 Overproduction 
 Domestic Supply 
 Foreign Supply 
 Price and Quality 
 Conclusion 
 
 VI The Psychology of the Foreign Market ... 39 
 
 Basic Principles 
 
 Commodities Pay for Commodities 
 
 Commerce Rests Upon Comparative Needs and 
 
 Supplies 
 Conditions of Society Determine Status of Market 
 Structure of the Market 
 Psychology of the Market 
 Reciprocity Significant 
 Civilizing Influences of International Trade 
 
 VII The Status of the Foreign Market .... 46 
 Knowledge of General Conditions 
 The Political Status 
 The Governmental Status 
 The Legal Status 
 The Economic Status 
 The Financial Status 
 The Social Status 
 The Commercial Status 
 
 VIII Principles of International Distribution . . 54 
 Factors of Distribution 
 Distribution and Trade Channels 
 Intermediaries in Foreign Trade 
 Fixing the Price 
 Comparative Costs 
 Dumping 
 
 Distribution and Credit 
 Distribution and Prices 
 
 Maximum and Minimum Efforts in Distribution 
 Mistaken Methods of Distribution 
 Acquaintance an Element in Distribution 
 
 J
 
 CONTENTS xi 
 
 Chapter Page 
 
 IX The Best Markets for the American Exporter . 64 
 Trade Centers 
 London 
 Paris 
 
 "New" Markets 
 China 
 Russia 
 
 Latin America 
 Special Lines of Effort 
 General Conclusions 
 
 X The Commercial Policies OF World Powers . . 70 
 The Development of Economic Thought 
 The Ancient World 
 Mercantilism 
 
 Eighteenth Century Laissez-Faire 
 Nineteenth Century Protectionism 
 Special Policies of World Powers 
 Protective Tariff Systems 
 Navigation Laws 
 
 Devices for Promoting Foreign Trade 
 General Policies of World Powers 
 United States 
 Great Britain 
 Germany 
 France 
 
 Other Nations 
 Knowledge of Special Trade Policies 
 
 XI Looking into the Future of Foreign Trade . . 80 
 What of the Future? 
 The Individualistic Nations 
 Higher Standards of Living _ 
 The Breaking Down of Barriers 
 The Present Economic Situation 
 Government Aid to Trade Expansion 
 Sociological Aspects 
 
 Part II— Machinery of Foreign Trade 
 
 XII The Exporter and His Staff 89 
 
 World Trade Machinery 
 
 The Exporter 
 
 Classes of Exporters 
 The Producer for Export 
 The Export Commission House
 
 xii CONTENTS 
 
 Chapter Page 
 
 The Commission House as Buying Agent 
 The Export Merchant 
 The Export Agent 
 Co-operative Export Organizations 
 
 The Exporter's Staff 
 
 The Export Manager 
 
 The Director of Foreign Sales > 
 
 The Foreign Trade Manager 
 
 The Manufacturer's Export Representative 
 
 The Correspondent 
 
 Translators 
 
 The Co-operative Salesman 
 
 Local Selling Agent 
 
 The Shipping Clerk 
 
 The Traffic Manager 
 
 Advertising Expert 
 
 XIII Importing and the Importer loi 
 
 Interrelation of Exports and Imports 
 
 The Utility of Imports 
 
 International Exchange of Commodities 
 
 Dividing Lines — Legal and Economic 
 
 The Importer and His Staff 
 
 The Importer Proper 
 
 The Importer Improperly So-Called 
 
 Local Commission Houses 
 
 Local Wholesale Distributer or Jobber 
 
 The Importer for Retail 
 
 The Exporter-Importer 
 
 The Co-operative Importer 
 
 The Resident Buyer 
 
 The Importing Manufacturer 
 
 Custom House Broker 
 
 Warehouse 
 
 Drawback Broker or Specialist 
 
 Methods of Importation 
 
 XIV Chief Factors in the Machinery ..... ill 
 Sources of Information 
 Foreign Trade Publications 
 Insurance and Freight Rates 
 Parcel Post and Express 
 Banks and Collections 
 Forwarding Agents 
 Foreign Exchange Broker 
 The Investigator 
 Foreign Trade Specialists
 
 CONTENTS 
 
 Xlll 
 
 Chapter Page 
 
 XV The Foreign Trade Machinery of the United 
 
 States Government Ii6 
 
 The Governmental Machinery 
 Machinery of the State Department 
 The Diplomatic Service 
 The Consular Service 
 The Office of Foreign Trade Advisers 
 Machinery of the Department of Commerce 
 Other Governmental Factors 
 The Shipping Board 
 The Federal Trade Commission 
 United States Tariff Commission 
 Co-ordinating Committee on Foreign Trade 
 Federal Reserve Bank 
 
 Functions and Operation of the Federal Reserve 
 Bank 
 
 XVI Foreign Trade Organizations in the United 
 States 
 
 Public Organizations 
 
 National Organizations 
 
 Local Organizations 
 
 The International Organizations 
 
 Private Organizations 
 
 128 
 
 XVII The Value of Co-operation in Foreign Trade 
 The American Trust 
 Industrial Combinations 
 Combinations Abroad 
 Possibilities of Co-operation 
 Co-operation Without Combination 
 Possibilities of the Future 
 
 133 
 
 XVIII The Webe-Pomerene Law 
 
 Enactment of the Webb-Pomerene Law 
 
 General Provisions of the Law 
 
 Methods of Control 
 
 Forms of Combination 
 
 Wide Range of Possibilities 
 
 The Law Designed to Aid Foreign Trade 
 
 Advantages of the Law 
 
 XIX Export Organizations and Combinations 
 Growth of Foreign Sales Combines 
 Specialty Foreign Sales 
 Staple Foreign Sales 
 
 139 
 
 . 148
 
 xiv CONTENTS 
 
 Chapter Page 
 
 Types of Sales Organizations 
 Jointly Controlled Selling Organization 
 Typical Plan of Jointly Controlled Selling Organi- 
 zation 
 Co-operative Sales Organization 
 Examples of Co-operative Sales Organization 
 The Selling Combine 
 Example of Selling Combine 
 Form of Incorporation 
 Agreements with Participating Concern 
 Suggested District Sales Company 
 
 XX GOVERNMENTAI SuPPORT OF FoREIGN TrADE . . l6l 
 
 An Achievement in Foreign Trade 
 
 Basic American Organization 
 
 Need of Governmental Help in Foreign Trade 
 
 Form of Organization 
 
 An American Board of Foreign Trade 
 
 Specific Activities of Board of Trade 
 
 Importance of Proper Organization 
 
 General Functions of the Board 
 
 Part III — Operating a Foreign Trade Organization 
 
 XXI The Development of a Foreign Market . . 171 
 
 Attitude Toward .the Foreign Field 
 Developing a Foreign Market 
 The Investigator 
 Investigation Procedure 
 Letters of Introduction 
 Deportment 
 Obtaining Data 
 Time 
 
 Expense of an Investigator or a Sales Representative 
 Export Office 
 • Expenses and Returns 
 Co-operation 
 Self-Developing Foreign Trade 
 
 XXII Preparing a Foreign Sales Plan 181 
 
 The Sales Plan 
 
 Information Required 
 
 Correlation of Selling Plan and Selling Organization 
 
 Elasticity of Selling Plan 
 
 Special Selling Plans 
 
 Local Sources of Information 
 
 Concentration
 
 Chapter 
 
 CONTENTS 
 
 Follow-Up Methods 
 Advertising as a Follow-Up 
 Closing Sales by Mail 
 Co-operation in Foreign Sales 
 The International Sales Manager 
 
 XV 
 
 Page 
 
 XXIII Selecting Men for Foreign Service 
 The Elements of Success 
 Aptitude and Adaptability 
 Special Knowledge and Training 
 Personality 
 
 The Right Man for the Right Field 
 Selecting the Man 
 Age and Experience 
 Tests of Candidates 
 
 • • 
 
 192 
 
 XXIV Education for Foreign Trade 200 
 
 Requisites for Salesmanship Success 
 European Methods 
 Technical Education 
 Practical Education 
 American Education in Foreign Trade 
 Status of American Education in Foreign Trade 
 Practical Training for Foreign Trade 
 Natural Qualifications Required in Foreign Trade 
 Haphazard Training for Foreign Trade 
 Why We Have Few Salesmen Qualified for Foreign 
 Trade 
 
 XXV Education for Foreign Trade (Continued) 
 The Export Office as a Training School 
 The Scl-ool and Shop Method 
 Opportunities for Study of Foreign Trade 
 A Practical Course in Foreign Trade 
 Practical Experience in Foreign Trade 
 
 210 
 
 XXVI The Efficiency of the Organization 
 
 Fundamental Efficiency Principles 
 
 Organization 
 
 Specialized Effort 
 
 Formulation of General Policies 
 
 Handling Salesmen 
 
 The Manager's Duty — Inspiration 
 
 Liberal and Fair Treatment 
 
 Keeping in Touch 
 
 218
 
 XVI 
 
 CONTENTS 
 
 Chapter 
 XXVII 
 
 XXVIII 
 
 XXIX 
 
 Selling Methods in Foreign Trade . 
 Adaptability of Selling Methods 
 Selling Methods Must Conform to Custom 
 Suiting Methods to Conditions 
 The Leisurely Approach 
 Methods for Promoting Foreign Trade 
 Competitors' Methods 
 
 Suggestions for International Salesmen 
 The International Salesman 
 Aggressive Salesmanship 
 Overcoming Customers' Excuses 
 Offering Suggestions 
 Keeping a Customer 
 Approaching a Prospect 
 Closing a Sale 
 What is Meant by Salesmanship as an Art? 
 
 Page 
 225 
 
 232 
 
 Foreign Trade by Mail Order . 
 Status of Foreign Mail Order Trade 
 The Ordinary Type of Mail Order House 
 The Dealer and the Mail Order House 
 Mail Order Advertising 
 Good Service 
 Credits 
 The Local Representative 
 
 241 
 
 XXX Advertising in Foreign Trade 
 
 Purpose of Advertising 
 
 Adapting the Advertisement to Conditions 
 
 Channels for Foreign Trade Advertising 
 
 Value of Advertising Mediums 
 
 Advertising Specialists 
 
 Circularizing 
 
 Local Advertising Agencies 
 
 Exhibits 
 
 Posters 
 
 Information as an Advertising Basis 
 
 Preparation for Foreign Advertising 
 
 Part IV — The Technique of Foreign Trade 
 
 247 
 
 XXXI The Technicalities of Importing . 
 
 Interrelation of Foreign Trade Machinery 
 Classes of Importers 
 Custom House Procedure 
 Foreign Preliminaries 
 
 250
 
 CONTENTS 
 
 xvii 
 
 Chapter 
 
 XXXII 
 
 Page 
 
 Domestic Procedure 
 Forms of Entry Blanks 
 Storing and Bonding 
 Undervaluation 
 
 Manufacturing for Export . . 
 Meeting the Customer's Demands 
 The American Manufacturing System 
 Manufacturing Details 
 Latent Demand 
 
 Production and Local Methods 
 Price and Quality 
 Conclusion 
 
 267 
 
 XXXIII 
 
 XXXIV 
 
 XXXV 
 
 XXXVI 
 
 From Factory to Seaport 
 
 The Technicalities of Exporting 
 
 Packing 
 
 General Conditions to be Considered in Packing 
 
 Special Conditions to be Considered in Packing 
 
 General Instructions for Packing 
 
 Marking 
 
 Railroad Transportation of Exports 
 
 Transfer at the Port of Shipment 
 
 Shipping Arrangements at the Port .... 
 What the Shipping Arrangements Include 
 Choosing the Steamship Company 
 Rates 
 
 Regulations Pertaining to the Handling of Freight 
 Shipping Permit 
 
 The Bill of Lading — Export Invoice 
 Consular Requirements 
 
 273 
 
 280 
 
 Custom House Procedure 
 
 Shipper's Export Declaration 
 
 Shipping Through an Agent 
 
 Shipments from the Interior 
 
 Clearance 
 
 Drawback 
 
 Shipping in Bond 
 
 The Principles and Laws of Marine Insurance 
 Marine Insurance 
 The Origin of Marine Insurance 
 Fundamental Regulations 
 The Agents 
 Important Features of Marine Insurance 
 
 286 
 
 291
 
 XVlll 
 
 Chapter 
 
 XXXVII 
 
 XXXVIII 
 
 CONTENTS 
 
 Liability of Steamship Companies 
 Abandonment 
 Settlements of Averages 
 Valued and Open Policies 
 
 Financing Foreign Shipments , 
 Methods of Export Payment 
 Cash With Order 
 Bank Credit 
 Open Accounts 
 Bills of Exchange 
 Negotiable Instruments 
 Trade Acceptance 
 The Use of Trade Acceptances 
 Documentary Drafts 
 Bank Acceptance 
 Financing the Import Shipment 
 
 Foreign Credits and Collections 
 
 Credit Customs 
 
 Credit Information 
 
 Discounting Drafts 
 
 International Banking 
 
 Effect of Federal Reserve Act 
 
 Trust Receipts 
 
 Finance Bills 
 
 Page 
 
 299 
 
 310 
 
 316 
 
 XXXIX Foreign Commerce Laws 
 
 Necessary for an Elementary Knowledge 
 
 The Commercial Codes 
 
 Registration 
 
 Miscellaneous Provisions 
 
 Bankruptcy Laws 
 
 Compulsory Bookkeeping 
 
 General Governmental Supervision 
 
 Commercial Paper 
 
 Peculiar Trade Customs 
 
 Commercial Travelers 
 
 Law of Agency 
 
 Sources of Information 
 
 XL Summary of Trade-Mark, Patent, and Tariff 
 
 Laws 326 
 
 A Knowledge of Trade-Mark Laws Essential in 
 
 Foreign Trade 
 Classes of Trade-Mark Laws 
 Regulations of the International Convention
 
 CONTENTS 
 
 Chapter 
 
 XIX 
 
 Page 
 
 Registration 
 
 What May Not be Registered 
 
 Rules Regarding Registration 
 
 Patent Laws 
 
 Tariff Laws 
 
 Part V — Trade Regulations 
 
 XLI Commercial Travelers 337 
 
 Knowledge of Regulations Indispensable to the 
 
 Exporter 
 License Fees and Taxes 
 
 Recent Treaties with South American Countries 
 Documents Required 
 Admission and Sale of Samples 
 Other Important Factors 
 New Republics and Enemy Countries 
 Regulations in Individual Countries 
 
 XLII Commercial Travelers (Continued) 
 Regulations in Individual Countries 
 
 366 
 
 XLIII Consular and Shipping Requirements in World 
 
 Trade 390 
 
 Requirements in Individual Countries 
 
 XLIV Credit Customs of the World 404 
 
 Customs of Individual Countries 
 
 Appendix 
 
 Appendix A — Governmental Enactments and Agencies . . 417 
 Text of the Webb-Pomerene Law 
 Law of Drawback 
 Federal Reserve Act 
 
 Work of the Bureau of Foreign and Domestic Commerce 
 Work of the Office of Foreign Trade Advisers 
 Federal Trade Commission — Rules of Practice 
 
 Appendix B — Diplomatic Representation, Parcel Post 
 
 Countries, and Shipping Distances 438 
 
 Foreign Cities in Which There Are American Consulates 
 Embassies and Legations Maintained Abroad by the United States 
 Parcel Post Countries 
 Distances from New York to Principal Ports of the World
 
 XX CONTENTS 
 
 Page 
 Appendix C — Currency and Weight Equivalents .... 447 
 Foreign Currency Equivalents 
 Values of Foreign Coins 
 Conversion Tables 
 
 Appendix D — Suggestive Investigation Charts .... 453 
 Investigator's Instruction Sheets 
 Investigator's Analysis Sheet 
 Investigator's Summary of Analysis Sheet 
 Supplementary Topics for Investigation 
 
 Appendix E — Bibliography 463 
 
 Appendix F — Glossary 4^5
 
 Principles of Foreign Trade 
 
 PART I 
 GENERAL CONSIDERATIONS
 
 CHAPTER I 
 
 THE OPPORTUNITIES OF FOREIGN TRADE 
 
 Advantages of Foreign Trade 
 
 Why should any American manufacturer or producer, who 
 has a satisfactory business at home, enter the foreign field? 
 Even when he is convinced that foreign trade would be advan- 
 tageous, how shall he set about it and how can he avoid the 
 obstacles and overcome the handicaps that confront the stran- 
 ger in a strange land ? These questions this book purposes to 
 answer. 
 
 Foreign trade offers to the American producer an oppor- 
 tunity for greater profit, for greater independence, and for 
 greater service. The exporter who discovers and develops a 
 new market is as much a creator of wealth for himself and his 
 country as is the miner or the farmer. Nor do the advantages 
 cease with his increased income. His foreign trade will tend 
 to make him independent of domestic conditions. He can 
 weather a period of national financial depression without 
 reducing his force or curtailing his output. High wages may 
 continue and the cost of doing business may rise, but his 
 increased production to meet his foreign orders will keep down 
 the cost price of his goods. Here he will find a profitable 
 use for the new factories and machinery bequeathed him by 
 the war. Here is employment for his surplus labor and here 
 are real careers for those of his employees who can qualify. 
 Finally if he will properly equip himself, he will be in a posi- 
 tion to grasp the greatest opportunity that has ever been 
 offered the American trader. 
 
 Now, if ever, is the time to establish overseas a permanent 
 
 3
 
 4 GENERAL CONSIDERATIONS 
 
 market for American goods and to lay the foundations of a 
 trade that will give the United States the place among the 
 world's exporting nations to which it is entitled by reason of 
 its size and resources. The shelves of the world are empty. It 
 will be years before the nations of Europe will be able to pro- 
 vide for more than their own needs. It should be possible for 
 this country, if its business men utilize their opportunity, not 
 only to maintain the remarkable trade it has gained during the 
 war, but still further to develop and stabilize this avenue of 
 industry. Such a development would vastly increase the 
 national wealth. The task for a few years to come will be 
 comparatively easy, though sooner or later the American ex- 
 porter will find himself in competition with the world's best 
 international traders. Only if he will properly equip himself 
 can he then hold the position he has gained. 
 
 Requisites to Success 
 
 The price of success in the foreign field is most careful and 
 constructive preparation. Foreign trade is not adapted to get- 
 rich-quick methods. It has a technique of its own which must 
 be mastered. The trader must study his market. He must 
 build for the future. He must not treat his foreign depart- 
 ment as a dumping ground for what he cannot easily dispose 
 of at home. He must seek business intelligently, for no longer 
 does foreign trade come unsolicited. He must be ready to 
 make a substantial investment of time, money, and energy. 
 The results will amply justify the expenditure. 
 
 One of the American trader's chief requisites for success 
 is knowledge — specialized, expert knowledge. He needs no 
 less the establishment of direct selling facilities, only possible 
 to the average trader through co-operative effort. Above all 
 he needs the support of a strong, aggressive, organized, and 
 continued efi:ort for the sale of American goods abroad and 
 for the protection of commercial integrity in foreign lands.
 
 OPPORTUNITIES OF FOREIGN TRADE 5 
 
 When to these requisites is added a proper individual equip- 
 ment, the road to success is open. 
 
 Foreign Trade as a Career 
 
 It is not only to the capitalist and the established producer 
 that foreign trade presents its opportunities. To the young 
 man with health and ambition, energy and intelligence, if he is 
 foot-loose, if he has imagination, and above all, if he is touched 
 by the spirit of adventure, it offers a career whose attractions 
 are strong. The spirit which may have lured his grandfather 
 to ship before the mast, or his father to forsake the village 
 store for the life of the commercial traveler, beckons him to 
 a greater opportunity than they ever dreamed of. It is not 
 merely a chance to see the world and to earn a good living, but 
 a call to act as his country's emissary. The work of extending 
 America's market is a pioneer work worthy of compari- 
 son with that of the early pathfinders who extended her 
 boundaries. 
 
 The opportunities are not restricted to salesmanship. Many 
 a successful salesman returns to the office from which he 
 started, to fill one of the executive positions which are the big 
 prizes of the calling — big not only in their material rewards 
 but in the chance they offer him to do constructive work of a 
 high order both for his products and for the welfare of his 
 country. 
 
 The positions in the office of the foreign trader call for 
 trained men. Here the habitual job-hunter meets his Water- 
 loo. Mere willingness and general education are not sufficient. 
 Special training and technical knowledge are indispensable. 
 Vocational education for foreign trade is one of the great 
 needs of the moment. If without such training a young man 
 can secure a foothold in an export office he is indeed fortunate. 
 If he hopes to advance or even to remain, he will at once set 
 about the acquisition of the special knowledge that he needs.
 
 6 GENERAL CONSIDERATIONS 
 
 Here is a vocation that is not yet overcrowded. Here is a 
 real future for the man who will do his part. 
 
 Foreign Trade and National Welfare 
 
 Foreign trade has begun to be conscious of a new spirit. 
 The day of the individualist is waning. The interests of the 
 foreign trader are closely knit with those of his native land 
 and of the country with which he deals, and whether he is 
 conscious of it or not his activities have an important bearing 
 on their prosperity and welfare. The national advantages of 
 foreign trade may be summed up as follows: 
 
 1. Foreign trade stimulates national progress and steadies 
 
 prices. 
 
 2. It creates national wealth by widening the circle of 
 
 exchanges. 
 
 3. It brings about a better adjustment of the creative 
 
 forces of the nation. 
 
 4. It disposes of surplus products and gives employment 
 
 to surplus labor. 
 
 5. It offers a new field in which the country's capital may 
 
 replace itself with profit. 
 
 6. It improves the distribution as well as the production 
 
 of wealth. 
 
 7. It tends to reduce the cost of money and it improves 
 
 the national credit. 
 
 In a word, foreign trade is among the most powerful fac- 
 tors in creating and multiplying the wealth of the nation. 
 
 The New Spirit of Foreign Trade 
 
 It is in the exporter's attitude towards his foreign market 
 that the new spirit is most manifest. He not only regards him- 
 self as the custodian of his country's honor, but he has begun 
 to build for the future. He is no longer satisfied to grasp an
 
 OPPORTUNITIES OF FOREIGN TRADE 7 
 
 immediate profit and to seek pastures new. Today he is aim- 
 ing to lay the foundations of a permanent trade. He wants 
 the confidence of his market and he is seeking to cultivate it. 
 He realizes, finally, that the highest business ethics and good 
 business policy are as closely identified abroad as they are at 
 home. 
 
 The exporter who, while he piles up his profits, thinks and 
 speaks of himself as a missionary who is extending the fruits 
 of this country's civilization and who therefore should be con- 
 sidered a benefactor of mankind, may evoke a smile, never- 
 theless there is much to be said for his point of view. It may 
 be that he is raising the standard of living and of civilization 
 itself and is helping to equalize the chances of all peoples in 
 the pursuit of happiness. If the exporter really believes in his 
 products and is successful in introducing them among people 
 who but for him would never know them, the financial returns 
 may well be the lesser part of what he has brought about. 
 
 The new spirit of foreign trade is born of a consciousness 
 of the opportunity for service and of the responsibility which 
 it involves. The trader who seeks success today must de- 
 serve it.
 
 CHAPTER II 
 
 SIX FUNDAMENTALS OF FOREIGN TRADE 
 
 Fundamental Factors 
 
 There are six factors in foreign trade which may be consid- 
 ered as fundamental. They are: 
 
 1. Capital 
 
 2. Information 
 
 3. Method of distribution 
 
 4. Organization 
 
 5. Terms of sale 
 
 6. General policies 
 
 Capital 
 
 Capital must be considered first, for on the amount of 
 capital the exporter has at his disposal will depend the char- 
 acter of the other factors. Large capital is not always neces- 
 sary. If he is satisfied to grow slowly, but little if any addi- 
 tional capital is needed to start. When more rapid progress 
 is desired a few thousand dollars will often suffice when the 
 exporter does not depend entirely on his export business for his 
 maintenance. Generally speaking, however, unless he is pre- 
 pared to make a substantial outlay for the development of the 
 business, it would be better not to enter the field. 
 
 Information 
 
 The amount of information necessary for an exporter de- 
 pends entirely on the other factors. If the exporter is satisfied 
 with the occasional order through a commission house which 
 the casual advertisement in an export paper may bring, exten- 
 
 8
 
 SIX FUNDAMENTALS OF FOREIGN TRADE 9 
 
 sive information is superfluous. But if direct trade is con- 
 templated, with a special organization to conduct it, all the 
 information available become? an absolute necessity. In the 
 chapters which follow the kinds of information needed and 
 the ways in which it may be acquired will be fully discussed. 
 
 Method of Distribution 
 
 There are, six general methods or channels of distribution: 
 
 1. Export houses (merchant and commission) 
 
 2. Mail order 
 
 3. Travelers 
 
 4. Local agents abroad 
 
 5. Branch office or special organization or arrangement 
 
 abroad 
 
 6. Co-operation 
 
 The choice of the method depends on what the exporter 
 aims to accomplish, on the amount of capital at his disposal, 
 the kind of merchandise he handles, and many similar factors. 
 Usually more than one and sometimes all of these six methods 
 of distribution are adopted simultaneously. 
 
 If the would-be exporter is merely experimenting or mak- 
 ing the preliminary moves, he may choose to solicit orders 
 from a local export house. He may also use an occasional ad- 
 vertisement in an export paper, at the same time corresponding 
 with foreign buyers and ^agents. Little outlay is required for 
 such a procedure, but the results are extremely slow and 
 uncertain. This course is wise in case a manufacturer wishes 
 to dispose of a small production which he fears home markets 
 will not absorb. It is wise if he wishes merely to develop 
 inquiries from abroad and to establish foreign connections 
 slowly and at little expense. But he should not expect large 
 results from this method or become discouraged if the process 
 is much slower than he originally anticipated. This method
 
 lO GENERAL CONSIDERATIONS 
 
 has been pursued by most of the manufacturers in this country 
 who are engaged in exporting — which in a measure explains 
 why our direct export trade has not been larger. 
 
 At the same time it must be remembered that cautious pro- 
 cedure is much more desirable than that of the man who tries 
 to do too much with too little — too little knowledge, too little 
 capital, and too little organization. Such a man usually 
 attempts to sell through commission houses, mail orders, trav- 
 elers and local importers, or agents abroad — through nearly all 
 the principal channels of trade, without first studying the re- 
 quirements. He soon comes to the conclusion that the game is 
 not worth the candle ; he finds the expenditures altogether out 
 of proportion to the profits and he concludes that there is 
 nothing in the export trade. There will never be anything in 
 export trade for men who aim to do business in a rush and 
 attempt everything without first testing anything. 
 
 The only wise courses to pursue are either to enter export- 
 ing with thorough equipment, or to begin on the very small 
 scale indicated in the first instance. Should the first method 
 be selected the exporter will need sufficient capital, complete 
 knowledge of the field, the establishment in foreign countries 
 of branch offices, agencies, or subsidiary organizations, the 
 adoption of proper terms of sale, and the formulation of poli- 
 cies that will stand the test of time. 
 
 If the resources of the concern are not large enough to 
 enable it to stand alone, co-operation should be sought with 
 other exporters in similar or non-competing lines with a view 
 to a joint investigation and exploitation of the field by means 
 of the combined resources in distribution, advertising, selling, 
 and branch office administration. 
 
 Organization 
 
 In direct exporting the manner of developing and handling 
 business is important. The type of organization must vary
 
 SIX FUNDAMENTALS OF FOREIGN TRADE il 
 
 with conditions. Very frequently the formation of a separate 
 company is the most practical way of promoting export busi- 
 ness. The new organization may be an allied company, a 
 joint selling company, an independent company, or any type 
 of combination permitted under the Webb Law. 
 
 In the case of the allied company, the name of the parent 
 house may be used for the company which is organized abroad 
 to handle the trade in the particular territory. Such company 
 may or may not be controlled by the producing concern and 
 the whole risk of selling for export in a particular territory is 
 frequently assumed by the allied organization. It is a matter 
 of business and legal detail to decide whether or not in a given 
 case the formation of an allied company is best and to what 
 extent independent or exclusive rights should be granted it. 
 
 A joint selling company, such as the United States Steel 
 Products Company, can be said to be merely an export depart- 
 ment acting as a separate sales organization for a number of 
 competing manufacturers. The advantages of such an organ- 
 ization in selling the products of a number of producers are 
 manifold. It usually buys goods from the concern or asso- 
 ciated concerns for which it is acting at prices allotted in 
 advance or during the year, with a periodic settlement of 
 accounts according to previously arranged plans. 
 
 An independent company organized for export may take 
 numerous forms — it may be essentially a commission house or 
 an agency handling the products of different manufacturers, as 
 in the case of the North American Copper Company; it may 
 be a co-operative company representing various manufacturers 
 in non-competitive lines in foreign markets, as the National 
 Paper and Type Company ; it may act as a selling agent for a 
 company made up of allied manufacturers, as is the case of the 
 American International Corporation in connection with the 
 Allied Machinery Company of America. Further discussion 
 of this subject appears in Chapter XIX.
 
 12 GENERAL CONSIDERATIONS 
 
 The type of export organization to be created or adopted 
 will naturally depend upon the nature of the product, the 
 financial resources of the manufacturer, the condition of the 
 markets, and the general financial situation throughout the 
 world. For a small concern entering the export field, even the 
 creation of a separate sales organization is usually unneces- 
 sary. The foreign department of a large company should be 
 fitted to transact every kind of export business for foreign 
 countries. A large concern would not think of giving up 
 indefinitely its selling rights to a separate organization, but 
 would devise a flexible plan adaptable to the varying conditions 
 under which the particular product has to be handled abroad. 
 The laws of the country where export business is to be trans- 
 acted will have much to do with determining the plans for a 
 separate selling organization abroad. 
 
 The Terms of Sale 
 
 The terms of sale constitute a very important point in 
 connection with foreign trade. No other question so interests 
 the foreign purchaser. His first demand in every market will 
 be for long-time credits, and the American exporter must be 
 prepared for it. The bulk of our foreign trade is at present 
 conducted on what is practically a cash basis, the commonest 
 form of payment being the bank acceptance. Of late a revival 
 of the trade acceptance has had its enthusiastic supporters. 
 The details of the operation of these methods of financing 
 foreign trade need not concern the reader at this point. Suffice 
 it to say here that from the buyer's viewpoint they offer all 
 the time recjuired for payment, while to the seller they mean 
 cash as soon as the goods are placed on the vessel. 
 
 One of the chief elements of success in export trade is for 
 the seller to discover a way of giving credit to his customers or 
 to some of his customers without being himself the sufferer, 
 for credit has been in the past and will be increasingly in the
 
 SIX FUNDAAIENTALS OF FOREIGN TRADE 13 
 
 future, a leading factor in overcoming competition and in 
 extending trade. To that end the seller should, through the 
 agency of his bank, arrange for the acceptance of his draft by 
 the buyer, the bank meanwhile advancing the greater part of 
 the value of the shipment on the security of the documents 
 w^hich give title to the goods. 
 
 Certain specific methods will be discussed later. In the 
 meantime it seems self-evident tliat so long as European ex- 
 porters continue to grant the more attractive credits the 
 American exporter faces a disadvantage, unless he is able to 
 outsell his European competitor through the superiority of his 
 product, or the efficiency of his service. 
 
 Miscellaneous Export Policies 
 
 Next in importance to the credit policy comes the deter- 
 mination of the quality of the article sold and the margin of 
 profit to be earned. The greater the margin of profit the 
 greater may be the extension of credit and the selling expendi- 
 tures. In fixing the selling price abroad the exporter should 
 be governed as much by local conditions as by his previous 
 experience in the domestic field. Whether his price be higher 
 or lower than at home, his margin of profit should be large 
 enough to permit of its reduction under the stress of foreign 
 competition. 
 
 If the goods have been manufactured for export and with 
 a view to the requirements of each market, they will generally 
 stand an increase in the margin of profit over and above the 
 normal. For it must never be forgotten that next to extended 
 credit what the foreign buyer wants from the exporter is 
 quality, and the concern which happily combines these two 
 finally determining factors is on the way to certain success. 
 
 There are other policies less fundamental but sometimes no 
 less vital, the most important of which will be discussed later. 
 The proper methods of choosing and training men for foreign
 
 I^ GENERAL CONSIDERATIONS 
 
 service, the methods of packing and shipping merchandise, the 
 wrapping of packages for display, etc., the rehabihty of the 
 exported article, the rate of discount for cash, the expense and 
 the methods of selling — all these are determining factors in 
 the policies of the exporting concern.
 
 CHAPTER III 
 
 FOREIGN TRADE STRATEGY AND ITS 
 ESSENTIALS 
 
 Strategy in Foreign Trade 
 
 Recent events have demonstrated that war may be a busi- 
 ness, and there is much in business which resembles war. 
 Every business campaign to be sound, should, like a military 
 campaign, be based on strategy. That is the most vital prin- 
 ciple in war and business alike. But although to a military 
 man the word strategy has a world of meaning, to a man of 
 affairs it is still vague and uncertain. He grasps its full sig- 
 nificance only after he has resolved a proposition into its 
 component parts. 
 
 Military strategy is the art by which Scipio conquered 
 Carthage, Caesar Gaul, and Napoleon the greater part of 
 Europe. It is the science of military movements in the game 
 of war, and not the mere theory of the scholar, nor the inspira- 
 tion of genius. To be scientific, strategy must be based on 
 exact knowledge, systematized and brought to a perfect focus. 
 In business, strategy is the art of commercial conquest. It is 
 the science of mercantile operations, by virtue of which Rocke- 
 feller extended his commercial organization throughout the 
 world. It is the science by which the modern captains of 
 finance and industry everywhere have accumulated their untold 
 milUons. 
 
 Commercial strategy is based upon the knowledge of the 
 factors which underly mercantile and financial movements 
 directed toward overcoming competition and extending opera- 
 tions to their utmost capacity. In foreign trade, strategy is by 
 
 15
 
 l6 GENERAL CONSIDERATIONS 
 
 far a more difficult and more complicated affair than it is in 
 domestic trade, just as the knowledge upon which it is based is 
 more intricate and less easy to acquire. In domestic trade, 
 instinct is of itself a kind of knowledge. Most people acquire 
 a sense for the right action almost automatically, through long 
 association with men and affairs and through the influence of 
 environment. One needs only to be born and bred in the 
 United States and to have an ordinary education and common 
 sense to be a fair judge of his countrymen and to understand 
 their customs, their tastes, and their manner of doing business. 
 Even the knowledge of the laws of the country is acquired 
 v^ithout perceptible effort through environment — through the 
 ordinary intercourse and reading of daily life. 
 
 Definite Study Essential 
 
 But instinct helps little in foreign trade. There one must 
 learn the character of the people, their ways, their business 
 methods, and other fixed conditions prevailing in a given coun- 
 try through patient study and observation on the ground. 
 Without this knowledge the trader may encounter difficulties 
 which will prove disastrous to his venture. The amount of 
 knowledge requisite to a well-directed effort in a foreign field 
 seems to bewilder and frighten many a manufacturer. This to 
 some extent accounts for the fact that so many American 
 producers, instead of handling their export business them- 
 selves, leave it entirely to the care of commission houses. 
 
 After all, when the intricacies are fully considered, the 
 knowledge necessary to the successful conduct of foreign trade 
 is no more impossible to gain than the knowledge of many 
 other phases of business activity, only requiring systematic, 
 intelligent endeavor. It is not the object here to teach business 
 strategy in international trade, but merely to point out the 
 essentials in the store of information which must be acquired 
 before one can qualify as a strategist in that field.
 
 FOREIGN TRADE STRATEGY 1 7 
 
 The Collection of Information 
 
 In one sense strategy is a deduction. There must be definite 
 data in hand from which the deductions may proceed. The 
 first step toward the acquisition of strategic information is to 
 find out what data are essential and through what channels 
 such data may best be obtained. 
 
 There are, of course, in every country various sources of 
 trade information, such as governmental bureaus, banks, and 
 trade associations, which will be more fully discussed in the 
 next chapter. Volumes upon volumes of material have been 
 gathered by consuls and representatives of private concerns in 
 all parts of the world. The reader must be able to discrim- 
 mate, however, otherwise years of study and research would 
 be only so much waste of time. 
 
 Investigation on the Spot 
 
 An international trader should take as his fundamental 
 maxim, that the most valuable information is that which is 
 acquired on the ground and personally by one who will par- 
 ticipate in the planning of a selling campaign in a given coun- 
 try or market. The information acquired at home and all 
 other second-hand information is of less value and most help- 
 ful to the extent that it facilitates personal research. The 
 study of actual cases has fully demonstrated that the concerns 
 which have made a success in foreign ventures have acted 
 upon this principle, and that those which failed have relied 
 wholly on second-hand information. 
 
 While the information collected on the ground concerning 
 demand and supply and the structure and psychology of the 
 market shows the immediate trade status, it should be sup- 
 ported by wider study both of the foreign country itself and of 
 its relations with the United States. A physical examination 
 of the human body shows the present state of a man's health, 
 but it does not indicate whether it is likely to improve or grow
 
 l8 GENERAL CONSIDERATIONS 
 
 worse. To determine that one should know the man's mode 
 of living, his occupation and habits, and his history, personal 
 and ancestral. So it is with a market. Knowledge of tli« pres- 
 ent status gives no certain indication of the future. Some 
 attention must be given to the study of the political, govern- 
 mental, and legal status of the country under investigation, of 
 its history and economic conditions, and possibly of the struc- 
 ture of its society. 
 
 The details to be mastered will vary with each case and the 
 man who knows his own business must be his own final judge 
 of what to learn and what to pass by. But it is always well for 
 him to know the nature of the relationship between the foreign 
 country and his own. Diplomacy nowadays is a part of inter- 
 national trade strategy, covering the action of parliaments, the 
 policies of governments, and the fortunes of war. 
 
 The trade of the world in the future will be far more 
 active than ever before, the attack upon new fields will be 
 sharper, fiercer, more international, and more overwhelming. 
 This fact, with the continually changing conditions, makes it 
 impossible to place complete reliance on any but the most 
 recent records which have been prepared for a given market, 
 however useful other information may be as indicating approx- 
 imate conditions. 
 
 What May Be Learned at Home 
 
 Nevertheless, a theoretical knowledge of foreign trade 
 should be acquired first through home study. The main facts 
 of demand and supply, and of all the necessary conditions and 
 requirements of trade in a given market can thus be learned. 
 If the interests involved are large the trader should visit the 
 country with which trade is contemplated and make an actual 
 survey of the market by personal observation, applying and 
 confirming second-hand knowledge derived from books, jour- 
 nals, reports, papers, and correspondence. Then and not till
 
 FOREIGN TRADE STRATEGY 19 
 
 then is he ready to draw final phins for a commercial campaign. 
 
 Strategic information of primary importance is the knowl- 
 edge of demand and supply — their sources and extent with 
 reference to a given product in a given country. A man does 
 not look for bread in a desert, nor will he try to sell his wares 
 either in a country which has no need for them, or in one in 
 which the markets are overstocked with similar lines. But that 
 is not all. Scientific direction of business in any territory 
 requires familiarity with the nature and quality of the goods 
 to be sold, their possible uses, the prevailing prices, extent of 
 existing competition, and whether or not the demand is actual, 
 real, and permanent. Such data as well as the knowledge of 
 the people, their tastes, habits, and business methods can best 
 be learned through personal observation. 
 
 Supply and price are by no means all that control trade in 
 any country, for the state of mind of the people is quite as 
 important an item. 
 
 Study of the Psychology and the Structure of the Market 
 
 The study of the psychology and the structure of the mar- 
 ket is, therefore, important, for it should be remembered that 
 every market has its peculiar structure and its distinct psycho- 
 logical aspects. Every nation, nay every city, has its collective 
 soul, or atmosphere, and so every market has its distinctive 
 characteristics. 
 
 A market, after all, is the manifestation of the feelings, 
 desires, and the material aspirations of the people. Its condi- 
 tion reflects the conditions which prevail among them. Find 
 the measure of the market and there will be found the measure 
 of the people that make it what it is, and conversely. The 
 structure of the market is more apparent after one has exam- 
 ined the methods of distribution, the mercantile systems exist- 
 ing in a particular territory, and the commercial laws and cus- 
 toms upon which they are founded. The observer learns by
 
 20 GENERAL CONSIDERATIONS 
 
 comparison. Knowing the commercial methods and the struc- 
 ture of the domestic market in his own pecuHar line, if he is 
 a keen observer, he will quickly note the differences in the 
 foreign market. In the same way, he grasps the financial situa- 
 tion. Once the conditions of demand and supply and the 
 structure and psychology of the market are ascertained, other 
 knowledge comes naturally and as a matter of course. 
 
 Charting the Results of Investigation 
 
 After the prospective trader has completed each detail of 
 his survey on the ground, the results of his investigation should 
 be reduced to writing. At the conclusion of the trip these data 
 should be carefully classified, digested, and embodied in a 
 chart. This chart becomes the war map of the foreign trade 
 strategist, or of the strategic board that is to sit in judgment 
 upon the accumulated data, and formulate conclusions as to 
 the advisability of a campaign, and of its nature and extent in 
 a given territory. (See "Investigator's Summary of Analysis 
 Sheet" in Appendix D.) 
 
 One may feel that it is not an easy thing for a stranger to 
 obtain information in a strange land and may be uncertain as 
 to how to proceed. The difficulties of m.aking such investi- 
 gations are not, after all, so much greater than they are at 
 home except that the process usually takes a little longer. 
 The channels are the same, and abroad one may have in addi- 
 tion the assistance of the diplomatic, consular, and trade 
 representatives of his own country. All these are at the serv- 
 ice of the trader, or, if he cannot or does not care to go abroad 
 himself, of his representative. 
 
 To get in touch with the market, to examine the Mnes of 
 current merchandise, and to study the methods of competition 
 at close range are alone w^orth the cost of the trip. A better 
 knowledge and grasp of actual conditions can be obtained by 
 personal observation in a week than can ever be learned at
 
 FOREIGN TRADE STRATEGY 21 
 
 home. Besides, why place the cart before the horse? If the 
 entrance into the market is desirable, someone must go there to 
 sell, if selhng is to be direct; why not let him first investigate? 
 
 The Formulation of Plans 
 
 Not many American business houses have as yet developed 
 in their organizations anything like a board of strategy, nor 
 can it be said even yet that trade strategy is a generally ac- 
 cepted factor in the conduct of business. The tendency, how- 
 ever, in large business undertakings is manifestly in this direc- 
 tion. In nearly every organization there is some individual 
 or group concerned with the deliberate planning of the selling 
 campaigns and in superintending their execution. 
 
 In recent years advertising agencies in the United States 
 have gradually developed into just such strategic boards for 
 planning and conducting selling campaigns. Some of these 
 agencies have their own strategic organizations; others advise 
 their clients how to proceed in the development of their trade — 
 chiefly domestic trade — very much on the lines indicated here. 
 They are acting upon the theory that modern merchandising 
 or scientific selling calls for carefully organized research into 
 trade conditions — for analysis of markets, study of the con- 
 sumer, and development of the technique of trade. It is 
 always wisest to start on a foreign trade reconnoltering expe- 
 dition with a definite written plan as to the information to be 
 obtained, what is to be studied, and how to proceed. (See 
 Appendix D for "Investigator's Instruction Sheet" and "In- 
 vestigator's Analysis Sheet.") 
 
 The chief work of the strategist comes after all this. 
 When he has gathered his necessary information he decides 
 upon the nature of his campaign, devises selling methods, pre- 
 pares the plan of sales, selects representatives, creates a sales 
 organization, and does all that is necessary to the successful 
 conduct of business in a particular country. If the strategic
 
 22 GENERAL CONSIDERATIONS 
 
 knowledge has been wisely obtained, the plans carefully drawn 
 and carried out, and the market conditions are favorable, then 
 all the elements of success are present. 
 
 Recapitulation 
 
 In the succeeding chapters the principal lines which every 
 strategic investigation in foreign markets should follow will 
 be considered separately and in some detail. But before 
 ending this chapter the following points should be emphasized. 
 
 Essentially there is no difference between domestic and 
 foreign trade. The basic principles remain the same whether 
 the commerce is between people of the same country or of 
 different hemispheres. The differences between the two kinds 
 of trade are differences of detail. In overseas trade the details 
 are naturally more complicated and less easy to master. 
 
 The most up-to-date methods of trade-preparedness study, 
 and of the investigation and planning which form the basis 
 of domestic business campaigns, should be adopted in foreign 
 trade. This study will include a complete understanding of 
 the supply and the demand for the product the exporter is to 
 offer, and of the structure and psychology of the market in 
 which it is to be pushed. The plan should be formulated with 
 scientific exactness and cover the following steps: 
 
 1. A preliminary home study of the contemplated market. 
 
 2. A written plan of investigation to be conducted at 
 
 first hand, if possible. 
 
 3. A compilation of the data thus obtained, digested, 
 
 classified, systematized, and embodied in a chart. 
 
 4. A written plan of the campaign to be based firmly on 
 
 these data and to be carried out with vigor and with 
 painstaking precision. 
 
 When this has been done the trader may feel that he has 
 made a truly adequate preliminary preparation for his task.
 
 CHAPTER IV 
 SOURCES OF FOREIGN TRADE INFORMATION 
 
 Statistical Information 
 
 Statistical information may be governmental or private. 
 Governmental statistics are gathered by nearly every country 
 and cover almost everything. An important part of every gov- 
 ernment's statistical data is that which is drawn from or con- 
 cerns foreign trade. 
 
 Defects of Governmental Statistics 
 
 Such data, however, to be really useful, should be properly 
 compiled and classified. In some countries more attention is 
 paid to this very essential point than in others. Unfortunately, 
 in many instances the greater stress is laid on the accumulation 
 of a mass of facts; hence the student of the world's trade is 
 frequently obliged to classify and digest such statistical in- 
 formation as he may obtain on the subject which interests him. 
 If, instead, ways and means were devised for the organization 
 and compilation of the material gathered — for placing it in 
 such form as to be easily accessible to all who are interested 
 in any line of investigation — its sphere of usefulness would be 
 greatly increased and the ends' of science better served. This 
 work is in itself a science. No great skill is necessary to com- 
 pile the figures obtained at a custom house, but it takes a great 
 deal of skill and originality to place each item where it belongs 
 and so to arrange the data that they touch every pursuit and 
 fill every requirement. On the whole, the government's sta- 
 tistical information is usually defective, because it embraces 
 too large a field and for the most part is too general. 
 
 23
 
 24 GENERAL CONSIDERATIONS 
 
 But one has to avail oneself of governmental statistics 
 when necessity arises, whether they are defective or not. The 
 statistical annals of foreign governments should be consulted 
 when those of one's own government fail to satisfy the par- 
 ticular inquiry. For a comparative statement of imports and 
 exports of every country the writer has found the British 
 Abridged Annual very convenient. 
 
 When complicated information is sought an expert should 
 usually be employed to search out the information concealed 
 in the maze of figures. Large concerns have their own statis- 
 tical departments, and a number of private firms make it their 
 business to supply statistical information. All of these people, 
 however, have to depend largely on governmental sources, and 
 the chief value of these works lies in the arrangement of mate- 
 rial and in its presentation in such form as to make it available 
 to the average business man. 
 
 Miscellaneous Sources of Information 
 
 To the miscellaneous sources of information belong consu- 
 lar reports and other governmental publications on the subject 
 of foreign trade, current discussions at conferences of export- 
 ers and trade associations, the articles in the trade journals, 
 and the information disseminated by the chambers of 
 commerce, boards of trade, and various foreign trade organi- 
 zations. 
 
 Consular Information 
 
 Consular information is not only useful, but indispensable. 
 It is unfortunate that manufacturers and exporters are not apt 
 to think of governmental assistance until they are in trouble, 
 and when not the preventive but the cure is required. Still, it 
 is a well-known fact that the government bureaus are not so 
 efficient an instrumentality for good as they might be expected 
 to be. They are often slow and unprogressive. In the United
 
 SOURCES OF INFORMATION 25 
 
 States many special reports published by the Department of 
 Commerce are too antiquated to be useful. 
 
 Trade Discussions 
 
 Every year discussions of special topics are held at various 
 trade meetings throughout the country, which are published 
 for the most part either in special reports or in the trade 
 papers. The trade papers print also from time to time the 
 experiences of traveling men and the opinions of professional 
 writers. It cannot be said, however, that these sources of 
 foreign trade information have yet reached in every case the 
 stage where it would pay a busy man to spend much time in 
 studying them. 
 
 Special trade information, such as is gathered and dis- 
 seminated by trade associations — for instance, the Automobile 
 Manufacturers' Association — is exceedingly valuable if prop- 
 erly organized. This is really the best method for the acquisi- 
 tion of special knowledge. It is a pity that such associations 
 do not pay more attention to this particular line of work. 
 
 Governmental Trade Investigation 
 
 In the preceding chapter stress was laid upon the value of 
 first-hand trade infonnation. The securing of such informa- 
 tion necessitates a personal trip into the country under investi- 
 gation. On account of the large expense involved such a trip 
 is oftentimes impossible. The government, realizing the hand- 
 icap upon smaller manufacturers who are ambitious for for- 
 eign trade, is sending out special investigators into various 
 countries to study and report on trade conditions. Each of 
 these representatives is empowered to carry on an investiga- 
 tion in some specific line, such as hardware or automobiles. 
 
 While this is an excellent idea, such an investigation usually 
 covers so large a field and takes so long a time that when it 
 is completed and published many of its points are out of date
 
 26 GENERAL CONSIDERATIONS 
 
 and consequently are not only useless but misleading. Then 
 again, the investigators are not always particularly well quali- 
 fied and trained. But perhaps the most important objection of 
 all to their employment is the fact that since their work is 
 limited to investigation, they have no such special interest in 
 the subject as would be the case if they had any hope of 
 advancement, of larger earnings, or of permanent employ- 
 ment. Notwithstanding all this, their reports are of great 
 value in promoting American commerce abroad. 
 
 Trade Representatives' Investigations 
 
 Perhaps of still greater value would be the reports of an 
 investigation in a foreign country based on the requirements 
 of a particular trade and furnished by a representative of a 
 trade association in a particular line. The result would be 
 more gratifying to the individual manufacturer for the reason 
 that such an investigation could be conducted primarily along 
 the lines which would be of special interest to the majority of 
 the members or to an export combination which might be 
 forming. In any event, neither the government's investigation 
 nor that of a trade association representative can be considered 
 by a conservatively managed concern as anything but a pre- 
 liminary to its own final and thorough survey of the field. Of 
 course, when a number of concerns enter into an export agree- 
 ment for the creation of a joint sales organization, their study 
 of the market by their own representative ought be deemed 
 sufficient and his reports final. 
 
 Miscellaneous Printed Matter 
 
 Of value are the works on political economy, and the 
 essays of private investigators upon different aspects of the 
 world's commerce. The trouble with such data is that they too 
 quickly get out of tune with the times. Commercial progress 
 marches rapidly and such information cannot be of much value
 
 SOURCES OF INFORMATION 27 
 
 if it is more than a year old. Some of these works are useful 
 as giving a general idea of foreign trade, but for practical 
 purposes, to the man who wishes to learn the game of inter- 
 national trade quickly and without waste of time, this source 
 is of moderate value only. 
 
 Sources of information of this sort which have been found 
 to be of real value are the almanacs and year-books of the 
 different countries, and commercial and geographic atlases. 
 
 Original Information 
 
 Original information is the data one secures for oneself 
 on the ground. This first-hand knowledge is the most valuable 
 of all. It should, of course, be strictly up to date^ — the very 
 latest news which is obtainable in the world of trade relating 
 to the line being handled. To accumulate a large volume of 
 knowledge from personal observation and investigation, the 
 investigator must not only have the opportunity but ability and 
 special qualifications as well. 
 
 This kind of information must be secured directly from the 
 people who are in possession of the facts, and if it is to be of 
 greatest value the investigator must be expert In the subject he 
 is investigating. 
 
 The available sources of foreign trade information are: 
 
 1. Consular and diplomatic officers and commercial at- 
 
 taches of the home government in a given countrv. 
 
 2. The local governmental channels of the country under 
 
 investigation. 
 
 3. Manufacturing, financial, and mercantile organiza- 
 
 tions and concerns, such as boards of trade, infor- 
 mation bureaus, banks, and the opinions of the fore- 
 most Importers in a given line. 
 
 4. Special trade channels. If one Is In the steel business 
 
 his special channels of Information would be all the 
 avenues of the steel trade. These channels would
 
 28 GENERAL CONSIDERATIONS 
 
 Include the manufacturers and traders In steel and 
 their trade and commercial associations. 
 
 The first two of the above sources are in some cases 
 of but little informative value, and especially when extensive 
 preliminary information has been secured at home. Even if 
 they are not available as sources of information they are fre- 
 cjuently capable of giving most valuable assistance in the way 
 of advice and introductions. 
 
 In the last analysis no investigation, no matter how thor- 
 ough, should be considered as all-sufficing because commercial 
 life is not stationary but is continually changing. The wisest 
 thing for an up-to-date, progressive house to do is to keep 
 someone permanently on the ground who can be in constant 
 touch with the ever-fluctuating trend of events in the world 
 of commerce. Above all, there should be a concrete and 
 definite plan of procedure and a clear idea of the knowledge 
 desired before any investigation is begun.
 
 CHAPTER V 
 
 DEMAND AND SUPPLY IN THE FOREIGN MARKET 
 
 The Principles of Demand 
 
 The investigator in the foreign field need not delve very 
 deeply into the philosophy of demand. The word has many 
 implications and its meaning to the psychologist is vastly dif- 
 ferent from the political economist's conception. From what- 
 ever point of view it is considered, however, demand always 
 implies two factors — the desire to possess and the means of 
 purchase. Beyond this, generalization is dangerous. 
 
 Every commodity has its own laws of demand and every 
 market has its own peculiarities. The investigator who is in- 
 terested in a particular product must study the reaction thereto 
 of each individual market. Nevertheless, his determination of 
 the extent and character of the demand will be greatly facili- 
 tated if he constantly bears in mind certain elementary prin- 
 ciples which are universal in their application. These may 
 be stated briefly as follows: 
 
 1. The demand for a given product rises or falls with 
 
 every rise or fall in price. 
 
 2. When a market demands a certain commodity at any 
 
 price, the price is determined by the competition of 
 the sellers. 
 
 3. With every reduction of price more will be demanded 
 
 and less offered, so that too low a price ultimately 
 creates an unsatisfied demand. 
 
 4. In the case of great international staples, price is con- 
 
 trolled by the demand and supply in the world's 
 markets. 
 
 29
 
 so 
 
 GENERAL CONSIDERATIONS 
 
 5. Demand indicates the degree of the utiHty of the 
 
 product, and a scale showing the demand for a 
 given commodity indicates its present status. 
 
 6. Demand may be elastic or inelastic, immediate or de- 
 
 ferred, and its status is governed by the social, 
 economic, political, and business conditions prevail- 
 ing in the given market. 
 In selecting a market the safest rule to observe is to enter 
 only those markets where the demand for a particular product 
 is already established and clearly defined, so that both its 
 extent and quality can be determined in advance. If no 
 immediate demand is apparent the conditions of the country 
 must be carefully studied to see whether a desire for the 
 product can be fostered or created, and whether it is worth 
 the time and the expense. The experience of the past shows 
 that concerns have often sustained financial losses by venturing 
 into a market where no adequate demand could be created. An 
 illustration of this point is the experience of a large concern 
 which went to Central America to sell an ordinary cooking 
 stove used in northern countries. After a very large expendi- 
 ture of money, the concern discovered that, owing to the 
 climatic conditions, the people would not buy the new stove. 
 The ill-judged effort to sell an utterly inappropriate article 
 was entirely wasted. 
 
 Tests of Demand 
 
 Correct strategy requires that before venturing into a for- 
 eign market, the exporter should not only be certain that his 
 preliminary information indicates a well-defined demand for 
 his product, but that he knows with accuracy the nature, qual- 
 ity, and extent of that demand. There are two tests, one 
 quantitative and the other qualitative, which if made on the 
 basis of correct statistical information will give him these 
 facts.
 
 DEMAND AND SUPPLY 31 
 
 Quantitative Tests 
 
 The quantitative test may be stated thus: The total amount 
 of domestic manufacture, pkis the total amount of importa- 
 tion, minus the total amount of exportation of a particular 
 product, will show the status of the demand in a given country 
 for that product. 
 
 The amount of a country's importation is not alone neces- 
 sarily the measure of its domestic requirements. England, 
 Germany, and other countries imported annually immense 
 quantities of merchandise which they never used in their own 
 country, buying for export only. They were the great inter- 
 national buyers and distributers for the markets of the world 
 Goods are often listed as coming from a certain country, when, 
 in truth, they only come through that country. For instance, 
 most of the American goods sold in Russia, up to the time 
 of the European War, were imported through Germany and 
 listed in Russia as German goods. 
 
 Qualitative Tests 
 
 To know the extent of a demand for a product in a given 
 country is not of itself sufficient; the nature and quahty of 
 the demand must also be determined. It is not enough to 
 know that Russia uses annually a certain number of automo- 
 biles. It is essential that the different qualities used and the 
 approximate amount of each quality should be learned. To 
 this end the following qualitative test may be employed: 
 Ascertain the amount of domestic output in each different 
 grade of goods, then add to each grade the amount of impor- 
 tation of a similar grade, and finally subtract from the totals 
 of each grade the amount of similar quality that is exported. 
 The result will show the different qualities of demand and the 
 extent of each quality. 
 
 It must be remembered that inasmuch as statistical data
 
 32 
 
 GENERAL CONSIDERATIONS 
 
 are often incorrect such tests are never conclusive. It is only 
 when they are supplemented by a personal investigation that 
 the extent and quality of the demand may be truly appraised. 
 In no country is the desire for a given product evenly dis- 
 tributed. The exporter should determine in each case the 
 quantity and quality of the demand for his product in a 
 particular locality, with a view to preparing a comparative 
 statement of the conditions obtaining in a given market. Until 
 this is done one is not ready to inquire into the reasons for 
 any phenomena in the nature of demand. If it is known that 
 one locality, with a population three times as large as another 
 locality, uses only one-fifth as much of a certain article, there 
 must be a reason. Such discoveries lead to a study of condi- 
 tions which should enable the trader to determ.ine whether or 
 not there is any deferred or potential demand, and whether 
 it is elastic or inelastic. 
 
 Potential Demand 
 
 The existence of a strong potential demand may change 
 the whole policy of a prospective exporter in regard to a 
 particular market. Both the immediate and the deferred 
 demand for a commodity are affected by local conditions. A 
 slight change in conditions may result in greater quantities 
 being required at a higher price or less at a lower price. There 
 are as many degrees of elasticity as there are variations in 
 human wants or in the ability of men to satisfy these wants. 
 If the demand is inelastic, it may be destroyed completely by 
 any marked increase of price. Thus a definite knowledge of 
 the possibilities of extending the demand for a product in a 
 particular market is not only desirable but often indispensable, 
 especially when extensive advertising is contemplated. 
 
 In some cases it is easy to determine the potential, deferred, 
 or probable demand. For example, it is obvious that after 
 a war which destroys railroads, bridges, buildings, and even
 
 DEMAND AND SUPPLY 33 
 
 entire cities, great quantities of Imilding material will im- 
 mediately be required. Also, through the great European War 
 people have learned the value of auto-trucks, and it is reason- 
 ably certain that there will now be an increased demand for 
 these vehicles, and a corresponding increase of the second- 
 hand supply. 
 
 As a rule, however, it is a difficult matter to estimate 
 potential demand or to invent new wants and habits for a 
 people. In backward and undeveloped countries a necessary 
 preliminary to the stimulation of demand is the awakening of 
 wants and desires that are dormant for the time being. In 
 developed countries there is much of the force of habit in con- 
 sumption, and as very few producers are capable of invention, 
 the problem of creating a demand is never an easy one. A 
 good illustration of an artificially created demand is that for 
 Postum, Grape Nuts, and other similar products. Mr. Post 
 happened to observe that the American people are subject to 
 nerve and stomach troubles and turn readily to such food 
 substitutes in the hope of improving their health. 
 
 In estimating a potential demand each case must be studied 
 carefully on its merits. There must be differentiation between 
 an absolutely new demand and the extension of an old demand, 
 although the word "potential" may be used in both cases. 
 Different methods must usually be employed in each case. 
 
 How to Study Demand 
 
 To enter a foreign market upon a large scale without a 
 thorough study of the demand is like embarking upon an ocean 
 voyage without providing oneself with a compass. Many con- 
 cerns — it would be surprising to know^ how many — have done 
 this foolish thing and failed to accomplish their purpose. The 
 investigation should proceed along the following lines: 
 
 I. Find out the law of demand for a product in a particu- 
 lar market from the aspects of that market.
 
 34 GENERAL CONSIDERATIONS 
 
 2. Determine the quantity of the demand by means of the 
 
 quantitative test, and its quality and extent by the 
 quaHtative test. 
 
 3. Supplement both tests by a personal investigation 
 
 among the dealers. 
 
 4. Prepare a comparative statement of demand in differ- 
 
 ent localities both as to quality and quantity, and 
 compute the quantity per capita. 
 
 5. Study the general conditions of the market and deter- 
 
 mine whether the demand is elastic or inelastic, and 
 how much potential demand can be counted on. 
 
 6. Prepare a chart which will set out briefly all the 
 
 findings on the subject. 
 
 The study of consular reports and of articles in export 
 journals may assist the exporter in gauging the foreign 
 demand for his product, but only when he has followed the 
 steps indicated has he carried out a scientific investigation. 
 
 The Relation of Demand and Supply 
 
 The fundamental tendency of all commerce is to adjust 
 itself to the needs and desires of the consumers. Hence 
 supply generally follows demand and constantly tends to 
 adjust itself to it. The equilibrium of demand and supply 
 is not a frequent occurrence and when it does occur it is 
 merely a temporary condition. Generally speaking, one is as 
 fluctuating as the other. Nevertheless, whatever knowl- 
 edge one may have of demand helps in determining the 
 corresponding data relative to supply; and the extent and 
 quality of supply, under ordinary conditions, give a sure indi- 
 cation of the extent and quality of the existing demand. 
 
 Tests of Supply 
 
 After obtaining the correct statistical data regarding a 
 particular line of product in a given market, there are three
 
 DEMAND AND SUPPLY 35 
 
 important qirestions to consider and determine relative to 
 supply. 
 
 1. Are there any signs of overproduction or of unused 
 
 supply ? 
 
 2. What is the nature and quantity of local or domestic 
 
 supply ? 
 
 3. What are the principal sources of foreign supply, 
 
 and what is the extent and quality of each? That 
 is to say, how much of a given product does the 
 country under consideration import from other 
 countries, and how does the quantity — and the 
 quality — imported from each country vary? 
 
 Overproduction 
 
 Whenever there is an overproduction in a certain line it 
 is followed by an immediate depression in the market which 
 is felt by everyone interested in that line. The existence of 
 overproduction can be determined by mere casual inquiry. 
 
 Unused supply or an overstocked market may exist when- 
 ever there is a temporary strain upon it, caused by local 
 conditions. A general financial depression, poor crops, 
 changes in the utility assigned to a commodity by its intended 
 purchasers, the rise of substitutes, or any simj'lar phenomena 
 may prevent immediate absorbtion of production by the local 
 market. Care must be exercised to differentiate between the 
 permanent and the temporary condition. Above all, one must 
 be careful not to mistake the signs of a temporarily over- 
 stocked market for the results of overproduction. In every 
 case there must be a careful investigation of the causes. 
 
 Overproduction always has its source in the increased 
 activity of capital and labor. Most often it is due to too 
 much idle capital. On the other hand, unused supply is 
 generally caused by a decrease in the income of the people, 
 just as the price of a commodity which the public is willing
 
 2,6 GENERAL CONSIDERATIONS 
 
 to pay for depends in a measure on the amount of money it 
 has to spend. 
 
 Unused supply, hke overproduction, needs no laborious 
 investigation to determine its existence. Everyone in the 
 market feels it and has his theory. The only point to empha- 
 size is the danger of mistaking a temporary phenomenon for 
 a permanent one. A temporary oversupply should not 
 frighten one from the market, but reliable evidence of over- 
 production or of a chronic failure of the market to absorb 
 the supply should be the signal to withdraw. 
 
 Domestic Supply 
 
 The determination of the nature and quality of domestic 
 supply is similar to that of demand. But it is not enough 
 to obtain figures as to the grade of a particular kind of goods 
 on the market and to have at hand the statistical informa- 
 tion as to supply. The large-scale exporter should have an 
 intimate knowledge of the character of the domestic supply, 
 such as can only be gained by careful personal examination 
 and notations of the different grades. 
 
 Foreign Supply 
 
 The exact determination of the original sources of supply 
 in any given foreign country is in some of its aspects a very 
 difficult problem. For practical purposes, however, it is neces- 
 sary only to find out the extent of each foreign supply, because 
 the principal channels, like those of overproduction, are gen- 
 erally known and easily ascertained. The quality of each 
 grade in the market must be determined by a personal 
 examination of samples. 
 
 In some cases it is advisable and even necessary to find 
 out what quantities or to what extent a particular country 
 contributes to the supply of the market. Such information 
 is not always possible to secure because of the fact — already
 
 DEMAND AND SUPPLY 37 
 
 noted — that every nation engaged extensively in foreign trade, 
 particularly in imports, buys a large amount of foreign prod- 
 ucts not for domestic use but for export into other countries. 
 Statistical data therefore are of no great value in such cases, 
 and only personal investigation can avail. Information of 
 this character can usually be secured from the dealers of the 
 country in which one is interested. Sometimes it is more 
 practical for this purpose to go among the exporters of the 
 competitor nations. 
 
 The quality of goods of a trader's principal foreign com- 
 petitor should be studied preferably in the competitor's home 
 markets, because the quality supplied abroad may be and 
 often is adjusted to meet foreign requirements; whereas the 
 quality in home markets is more stationary and standardized. 
 
 Price and Quality 
 
 The price alone at which an article is sold should not 
 frighten the trader from a market if he can supply the grade 
 which is more desirable to the consumer. There may be a 
 plentiful supply of pumps, for instance, but their quality may 
 be generally defective though the prices are low. Poor pumps 
 are better than none ; but if one can improve upon the quality 
 he can charge more for his pumps and will be able to make 
 sales by demonstrating that the user would profit more by 
 paying a higher price for a pump that does the work than by 
 buying a cheaper article liable to break down and wear out 
 rapidly. 
 
 Conclusion 
 
 There are certain principles underlying both demand and 
 supply which the exporter must have constantly in mind. His 
 attempts to gauge the character of either element should be 
 based largely on statistical data checked and confirmed by an 
 investigation of the ground. He should avoid generalization 
 
 119483 

 
 38 GENERAL CONSIDERATIONS 
 
 and apply his tests to each market and to each product. He 
 should go beneath the surface and consider potentialities as 
 well as actualities. He must be able to distinguish between 
 overproduction and an overstocked market, avoiding the one 
 and taking his chances with the other. He should familiarize 
 himself with the quality as well as the quantity of the supply 
 of his products both from local and foreign sources, but he 
 must remember that neither source gives a conclusive measure 
 of the actual demand. 
 
 It is well to know whether the supply or demand is in- 
 creasing or diminishing, whether it is elastic or more or less 
 stationary. If the demand is steadily decreasing there may 
 be a reason which, if ascertained, would make it wise to keep 
 out of the market. A selling campaign cannot be prosecuted 
 with certainty of success in a territory where no definite data 
 are available as to the volume, nature, and quality of demand 
 and supply. It is always to be remembered that the final 
 approximation of these essential elements is best fixed by 
 personal investigation. In the case of demand the investiga- 
 tion must be conducted in the market itself; in the case of 
 supply, in the countries from which emanate the main currents 
 of supply. If the trader's chief competitor is England he must 
 go first to England for the basic information, and if the data 
 secured there does not deter him from his purpose, he must 
 then go into the market he desires and there complete his 
 information. Only when this mass of information is embodied 
 in his chart is he ready to proceed with extended effort.
 
 CHAPTER VI 
 
 THE PSYCHOLOGY OF THE FOREIGN MARKET 
 
 Basic Principles 
 
 It is difficult to outline any definite procedure for the inves- 
 tigation of the structure and psychology of the foreign market. 
 From their nature, psychology and structure are closely inter- 
 woven; each reacts on the other. Both elements vary in dif- 
 ferent countries and even in the different markets of the same 
 country to the extent that the history, the temperament, and 
 civilization of the peoples vary. The domestic market is com- 
 paratively homogeneous, but abroad heterogeneity is the rule. 
 Here is one of the difficulties that the investigator must antici- 
 pate. 
 
 In his study perhaps the first essential is to avoid either 
 generalizing or judging one market by another; to learn to 
 discriminate between facts and fancies, realities and illusions, 
 apparent and real values. There are already too many illu- 
 sions — academic, governmental, mercantile, and financial — 
 concerning the foreign field. 
 
 The foreign investigator may never be able to achieve the 
 native's insight into the wants of a people or his intuitive 
 knowledge of their standards and mental processes. The best 
 that the foreign observer can do is to live with the people of 
 his prospective market until he has absorbed their psychology 
 and has a real understanding of the structure of their market 
 and of their ways of doing business. There are, however, 
 certain fundamental economic doctrines which he should have 
 in mind because of their particular bearing upon the develop- 
 ment of foreign trades. 
 
 39
 
 40 GENERAL CONSIDERATIONS 
 
 Commodities Pay for Commodities 
 
 Commodities pay for commodities or exports for imports, 
 and in tlie commercial dealings between nations only a small 
 balance is settled by the payment of precious metal. 
 
 The general tendency is to exchange the produce of one 
 country for that of other countries at such value that the sum 
 of a country's exports shall pay for the sum of its imports. 
 Here, however, it should be remembered, first, that although 
 we may speak of debts between nations, as for instance the 
 indebtedness of France to the United States, this is merely a 
 convenience of speech. In reality the debt, save in such 
 exceptional cases as the direct war loans of the Entente Pow- 
 ers, is not of one state to the other, but of a multitude of 
 Frenchmen, for instance, to a multitude of Americans. Such 
 expressions as "international indebtedness," or "balance of 
 indebtedness," in favor of or against a country, mean simply 
 the balance of a mass of individual accounts. 
 
 Secondly, it should be borne in mind that when we speak 
 of the "balance of trade" this phrase also is largely a figure of 
 speech. In reality, the so-called balance of trade is a delusion. 
 In the first place, it is difficult, if not impossible, to ascertain 
 with any accuracy the exact relationship between exports and 
 imports. When there is a long frontier it is well-nigh impos- 
 sible to include in the estimate everything that passes over the 
 border. There is also no rule of uniformity in the method 
 of calculating the values — whether values should be calculated 
 at the place of export or import, and whether the cost of trans- 
 portation should or should not be included. 
 
 But even if every article could be definitely and honestly 
 recorded on the "balance sheet," the statistics themselves 
 would need f'-.rther interpretation. As has been noted, while 
 some European countries habitually import more than they 
 export, a considerable part of their imports is used for export. 
 This the governmental statistics do not usually show.
 
 THE PSYCHOLOGY OF THE FOREIGN MARKET 41 
 
 Commerce Rests Upon Comparative Needs and Supplies 
 
 A second fundamental economic doctrine is that interna- 
 tional commerce rests upon the comparative needs and supplies 
 of the trading countries, or to use the technical expression, on 
 the conditions of comparative cost. 
 
 A simple illustration of comparative cost may be found in 
 the case of a mechanical engineer who employs a man to 
 care for his furnace. He could save this money by attending 
 to his furnace himself, yet he prefers to leave the furnace in 
 charge of the man, because it pays better in the end for him 
 to attend to his technical business and leave the furnace in 
 charge of someone else. He gains in that way more than he 
 loses. 
 
 In this law of comparative costs and of reciprocal demands 
 lies to a great extent the explanation of the phenomenon of 
 foreign trade. In applying this law, however, and in studying 
 the actual effects of foreign trade in any particular country, it 
 is necessary to consider that country independently of the rest 
 of the commercial world, otherwise one is apt to arrive at an 
 erroneous conclusion. Whether or not France sends any silk 
 to Russia, and the quantity she may send, depends upon the 
 prices obtainable in other countries. These prices, in turn, 
 depend upon the causes, both general and special, which oper- 
 ate throughout the commercial world. In other words, the 
 markets of the world are interdependent, and the collective 
 influence of all effects the prices in each particular locality or 
 market. This fact must never be forgotten in studying the 
 prices and other conditions in any market. 
 
 The growth of wealth and population increases the quality 
 and quantity of demand, and the growth of labor and capital 
 increases the supply. The changes in the conditions of supply 
 are usually the changes in the rates of wages and in the pro- 
 portionate increase of profits, which are the universal elements 
 in the cost of production.
 
 42 
 
 GENERAL CONSIDERATIONS 
 
 When foreign goods sold in home markets are of a kind 
 which can be produced at home, it shows that either the foreign 
 goods are cheaper or else the home producers did not produce 
 the quantity or kind needed. When the foreign force of 
 supply has spent itself and competition sets in, the profits tend 
 to vanish and the greater the competition the more fluctuating 
 will be the price. In a highly organized market the prices for 
 the same commodity are more uniform; in a primitive or dis- 
 organized market there is always a marked variation of price 
 for practically the same commodity. 
 
 Conditions of Society Determine Status of Market 
 
 A third fundamental maxim of foreign trade is that the 
 conditions of society in a given country are the most influential 
 factor in determining the status of the market in that country. 
 For this reason one cannot correctly pass upon a trade situation 
 in any one country without a painstaking and careful study of 
 the political, economic, and social forces which operate there 
 and which translate into commercial forces the feelings of the 
 individuals who compose these social groups. A knowledge of 
 conditions in a given country is indispensable to commercial 
 success therein. The need of studying the market's psychology 
 and structure, therefore, is manifest. 
 
 While the determining factor of trade is the rate of profit 
 obtained, the basis for the demand for an article is the utility 
 assigned thereto. Estimates cf utility may change according 
 to changes in fashion, education, morality, or law, and it is 
 necessary to he constantly in touch with the varying conditions 
 in the trading country including not only the prevailing cus- 
 toms but the commercial ethics of the community as well. 
 
 Structure of the Market 
 
 It should be clear that anyone venturing into the foreign 
 field must give close study to the organization and structure of
 
 THE PSYCHOLOGY OF THE FOREIGN MARKET 43 
 
 each particular market; that he must learn what classes of 
 dealers can handle his goods to advantage, and know the func- 
 tion and characteristics of each class. 
 
 One important difference between foreign and domestic 
 trade is that in foreign trade it is for the most part the dealer, 
 not the consumer, who originates the demand. For this reason 
 the dealer — and with him should be included the commission 
 man and the jobber — is a far more important trade factor in 
 foreign than in domestic trade. At home the consumer will 
 generally buy the article which is well advertised ; abroad the 
 dealer is usually the chief factor in the introduction as well as 
 in the distribution of new merchandise. He is the local mis- 
 sionary of the world's trade, and the medium through which 
 the consumer is educated in the value of a new or a different 
 kind of merchandise. It is sometimes well for the exporter 
 who cannot undertake an expensive campaign for the introduc- 
 tion of his goods, to make arrangements with the local jobber 
 in the foreign country whereby he assumes the expense. 
 
 There are many strange details of commercial structure. 
 In China, for example, foreign business is transacted exclu- 
 sively through a third party called a fostook or comprador, 
 who is a relic of the old olio or hong custom, and who is a 
 character that enters into every possible phase of life in China, y 
 He is the most important person for an importer or an exporter 
 to know, for he takes the place of the commercial traveler, 
 buyer, advertising agent, credit man — in fact, he does every- 
 thing. His connections and his influence with local merchants 
 are unlimited, which makes him the controlling lever in the 
 trade of China where precedent and superstition are still 
 inseparable elements in commercial as well as in social life. 
 
 Psychology of the Market 
 
 Perhaps the most important element of the psychology of 
 the market is the attitude of the peoples or the governments of
 
 44 GENERAL CONSIDERATIONb 
 
 two trading countries toward each other. Nearly every coun- 
 try has certain favored nations with which it prefers to trade. 
 The reasons for this distinction are numerous and sometimes 
 very compHcated — tradition, similarity of language, long-last- 
 ing political friendship, religious kinship. These factors, 
 which scarcely enter into domestic commerce, where he who 
 has the best goods and the lowest prices generally wins, play 
 an important part in international trade. 
 
 In every country, trade is to a great extent regulated by 
 financial interests. If the people of one nation have large 
 investments in a certain foreign country, their financial hier- 
 archy comes in close touch with that country's banking and 
 other moneyed interests. These influences stimulate the exten- 
 sion of trade between the two countries because both are 
 greatly benefited thereby. Since all trade is a mere exchange 
 of commodities, one kind paying for another, the people who 
 buy much will also sell much. Ships cannot afford to go out 
 full to come back empty. 
 
 Reciprocity Significant 
 
 Reciprocity is, of course, significant in the psychology 
 of foreign trade. The people who think only of their own 
 side of life never get very far in international dealings. As a 
 rule a man is more wary of a foreigner than he is of a person 
 of his own nationality; and he is likely to scrutinize every act 
 of a foreigner who seeks business connections with him. 
 Neither is he ever slow to note any mercenary propensities. It 
 is most important to bear in mind that he who takes must also 
 be able to give, for one cannot get something for nothing if 
 that something is worth having. A foreign customer must be 
 treated with at least as much consideration as the domestic 
 customer. To consider only the immediate and narrow per- 
 sonal advantage is absurd and never pays in the end. Every 
 nation has its susceptibilities. Nations have the same likes and
 
 THE PSYCHOLOGY OF THE FOREIGN MARKET 45 
 
 dislikes as individuals and the trader must learn them. The 
 admiration or sympathy of the people of one nation for the 
 people of another is a great commercial advantage. So is 
 national prestige. 
 
 The theory that foreign trade is the result of differences in 
 comparative cost is limited in its application by various hin- 
 drances to trade and by the competition of different countries. 
 On the other hand, the differences between foreign and domes- 
 tic trade should not be too much emphasized. Unless it is 
 clearly perceived that the movement toward an increase of 
 trade relations between nations is accounted for in the same 
 way as the growth of domestic trade, serious mistakes are 
 likely to be made in interpreting the facts in foreign trading 
 and in judging matters of commercial policy. 
 
 Civilizing Influences of International Trade 
 
 International trade has great humanitarian, political, edu- 
 cational, and social, as well as commercial aspects, for the 
 more it is developed the more closely will the nations become 
 knit together and the more alike will be their civilizations and 
 their ideas. As time goes on, the conditions of international 
 trade will resemble more and more the trade conditions exist- 
 ing within the principal civilized countries. If the world is 
 ever to become a federation of states devoted to the pursuit of 
 peace and happiness it will be largely due to the development 
 of international commerce, through the basic understanding of 
 nation by nation and the vigorous, healthy interchange of 
 markets, resulting in international structural growth.
 
 CHAPTER VII 
 
 THE STATUS OF THE FOREIGN MARKET 
 
 Knowledge of General Conditions 
 
 The exporter's study of his prospective market cannot be 
 considered complete until he has investigated the conditions 
 which surround it. He must know not only the details of 
 supply and demand and the general points of structure, but 
 also the status of the market both within and without its own 
 country. The principal lines of study are the following: 
 
 1. The political status 
 
 2. The governmental status 
 
 3. The legal status 
 
 4. The economic status 
 
 5. The financial status 
 
 6. The social status 
 
 7. The commercial status 
 
 The Political Status 
 
 The political status of a market has two aspects — the 
 international and the domestic. 
 
 To understand the international status the prospective 
 trader must determine the state of cordiality existing between 
 his country and the country with which he proposes to trade. 
 On this point the information can be secured from the Depart- 
 ment of State. He should examine the treaty rights to find 
 whether or not they contain the "favored nation" clause. 
 Most important of all are the tariff schedules, so far as they 
 refer to his products. If the schedules are very high he may 
 well consider whether or not they are prohibitive. 
 
 46
 
 STATUS OF THE FOREIGN MARKET 47 
 
 There are several kinds of international complications the 
 existence of which — if they do exist — should be determined 
 before the exporter ventures into the new field. 
 
 For instance, there may be a reciprocal arrangement with 
 some other country by virtue of which the country under 
 investigation levies no import duties on certain articles sup- 
 plied by the preferred nation. Should the exporter find his 
 products in the list of such articles he may decide to withdraw 
 rather than try to compete under the handicap of an import 
 duty which is not paid by the preferred nation. 
 
 The internal political situation of the country is always 
 deserving of study and has an important bearing upon busi- 
 ness conditions. If the government is stable and if there is 
 intelligent and friendly co-operation between political parties, 
 the conditions may be considered favorable. If the political 
 atmosphere is highly charged and the stability of the govern- 
 ment is doubtful, the conditions for the establishment of any 
 permanent business are far from favorable. 
 
 One should learn something about the political structure 
 of the foreign country and its bearing upon trade in general 
 and international commerce in particular. Especially should 
 the exporter decide whether or not political conditions or con- 
 tingencies can affect his business, and if they can, how and 
 to what extent. Generally speaking, an international trader 
 must acquire an intimate knowledge of such conditions per- 
 taining to or prevailing in the country in which he is to seek 
 trade. 
 
 The study of the political status of a nation should include 
 a study of its institutions. The observer should learn the 
 degree of religious toleration. If there are privileged classes 
 he should know their attitude toward the common people. 
 All this may be of great importance to the trader in his par- 
 ticular line. In Russia, for example, semipolitical, co-opera- 
 tive associations called "Zemstvos" are an important factor
 
 48 GENERAL CONSIDERATIONS 
 
 in the commercial life of the country inasmuch as all of them 
 give close study to various Hnes of products, especially agri- 
 cultural lines, and to a great extent make or influence the pur- 
 chases for the community over which they preside. 
 
 If any countries still retain censorship, it is well to 
 know what formalities one must be prepared to undergo be- 
 fore distributing commercial Hterature, such as catalogues 
 and general advertising material. 
 
 The Governmental Status 
 
 Every government is a purchaser of certain commodities 
 to a greater or lesser extent, and some governments are very 
 large buyers. It is well, therefore, "to know the ropes." 
 This not only means that one should learn what official or 
 officials to approach in order to sell or buy from the govern- 
 ment ; it means also that one must know the character, habits, 
 usages, temperaments, and tendencies of the officials in a 
 particular country so as to deal with them successfully. 
 
 The government of every country has its distinct political 
 structure as well as the usual legal functions. It is advisable to 
 know both in a general way, and to be familiar with their 
 policies. If, for instance, one is interested in the sale of motor 
 vehicles, it might be well to know beforehand whether it is the 
 policy of the local governments to build good roads and to tax 
 passenger cars. If one is interested in the sale of agricultural 
 machinery, he should know how much encouragement the gov- 
 ernment affords to the agricultural interests of the country. 
 
 The Legal Status 
 
 Upon the laws of the country rests the security of com- 
 merce. If the laws are bad, business is likely to be bad. 
 Every exporter to be thorough and scientific in his foreign 
 trade should familiarize himself with the fundamental legal 
 requirements which relate to his business in the country with
 
 STATUS OF THE FOREIGN MARKET 49 
 
 which he proposes to trade — especially those legal principles 
 with which he is or will be obliged to come in contact every 
 day. He who makes a bill, a note, or a draft, should know 
 something of the commercial laws involved — whether protest 
 is required or not and within what time after maturity the 
 note must be presented for payment. In some countries the 
 principal is responsible for all the business acts of his agent; 
 in other countries the registration of all business concerns is 
 required under severe penalties. Some countries demand a 
 license from commercial travelers. There are different laws 
 regarding partnerships and different requirements governing 
 corporations. No knowledge connected with international 
 trade is complete without some knowledge of the commercial 
 law of the country with which one has or expects to have 
 constant business dealings. Yet there is no knowledge which 
 is more neglected, because many people have not yet learned 
 that an ounce of prevention is worth a pound of cure. 
 
 The Economic Status 
 
 As international trade is based upon the exchange of com- 
 modities, a country which produces nothing of value for ex- 
 port, cannot be of great value as an importing country. It is 
 advisable to know the principal sources of the wealth of the 
 country, as such information will not only help to approximate 
 the value of the field as a trading center, but it will also assist 
 in estimating correctly the demand for any particular product. 
 
 The knowledge of the economic conditions of the country 
 and its people may likewise be obtained through the study of 
 labor conditions. The prevailing scale of wages, the number 
 of men employed in various lines of enterprise, the degree of 
 thrift as shown by savings and bank statistics (though in 
 Russia and China people do not usually keep their savings in 
 banks), the number of paupers and unemployed — all these are 
 important. One should learn the nature and the number of
 
 50 GENERAL CONSIDERATIONS 
 
 industries and the amount of capital invested in such enter- 
 prises. He should know also the state of the distribution of 
 wealth, the amount per capita, and the principal sources of 
 national wealth. This is purely statistical data, easily obtain- 
 able. 
 
 The Financial Status 
 
 The exporter should know beforehand if there is much 
 governmental interference in trade, if money has an inflated 
 value, if the banks are poorly regulated and unsafe, if panics 
 are frequent — in short, if a country is unsound financially. 
 The only safe method of trading in such circumstances is — 
 cash in advance. 
 
 The commonest sources of statistical information will 
 show the value of a country's currency, its revenues, the 
 amount of national debt, whether the interest is being paid or 
 not, the extent of the banking business, and the value of 
 weights and measures — all of which are good indicators of 
 the degree of financial stability. 
 
 Gold and credit substitutes for gold, which in normal times 
 are accepted with equal readiness, like other commodities, are 
 sent to the dearest market. The dearest market for gold or 
 money is not the market where the prices of commodities are 
 the lowest, or the exchange value of gold is the highest, but 
 where the rate of interest is the highest. 
 
 The ordinary fluctuation of the foreign exchanges about 
 the gold par affect foreign trade only indirectly on the ad- 
 verse balance of indebtedness, but it may affect the exchanges 
 directly and effectively by raising the rate of discounts. 
 Countries of different monetary standards in which there is 
 no limit to fluctuations may present a serious situation in hard 
 times. 
 
 As a general rule, it is better to leave questions pertaining 
 to the currency problem and exchange to the judgment of
 
 STATUS OF THE FOREIGN MARKET 51 
 
 the bankers. From them one can also ascertain whether or 
 not the financial conditions in the country are sound, and war- 
 rant the trade. 
 
 The Social Status 
 
 A person who knows nothing of the ways of the people 
 with whom he proposes to deal, their manner of living, and 
 their temperament, cannot succeed as a business man among 
 them, and is certainly not qualified to draw plans for a com- 
 mercial campaign. 
 
 There will always be those who think they can go into 
 a foreign country and do business on their own terms and in 
 their own way, but the international business man must learn, 
 first of all, that he cannot change the habits, customs, and 
 methods of the people with whom he is coming to trade, and 
 that he must adapt himself to their particular civilization. 
 The closer he gets to them and the more in sympathy he is 
 with them, the greater will be his chances of success. To be 
 successful he must first know how to make himself liked. 
 
 Much is said about national susceptibilities and racial 
 characteristics. They must be studied separately in each case. 
 Broadly speaking the races may be divided into three cate- 
 gories, according to their temperaments. These classes may 
 be called: the emotional, the phlegmatic, and the eccentric. 
 
 To the emotional group belong all the South American 
 and other Latin races, and the Slavs, including the Russians 
 and Poles, Czechs, Jugoslavs, Serbians, Bulgarians, Croatians, 
 and Ukrainians. These people are exceedingly sensitive and 
 prompt to take offence if not handled tactfully. As a rule, 
 they are ready to forego business advantages if they feel that 
 they are not approached or treated properly. 
 
 The principal peoples of the phlegmatic class are the 
 British and the inhabitants of the United States. These 
 peoples are not so particular as to how they are treated so
 
 52 
 
 GENERAL CONSIDERATIONS 
 
 long as they gain a commercial or financial advantage. They 
 do not relish an insult, but they are ready to overlook it if it 
 should seem to them good business policy to do so. 
 
 In the class of eccentrics might be placed the Oriental 
 races. These people may be said to possess a mixed tempera- 
 ment. They frequently have the qualities of both the phleg- 
 matic and the emotional temperaments. They are eccentric 
 only when one tries to get something out of them. It is other- 
 wise when they are trying to get something out of someone 
 else; then there is no limit to their persistence. Although 
 most of the Oriental races — except the Jews, the Japanese, 
 and the Syrians — seem to lack persistence, it is not that they 
 do not possess this quality, but that they do not care enough 
 for money to exert themselves to the utmost for its acquire- 
 ment. 
 
 In cases where one is desirous of creating a demand for 
 a product among a certain people, more than a casual study 
 of their characteristics should be undertaken — their desires, 
 their habits, and their mode of living then require close 
 attention. 
 
 The development of a new demand Involves advertising, 
 as well as a close study of national wealth and its distribution. 
 The press of the country must be studied and the best mediums 
 for advertising selected. In this connection one should not 
 forget to look up the statistics of illiteracy. If a large portion 
 of the people cannot read, the advertising policy will have to 
 be adjusted to suit the conditions. Under such circumstances 
 it may be possible to use posters and other pictorial appeals to 
 advantage. The subject of advertising in foreign trade is 
 discussed In Chapter XXX. 
 
 The Commercial Status 
 
 The Investigation of the commercial status of a country 
 concerns itself with the structure and psychology of the for-
 
 STATUS OF THE FOREIGN MARKET 53 
 
 eign market and with all the technical details which pertain 
 to it. It includes the status of local supply and demand, qual- 
 ity, prices, current rates of exchange, possible uses of the 
 article to be sold, the purchasing power of money, the cost of 
 labor and materials, commercial customs and trade methods 
 pertaining to sale, credits, demands and acceptances, and the 
 volume, quality, and extent of competition in a given line. 
 
 Under this heading will come the study of the type of 
 organization adapted to business with a particular country and 
 whether the particular business should be transacted through 
 local jobbers, through agents and personal representatives, or 
 through branch offices. 
 
 Every exporter realizes the necessity for the study of the 
 commercial status of the prospective market, but only a few 
 see the value of investigating the other conditions which have 
 been pointed out. The man who is thorough in his business 
 methods and who leaves undone nothing which should be 
 done, will give to each of the lines of inquiry here suggested 
 his best thought and study.
 
 CHAPTER VIII 
 
 PRINCIPLES OF INTERNATIONAL DISTRIBUTION 
 
 Factors of Distribution 
 
 Any general selling operation by which marketable goods 
 change ownership and pass into the hands of a Cfjnsiderable 
 number of people is called "distribution" in the commercial 
 sense of the word. 
 
 The distribution of commodities is an intricate subject. It 
 involves so many principles and is so closely correlated with 
 every conceivable economic factor that it is out of the question 
 to con::ider it here in any but its most fundamental aspects 
 from the standpoint of the producer. 
 
 The factors of distribution are many and complex. Among 
 them must be included the problems involved in moving the 
 commodity from the place of production to the ultimate 
 consumer, also its storage in the warehouse, and the cost of 
 its display in the retail store. All the details of its several 
 transfers of ownership until it at last reaches the retail cus- 
 tomer — everything that goes to make up its selling cost which 
 of course includes the cost of advertising — is properly charged 
 to distribution. 
 
 The elements involved are both physical and psychical. The 
 physical elements are relatively simple ; the psychical are 
 involved and to them are due the complications that make 
 distribution so expensive, so difficult, and in a sense so 
 inefficient. 
 
 The principles of international distribution are the s^ime 
 among all peoples and among all classes and conditions of 
 humanity at all places where trading is carried on. On the 
 
 54
 
 INTERNATIONAL DISTRIBUTION 
 
 55 
 
 one hand they are governed by eccnomic laws and, on the other 
 hand, they are developed by the element of fortuity in isolated 
 cases and among individual traders. 
 
 Distribution and Trade Channels 
 
 Nevertheless, distribution in the last analysis can be most 
 successfully accomplished through the regular trade channels. 
 
 The domestic channels of distribution for the American 
 manufacturer are illustrated in the following diagram: 
 
 Manufacturer 
 
 Commission 
 Agent 
 
 Consumer 
 
 Retailer 
 
 Wholesaler 
 ~1 
 
 Retailer 
 
 Consumer 
 
 I 
 
 Consumer 
 
 Chart Showing Domestic Channels of Distribution 
 
 It is obvious that the more intermediaries there are inter- 
 vening between the manufacturer and the consumer, the 
 greater the cost of distribution. 
 
 Intermediaries in Foreign Trade 
 
 In foreign trade the intermediaries are, of course, greatly 
 increased. The accompanying diagram illustrates the chief 
 factors of distribution and their various auxiliaries involved 
 in the process of transferring a commodity from the producer 
 in one country to the ultimate consumer in another. 
 
 It will be seen that seven groups of factors intervene 
 between the producer, I, and the consumer, VIII. Groups II 
 and III represent two general types of collectors; IV, V, the
 
 56 
 
 GENEFL\L CONSIDERATIONS 
 
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 INTERNATIONAL DISTRIBUTION 57 
 
 foreign trade intermediaries ; and VI and VII, the distributing 
 trade in the importing country. 
 
 The traders are of two classes, those who assume title to a 
 commodity, buying and selling it at a profit, and those who 
 sell only their services. The latter factors owe their existence 
 to their co-operative efforts and to the benefits they confer. 
 Only when they cease to be worth what they cost will they 
 be eliminated. Direct importing and co-operative methods 
 may reduce their number somewhat, but in the meantime their 
 presence is felt in the increased cost of the commodity. 
 
 Fixing the Price 
 
 It is evident that the selling price abroad must reflect 
 the greatly increased cost of distribution. Selling cost has 
 been estimated as averaging from 20 to 35 per cent more 
 abroad than at home when the same method is followed. Even 
 under the general merchandising plan the increased selling cost 
 is still much higher. In fixing the retail export price the 
 exporter must know his own costs and must allow himself a 
 fair profit. 
 
 Generally his price will be higher than his European 
 competitor's, but that need not necessarily exclude him from 
 the market. A high price will always connote a superior 
 article in the mind of the consumer. A slight difference in 
 cost is not such an important element to the man who has also 
 to consider the difference in transportation charges, the quality 
 of the product and possibly export duties as well. There are 
 other ways of offsetting price differences and, as will be 
 pointed out in Chapter XXXII, cost is not always the deter- 
 mining factor in effecting a sale. 
 
 Comparative Costs 
 
 Individuals find it most profitable to confine themselves 
 to their particular functions and to have someone else do the
 
 ^3 ' GENERAL CONSIDERATIONS 
 
 less productive work. The exporter may himself be an expert 
 packer, but he will make more money if he spends all his 
 time in directing his business and leaves the work of packing 
 to a moderately paid subordinate. So it is with nations. If 
 in Spain it costs ten times as much to produce a barrel of flour 
 as a yard of cloth, while in America it costs but six times as 
 much, it is to the advantage of the Spaniard to confine himself 
 to making cloth and to purchase his flour from America. So 
 long as the comparative costs of producing goods vary among 
 the different nations of the world, so long will there be inter- 
 national trade. This is the principle commonly referred to 
 as the law of comparative costs. 
 
 As stated by Bastable in his "Theory of International 
 Trade": "John Stuart Mill's conclusion, in his first and 
 soundest exposition of his theory, is that the ratio of exchange 
 in the case of commodities which are subject to international 
 trade depends on the comparative intensity of the demand on 
 each side, always of course operating within the limits set by 
 comparative costs. . . . This Mill calls the first elementary 
 principle of international values." 
 
 The benefits of international trade come from the advan- 
 tage which the nation derives in producing commodities in 
 excess of its own needs which it can exchange for those of 
 other nations unable or unwilling to produce like commodities. 
 It may be to the advantage of a nation to purchase from 
 another nation commodities which it could manufacture itself, 
 if, as may well happen, it can purchase imports with exports 
 more cheaply than it can manufacture them. 
 
 The climate and resources of a country determine whether 
 or not it is advantageous for it to obtain the needed products 
 of another country by exchanging its own products for those 
 of the other country instead of producing them itself. 
 
 The apparent handicaps of nature and industry may, how- 
 ever, be reduced if the country will develop to the utmost,
 
 INTERNATIONAL DISTRIBUTION 59 
 
 through organized and intelligent effort, such advantages as 
 it may possess. This course calls for a highly developed 
 economic organization worked out along the lines of produc- 
 tion, transportation, merchandising, and banking. The country 
 attempting such industrial expansion must produce her prod- 
 ucts at the lowest possible cost through the co-operation of 
 her capital, labor, and men of science; she must have every 
 facility for transportation on both land and sea; she must 
 know how to sell her goods abroad ; and her foreign trade 
 must be adequately financed by an organized system of 
 international banking. 
 
 Such a nation will be able to meet the competition of 
 foreign trade under the best conditions. So ecjuipped, the 
 restrictions imposed by comparative costs become fewer and 
 fewer, and it may ultimately come to pass that she may defy 
 nature itself. 
 
 Dumping 
 
 There is a class of international distribution known as 
 "dumping," which is the selling of surplus goods in foreign 
 markets for such purposes as stabilization, or to decrease the 
 home supply and thus maintain high domestic prices. 
 
 In such cases the goods are usually offered for sale abroad 
 at lowTr prices than they bring at home. When this practice 
 becomes general it furnishes additional propaganda against 
 a protective tariff, in that the existence of such a tariff enables 
 the foreigner to buy under more favorable conditions than can 
 the native of the country. Dumping is frec{uently detrimental 
 to the producers of the importing country. On the other hand 
 it sometimes stimulates them to improvements and adaptions 
 that more than offset the differences in price. To avoid dump- 
 ing certain British colonies have required the filing of non- 
 dumping certificates on the part of the exporter as a part of 
 the export procedure.
 
 6o GENERAL CONSIDERATIONS 
 
 Distribution and Credit 
 
 One ma}' judge the credit of a country by the character of 
 its imports, for they are the surest indication of its financial 
 stabiHty. If, during the borrowing period, the country imports 
 luxuries only, it may indicate an unhealthy condition. But if 
 it imports things necessary for the upbuilding of its industries 
 and the development of its resources, its credit standing is 
 improved. 
 
 Thus, if the borrowing country imports chiefly iron, steel, 
 rails, and mining machinery, it is manifestly developing its 
 resources; whereas if it imports largely champagne, spices, and 
 silks, this might show that instead of developing, it is wasting 
 its resources and is squandering borrowed money. Since 
 nations are composed of individuals, it is justifiable to judge 
 the character and conduct of a nation by the tendencies of a 
 majority of its people. 
 
 Distribution and Prices 
 
 Foreign trade is a most potent force in regulating over- 
 production. Hence it is likewise a great aid in keeping prices 
 level. The overseas markets, by absorbing the surplus, keep 
 distribution active and prevent a storage of goods in the ware- 
 houses at home that sooner or later must depress prices. 
 
 It is the natural function not only of the international 
 trader but of every intermediary between the producer and the 
 consumer so to gauge the extent of demand and supply that 
 the equilibrium between production and consumption is pre- 
 served. So long as the channels of distribution are kept open 
 and the markets, domestic and foreign, absorb production, so 
 long will prices remain firm to the benefit of all concerned. 
 
 Maximum and Minimum Efforts in Distribution 
 
 Results are usually proportionate to the efforts made to 
 obtain them, and of two efforts in the same direction the one
 
 INTERNATIONAL DISTRIBUTION 6l 
 
 which is the more intense will usually produce the greater 
 results. 
 
 For example in the case of the automatic method of dis- 
 tribution so popular in the United States in connection with 
 foreign trade, the risk will be small, but the returns from such 
 a course will naturally be small. This method consists in send- 
 ing abroad some catalogues, in placing advertisements in a 
 few export publications, and awaiting results. 
 
 On the other hand, if the manufacturer utilizes a larger 
 number of methods of distribution — if in addition to local 
 advertising and the issue of catalogues he will also send out 
 salesmen, advertise in foreign newspapers, and use the other 
 recognized means of promotion — he will obtain quicker, better, 
 and more certain results. It will, however, require a far larger 
 expenditure and involve a greater risk. 
 
 Maximum efforts produce maximum results, always pro- 
 vided of course that the efforts carry with them the greatest 
 efficiency both in conception and in execution, in direction as 
 well as in dynamic energy. Ordinarily if there is no risk, 
 there is little or no profit. Interest on investment is usually 
 highest when the risk is the greatest, while the perfectly safe 
 investment usually commands a low rate of interest. 
 
 It is one of the maxims of poHtical economy that a product 
 when sent into a market must encounter the chances of the 
 market, and the capital invested in the distribution of the 
 product must likewise encounter the hazards incident to every 
 commercial effort. In international commerce the hazards 
 relating to distribution are greater than those in home trade, 
 but the rewards are commensurate. 
 
 Mistaken Methods of Distribution 
 
 Much provincialism is still apparent among the manufac- 
 turers in America who attempt to enter foreign markets. 
 Some of them imagine that once a concern has established
 
 62 GENERAL CONSIDERATIONS 
 
 itself firmly in the United States, forei^ trade will come as a 
 matter of course with little or no effort towards securing it. 
 There are producers who go to the other extreme and assume 
 that to secure one's share of international trade, they must 
 overcome difficulties more imaginary than real. There are 
 also those who think of foreign trade as a costly plaything, 
 which only the richest can afford. 
 
 Such notions result from failure to understand the prin- 
 ciples of distribution. Sooner or later there comes a time in 
 the life of every progressive nation when its commercial activi- 
 ties become focused on foreign trade. Only now has America 
 reached that stage in its development. For us as for every 
 nation foreign trade is beset with difficulties, but they are 
 relatively no greater than those of any other commercial enter- 
 prise when the opportunities for profit are considered. 
 
 Perhaps the most futile course is that of the man who sits 
 behind his desk and waits for trade to come to him from across 
 the seas without any appreciable effort on his part. While 
 much of our early export trade came to us in this way, that 
 day of easy profits is over for the time. At the present moment 
 the foreign buyer does not need to solicit his source of supply. 
 The pendulum may swing back to its former place but today it 
 is the producer who must needs employ aggressive methods to 
 satisfactorily market his goods. 
 
 Acquaintance an Element in Distribution 
 
 Acquaintance will always be a most important factor in 
 determining the extent of distribution in foreign trade. Un- 
 fortunately the United States is still misunderstood in many 
 countries. We have been the subject of much propaganda of 
 which many of our own citizens, travelers abroad, and writers 
 at home have been the unconscious agents. 
 
 The attempts of foreign competitors in overseas markets 
 to misrepresent us, our political policies, and our goods have
 
 INTERNATIONAL DISTRIBUTION 63 
 
 been ably seconded by irresponsible newspaper and magazine 
 correspondents; and also the careless talk of our own citizens 
 has been quoted and misapplied for the benefit of our com- 
 petitors' interests. 
 
 The establishment of American banks abroad, especially in 
 the newer markets, should go far to offset the handicap. The 
 increasing tendency of the exporters to establish branch offices 
 in foreign lands will be of great assistance in this direction. 
 Only when American traders begin to settle in trade centers 
 will the influence of their high regard for commercial honesty 
 and business efficiency begin to be fully recognized. 
 
 Doubtless the attitude of America in the great war and in 
 the peace deliberations will do much toward clearing the air 
 and defining our aims and aspirations so clearly that every 
 man can read them. Practical idealism has its place in business 
 as well as in politics and everything indicates that the Ameri- 
 can trader will be accepted at a higher value in the future than 
 in the past. May he prove worthy of the increased confidence!
 
 CHAPTER IX 
 
 THE BEST MARKETS FOR THE AMERICAN 
 
 EXPORTER 
 
 Trade Centers 
 
 The exporter will frequently find himself confronted with 
 a choice of several markets, each of which appears to offer 
 ecjual advantages and possibilities but only one of which can 
 be selected. The nature of his product will usually determine 
 the field of his initial activities. Other things being equal, 
 however, it will be well for him first to establish his connec- 
 tions with the world trade centers before he launches his cam- 
 paign in any one country or locality. 
 
 London 
 
 London is pre-eminently the place where a world trader 
 should locate first of all, if only for the purpose of using it 
 as a laboratory in which to study international trade. Trade 
 connections should be sought there before any other steps for 
 obtaining foreign business are undertaken. 
 
 The reason for this is that London has been and may soon 
 again become the center of all international trade. From that 
 center emanates a vast network of commercial activities which 
 reaches every important trading port in the wide world. In 
 London you may meet a merchant from Siberia and a banker 
 from Australasia. You may' sell goods there to the man in 
 Calcutta or buy from a house located in Madagascar. That 
 is w^hy no exporter thinks himself of much distinction as an 
 international trader until he can put on his stationery the sig- 
 nificant words "London Office."
 
 THE BEST FOREIGN MARKETS 65 
 
 Paris 
 
 Of course, Paris is also a great world trading center, but 
 it has more charm for the buyer than for the seller. Never- 
 theless, Paris ought always to be considered in connection with 
 the idea of establishing headquarters or a branch house on 
 the Continent. 
 
 It is easy enough to decide upon the advantages of trade 
 with most of the old European countries, and upon the nature 
 and extent of one's connections in the effort to secure a share 
 of European trade. This can be done in many cases even 
 before a personal investigation on the ground is undertaken, 
 because information concerning the opportunities and possi- 
 bilities of the "old" markets of Europe as they were before 
 the war, is pretty well known. This knowledge has been well 
 systematized and is easily obtainable from sources which are 
 generally reliable. 
 
 "New" Markets 
 
 The difficulty of choice becomes serious only when one 
 contemplates entering directly upon trade with what may be 
 called the "new" markets. By this phrase is meant either a 
 market which has not yet begun to be exploited to its capacity, 
 or one of those markets which are becoming important owing 
 to their increased commercial activity. Of course, in years 
 of actual age many of the so-called new markets are much 
 older than even the ancient trade centers of London and Paris. 
 The new markets which are particularly interesting the world 
 today are in China, Russia, Latin America, and the newly 
 formed European states. 
 
 China 
 
 China with its enormous population is as yet in a very 
 unsettled condition. Moreover, the commercial demands of 
 the population are few and limited. The giant is still asleep
 
 C^ GENERAL CONSIDERATIONS 
 
 and the awakening has thus far taken place only in politics. It 
 will be half a century before China will develop the capacity 
 to absorb Western civilization. 
 
 Eventually China will offer an opportunity unequaled per- 
 haps elsewhere. For the present, China should receive the 
 most careful attention of American diplomats, statesmen, and 
 financiers, so that when the great opportunity at last arrives 
 the Americans will be among the fortunate people who will 
 sell to modern China — with its four hundred million inhabi- 
 tants — the commodities that it must have. 
 
 As soon as political readjustment is complete, the next 
 phase of China's progress will open. It will be along purely 
 economic lines. China's finances must be rehabilitated and 
 Its monetary standard must be reformed. It is along these 
 lines that the American government and people should en- 
 deavor to assist the Chinese government. 
 
 Russia 
 
 Russia in many respects resembles China. Conditions are 
 in every way unsettled. Here, too, the bulk of the population 
 is still asleep, so far as commercial considerations are con- 
 cerned. As in China a great deal of commerce is conducted 
 on the lines of pure barter, that is, the exchange of commodi- 
 ties without the use of money. The Russian peasants are not 
 unlike the population of China, in that they subsist on a very 
 simple diet, they produce nearly everything that they need, and 
 are satisfied with bare necessities. The luxuries of civiliza- 
 tion are almost unknown among the masses of the rural 
 population. 
 
 At present, trade with Russia is seriously hampered by 
 political disturbances. A trade tax was put in operation long 
 ago compelling all foreign concerns to pay a proportion of 
 their earnings to the government. But new laws and regula- 
 tions are coming into effect every day. No one knows now
 
 THE BEST FOREIGN MARKETS 67 
 
 what will become of Russia. Taking it all in all, despite 
 Russia's great need for foreign enterprise and foreign capital, 
 the outlook is most uncertain and will continue to be so until 
 some stabilization is effected. 
 
 Latin America 
 
 With the exception, perhaps, of the British colonies, the 
 best new markets for the American exporter at the present 
 time will be found in Latin America, if we exclude the Euro- 
 pean market in its present depleted state. 
 
 In the first place, there is a similarity of government in 
 Latin America and a practical alliance of all the Latin-Ameri- 
 can republics in their political and commercial aims. There 
 are well-established ties which bind the United States to all 
 the sister republics below the Rio Grande. 
 
 The total population of these countries, it is true, is much 
 smaller than that of either China or Russia, but it is fast 
 increasing. 
 
 Unlike Chinese or Russian, Spanish and Portuguese — 
 the only two languages that are spoken by the bulk of the 
 population — can easily be learned. The inhabitants of Cen- 
 tral and South America for the most part are thoroughly mod- 
 ern in their demands. Nearly everything that they produce 
 we can use, and our finished products of all sorts find a ready 
 market among the Americans of the Southern Hemisphere. 
 
 Special Lines of Effort 
 
 One way in which we can assist our fellow Americans in 
 the south is by sending our capitalists to help develop their 
 resources — to build railroads, telephone lines, electric and gas 
 works, and to open up their mines and forests. We should 
 send our young men there to study the language and customs 
 of the people and to learn how to fraternize with them. These 
 young men may be expected later to become directors of enter-
 
 68 GENERAL CONSIDERATIONS 
 
 prises on the Southern Continent, and thereby serve as the 
 most important hnk binding forever in friendship the great 
 northern repubhc with her sister nations to the south. All 
 this is to some extent now being done, but only on a small 
 scale. 
 
 In the meantime, the manufacturers and traders of the 
 United States should devise more effective ways for promot- 
 ing their interests in Latin America. They should form syn- 
 dicates for the joint development of the markets and resources 
 of the twenty republics. Individual concerns, whenever pos- 
 sible, should send personal representatives to study conditions 
 and opportunities in order to handle the trade intelligently. 
 Above all, various trade associations should be urged to co- 
 operate in the work of assisting individuals and firms to 
 establish themselves in the trade of South America. 
 
 General Conclusions 
 
 Inasmuch as the scattering of forces is rarely wise, a search 
 for markets too far overseas is not on the whole to be advo- 
 cated. Here and there a concern will find it advisable to seek 
 trade in South Africa, in Australia, in India, and other far- 
 distant lands, but for a beginning in foreign trade, it is much 
 better to concentrate on one or two near-by markets. 
 
 In establishing headquarters abroad, due attention should 
 be paid to the future development of trade as well as to its 
 immediate prospects. 
 
 If participation in the trade of Russia is contemplated 
 not only through local agents but by the personal efforts of the 
 concern's own salesmen and agents In Germany, Denmark, 
 etc., headquarters in Paris might be more suitable than in any 
 other trade center of Europe. 
 
 In South America one may hesitate between Buenos Aires 
 and Rio de Janeiro, but a wise trader will choose one of these 
 cities in preference to any others in South America.
 
 THE BEST FOREIGN MARKETS 69 
 
 A firm desirous of the world's trade should first of all 
 investigate the possibilities of the old markets for its line of 
 products. For that purpose a member of the firm should go 
 to London and to the Continent and personally survey the field 
 there. If it is found to be favorable, the headquarters office 
 then should be established either in London or in Paris, not 
 only as a matter of direct business, but also to keep in touch 
 w^ith the markets and competition. The next step should be 
 to go to South America to study the prospects, and if the out- 
 look still appears favorable, to establish headquarters in Buenos 
 Aires or in Rio de Janeiro. When a concern gets as far as 
 that, it will be well under way upon the sea of world commerce.
 
 CHAPTER X 
 
 THE COMMERCIAL POLICIES OF WORLD POWERS 
 
 The Development of Economic Thought 
 
 The commercial policies of the great nations are the results 
 of an economic development that has been going on for cen- 
 turies. They have been influenced not only by the history and 
 traditions, the temperament, and industry of their peoples, but 
 they reflect the ever-changing economic ideas of the times. If 
 we arc to understand them we must know something of the 
 history of the development of economic thought. 
 
 The Ancient World 
 
 In the ancient world the traders were organized locally and 
 their policies were strictly municipal. The merchants of Tyre, 
 Carthage, and Rhodes thought only of the welfare of their 
 respective cities. The commercial policies of the Middle Ages 
 still failed to exhibit any national tendencies and concerned 
 themselves chiefly with the exclusion of all foreigners from 
 participation in local commerce. It was not until the sixteenth 
 century that men began to think and to legislate along national 
 lines. They were influenced at first by the economic doctrine 
 known as mercantilism. 
 
 Mercantilism 
 
 Mercantilism was the first serious attempt to explain the 
 circulation of wealth. In their effort the mercantilists were 
 not entirely successful. They confused capital with money 
 and wove into their economic theories many another fallacy. 
 They exaggerated the function of money and failed to grasp 
 
 70
 
 COMMERCE POLICIES OF WORLD POWERS 71 
 
 the rudimentary fact that without selHng there can be no 
 buying. 
 
 They believed that the balance of debits and credits is con- 
 vertible, and never stopped to consider that a nation may go 
 on for a long time importing goods of greater value than 
 those it exports without exhausting its store of precious metals. 
 They ignored the important truth that many payments are 
 made not in money but in merchandise, and that an excess in 
 the value of imports over exports is often covered by drafts on 
 foreign ports for amounts due to the importing country. They 
 failed to perceive that nations as well as individuals grow 
 rich by producing more than they consume. Their fallacious 
 doctrine that exports must exceed imports in order that the 
 country may be benefited through foreign trade finds support- 
 ers even in this day. 
 
 They identified the interests of the people at large with 
 those of but one class — the traders. Their theory caused un- 
 speakable rivalries in the seventeenth century between France, 
 England, and Holland, each attacking the other with tariff 
 assaults and reprisals. Mercantilists of the sixteenth century 
 failed to perceive that in refusing the admission of foreign 
 goods as a retaliatory measure, they frequently deprived them- 
 selves of products, the loss of which more than offset the 
 supposed economic advantages. 
 
 Eighteenth Century Laissez-Faire 
 
 In the eighteenth century a reaction arose against mercan- 
 tilism which resulted in the establishment of the physiocratic 
 system founded by Ouesnay, advocated by Turgot, and Influ- 
 enced by the writings of John Locke and Rousseau. These 
 writers believed in the superiority of agriculture over com-' 
 merce, considering it the sole source of wealth. Their theories 
 were quite the opposite of those of the mercantile school. They 
 believed not in protection but in free trade, and the policy of
 
 72 
 
 GENERAL CONSIDERATIONS 
 
 laissez-faire was their pet doctrine. The theories of the physi- 
 ocrats were finally crystalized in the works of Adam Smith and 
 David Hume, who laid the foundations of the science of 
 political economy. 
 
 Nineteenth Century Protectionism 
 
 In the early part of the nineteenth century another reaction 
 set in and the tendency throughout the world began again to 
 turn in favor of tariff. This movement, commencing in 1834 
 with the formation of the German Zollverein, materialized 
 into the modern economic theory of protection, which is 
 largely a policy of encouraging home industries by the imposi- 
 tion of customs duties on imports or by bounties given to 
 domestic producers. Thus the moderu nations have to an 
 extent returned to the old doctrine of mercantilism. In recent 
 years protection has become universal and no nation is now 
 without some form of it. 
 
 Special Policies of World Powers 
 
 The special commercial policies of the nations today are 
 of three kinds: 
 
 1. Those relating to the development of a country within 
 
 its own borders, as exemplified chiefly in its protec- 
 tive tariff systems. 
 
 2. Those relating to a nation's maritime policies found 
 
 in its navigation laws. 
 
 3. Those relating to a country's trade expansion in for- 
 
 eign markets, as shown in its devices for the promo- 
 tion of foreign trade. 
 
 These special policies, as well as the general foreign com- 
 mercial policy of each nation, as discussed at the end of this 
 chapter, are promoted by a variety of methods most of which 
 come under one of the following heads:
 
 COMMERCE POLICIES OF WORLD POWERS 73 
 
 1. Diplomatic efforts 
 
 2. The display of armed force 
 
 3. Private efforts 
 
 4. Legislative aids 
 
 5. Pecuniary aids (subsidies, etc.) 
 
 Protective Tariff Systems 
 
 The protection of home industries against foreign compe- 
 tition is now practically universal. France, Germany, Austria, 
 Italy, and the United States are the strongholds of the high 
 tariff system. Holland, Belgium, Switzerland, Sweden, and 
 Norway favor moderate tariffs. England, still influenced by 
 the thought of Smith and Hume, has a very low tariff, thus en- 
 couraging the importation of food, raw materials, and semi- 
 manufactured goods, and making the country the great center 
 for the reshipping of foreign products. 
 
 A further protective policy which is used to foster domes- 
 tic commerce is that of levying export duties ad valorem on 
 certain classes of goods. This policy has been followed par- 
 ticularly in Turkey, Persia, and Servia. Some countries levy 
 special export duties for special purposes. Sweden and Nor- 
 way, for example, levy export duties on wood and timber in 
 order to preserve their forests. 
 
 In certain cases particular articles may be prohibited from 
 entering a country at all, either as a matter of public policy 
 based on moral or religious reasons, as opium has been pro- 
 hibited in China, or for reason of public security, as in the 
 case of ammunition entering the countries of Central America. 
 These are not, of course, matters of commercial protection. 
 
 In the United States a constitutional provision prohibits 
 any tax on exports. In foreign countries, export duties are 
 sometimes levied to meet extraordinary expenditures, as when 
 during the Boer War, England placed an extra duty on coal, 
 coke, and manufactured fuel. Some countries collect extra
 
 74 GENERAL CONSIDERATIONS 
 
 duty from certain commodities on which they have a monop- 
 oly, as for instance, nitrate of soda exported from Chile and 
 cork from Spain. There are duties on coffee, rubber, sugar, 
 rum, molasses, tobacco, nuts, wood, hides, skins, wool, sponges, 
 olives, spices, tea. rice, silk, and precious stones exported from 
 different parts of Asia, Africa, and of Central and South 
 America. Protective export duties are not numerous and are 
 levied only in cases of emergency. 
 
 There are also the so-called "transit duties" which are 
 levied upon merchandise passing through one country and 
 destined for another. Such was the case in Russia where 
 transit duties on goods destined for Persia were imposed in 
 order that Russia might be favored in Persian markets. The 
 importation of sugar into Great Britain from sugar-bounty- 
 paying countries, was recently prohibited, the purpose being to 
 protect the domestic sugar producers in certain British colonies 
 and the sugar refiners in Great Britain proper. 
 
 Against the bounties of one nation, countervailing duties 
 are sometimes enacted by another. Thus, against the bounties 
 of European countries on sugar, there existed in the United 
 States a countervailing duty to protect domestic sugar pro- 
 ducers. As a part of the same policy of protection, a nation 
 sometimes enacts retaliatory duties upon goods imported from 
 another country which has discriminated against its citizens. 
 This was the case between Austria-Hungary and Roumania in 
 1892-1894, and caused the tariff war of 1893-1894 between 
 Germany and Russia. 
 
 Navigation Laws 
 
 The commercial policies which pertain to the maritime 
 expansion of a country are to be found in the navigation 
 policies of the world powers and in their laws — as in England's 
 navigation acts of 165 1 and 1663 and the registry law of the 
 United States enacted in the year 1789.
 
 COMMERCE POLICIES OF WORLD POWERS 75 
 
 Certain countries have aimed to exercise jurisdiction over 
 at least some parts of the seas. Thus Venice at one time 
 controlled the Adriatic, England the waters surrounding its 
 home islands, and the Scandinavian countries the Baltic Sea. 
 
 This mare claiisiim policy will never be popular, except 
 with the few nations which maintain it for special reasons. 
 Such nations are never at a loss to present excellent arguments 
 in its defense. The doctrine of the freedom of the seas with 
 equal rights to unrestricted passage for all nations may be 
 expected to form a part of the general policy of all excluded 
 nations until the ideal is attained. 
 
 Maritime policy has been promoted by protective legisla- 
 tion in favor of the shipping industry and against foreign 
 competition by levying tonnage fees and custom duties on for- 
 eign ships participating in domestic trade, by the restriction of 
 the coasting trade to native ships, and by similar means. The 
 advancement of maritime interests has been accomplished by 
 the policy of ship subsidies. Government aid to the shipping 
 industry before the war was liberally provided by the British, 
 German, and French governments, the latter government 
 being the most generous of the three. 
 
 Devices for Promoting Foreign Trade 
 
 Trade expansion in foreign markets is usually promoted 
 by spontaneous private action, with greater or less assistance 
 from the government through its laws, subsidies to shipping, 
 its diplomatic channels and consular staffs, the negotiation of 
 favorable treaties, etc. The spontaneous action of private 
 interests which seek on their own initiative an outlet for their 
 surplus products or for their commercial activities in other 
 ways, is the most potent factor in trade expansion and in the 
 conquest of foreign markets. 
 
 In spontaneous trade expansion abroad and the promotion 
 of the overseas commerce, private organizations are of great
 
 76 GENERAL CONSIDERATIONS 
 
 assistance. The American auxiliaries to the promotion of 
 foreign trade will be discussed in a subsequent chapter. 
 
 In this connection it is interesting to note the influence 
 which the German Kartcls have exercised upon foreign trade 
 in general and the American export trade in particular. By 
 means of these combinations of exporters the Germans were 
 able to regulate trade and to offer a solid, organized, combined, 
 and aggressive front to the advancement and protection of 
 their interests abroad. By reason of the fact that in America 
 such combinations of exporters were prohibited until the pas- 
 sage of the Webb-Pomerene Act, there have been few great 
 organizations for the purpose of offering combined and effec- 
 tive resistance to competition in foreign markets. Thus the 
 Germans had an additional advantage over this country by 
 means of a device which had not only the sanction of their 
 government but its active support and from the use of which 
 the United States was deprived by its own laws. 
 
 General Policies of World Powers 
 
 Besides its special commercial policies, each great nation 
 will be found to have a general policy, a policy which is not 
 merely commercial and economic but political as well, its roots 
 lying deep in the national consciousness. For the maintenance 
 of this policy the people are willing often to go to great lengths. 
 
 United States 
 
 Hitherto the United States has been the exception that 
 proves the rule in this particular. The nearest approach that 
 it has made to such a policy is to be found in the Monroe 
 Doctrine, and in an attitude of isolation and aloofness in inter- 
 national affairs — a policy often harmful to commerce with 
 the rest of the world. What the future general policy of this 
 great country will be is still uncertain but it is to be hoped 
 that out of the great turmoil of international conflict and
 
 COMMERCE POLICIES OF WORLD POWERS 77 
 
 negotiation we shall emerge with a definite and wise commer- 
 cial policy that will largely determine the course of our future 
 history. 
 
 Great Britain 
 
 The general commercial policy of Great Britain has been 
 for many years to maintain, first its commercial supremacy on 
 the sea, and second the integrity of its colonial empire in all 
 parts of the world. The great war has demonstrated as nothing 
 else could, how supremely successful she has been in both 
 endeavors. 
 
 Germany 
 
 The policy of Germany, while of comparatively recent 
 origin, was pushed with remarkable energy and ability. It 
 aimed at the conquest of the world's markets and the creating 
 of a strong merchant marine. It was developed along lines 
 similar to the country's military machine and with a similar 
 un.scrupulousness and ruthlessness, ultimately degenerating 
 into a policy of military conquest, disastrous failure, and a 
 future of the greatest uncertainty. 
 
 France 
 
 France before the war seemed satisfied with the cordial and 
 preferred commercial relations which it had gained solely 
 through its diplomacy. The nation had strong colonial ambi- 
 tions and was seeking to develop its merchant marine through 
 subsidies. It is impossible at this time to forecast her future 
 aims. 
 
 Other Nations 
 
 It is possible to discuss the general policies of the other 
 leading nations only in terms of the past. With the war all 
 things came to a stop, and it is too much to say that their
 
 78 GENERAL CONSIDERATIONS 
 
 general policies may be expected to resume their former direc- 
 tions after the world reverts to normal conditions. In some 
 instances it is obviously impossible, in other cases a new 
 direction is already evident. 
 
 Russia's chief aims were in the Far East, and in the indus- 
 trial and commercial development of the country through 
 foreign capital and brains. 
 
 Austria-Hungary has been in the past bent on extending 
 its influence over the Adriatic, and its commercial aims have 
 been concerned largely with the Balkan situation and its trade 
 aspects. 
 
 The Sdandinavian countries had a joint policy of maintain- 
 ing their commercial integrity abroad and of intensively cul- 
 tivating trade intercourse among themselves and with near-by 
 states. 
 
 Italy had great colonial ambitions in Africa but its foreign 
 trade policy seems to have been chiefly in the direction of 
 obtaining toleration for its emigrants and exercising close 
 supervision over its subjects in all countries, to the end that 
 if its citizens should not return to their native land after they 
 had made their small fortunes abroad, at least that they should 
 not fail to contribute their quota to the welfare of their 
 relatives at home. 
 
 Japan's immediate policy was concerned with the Far East 
 and to obtain equal rights for its citizens everywhere. Its 
 principal aim. is practically to monopolize the trade of Eastern 
 Asia. 
 
 Holland's foreign policy was to keep what it had and to 
 look for more in the way of distribution. Holland always 
 has been the abode of a large number of those intermediaries, 
 who are such potent factors in the international marketing of 
 commodities. 
 
 Spain was content to rest upon its glory of the past and, 
 like the United States, did not seem to have any strong or
 
 COMMERCE POLICIES OF WORLD POWERS 79 
 
 well-defined foreign trade policy, except with regard to Africa 
 and in the maintenance of particularly cordial commercial 
 relations with all the Spanish-speaking countries of the world. 
 
 The smaller nations and the oriental countries have had 
 all they could do in keeping their heads above water and in 
 safeguarding their political independence. They could not, 
 even if they would, pursue a consistent foreign trade policy. 
 
 The South American countries have an international trade 
 policy which is much the same for all. They endeavor to 
 utilize their diplomatic and consular staffs and to use other 
 means in attracting capital, trade, and immigration into their 
 countries — particularly capital. 
 
 Knowledge of Special Trade Policies 
 
 The knowledge of the special policies of the country where 
 the prospective market is located is essential to commercial 
 success abroad. A good idea of the general foreign trade 
 policy of the country with which one expects to deal is often- 
 times valuable and never useless.
 
 CHAPTER XI 
 
 LOOKING INTO THE FUTURE OF FOREIGN TRADE 
 
 What of the Future? 
 
 Every sound business is started and conducted with an 
 eye to the future. Today every wide-awake business man, 
 every active or prospective foreign trader is asking himself 
 and others: "What of the future?" We can best judge it by 
 the past. In surveying its vistas by the lamp of experience 
 and in the light of the startling events which have taken place 
 in the recent history of the nations, certain prognostications 
 may be ventured. 
 
 In formulating these one has to be guided by the unusual 
 developments of the past few years in the domains of inter- 
 national politics, economics, and sociology. Every business 
 is fundamentally dependent upon politics, which includes law, 
 government, order, and the current ideas of freedom. It is 
 also dependent upon economics, the financial and industrial 
 status of the people, and upon social forces, which produce 
 and which are represented by human wants and desires and, 
 in the widest sense of the word, by social aspirations. 
 
 The Individualistic Nations 
 
 The world has been astounded by the recent socialistic up- 
 heaval in Russia. This phenomenon is too vast and momen- 
 tous for discussion here. Its occurrence, and the fascina- 
 tion of this sort of sudden social transformation for a certain 
 type of mind, will have the effect of arousing the rest of the 
 world to strenuous preventive measures. There is the best 
 of reasons to believe that the most potent factors of the 
 
 80
 
 THE FUTURE OF FOREIGN TRADE 8l 
 
 peculiar and radical social revolution in Russia were the 
 oppression, poverty, and ignorance that then prevailed. 
 
 The civilized and individualistic nations of the world 
 realize this and are making strong efforts so to improve and 
 better the conditions of the working classes that the appeal 
 of Bolshevism will fall dead on their ears. 
 
 Higher Standards of Living 
 
 One certain result of this agitation will be that the work- 
 ing classes of every country will attain to wider participation 
 in politics and industry, and will secure greater privileges and 
 a greater share in the earnings of capital. The average man 
 in other nations, as well as in our own country, will have more 
 money to spend, he will provide himself and his family with 
 greater comforts, and he will be able and eager to purchase 
 luxuries to the extent of his earnings. This translated into 
 the language' of foreign trade signifies that the average man 
 abroad will want every commodity and luxury which the 
 average man in other countries may have and which he 
 has not and that also he will be better able to pay for them 
 than ever before. 
 
 What the present labor unrest means is that both soldier 
 and worker have glimpsed higher standards of life and living 
 and that for themselves and their famihes they mean to hold 
 fast what vantage ground they have gained, and strive for 
 more. 
 
 It also seems as if the more intelligent capitalists appre- 
 ciate this attitude of the workers and sympathize with their 
 aspirations for better things. Under these circumstances it is 
 likely that the world will see a new order in which the demand 
 for the necessaries, the comforts, and the conveniences of 
 civilized life will be for quantities and varieties heretofore 
 unknown in the history of production. The markets of the 
 world will be enlarged and extended beyond precedent and
 
 82 GENERAL CONSIDERATIONS 
 
 the opportunities for the merchant in foreign trade will be 
 multiplied marvelously. 
 
 The Breaking Down of Barriers 
 
 The increase of demand, the expansion of trade, and the 
 resulting interchange of ideas and intelligence will have 
 another momentous effect. The economic co-operation and 
 international exchange of commodities will tend to break 
 down the hindrances and obstacles that now exist. Like water 
 seeping through an obstructing wall, increasing volumes of 
 trade will disintegrate and break down the barriers that now 
 obstruct and make trade difficult. 
 
 Hitherto the interchange of commodities between the 
 nations of the world has been hampered by lack of uniformity 
 of laws, by high tariff and other protectionist barriers, by 
 preferential treaties (both secret and open) and by govern- 
 mental interference with transportation and selling methods. 
 If these hindrances to free commerce are to be done away 
 with and the nations of the earth are to be allowed liberty 
 to compete with each other on equal terms throughout the 
 world as they do in their own country, the impetus given to 
 foreign trade will be tremendous. Such a course is the logi- 
 cal result of the now visibly developing rapprochement of 
 the people of different races in every part of the globe. 
 
 The Present Economic Situation 
 
 The United Stsates is a large creditor of the world's strong- 
 est nations. She has made a very substantial contribution 
 towards the world's freedom from autocratic and militaristic 
 dominion. Many small nations are grateful to her for their 
 liberties. 
 
 The economic situation of the world from the standpoint 
 of finance is that smaller nations are financially obligated to 
 larger nations and many of them are obligated to the United
 
 THE FUTURE OF FOREIGN TRADE 83 
 
 States of America. If there were no other reasons the world 
 sentiment and the world financial indebtedness in our favor 
 would be sufficient to obtain for us just concessions to our 
 exporters, from every nation which sided with the AlHes. 
 
 These, however, are not the only reasons. What we gave, 
 we gave. It belongs to the past. Sometimes a gift or a loan 
 is gratefully received and then quickly forgotten. But what 
 we are yet to give is what concerns us. The world has been 
 hungry and almost naked for years. Many small nations 
 have suffered slavery for centuries. The world wants to be 
 fed, clothed, and enabled to enjoy its newly begotten free- 
 dom. It looks to America for assistance, to America the great 
 hope of humanity, the ever-constant friend of the oppressed, 
 America basking in affluence, blessed with riches never 
 dreamed of even by the ancient kings. And America is ex- 
 pected to respond kindly and generously, if not lavishly. The 
 necessity laid on the nations of the world to come to America 
 for that which they need will open up channels of trade that 
 if we do our part need never afterwards be closed. 
 
 There will be for some years to come a great multitude of 
 buyers in every country. They will clamor with outstretched 
 hands for everything this country has to sell. In the begin- 
 ning they will have but little money; not only their govern- 
 ments but most of their financial and mercantile institutions 
 will beg for credit. Their natural resources — mines, forests, 
 fields — as well as their municipalities, r*ailroads, and indus- 
 tries, all will need capital for development. Here is the un- 
 paralleled opportunity in all history for one nation not only 
 to do good to the rest but in doing it to prosper and accumulate 
 wealth and economic power. 
 
 Government Aid to Trade Expansion 
 
 Our government should arrange to extend credit and other 
 facilities to foreign peoples. It should provide the most favor-
 
 84 GENERAL CONSIDERATIONS 
 
 able business conditions for our bankers, our financiers, our 
 manufacturers, our exporters, and for all other national 
 factors having any dealings of an international character. 
 Our commerce should be placed in a specially favored and 
 privileged position with every people who desire to avail 
 themselves of our national economic aid. If this is done we 
 shall have another potent factor in our favor. 
 
 Sociological Aspects 
 
 It is easily seen that the sociological trend of the mod- 
 ern world points also most auspiciously in our favor. This 
 is, if not a new, at least a renovated world in which we are 
 now living. A glance at the map of Europe shows countries 
 scarcely heard of in recent years — Bohemia, Poland, and 
 Ukrainia. The dead have risen, impelled with new life and the 
 vigor of youth. These countries need a guide, counselor, and 
 friend, as much as they need economic assistance. They 
 admire America; they are most grateful for the help it ren- 
 dered to them. They want us with them in preference to 
 any other nation, for our ideals are their ideals. 
 
 But this is not all. For generations the people of these 
 races have been migrating to America until we number mil- 
 lions of them in our citizenship. These millions, too, are 
 impregnated with American ideals. Many of them will go 
 back to their old homes. Is it not natural to suppose that 
 they will carry with them a love for America and an appre- 
 ciation of American civilization, while those of their fellow 
 countrymen who remain here will inevitably add their in- 
 fluence in our favor? 
 
 Such signs as these speak one language and point to one 
 conclusion ; American civilization will be the most favored 
 civilization among the newly created nations of the old 
 Europe. In the language of trade this means that, by adopt- 
 ing our ways land our methods of life, the nations under dis-
 
 THE FUTURE OF FOREIGN TRADE 85 
 
 ctission will want all the material blessings of our civilization 
 which we have on sale. Their social aspirations will be akin 
 to ours and our civilization will be widely emulated. 
 
 If this is true in one respect, it may be true in other re- 
 spects. If they want our products, they may be willing to 
 accept our methods of distribution. Intense commercial activ- 
 ity is bound to come and each nation will become a veritable 
 beehive of mercantile life. If we can go into these new coun- 
 tries and install our methods, there will be willing hands to 
 assist us and willing minds to follow us. 
 
 The democratization of the entire world in which the 
 American civilization will be a very influential if not a pre- 
 dominant factor may safely be predicted. Whatever may be 
 the course of world affairs — politically, economically, socio- 
 logically — the citizens of this country may rest assured that 
 they will be in a most advantageous position.
 
 PART II 
 MACHINERY OF FOREIGN TRADE
 
 CHAPTER XII 
 
 THE EXPORTER AND HIS STAFF 
 
 World Trade Machinery 
 
 The trade machinery which keeps the world's commerce 
 in motion is composed of certain factors, the functions and 
 interrelations of which must be considered. These factors 
 may be grouped as follows: 
 
 1. The exporter and his staff 
 
 2. The importer and his staff 
 
 3. Foreign trade auxiliaries 
 
 The machinery of exporting so runs into the machinery of 
 importing that it is difficult to distinguish the separate func- 
 tioning of each. For convenience certain dements will be 
 discussed as a part of the exporter's staff which are equally 
 applicable to the importer, and some which might be classed 
 under all of the three heads given above. 
 
 The Exporter 
 
 Classes of Exporters 
 
 Anyone engaged in selling goods for export may properly 
 be called an exporter, but in its commonest application the term 
 suggests either the manufacturer who sells his product abroad 
 or the individual or firm selling on its own account or for a 
 third party. 
 
 Exporters may be classed according to their functions as: 
 
 1. The producer for export 
 
 2. The export commission house 
 
 89
 
 90 MACHINERY OF FOREIGN TRADE 
 
 3. The export merchant 
 
 4. The export agent 
 
 5. The co-operative export organization 
 
 The Producer for Export 
 
 The producer for export may be a manufacturer, or he 
 may be the owner of natural resources, such as mines, oil wells, 
 or forests, or of the products of the soil, such as cotton, wheat, 
 live stock, etc. He may export his product through one of 
 the other export factors or he may do it through his own 
 export department, this latter procedure being, as yet, the ex- 
 ception rather than the rule. International trade in raw mate- 
 rial goes on through well-defined channels and requires no 
 intricate export mechanism to handle it. The producer of 
 finished merchandise usually has a more complicated task. 
 Unless he is satisfied with very slow progress, the manufac- 
 turer must take definite steps either to push his foreign sales 
 himself or to use other agencies in the trade to that end. 
 
 The Export Commission House 
 
 The export commission house and the export merchant are 
 usually confused in the public mind. They are not identical. 
 The commission house buys goods for a foreign client and 
 charges a commission for the service; it cultivates trade only 
 in foreign countries, does not deal with other houses, and 
 should not be considered as a broker in any sense of the word. 
 
 There are about one thousand commission houses in the 
 United States, two-thirds of which are in New York City. 
 They are of particular importance to the manufacturer, be- 
 cause they handle nearly 70 per cent of all the exports of the 
 United States. In a legal sense they are agents acting for 
 their principal for a compensation called commission or fac- 
 torage. It is neither legal nor proper for a commission house 
 to receive a commission from both parties to the same transac-
 
 THE EXPORTER AND HIS STAFF 91 
 
 tion, although there is nothing to prevent its also acting as an 
 agent for an exporter in the sale of his merchandise abroad. 
 In fact it often acts both in this capacity and as an agent for 
 a foreign buyer. The commissions vary from 2^ to 5 per 
 cent. 
 
 The large export commission houses of this country are 
 exceedingly useful adjuncts to foreign trade and their activi- 
 ties should not be discouraged. This does not mean that our 
 manufacturers should always depend entirely upon commis- 
 sion houses for their orders as they do now. Any business 
 man with ordinary business judgment and sagacity can see 
 that the orders coming to him through the commission houses 
 will never build for him an independent or permanent export 
 trade. He will also see that usually it will pay him best not 
 to ignore this source of business supply, but on the contrary 
 to cultivate the acquaintance and the good-will of the repre- 
 sentative exporters. 
 
 The Commission House as Buying Agent 
 
 The commission house is the buying agent for foreign mer- 
 chants ; this is its proper function. When it starts to buy- on 
 its own account and to send salesmen throughout the world, 
 it becomes a sort of international department store and devi- 
 ates from its true sphere. 
 
 Not infrequently, the manufacturer finds a buyer abroad 
 who will give him an order only through his commission mer- 
 chant in the producer's country. In that case it is customary 
 to ask the buyer to send a duplicate order to the factory, so 
 as to make sure that the order will be executed according to 
 directions, and incidentally that the order itself will be trans- 
 mitted to the manufacturer by the local commission house. 
 
 There are numerous reasons why a buyer abroad often 
 prefers to deal through the commission house. If he buys 
 much and in a great variety it saves him much correspondence,
 
 92 MACHINERY OF FOREIGN TRADE 
 
 expedites matters, and makes it possible to have various con- 
 signments shipped on the same bill of lading, with possibly a 
 saving of freight and cartage, to say nothing of trouble. The 
 purchaser is likely to be acquainted with the commission house, 
 which perhaps has a branch in his town. He can look to this 
 house for responsibility if anything goes wrong with the order 
 or the shipment. But perhaps the most important reason of 
 all is that the export house will give him the credit which, in 
 most cases, the American manufacturer will refuse. 
 
 There are also certain advantages for the manufacturer in 
 dealing through the export commission house. The transac- 
 tion is like any other domestic transaction, for the export house 
 is practically the purchaser. The business entails no extra- 
 ordinary expense, and the manufacturer is always sure of his 
 money as soon as he executes the order. 
 
 The Export Merchant 
 
 There are very few real export merchants in this country, 
 although they are fairly numerous and important abroad, some 
 of them merely loaning money to importers in foreign mar- 
 kets. Many commission houses stock goods and sell from 
 these stocks and in this sense may be called export merchants. 
 
 The more important export merchants sometimes maintain 
 very extensive organizations, having numerous offices abroad, 
 employing traveling salesmen, issuing magazines, and even 
 owning and operating steamship lines. They are always to 
 be considered as acting, not for the producer or the purchaser, 
 but for themselves. 
 
 The Export Agent 
 
 An export agent does not act for the buyer as does the 
 export commission house, but for the seller, usually charging 
 the latter a commission on all his foreign sales. Generally an 
 export agent specializes in some one line of products, such as
 
 THE EXPORTER AND HIS STAFF 
 
 93 
 
 paper, hardware, copper, etc. Most frequently he also con- 
 fines his operations to a certain locality — some operating ex- 
 clusively in South American markets, others in the Far East, 
 and so on. In New York City there are a number of success- 
 ful foreign selling agencies which operate on a large scale, 
 maintaining many foreign offices and having extensive con- 
 nections among foreign buyers. 
 
 Co-operative Export Organizations 
 
 There are a few co-operative export organizations which 
 are maintained as the export departments of non-competing 
 manufacturers, but this method of promoting export business 
 has not yet come into its own among the American producers. 
 Nevertheless, in many cases it is not only the best but the only 
 practical method for the extension of export trade. In Eng- 
 land, France, and Germany, co-operative selling organizations 
 have been very popular and are doing a prosperous and suc- 
 cessful business. 
 
 The Exporter's Staff 
 The Export Manager 
 
 The export manager is an all-important personage in ex- 
 port trade, and no concern engaged largely in such trade can 
 safely dispense with him. "Export manager" does not fully de- 
 scribe his calling, which is oftentimes more complicated than 
 the title would indicate. His duties depend upon the size of 
 the concern employing him, and, to some extent, upon the trade 
 strategy of his employer. 
 
 If the concern is small, the export manager may combine 
 within himself the functions of foreign correspondent, ship- 
 ping clerk, traffic manager, advertising expert, sales manager, 
 export agent, and eastern manager. Ordinarily he is expected 
 to cultivate the acquaintance of export commission men and 
 brokers, attend to shipments of merchandise at the port of
 
 f)4 MACHINERY OF FOREIGN TRADE 
 
 exit, and occasionally write an advertisement for insertion in 
 some local export publication. This is his usual work, not 
 because his profession does not call for a larger field and more 
 important duties, but because his employer is too often of the 
 class who either cannot or dare not enter export activities on 
 a larger scale, depending, for the time being at least, upon the 
 local commission houses and resident buyers of foreign houses 
 for his export orders. 
 
 There are several classes of these export managers but the 
 type just described is fairly representative. The theory on 
 which many of these boys (for they are usually very young 
 men) are put in their positions is that they are honest, per- 
 severing, and "good mixers." It is believed that even though 
 they have not an extensive acquaintance among export com- 
 mission houses they can soon develop such an acquaintance, 
 that because of their perseverance and honesty they can learn 
 the business and that they will stick to their jobs. There is no 
 good reason known why men of greater education and ability 
 should not be anxious to enter this field, which offers really 
 large opportunities. It is certain that many large concerns 
 would be ready to employ them on favorable terms. 
 
 The Director of Foreign Sales 
 
 There is another class of men sometimes called export man- 
 agers. These are the men of large caliber who are usually 
 given reponsible offices, such as vice-president or secretary. 
 Their function also is to cultivate the acquaintance of export 
 commission houses and resident buyers, but that is only a small 
 part of their activities, for they usually have complete charge 
 of selling campaigns in different sections of the world. They 
 supervise agencies, correspond with customers, and negotiate 
 sales directly from the factory. In addition to all this they 
 usually manage a large force of local employees, salesmen, 
 managers, and agents.
 
 THE EXPORTER AND HIS STAFF 95 
 
 The Foreign Trade Manager 
 
 The foreign trade manager is usually a man of consider- 
 able education and large experience in foreign trade, familiar 
 with a number of foreign languages, and who has traveled and 
 sold goods abroad. He has secured his position, as a rule, by 
 first winning his spurs in the field. These men are high-priced 
 and only concerns conducting operations in foreign markets 
 on a very large scale can afford to employ them. Oftentimes 
 they have left lucrative positions abroad or in the government 
 service to fill this office. The term ''foreign trade manager" is 
 better known among importers who often have such a man as 
 manager of a foreign department. There is reason to believe 
 that the time is approaching when the larger exporters will 
 replace the export managers of the type first described by for- 
 eign trade managers who will have charge of imports as well 
 as exports. 
 
 The Manufacturer's Export Representative 
 
 The manufacturer's export representative is the name given 
 to the agent of the manufacturer who attends to his foreign 
 shipments and solicits orders for him from the local commis- 
 sion houses. Such agents frequently represent more than one 
 house. The arrangement is not generally satisfactory and the 
 concerns employing such persons are usually beginners in for- 
 eign trade. 
 
 The Correspondent 
 
 The correspondent is also an indispensable adjunct of the 
 world's trade. Knowledge of languages alone does not make 
 a competent correspondent, even though such knowledge in- 
 cludes all the refinements of correspondence used in the coun- 
 try with which he is employed to deal. The right kind of 
 correspondent must possess some of the qualities of a high-
 
 96 MACHINERY OF FOREIGN TRADE 
 
 class international salesman, for his chief aim is not only to 
 answer inquiries and to cultivate clients by mail, but to initiate 
 and conduct correspondence with a view to selling merchan- 
 dise. Particularly important is this in the case of the concern 
 employing a correspondent to conduct active selling campaigns 
 by means of circular letters, the distribution of catalogues, etc. 
 The proper function of a foreign correspondent is really 
 mail order salesmanship. Of course, he may be made merely 
 an adjunct of the sales manager, but in such a case the man- 
 ager, as well, must know something of the language and the 
 people with whom he is dealing. 
 
 Translators 
 
 Translators are not usually accorded the importance due 
 them, and therefore it may not be out of place to point out the 
 fact that many a deal has fallen through because of the trans- 
 lator's errors in translating the original copies of correspon- 
 dence. Every careful business man knows the importance of 
 placing an exact interpretation upon propositions which pass 
 between buyer and seller. Clumsy translation not only fails 
 to carry out the original meaning but is apt to distort it in such 
 a way as to give it a meaning that is quite different. A reli- 
 able translator must be thoroughly familiar with both lan- 
 guages — the one he translates and the language into which he 
 is translating — otherwise he is apt to create mischief. Techni- 
 cal dictionaries are now available in most industries and in the 
 principal foreign languages. Such a dictionary should be 
 possessed by the average translator in addition to whatever 
 first-hand knowledge of the language he may have, because 
 of the great number and variety of trade and technical terms 
 employed in ordinary business transactions. 
 
 There are many poor translators, not because they do not 
 know one language well, but because they rarely know two 
 languages equally well. Still, with a little care and business
 
 THE EXPORTER AND HIS STAFF 97 
 
 tact, a competent translator should be readily obtained, 
 though it is a good plan to have another man familiar with the 
 foreign language to verify the translation, especially at the 
 outset. 
 
 The Co-operative Salesman 
 
 The salesman is, in a sense, the most important member of 
 the exporter's staff. On him depends the ultimate success or 
 failure of the enterprise. The remainder of the staff exists 
 to direct and support his efforts and to fill his orders. The 
 requirements and procedure of international salesmanship will 
 be dealt with in a later chapter. Here but a single type of 
 agent is considered — the co-operative salesman. This repre- 
 sentative may be an international itinerant merchant work- 
 ing independently, or he may be the representative of an 
 export commission house. Most frequently he represents a 
 number of manufacturers in non-conflicting lines, and goes 
 abroad in the capacity of their agent. He carries and dis- 
 tributes their samples and generally advertises the wares of 
 his principals wherever he goes. For these labors he receives 
 a small expense allowance from his employers, but frequently 
 he finances himself and works purely on a commission basis. 
 
 It is a well-established theory that the seller, to hold his 
 customers, must at stated intervals either visit the territory 
 himself or send his personal representative. This theory is 
 put into practical effect by the co-operative salesman, who be- 
 comes acquainted with the customers of the houses which he 
 represents, collects credits and market information and keeps 
 his employers posted on the conditions existing in a particular 
 territory. 
 
 When the manufacturers in the United States have fully 
 realized the benefits of co-operation in foreign trade, co-oper- 
 ative salesmen will become more potent factors in the promo- 
 tion of international trade. Until that time the position will
 
 98 MACHINERY OF FOREIGN TRADE 
 
 continue to be one of hard pioneer work, and of its kind not 
 the most remunerative. 
 
 Local Selling Agent 
 
 The employment of local selling agents is an old and well- 
 established custom with foreign traders. European manufac- 
 turers use them almost universally, and the advantages of the 
 practice are obvious. A good local agent knows his people, 
 their methods of business, their needs, and their financial 
 standing. He is able to adjust misunderstandings between the 
 exporter and his customer, and his presence on the ground in- 
 variably results in the saving of much time and inconvenience, 
 whatever the nature of the transaction. 
 
 The chief difficulty is to find the right representative. Men 
 with the requisite character, selling ability, and discretion, who 
 can grasp their employers' points of view, who can make the 
 most of their favorable position on the ground so as to take 
 advantage of local opportunities as they occur, who can be 
 trusted to grade prices to suit the exigencies of the moment, 
 and to keep abreast of the operations of their competitors, are 
 not numerous in any market whether domestic or foreign. If 
 the exporter is fortunate enough to find such a man he will 
 be worth all he costs. 
 
 The Shipping Clerk 
 
 The shipping clerk is an important link in foreign trade. 
 He has full charge of preparing goods for shipment, which 
 means packing, marking the cases, attending to all the shipping 
 documents, consular formalities, transportation of shipments 
 to the vessel — in fact, of everything from the time the mer- 
 chandise is collected for packing until it is practically on board 
 the vessel. Sometimes he also performs the function of 
 traffic manager, selecting routes and making all arrangements 
 with steamship companies for transportation. It depends on
 
 THE EXPORTER AND HIS STAFF 99 
 
 the business of the company employing him, whether his func- 
 tions are general or intensive and consequently more special- 
 ized. If the company does a very large business, he may only 
 get the consignments together and into the hands of the steam- 
 ship company; if the business is comparatively small the ship- 
 ping clerk may have to give his attention to everything, includ- 
 ing the duties of the bookkeeper and messenger boy. 
 
 The responsibilities of a shipping clerk in a small concern 
 are not so numerous as in a large manufacturing or export 
 commission concern, but his position is a very responsible office 
 just the same. A manufacturer' looking for an export ship- 
 ping clerk can find the best trained men in the large export 
 commission houses, and if he cannot pay enough to induce an 
 old employee of such a house to work for him, the best he can 
 do is to train one of his promising young men in the office of 
 some export house, or of some transportation company en- 
 gaged in international business on a large scale. 
 
 Numerous customers have been lost by American manu- 
 facturers because their goods were not properly packed, 
 marked, or shipped. In fact, until this branch of foreign 
 service becomes more efficient and more specialized, we cannot 
 become leaders in the world's commerce. 
 
 The Traffic Manager 
 
 The traffic manager should know all that a shipping clerk 
 knows, and in addition to that he must know how to route 
 freight. In foreign trade he must know thoroughly all the 
 steamship companies, their rates, their facilities, and their re- 
 quirements. He must know the railways connecting the fac- 
 tory with the port of shipment, if he is a traffic manager for a 
 manufacturing concern; if he works for an export house, he 
 should also know the railways connecting the harbors of the 
 world with the interior. This position is one of great respon- 
 sibility and requires considerable education and special train-
 
 lOO MACHINERY OF FOREIGN TRADE 
 
 ing, as well as natural ability. It is surprising that not until 
 recently have the colleges and commercial schools of this 
 country offered practical courses in transportation and ship- 
 ping. Even now but very few such courses include foreign 
 as well as domestic transportation. The graduates of schools 
 that offer proper training in these subjects will have no diffi- 
 culty in obtaining positions as traffic managers. 
 
 Advertising Expert 
 
 American trade expansion is suffering from lack of adver- 
 tising men familiar with advertising methods and principles 
 applicable to foreign lands. From the standpoint of learning 
 alone, there is no reason why an advertising expert could not 
 be developed who is versed in foreign advertising pertaining 
 not to any one particular country, but to every country of 
 the world. 
 
 The function of the advertising specialist need not be 
 described at length here. Stated briefly, his business is to 
 manage the distribution of merchandise by means of publicity, 
 and the methods by which this is accomplished are discussed 
 in Chapter XXX, "Advertising in Foreign Trade."
 
 CHAPTER XIII 
 
 IMPORTING AND THE BIPORTER 
 
 Interrelation of Exports and Imports 
 
 Much stress is commonly laid upon our export trade, but 
 our imports are seldom mentioned. It is not surprising that 
 there is still a popular assumption that the greater the excess 
 of our exports over our imports, the better it is for the United 
 States. This is a fallacy. Those who leave the subject of 
 imports out of their definition of foreign trade, forget that 
 there is essentially no real difference, from the economic 
 standpoint, between the trading people of foreign countries and 
 the traders of the same community. When we try to show 
 our prosperity by quoting the excess in the value of our 
 exports over our imports, we forget that we pay annually 
 millions of dollars to foreigners on the investments which 
 they have made here and in interest on the money which we 
 have borrowed abroad and that each year other millions are 
 sent abroad by the aliens in America. The money thus sent 
 out of the country when properly compiled would, in a large 
 measure, offset the boasted excess of our exports over our 
 imports. We shall not be able to understand the subject of 
 exports and imports nor to draw the line between the two, 
 unless we realize that both are necessary to the prosperity of a 
 country and the happiness of its people. 
 
 The people abroad cannot continue to buy unless they can 
 also sell, for the money which they pay for our goods must 
 be made in the production and sale of their raw materials and 
 the commodities which they manufacture. It is an economic 
 Impossibility for a nation to be solely an exporter. The trade 
 
 lOI
 
 102 MACHINERY OF FOREIGN TRADE 
 
 of the world is based upon the exchange of commodities, and 
 "reciprocity" is the watchword of international commerce. 
 
 It is also a false assumption that all the money which is 
 paid for imported products necessarily goes out of the country. 
 What of the millions of dollars which the importer of foreign 
 goods spends in advertising in American publications? What 
 of the profits earned from their sale by American jobbers and 
 retailers? What of the money the importer spends in trans- 
 porting his goods by American carriers? What of the revenue 
 he pays to sustain our government? Nor is this all, for as 
 soon as his business warrants it, the foreign exporter often 
 establishes an American factory and, importing material only, 
 spends more money in wages to American employees. 
 
 We cannot reap profits indefinitely on the sale of goods in 
 any foreign country unless we buy commodities in return. It 
 is a good policy for an international trader to buy from that 
 country in which he sells so far as it is consistent with his 
 financial interest. 
 
 The Utility of Imports 
 
 Aside from monetary considerations imports have another 
 significant function to perform. They satisfy the wants of the 
 people and contribute to their happiness. There are many 
 things which we have grown to consider indispensable which 
 cannot under existing conditions be produced in this country. 
 Coffee, tea, fruits, and many other food products, common 
 utilities like rubber, or medicinal products like opium, are all 
 of foreign origin. Even the money which is sent out to for- 
 eign countries is a source of profit to the banks through the 
 sale of drafts and letters of credit. 
 
 To become efficient in international commerce one should 
 become accustomed to take broad views and to form correct 
 ideas of the object and the end of all barter, which is not 
 merely to make money. Money, as a thing by itself, is useless.
 
 IMPORTING AND THE IMPORTER 103 
 
 It is good only to the extent that it can be used to buy other 
 things desired. It is a medium of exchange with which one 
 can procure what the heart desires. 
 
 In a crude state of hfe money was of Httle value, for in 
 that state man's needs were few and simple and his desires 
 were limited. As he began to Hve in a state of refinement and 
 culture, he began to develope artistic tastes, to crave amuse- 
 ments, and to demand luxuries — the lady a silk gown, the man 
 a high-powered automobile. Some of these things cannot be 
 obtained in this country. Rubber from which automobile 
 tires are made, and raw silk for milady's gown, must be 
 brought from overseas. Here are the desires and here is the 
 money, but we must go abroad to buy the things which our 
 environment has taught us to want. Were we to be deprived 
 of the things which foreigners sell us, all the money in the 
 world, if placed at our disposal, would hardly enable us to 
 satisfy our desires for these things. 
 
 International Exchange of Commodities 
 
 The farmer who grows grains and vegetables and raises 
 animals in excess of the supply required for his own house- 
 hold needs, sells to others what he cannot use himself. But he 
 needs sugar and coffee, a new collar now and then, and perhaps 
 some dresses for his wife and daughters. These he does not 
 produce on his farm, so he buys them in town or exchanges 
 them for his farm products which he takes to the village 
 storekeeper. 
 
 Exactly the same principle is involved in the case of na- 
 tions. Each country produces certain commodities and sells 
 to foreign countries the quantity that it does not consume 
 itself. Each buys from other countries those commodities 
 which are not produced at home or are produced in an amount 
 that is not adequate to supply all the needs of its people and 
 thus the exchange goes on everywhere and forever.
 
 104 
 
 MACHINERY OF FOREIGN TRADE 
 
 Dividing Lines — Legal and Economic 
 
 The lines that divide the exports and imports are many in 
 theory, but in reality are non-existent. Both are the offspring 
 of human needs and desires and both are the ends of the same 
 line of transaction. 
 
 In a legal sense, export begins when the ship with its 
 cargo clears from the home port for the lands beyond the seas, 
 or when the goods are carried across an international boun- 
 dary from one country to another. Imports only become such 
 after the goods from abroad are in the custody of the custom 
 house officers. 
 
 In an economic sense, the dividing line between imports 
 and exports is the clear increment earned through the exchange 
 of commodities after all the transactions have been balanced 
 and the net profit from the trade between two nations, or of 
 one nation with the rest of the world, has been determined. 
 
 It is not an easy thing to determine such increment with 
 exactness or to distinguish between imports and exports. It 
 is impossible to obtain exact figures covering all the goods 
 which have been sent out of the country or to bring them 
 under proper classification. Nor can loss always be determined 
 from figures representing the volume or value of imports or 
 exports. Gold is the standard of value, but there are numerous 
 cases in which the Individual loss or gain cannot be measured 
 by such a standard. 
 
 It is not possible to be very specific on this point. The 
 topic is complex and puzzling. The purpose here is rather 
 to warn the student against the too ready assumption of the 
 uncritical, that there is no mystery in foreign trade, and that 
 the entire profit in such trade is shown in the excess of exports 
 over imports according to the values represented by the official 
 figures. 
 
 The exporter who understands his problem will decide to 
 do his own importing, if possible, from the country with
 
 IMPORTING AND THE IMPORTER 105 
 
 which he is transacting a large export business. He will 
 endeavor to influence others to do the same. Whenever pos- 
 sible he will make his investments in the country from which 
 he expects a large volume of trade. 
 He will always bear in mind: 
 
 1. That imports and exports are equally necessary to the 
 
 welfare of a nation. 
 
 2. That international trade is founded on reciprocity and 
 
 individual and national welfare in world's commerce 
 can be maintained only on a broad principle of give 
 and take. 
 
 The Importer and His Staff 
 
 The business and functions of the importer are well 
 known, and it is hardly necessary to describe at length the 
 factors engaged in this department of foreign trade. Those 
 agencies of foreign trade that are for the most part exclusively 
 concerned with importing are as follows: 
 
 The importer proper. 
 
 The importer improperly so-called. 
 
 The local commission houses. 
 
 The local wholesale distributer or jobber. 
 
 The importer for retail. 
 
 The export-importer. 
 
 The co-operative importer. 
 
 The resident buyer. 
 
 The importing manufacturer. 
 
 The Importer Proper 
 
 The importer proper Is the individual or company that 
 deals on a national scale and exclusively with merchandise 
 imported from abroad. Some of these importers conduct 
 their business on an international basis, buying goods in all
 
 I06 MACHINERY OF FOREIGN TRADE 
 
 the principal markets of the world and reshipping them to 
 other countries as goods exported from their own country. 
 Great Britain, Germany, and Holland have many such im- 
 porters. Their buying agents are constantly engaged in 
 studying the markets, investigating the products of the differ- 
 ent manufacturers or the raw material of the producers in 
 all parts of the foreign countries in which they operate. 
 
 The Importer Improperly So-Called 
 
 The importer improperly so-called is a broker commis- 
 sioned by one or more small distributers to purchase goods 
 for them in foreign markets. He owes his existence to the 
 lack of knowledge or the lack of facilities of those who 
 employ him, whose purchases are generally too small to justify 
 their attention to the numerous formalities which only an 
 expert can understand. The importer of this class charges 
 a commission varying from 5 per cent upon the purchase 
 price to as much as he can get. Frequently, if it is procurable, 
 it pays to get a list of these "importers" in a given market 
 and to cultivate them in order to learn the local conditions. 
 
 Local Commission Houses 
 
 The local commission houses are the main channels of 
 distribution for imported merchandise in the countries which 
 have few if any wholesale distributers or jobbers. They do 
 business on a strictly commission basis, representing numerous 
 connections. Sometimes they buy and sell on their own 
 account as well. They are often branches of houses located 
 in the countries where principal purchases are made. 
 
 In deciding as to what extent these local commission houses 
 may be useful in foreign business the manufacturer should 
 not neglect to inform himself relative to the laws of their 
 country which regulate their activities and define their rela- 
 tionship with the outside world.
 
 IMPORTING AND THE IMPORTER 107 
 
 Local Wholesale Distributer or Jobber 
 
 Besides traveling salesmen and local agents, it is often 
 desirable for an exporter to establish in a foreign country a 
 connection with a wholesale representative distributer or job- 
 ber who carries a line of samples, or, as in case of machinery, 
 a supply of spare parts for repairs and who will oftentimes 
 stock goods. Such houses are not always easy to find, but 
 wherever they exist they form a convenient link between the 
 foreign producer and the local consumer. 
 
 Some jobbers specialize in one or more kinds of merchan- 
 dise, others conduct a sort of wholesale department store, 
 some limit their activities to certain territory, while others 
 do a national and even an international business. They differ 
 from the importer proper merely in method and the scope 
 of their operations. In most countries they take the place of 
 the importer. In some cases they accept consignments and 
 sell them on a commission basis. They are popular factors in 
 the foreign trade of Central and South America, 
 
 The Importer for Retail 
 
 The importer for retail is usually the general store 
 operator and includes, as in the United States and the other 
 large countries, the department store representative and the 
 buyers for the retail stores specializing in imported merchan- 
 dise, milliners, dressmakers, tailors, Japanese art goods stores, 
 etc. These people can be reached at their local offices and will 
 oftentimes purchase freely. 
 
 The Export-Importer 
 
 The export-importer is the representative of the manu- 
 facturer in charge of the branch house or distributing office 
 of a foreign manufacturer in a given country. He is both 
 an exporter and importer, being an importer in a legal and 
 local sense only.
 
 io8 MACHINERY OF FOREIGN TRADE 
 
 The Co-operative Importer 
 
 The co-operative importer may represent an association or 
 governmental agency. Co-operative buying societies exist in 
 several countries, Russia and England for example. Some of 
 these in Russia are the so-called "Zemstvos." Governments 
 of many nations have always been extensive buyers. Their 
 agents are often governmental officials who are not infre- 
 quently represented in foreign countries by permanent 
 commissioners. 
 
 The Resident Buyer 
 
 In recent years a number of foreign importing houses have 
 begun sending their buyers into this country. Some of these 
 houses established offices in New York and have as a perma- 
 nent representative on the ground, a man who makes all 
 their purchases in this country. These representatives are 
 called in the trade "resident buyers" of the concerns employing 
 them, and they call themselves the "American representatives" 
 of their employers. Some American firms have also their 
 resident buyers stationed abroad. 
 
 The Importing Manufacturer 
 
 The importing manufacturer buys goods in foreign 
 countries, usually raw materials, for use in his manufacturing 
 business. 
 
 Custom House Broker 
 
 The custom house broker is a person authorized to act 
 for purchasers in the import and export of goods, and in the 
 transactions of the general business pertaining to shipping. 
 His legal status is similar to that of a mercantile agent who 
 is employed to buy or sell goods for other people. Being an 
 agent, he must act strictly within the scope of his authority 
 lest he lose all rights to remuneration or brokerage. Abroad,
 
 IMPORTING AND THE IMPORTER 109 
 
 brokers are usually licensed by the government, occupying a 
 position similar to that of notaries in the United States, and 
 they are frequently required to put up a large bond for the 
 faithful performance of their duties. 
 
 Warehouse 
 
 The warehouse plays a very important role in importing, as 
 imported goods may remain in a bonded warehouse for 
 years without payment of duty. Frequently the warehouse is 
 useful for the exporter, especially in making a shipment of 
 merchandise on which there is an excise tax, as in case of 
 liquors and tobacco. 
 
 Drawback Broker or Specialist 
 
 The drawback broker concerns himself with the collection 
 from the government of the benefit of drawback, which is 
 repayment to the exporter of the 99 per cent of the duty paid 
 on the imported material from which the exported article is 
 made. He usually works on a commission basis. 
 
 Methods of Importation 
 
 The American methods of purchasing goods abroad are 
 either through correspondence, or through the importers who 
 make periodical purchasing trips abroad or send their repre- 
 sentatives. Whenever convenient, however, purchases are 
 made through the local representatives of foreign concerns 
 stationed in America and sometimes through their own perma- 
 nent buyer located abroad. 
 
 Other countries employ similar methods, but in addition 
 they do a tremendous business through commission houses, 
 through the importers, properly so-called, and through brokers. 
 
 Every exporting producer should thoroughly familiarize 
 himself with the methods by which the importing business is 
 conducted in the country of his interests. He should then
 
 no AIACHINERY OF FOREIGN TRADE 
 
 learn the channels through which the imports are carried 
 in a given country so as to be able to investigate all the 
 avenues of trade and determine beforehand the nature, quality, 
 and extent of both the supply and the demand. This informa- 
 tion is needed for the preparation of his plans, and for the 
 study of the market conditions no less than for conducting his 
 selling campaigns. 
 
 There are various directories of foreign buyers and trade 
 information on file with trade associations and in the United 
 States Bureau of Foreign and Domestic Commerce. But the 
 most certain way to ascertain the exact importing machinery in 
 a given country is to send a properly qualified representative to 
 study and report.
 
 CHAPTER XIV 
 
 CHIEF FACTORS IN THE MACHINERY 
 
 Sources of Information 
 
 The study of the machinery of foreign trade is completed 
 by a consideration of the sources of information upon which 
 the exporter can draw and by a brief discussion of the in- 
 dispensable factors of this machinery. The full discussion of 
 the more important of these factors has been reserved for 
 following chapters. 
 
 Most important of all sources of information are the gov- 
 ernment bureaus, the consulates of foreign countries in the 
 United States, and the United States consulates abroad. In- 
 formation of a general character which is in the interest of 
 trade between two countries is given to the best of the ability 
 of the staffs of these offices. Specific information requiring 
 investigation must of course be sought for by the exporter or 
 his agent. The following chapter contains a description of 
 the governmental trade machinery. A list of the foreign cities 
 in which United States consuls are stationed is given in 
 Appendix B. 
 
 Foreign Trade Publications 
 
 The trade papers in this country which maintain foreign 
 trade departments and the export journals are generally willing 
 and able to answer any question relating to the mechanism of 
 foreign trade. The foreign departments of the trade associa- 
 tions which are seeking by co-operative effort to create a mar- 
 ket for their goods abroad are usually able to supply any infor- 
 mation relating to their particular trade. 
 
 Ill
 
 112 MACHINERY OF FOREIGN TRADE 
 
 Insurance and Freight Rates 
 
 The marine insurance poHcy is an indispensable factor of 
 nearly every transaction of the exporter. This complicated 
 detail of insurance is discussed in Chapter XXX VI. 
 
 Ocean carriers include both freighters and passenger- ves- 
 sels and the lighters or other small vessels carrying freight 
 from a public pier to a vessel stationed in the port. The rates 
 for freight between any two ports, including lighterage, the 
 rates of insurance, and all other questions concerning the cost 
 of making foreign shipments will be furnished by any ship- 
 ping house which has relations with the country to which the 
 shipment is to be forwarded. 
 
 Parcel Post and Express 
 
 The limit of weight which can be sent abroad by means of 
 the parcel post is 20 lbs. The huge mail order houses in this 
 country handle all the foreign business that comes within this 
 weight limit by mail. Samples and catalogues, which in most 
 countries are admitted without duty, are invariably handled 
 by this means and small consignments may usually be sent by 
 parcel post with greater safety than by any other method of 
 transportation. A list of the parcel post countries will be 
 found in Appendix B. 
 
 The express companies of this country are equipped with 
 the machinery to forward package freight of any kind to any 
 port in the world served by a regular line of steamships. The 
 American Express Company maintains offices in London and 
 Paris and is prepared to render the combined services of col- 
 lection and shipping agents to the more important of cities of 
 Europe. 
 
 Banks and Collections 
 
 The international bank or the local bank with a foreign 
 department and international connections is prepared to take
 
 CHIEF FACTORS IN THE MACHINERY 113 
 
 over the burden of financing export trade by advancing the 
 greater part of the vakie of an invoice against the documents 
 which give title to the goods. The bank through its affiHations 
 will also collect the amount due by means of a draft to be 
 presented to the buyer on the arrival of the goods and payable 
 either at sight or at some future date. The methods of financ- 
 ing foreign shipments are described in Chapter XXXVII. 
 
 The bank of course does not press claims against a debtor 
 who fails to accept his draft or take it up when due. Collec- 
 tion agencies exist abroad as well as at home and connections 
 may be made with them. Many collection agencies in the 
 United States will undertake to press claims against delin- 
 quent debtors abroad. 
 
 Forwarding Agents 
 
 The function of the forwarding agent is to be of service 
 to shippers, especially in interior points. Better rates may be 
 obtained through them, because forwarding agents are sup- 
 posed to ship goods in large lots. Usually they combine the 
 function of freight forwarders with the performance of other 
 services which the shipper may need in making his consign- 
 ments, especially if he has no agent of his own at the port of 
 shipment. For instance, forwarding agents in most cases 
 attend to the transfer of merchandise from the station to the 
 dock, see the shipment onto the boat, attend to the bill of 
 lading, insurance policy, consular formalities, and even to the 
 sale of the shippers' drafts. Thus this factor usually combines 
 the functions of freight broker with those of custom house 
 broker and agent so far as it is necessary to make the ship- 
 ment and to collect the payment for it. 
 
 By special arrangements, some such agents will undertake 
 even to sell small consignments abroad, which may serve the 
 purpose of trial orders. They will distribute samples and 
 sometimes they solicit orders. Some of the companies engaged
 
 IT4 
 
 MACHINERY OF FOREIGN TRADE 
 
 in the forwarding business advertise parcel express service, 
 which is performed by express companies and the United 
 States Post Office. There are instances when such service 
 may be most useful and the facilities afforded by these factors 
 deserve investigation. They serve both importers and ex- 
 porters. A list of reliable houses can be obtained from the 
 United States Department of Commerce. 
 
 Foreign Exchange Broker 
 
 The foreign exchange broker is found in port cities and 
 makes his living by negotiating foreign drafts with banking 
 houses. He does not usually handle any money himself. He 
 learns from different bankers the prices they are willing to 
 pay for certain drafts and reports these offers to his principal 
 who chooses the best offer and collects his money himself. The 
 broker receives a commission for his information. Foreign 
 exchange brokers do other kinds of brokerage at the same 
 time. They are found only in large seaport cities like New- 
 York. 
 
 The Investigator 
 
 Of recent years a link has been developed in the foreign 
 trade machinery, called the "investigator." The first investi- 
 gators were special agents sent abroad by the government to 
 study trade conditions. The private investigator is now a 
 familiar figure. He is usually a specialist in the line he is 
 commissioned to investigate. He is the business diplomat and 
 the commercial scout of trade strategy, and should be a man 
 who has had a successful experience at home in the business 
 he is commissioned to investigate abroad. 
 
 Foreign Trade Specialists 
 
 The export adviser is a new figure in the field of foreign 
 trade. There are at present very few of these foreign trade
 
 CHIEF FACTORS IN THE MACHINERY 115 
 
 Specialists who are fully competent to give advice on every 
 phase of the work. Here and there a former official of the 
 United States Department of State or of Commerce specializes 
 in this line of endeavor, but as yet the demand for his services 
 is limited. It is not that the specialist of this character is not 
 needed, but that the business men of this country have not yet 
 come to realize how valuable to them a fully competent trade 
 adviser can be. It is only a question of time when the foreign 
 trade efficiency engineer — by whatever name he may be called 
 — will have a permanent place on the staff of every extensive 
 exporter. The manufacturers who do not know where they 
 stand in reference to their foreign trade, whose so-called 
 export managers are inexperienced, who do not yet know the 
 fundamental principles of foreign trade — much less how to 
 break into a foreign market — certainly need an expert adviser 
 for whom they should be prepared to pay liberally. 
 
 Every co-operative trade organization should retain a 
 competent foreign trade adviser who is constantly available 
 for advice and council.
 
 CHAPTER XV 
 
 THE FOREIGN TRADE MACHINERY OF THE 
 UNITED STATES GOVERNMENT 
 
 The Governmental Machinery 
 
 If the foreign trade machinery of the United States gov- 
 ernment is intelHgently utiHzed, it can be of the greatest value 
 to the man engaged in international commerce. But he must 
 know what it is and how it works if he is to use it to the best 
 advantage. 
 
 Most of our government machinery designed to aid foreign 
 trade is operated under the supervision of the State Depart- 
 ment and of the Department of Commerce. This work is 
 carried on through the bureaus of those departments and 
 through our diplomatic, consular, and commercial agents 
 throughout the world. The work of the Tariff Commission 
 has a most vital bearing on foreign trade and recently the 
 Shipping Board and the Federal Trade Commission have be- 
 come important factors. 
 
 Machinery of the State Department 
 
 The State Department is the legal organ of communication 
 between this government and those of foreign nations. It 
 negotiates treaties and other international agreements, prose- 
 cutes the claims of our citizens against foreign governments, 
 and protects their rights through its diplomatic channels and 
 by such other means as are at its disposal. 
 
 In presenting claims against foreign governments, the 
 claimant must conform to a prescribed procedure. He must 
 file a sworn petition or memorial, setting forth the facts and 
 
 ii6
 
 UNITED STATES GOVERNMENT MACHINERY 117 
 
 circumstances from which his right to prefer the claim is de- 
 rived. This petition is accompanied by the evidence in support 
 of the claim, with the proof that the claimant is and was at the 
 time the claim originated a citizen of the United States. If 
 the Department is satisfied that the claimant has made out a 
 prima facie case, it will press the claim against the government 
 in question. 
 
 The claims of American citizens against foreign govern- 
 ments are of great variety, but the most common claims are 
 those based either on wrongful arrest and imprisonment or on 
 the denial of justice. An important rule to bear in mind in 
 connection with claims based upon the denial of justice is that 
 the claimant must have exhausted all other remedies before 
 appealing to the State Department. If the laws of the country 
 provide a means of redress through an appeal to higher courts 
 of justice, the Department will not interfere. Neither will it 
 consider claims against private individuals. The claims must 
 be against the foreign government or its representatives, since 
 individuals can be prosecuted through the courts of the country 
 in which the cause of action accrues. 
 
 The Secretary of State passes upon the claims of aliens 
 presented by their governments against the government of the 
 United States. Such an alien to obtain consideration must 
 first appeal directly to the foreign affairs department of his 
 country. His embassy in this country is powerless to take the 
 initiative in such matters. 
 
 For instance, a cargo of petroleum consigned to a citizen 
 in the United States was held at Riga by the revenue officers of 
 that port on the ground that the consignee had not furnished a 
 guarantee required by law that the goods, after reaching the 
 United States, would not be reshipped to the enemies of Russia. 
 When the purchaser in the United States was informed of the 
 action he went to the Russian Ambassador in Washington and 
 offered to adjust matters. Here he was referred to his Depart-
 
 Ii8 MACHINERY OF FOREIGN TRADE 
 
 ment of State on the grounds that the embassy could not 
 negotiate such matters directly. Our State Department took 
 up the matter with the Russian Department of Foreign Affairs 
 through which it was finally adjusted. 
 
 There is absolutely no exception to the rule that the only 
 channel in this country through which a citizen of the United 
 States can secure redress against another country is the De- 
 partment of State. 
 
 The Diplomatic Service 
 
 The State Department controls the diplomatic and consular 
 service of the country, located at more than three hundred 
 different posts throughout the world. The diplomatic ofBcers 
 are the accredited representatives or agents of the government 
 through whom contact wdth foreign governments is main- 
 tained. 
 
 The diplomatic service of the United States is divided into 
 four ranks: (i) ambassadors, (2) envoys extraordinary and 
 ministers plenipotentiary, (3) ministers resident, and (4) 
 charges d'affaires, which latter are active only in the absence 
 of the ambassador or minister, taking his place as an acting 
 ambassador or minister. 
 
 A diplomatic officer is required to transmit to his govern- 
 ment at frequent intervals accurate information concerning the 
 policy and views of the government to w'hich he is accredited, 
 with detailed reports on political events and similar matters 
 which may have a bearing upon international relations. The 
 communications of the diplomatic officers abroad to the State 
 Department are called "dispatches." In recent years our diplo- 
 matic representatives have been required to keep a keen eye on 
 all measures relating to commerce which may affect the inter- 
 ests of our manufacturers and exporters. American diplomats 
 are not communicated with directly by private American citi- 
 zens, but should always be addressed through the Department
 
 UNITED STATES GOVERNMENT MACHINERY 119 
 
 of State. A list of the embassies and legations which the 
 United States maintains abroad is given in Appendix B. 
 
 The Consular Service 
 
 While the consuls and consular officers are also under 
 control of the State Department their duties are restricted to 
 commercial matters and their reports go to the Department 
 of Commerce. They have no diplomatic functions and 
 their work in no way conflicts with that of the diplomatic 
 corps. Consuls are the commercial or business agents of the 
 country. Their functions and duties are to facilitate trade, 
 furnish valuable information on matters of interest to com- 
 mercial concerns of the country, watch over the shipping and 
 navigation of their own country, and endeavor to prevent 
 fraud upon its revenues and to protect the persons and interests 
 of their countrymen abroad. 
 
 One of the important duties of consuls is that of certifying 
 to the correctness of declarations required by law to accompany 
 invoices of merchandise exported to the United States. In 
 this connection the consul is required to receive the declaration 
 of the shipper as to the actual value of the goods shipped from 
 his district into the United States and to certify the invoices of 
 goods exceeding $100 in value destined for entry into the 
 United States. 
 
 Of particular interest to exporters are the consular reports 
 of trade opportunities occurring in different parts of the world. 
 These reports are published by the Department of Commerce 
 in its Daily Commerce Reports. 
 
 Another effective way in which the consuls aim to assist 
 our foreign trade is in the maintenance of commercial reading 
 rooms and information bureaus at the consular offices in all 
 parts of the world where catalogues of American manufactur- 
 ers, trade papers, classified indexes, price lists, discount sheets, 
 and other matters of trade importance are available.
 
 I20 MACHINERY OF FOREIGN TRADE 
 
 Unlike the diplomatic officers, the consular officers can be 
 directly communicated with by anyone who has business with 
 them. They are useful sources of specific information, relating 
 to foreign trade. The consuls should not be addressed by 
 
 name, but as "The American Consulate General at ," 
 
 for the reason that when the consul is away, his official cor- 
 respondence is opened at the office in his absence and attended 
 to by his assistants. A list of the foreign cities in which Amer- 
 ican consulates are located is given in Appendix B. 
 
 The Office of Foreign Trade Advisers 
 
 An important bureau attached to the Department of State 
 is that of the Office of Foreign Trade Advisers. The re- 
 sources and activities of this bureau are described in a state- 
 ment w^iich will be found in Appendix A. The duties of the 
 bureau mav be summarized as follows: 
 
 1. To control and direct the commercial work of the 
 
 diplomatic and consular services. 
 
 2. To attend to the correspondence and other miscel- 
 
 laneous business of the State Department which re- 
 lates primarily to trade. 
 
 3. To gather information and formulate advice on com- 
 
 mercial subjects for the use of the Secretary and 
 other officers of the Department. 
 
 Machinery of the Department of Commerce 
 
 In addition to the work of the Office of Foreign Trade 
 Advisers, a great deal of work that is extremely valuable to 
 everybody engaged in foreign trade is done by the Depart- 
 ment of Commerce. This work includes the preparation of in- 
 formation secured through the consular service. It covers 
 every possible feature of trade in other countries that could be 
 of interest to business men seeking markets in foreign coun- 
 tries. Its publications are available to all who ask for them.
 
 UNITED STATES GOVERNMENT MACHINERY 121 
 
 There is a bureau in the Department of Commerce, known 
 as the Bureau of Foreign and Domestic Commerce, which is 
 of special interest to foreign traders. The following descrip- 
 tion of its work has been furnished by its chief: 
 
 The Bureau of Foreign and Domestic Commerce is charged by 
 law with the duty of "developing the various manufacturing indus- 
 tries of the United States and markets for their products at home 
 and abroad, by gathering and publishing useful information, or by 
 any other available method." 
 
 The Bureau is a clearing house for commercial information of 
 all kinds, and has a well-organized and efficient system for its 
 collection and distribution. 
 
 It furnishes American manufacturers and exporters with definite 
 information as to specific opportunities to sell their goods in foreign 
 countries. It edits and publishes consular reports on commercial 
 subjects. 
 
 It tabulates and publishes statistics of American trade with 
 foreign countries. It collects, translates, and publishes customs 
 tariffs of foreign countries. 
 
 It formulates instructions for the commercial work of the con- 
 sular service. It has a corps of commercial agents who visit foreign 
 countries and make reports upon special industries and special phases 
 of commerce. It maintains a staff of commercial attaches stationed 
 in the principal countries of the world, who devote all their time to 
 commercial studies. Through its distant offices it disseminates trade 
 information and keeps in touch with the commercial interests of 
 the country. 
 
 The official statement which appears in Appendix A de- 
 scribes in further detail the work of the bureau. 
 
 Other Governmental Factors 
 
 The following governmental boards constitute a part, at 
 present, of the machinery concerned with the promotion and 
 control of foreign trade: 
 
 1. The Shipping Board 
 
 2. The Federal Trade Commission 
 
 3. The Tariff Commission
 
 122 MACHINERY OF FOREIGN TRADE 
 
 The Shipping Board 
 
 The Shipping Board has two functions. It has control of 
 the construction of the emergency fleet and at the same time 
 regulates foreign commerce, performing, in connection with 
 foreign trade, the work of the Interstate Commerce Commis- 
 sion in the domestic field. 
 
 The Federal Trade Commission 
 
 The Federal Trade Commission in its general place and 
 purpose has a large indirect bearing upon our foreign trade. 
 The last paragraph of Section 6 of the act creating the Federal 
 Trade Commission has a direct bearing on the subject. This 
 paragraph is as follows: The Commission shall have power 
 "to investigate from time to time trade conditions in and with 
 foreign countries where associations, combinations or practices 
 of manufacturers, merchants or traders, or other conditions, 
 may affect the foreign trade of the United States, and to report 
 to Congress thereon, with such recommendations as it deems 
 advisable." 
 
 This provision empowers the Commission to investigate 
 in cases where foreign combinations affect American business. 
 Tariff matters and the entire system under which corporate 
 business is conducted in foreign countries may be investigated. 
 If the Commission finds that corporations in foreign countries 
 possess advantages, and under the laws of their countries are 
 allowed latitude and privileges which make it difficult or 
 impossible for American corporations to compete successfully 
 with them, it may report its conclusions to Congress, with its 
 recommendations for additional legislation. 
 
 It is entirely possible, therefore, for the Trade Commission 
 to become a great safeguard of our business interests abroad 
 and our American foreign trade ought to be greatly aided by 
 these powers, if they are exercised with sagacity. 
 
 In pursuance of the duty thus conferred by Congress, the
 
 UNITED STATES GOVERNMENT MACHINERY 123 
 
 Commission has busied itself upon the matter of foreign trade 
 very effectively. Conferences were held at which manufac- 
 turers and exporters were invited to give their opinions prin- 
 cipally regarding the desirability or the non-desirability of 
 extending the application of the Sherman Anti-Trust Law, and 
 other acts in connection therewith, to our foreign trade. The 
 Commission also addressed numerous letters of inquiry to 
 those who they thought could speak upon the subject, if not 
 authoritatively, at least wisely. The result was the enactment 
 of the Webb-Pomerene Law. 
 
 The future of the Commission, as well as the value of the 
 work, will depend entirely upon the efficiency of its personnel 
 and the financial help which Congress provides for its activi- 
 ties. Certainly its powers, for weal or for woe, are most 
 astonishing if it should have the capacity to appreciate them 
 and the initiative to exercise them. The rules of procedure 
 of the Commission are given in Appendix A. 
 
 United States Tariff Commission 
 
 The Tariff Commission has authority to investigate the 
 operation and effects of the custom laws. This information it 
 is directed to put at the disposal of Congress and the President. 
 It has the power "to investigate the tariff relations of the 
 United States and foreign countries, commercial treaties, pref- 
 erential provisions, economic alliances, the effect of export 
 bounties and preferential transportation rates, the volume of 
 importations compared with domestic production and con- 
 sumption and the conditions, causes and effects of the compe- 
 tition of foreign industries with those of the United States 
 including dumping and the cost of production." 
 
 Co-ordinating Committee on Foreign Trade 
 
 The recently organized Co-ordinating Committee on For- 
 eign Trade marks a distinctly constructive step in the promo-
 
 124 MACHINERY OF F^PEIGN TRADE 
 
 tion of export commerce. This new governmental agency 
 "includes representatives of all Governmental offices which 
 deal in any way in foreign trade matters. Its duty is to formu- 
 late conclusions and to harmonize and co-ordinate all Govern- 
 mental activities in any way connected with foreign trade, 
 thus safeguarding the economic future of the nation. 
 
 "The committee will provide advisory and supervisory 
 machinery of Government executives for unifying the work of 
 further extending and developing the business interests of the 
 United States in foreign channels. 
 
 "Neither the committee as a whole, nor its subcommittees, 
 will deal with specific cases of foreign trade interests except 
 as they may be brought to its attention by the different Gov- 
 ernment officers now handling these matters." 
 
 The work of this committee should be a large factor in 
 rendering more efficient and helpful the foreign trade machin- 
 ery of this country. Through it the results of many years of 
 governmental research work will be placed at the disposal of 
 American merchants in their efforts to build up a stable and 
 permanent trade expansion policy for the United States. 
 
 Federal Reserve Bank 
 
 Somewhat distinct from the commonly recognized foreign 
 trade machinery of the government is the federal reserve bank, 
 yet it too plays its part in our national scheme of foreign trade 
 promotion. 
 
 Under our old national banking system which was inaugu- 
 rated at the end of the Civil War, the national bank note 
 currency was based upon government bonds which were de- 
 posited in the treasury, and the currency issued has been 
 classed as bond-secured currency. This method not only na- 
 tionalized and unified our currency but it also created a market 
 for United States bonds, in that way sustaining their value. 
 Notes were issued by both state banks and national banks.
 
 UNITED STATES GOVERNMENT MACHINERY 125 
 
 For a time the system worked very well, but it outlived its 
 usefulness. Then currency began to show a lack of elasticity 
 and whenever there was any cause for a panic our whole 
 financial system was threatened with upheaval. 
 
 Statesmen and bankers, realizing the deficiency and weak- 
 ness of our national banking system, inaugurated a movement 
 for reform which finally resulted in an enactment by Congress 
 in the year 1913, of the Federal Reserve Bank Act under 
 which federal reserve banks were established in twelve cities 
 of the United States, namely: Boston, New York, Philadel- 
 phia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Kan- 
 sas City, St. Paul, Dallas, and San Francisco. These twelve 
 cities are known as federal reserve cities, each being the head- 
 quarters for the district in which it is located. 
 
 Each district comprises all the national banks therein which 
 were required to become stockholders in the federal reserve 
 bank of the district ; state banks and trust companies which 
 complied with certain requirements were also permitted to be- 
 come stockholders. At the present time there are approxi- 
 mately seventy-five hundred national banks in the United 
 States which have been compelled to become members of the 
 federal reserve system. 
 
 Each national bank is required to subscribe to stock of the 
 federal reserve bank of its district to an amount equal to 6 
 p:r cent of its paid-up capital stock and surplus. Federal 
 reserve banks do no business with the public directly. A fed- 
 eral reserve bank is rather a bank for banks. It is a depository 
 for a certain portion of the reserve of all the member banks, 
 in addition to which it may also be a depository for govern- 
 ment funds. 
 
 Functions and Operation of the Federal Reserve Bank 
 
 One function of the bank is to issue and redeem currency. 
 It may secure from the Treasury government notes, known
 
 126 MACHINERY OF FOREIGN TRADE 
 
 as federal reserve notes, which it may issue against commer- 
 cial paper with a minimum gold reserve of 20 per cent. Fed- 
 eral reserve banks are also granted certain powers in the matter 
 of operations in the open market, such as the purchase of 
 commercial paper, foreign exchange, etc. Thus they function 
 as clearing houses for their members. 
 
 Each federal reserve bank is governed by nine directors. 
 Three of these represent the member banks and three represent 
 commercial, agricultural, or other pursuits; these six directors 
 are chosen by the member banks. The remaining three are 
 appointed by the government, or rather by the Federal Reserve 
 Board. The directors are charged with the duty of appointing 
 all the officers including the manager of the bank, who is 
 designated as "Governor." 
 
 The entire system is under the supervision of the central 
 board in Washington. This board, known as the Federal 
 Reserve Board, consists of the Secretary of the Treasury, the 
 Comptroller of the Currency acting ex-officio, and five other 
 members, named by the President with the approval of the 
 Senate, who receive a salary of $12,000 per annum. The 
 amounts constituting the salaries of the directors, together 
 with the other expenses, are assessed against the federal 
 reserve banks in proportion to their capital stock and surplus. 
 
 The most important bearing of the Federal Reserve Act on 
 foreign trade is that part of it which pertains to the permission 
 to national banks with a certain surplus and capitalization to 
 open foreign branches. Under this act all banks in the federal 
 reserve system are authorized to accept drafts or bills of ex- 
 change drawn on them in foreign trade transactions. They 
 are also allowed to rediscount, with federal reserve banks, the 
 acceptances based on the importation or the exportation of 
 merchandise. (For text of this portion of the act see Appen- 
 dix A.) 
 
 These features of the law have been most beneficient to
 
 UNITED STATES GOVERNMENT MACHINERY 127 
 
 foreign traders allowing tiiem to meet the competition of other 
 nations more effectively. By this means a ready discount mar- 
 ket has been created and facilities for extension of credit mul- 
 tiplied in favor of the American trader.
 
 CHAPTER XVI 
 
 FOREIGN TRADE ORGANIZATIONS IN THE 
 UNITED STATES 
 
 Public Organizations 
 
 The public organizations in the United States concerned 
 with the promotion of foreign trade may be divided into three 
 classes according to the scope of their activities: 
 
 1. National organizations 
 
 2. Local organizations 
 
 3. International organizations 
 
 National Organizations 
 
 The organizations which may be considered as national in 
 
 their scope and purpose include the following, the first three 
 
 of which devote themselves exclusively to the promotion of 
 
 foreign trade: 
 
 The National Foreign Trade Council, New York City. 
 The American Manufacturers Export Association, New York 
 
 City. 
 The American Exporters and Importers Association, New 
 
 York City. 
 The Philadelphia Commercial Museum, Philadelphia, Pa. 
 
 The purpose of the National Foreign Trade Council as 
 stated in its literature is "effectively to co-operate with other 
 organizations in the encouragement of sound national foreign 
 trade policy." Its function is investigative and advisory. 
 The reports of its annual conventions are perhaps the most 
 interesting and suggestive material of this character that is at 
 present available. To the work of this council and its un- 
 
 128
 
 ORGANIZATIONS IN THE UNITED STATES 129 
 
 usually able membership and officers is due much of the credit 
 for the enactment of tlie Webb-Pomerene Law. 
 
 The American Manufacturers Export Association Is also 
 a very important body, which is doing excellent work in the 
 promotion of foreign trade. It keeps in close touch with the 
 United States consular representatives abroad with a view to 
 informing itself of every important opportunity that develops 
 for the extension of American trade in foreign countries. Its 
 periodical publications, its monthly and annual meetings, and 
 its personal service are all exceedingly valuable. 
 
 The American Exporters and Importers Association aims 
 largely to promote the interests of export and import mer- 
 chants in New York and elsewhere. 
 
 The Philadelphia Commercial Museum is a semiofficial 
 organization in which the State of Pennsylvania and the 
 City of Philadelphia are directly concerned and under whose 
 patronage it is operated. The work of the museum is of the 
 greatest value; it publishes two. periodicals on foreign trade 
 and also certain confidential information which appears in its 
 bulletins. The director of the Foreign Trade Bureau of the 
 museum is always glad to give information regarding the 
 activities of the bureau. Everyone interested in foreign trade 
 should keep in touch with this bureau. 
 
 To the group of national organizations which aid in the 
 promotion of foreign trade also belong: 
 
 The National Association of ISIanufacturers, New York City. 
 The Chamber of Commerce of the United States of America, 
 
 Washington, D. C. 
 The Merchants Association of New York. New York City. 
 The Chicago Association of Commerce, Chicago, 111. 
 
 Each of these four associations has a separate department 
 devoted to foreign trade promotion, the work of which may 
 properly be considered as national. 
 
 The activities of the Chamber of Commerce of the United
 
 T30 
 
 MACHINERY OF FOREIGN TRADE 
 
 States of America and the work of the National Association 
 of Manufacturers are too generally known to require any de- 
 scription here. 
 
 The Merchants Association of New York through its For- 
 eign Trade Department is doing the most extensive and valu- 
 able work of any local chamber of commerce or trade organi- 
 zation in the United States. It is decidedly national in its 
 membership, scope, and purpose and is particularly useful for 
 the reason that nearly every prominent manufacturing concern 
 has an office in New York, and also the metropolitan city is 
 the great center of foreign trade activities and the main con- 
 necting link between the greatest trading points of the world. 
 
 The Chicago Association of Commerce performs a corre- 
 sponding service for the Middle West. The manufacturers of 
 that locality usually maintain offices in Chicago, through which 
 they keep in touch with the activities of the association. 
 
 Local Organizations 
 
 Local trade associations of special prominence are: 
 
 The Philadelphia Association of Commerce 
 
 The Detroit, San Francisco, Cleveland, Boston, Baltimore, 
 
 Pittsburgh, and St. Louis Chambers of Commerce 
 New Orleans Association of Commerce 
 The Cincinnati Foreign Trade Association 
 The Foreign Trade Club of San Francisco 
 The Pittsburgh Foreign Trade Commmission 
 The Associated Chambers of Commerce of the Pacific Coast 
 
 All of these organizations are extending their facilities 
 and are enthusiastic advocates of foreign trade so far as it 
 concerns their local interests. 
 
 The International Organizations 
 
 The most prominent international organization for trade 
 development is the Pan American Union, Washington, D. C.
 
 ORGANIZATIONS IN THE UNITED STATES 131 
 
 It is in a class by itself, confining its work to the promo- 
 tion of trade and amity among the nations of the Western 
 Hemisphere. Every American republic contributes to the sup- 
 port of this Union. Its magnificent buildings are largely the 
 gift of Andrew Carnegie. 
 
 Some of the other organizations in this class are: 
 
 The American Asiatic Association, New York City 
 
 All-Americans Association, Inc., New York City 
 
 The American-Russian Chamber of Commerce, New York 
 
 City 
 The Pan-American Chamber of Commerce, San Francisco 
 The Japan Association of North America, Seattle, Wash. 
 The French Chamber of Commerce of New York City 
 The Japan Chamber of Commerce, San Francisco 
 The Holland-American Chamber of Commerce, San Fran- 
 cisco 
 The American-Polish Chamber of Commerce, New York City 
 The American-Roumanian Chamber of Commerce, New York 
 City 
 
 There are also Norwegian, Spanish, Swedish, and Italian 
 Chambers of Commerce, all having some sort of organiza- 
 tion and place in New York City, but their activities are of no 
 such significance as those of the organizations enumerated 
 above. 
 
 The American Chamber of Commerce for the Levant, the 
 Greek Association, and a number of similar organizations also 
 aim in their own way to assist our foreign trade wdth particu- 
 lar nations. 
 
 The manufacturer or merchant who is trying to make con- 
 nections with one of the countries in the Far East will do w^ell 
 to communicate with the American Asiatic Association and to 
 subscribe for its publication Asia. He who has an eye on 
 Russia should not fail to become acquainted with the Ameri- 
 can-Russian Chamber of Commerce, and those who are doing 
 or contemplate doing business in Central or South America
 
 132 MACHINERY OF FOREIGN TRADE 
 
 may be greatly benefited by getting in touch with one or more 
 associations interested in the promotion of our commerce with 
 these countries. 
 
 Private Organizations 
 
 Recently certain large banks have organized foreign trade 
 bureaus which aim to supply information and perform other 
 services regardless of whether the person seeking their aid is 
 a customer of the institution. 
 
 Among the most noted of these are the National City Bank 
 and the Guaranty Trust Company, both of New York City. 
 The former is issuing, for gratuitous distribution, a very valu- 
 able monthly called The Americas and the latter sends out 
 periodically papers on foreign trade which are interesting and 
 helpful because they are based on a thorough study and knowl- 
 edge of the subjects which they treat. 
 
 A good many newspapers and magazines throughout the 
 United States maintain information bureaus and publish bulle- 
 tins relating to foreign trade. All such activities are very 
 encouraging and are fast multiplying and extending. 
 
 There is still an apparent lack of co-ordination among the 
 foreign trade organizations. A great deal of the work done 
 by each organization is duplicated by the others and much 
 money and intelligent effort is wasted in consequence. We 
 still need a great, all-embracing, national foreign trade organi- 
 zation co-ordinating every function of the associations named 
 above and which because of its greater resources shall enable 
 these associations to render better and more effective service 
 than they are able to do at present, even through their com- 
 bined efforts.
 
 CHAPTER XVII 
 
 THE VALUE OF CO-OPERATION IN FOREIGN 
 
 TRADE 
 
 The American Trust 
 
 Perhaps nowhere in tlie world is individualism carried to 
 a greater extent than in America. The American business man 
 instinctively prefers to play the game alone and to take his 
 chances of success unencumbered by "entangling alliances." 
 Nevertheless it was in America that the trust came into being 
 and reached its highest development, flourishing unrestrained 
 until its abuse of power resulted in its regulation. 
 
 The American trust was an attempt at co-operation which 
 from its founder's point of view at least was entirely successful. 
 The original trust was created by John D. Rockefeller, by the 
 agreement of 1882, the so-called Standard Oil Trust Agree- 
 ment, by virtue of which the management of all the Standard 
 Oil Companies was vested in a body of nine trustees with 
 Rockefeller as chairman. The success which followed is at- 
 tributed largely to its highly centralized and efificient organiza- 
 tion and its elimination of waste through co-operative methods. 
 
 The trustees directed the numerous activities of the com- 
 bination by most original and scientific methods. They organ- 
 ized various committees, such as that on marketing and that on 
 crude oil. These committees studied the oil business in all its 
 phases, received reports from every nook and corner of the 
 world, and made frequent reports to the board of trustees who 
 devised plans and issued orders accordingly. 
 
 In the wake of the Standard Oil followed the Michigan Salt 
 Trust, the Whiskey Trust, the Wire Nail Trust, the Pipe Trust, 
 
 133
 
 134 MACHINERY OF FOREIGN TRADE 
 
 the Steel and Sugar Trusts, until there were a dozen or more 
 mammoth trusts and hundreds of smaller ones in the United 
 States at the time of their dissolution by order of the courts. 
 
 Industrial Combinations 
 
 The advocates of industrial combinations on a large scale 
 believe that instead of being harmful the trusts were beneficial. 
 Among the benefits claimed for them are the saving in produc- 
 tion, transportation, and marketing — the elimination of waste 
 and of the hazards of trade, the greater co-ordination of eco- 
 nomic forces, and the greater certainty of results. 
 
 Those who inveighed against the trusts charged them with 
 various abuses in their financing and methods of operation. 
 They accused them of stifling free competition, of cutting down 
 prices at the outset, and of abnormally increasing them when 
 competition was destroyed. They claimed that the trusts 
 forced competitors into disadvantageous agreements and that 
 they were guilty of generally oppressive and tyrannical conduct 
 in the restraint of trade. 
 
 The consensus of the intelligent public opinion of the world, 
 however, seems to be in favor of industrial combinations, pro- 
 vided they are properly regulated by the government. 
 
 Combinations Abroad 
 
 The benefits of co-operative efiforts have always been under- 
 stood abroad. On the whole, combinations have been encour- 
 aged, although the danger of abuse has been clearly realized 
 and guarded against by stringent governmental regulation. 
 Even the countries that have hesitated to submit their domestic 
 markets to the restraints which such combinations entail, have 
 had no scruples against inflicting them on their foreign markets 
 and the strong combines of our foreign competitors have given 
 them a great advantage over us in the race to capture the 
 Vv^orld's trade.
 
 THE VALUE OF CO-OPERATION 135 
 
 In Germany the Kartcls, as such combines have been called, 
 have always been considered as model trusts, due to the fact 
 that they were most effectively regulated by the government, 
 in both their domestic and foreign activities. 
 
 A new phenomenon appeared in Germany during the war 
 in the form of compulsory Kartels. Some of these syndicates 
 maintain common sales departments and in some cases they 
 have common, centralized purchasing departments. 
 
 In England a special law, called the "New Companies Act," 
 was brought forth in 1900 for the purpose of meeting the 
 Kartels' competition and of assisting the export trade of Great 
 Britain. At the close of the Great War two enormous foreign 
 trade organizations, the British Corporation and the British- 
 Italian Corporation, were formed in Great Britain with govern- 
 ment support and with a similar purpose. 
 
 Somewhat similar organizations have been formed in 
 France and in Japan, and the German idea of industrial com- 
 bination has been followed, if not copied, by a number of 
 smaller countries. All of these organizations aim to bring 
 about the control of prices by agreement, the adoption of the 
 uniform price lists, the limitation of production, and the deter- 
 mination of the distribution of output. 
 
 Possibilities of Co-operation 
 
 Co-operation may be neutral, benevolent, or malevolent. 
 When it benefits no one and hurts no one outside of the co- 
 operative body it is strictly neutral. When it benefits some 
 and hurts no one it is benevolent. But when it benefits only 
 the co-operative body and is destructive to all the outsiders, it is 
 malevolent — whether it be a gang of bandits, a "trust," or an 
 organization of the state. 
 
 All organized commercial effort is bound to strive to over- 
 come competition. Such is its primary purpose and the fact 
 might well be recognized that an exceedingly keen competition
 
 1^6 MACHINERY OF FOREIGN TRADE 
 
 is not, in its last analysis, a beneficial factor, nor is its reguki 
 tion to be considered as destructive to general welfare. On the 
 other hand, the entire elimination of the natural play of com- 
 petitive effort brings about a monopoly with its resultant 
 tyranny, and is far worse than even cut-throat competition. 
 
 To what extent co-operative effort may be detrimental to 
 the country in which it exists is a political cjuestion to be deter- 
 mined in each case by the proper legislative, administrative, and 
 judicial branches of the government. The most innocent form 
 of co-operative organization may become destructive in its ef- 
 fects when it outgrows its benevolent sphere, deteriorates, and 
 lapses into ruthlessness. 
 
 Co-operation Without Combination 
 
 Co-operative methods are not confined to such elaborate 
 organizations as American trusts or foreign syndicates. There 
 is a simpler and more natural form of co-operation which has 
 always existed. Such is the union of two or more persons to 
 attain an end which it is impracticable for either to attain 
 singly. All co-operative efforts are based on such an aim. 
 They are to be distinguished less by their form than by their 
 methods and the ends for which they strive. 
 
 To an increasing extent groups of manufacturers in non- 
 competing lines are uniting for the joint export and sale of 
 their products. Usually their aims are merely to save trans- 
 portation and selling expenses and to increase the efficiency of 
 their organizations. In all this they are entirely successful, 
 especially in the South American field. 
 
 Hitherto, it has been almost impossible for the average 
 American manufacturer of modest pretentions to enter the field 
 of foreign trade under conditions as favorable as those com- 
 manded by his larger competitor. To such a man co-operative 
 methods mean the difference between success and failure. In 
 acting in conjunction with men similarly placed, he finds him-
 
 THE VALUE OF CO-OPERATION 137 
 
 self able to overcome his limitations. The very considerable 
 expense involved in the preliminary investigation of the market 
 is shared by others, and his marketing facilities are vastly 
 improved. 
 
 Such co-operation enables the small manufacturer to ship 
 his goods jointly with his associates and thereby to secure bet- 
 ter rates and greater facilities. He is able to pass on to his 
 customers the benefit of his economies and, what is of even 
 greater importance, he can offer them the services of a joint 
 representative to whom they can turn in case anything goes 
 wrong. This connecting link between seller and purchaser is 
 often a deciding factor in making a sale. 
 
 Advertising in foreign fields is more expensive and cum- 
 bersome than it is at home and yet it must be attended to. In a 
 co-operative organization the newspaper advertising, the circu- 
 larizing, and the personal propaganda work can be made to 
 compare in both quality and quantity with that of the combined 
 exporters of foreign countries. 
 
 Possibilities of the Future 
 
 Co-operation in foreign trade, so far as the American trader 
 is concerned, has hitherto been retarded by the anti-trust laws. 
 A realization of the disadvantage under which the American 
 competed in foreign trade has resulted in the passage of the 
 Webb-Pomerene Act which modified our anti-trust laws, so far 
 as foreign trade is concerned, and makes co-operative methods 
 legal. 
 
 Unless this law is promptly taken advantage of by the small 
 manufacturer it will do him no good and the larger exporters 
 will reap the benefits. If the average manufacturer is to share 
 with these larger traders, he should at once begin to agitate for 
 co-operation through his trade associations. 
 
 Co-operation is destined to become an important factor in 
 the life of the world as democracy becomes more general. The
 
 138 MACHINERY OF FOREIGN TRADE 
 
 reign of political democracy is bound to be followed by a com- 
 mercial democracy, which will mean a more extensive and 
 stronger co-operation between the competing interests within 
 the nation, and between the employer and his employees. 
 
 It is altogether within the range of probability that in the 
 near future the European nations will unite in the production 
 and distribution of the common necessities and that such a 
 course will be based upon the industrial alliances within each 
 country. In such an event, those who have perfected co-oper- 
 ative trade alliances will be most benefited because they will 
 have established their organization on their own terms while 
 those who follow will have to accept the terms dictated by the 
 exigencies of the moment. The nations with a long range of 
 vision will first reap the rewards of the future.
 
 CHAPTER XVIII 
 
 THE WEBB-POMERENE LAW 
 
 Enactment of the Webb-Pomerene Law 
 
 Every exporter or would-be exporter should be thoroughly 
 familiar with the tenor, the significance, and the application 
 of the act of Congress to promote export trade, commonly 
 called the Webb-Pomerene Law. 
 
 This act practically negatives the application to export trade 
 of former anti-trust legislation embodied in the Sherman Act 
 of Congress of July, 1890, to protect trade and commerce 
 against unlawful restraints and monopolies, and in the supple- 
 mentary act of October, 19 14; in other words it permits the 
 formation of trusts in export trade. 
 
 The term "trust" in its limited commercial sense is com- 
 monly used to denote an industrial combination embracing a 
 peculiar form of business association effected by the transfer 
 of stock by the stockholders of the component corporation to a 
 board of trustees, to be voted by them as they see fit. 
 
 In this sense the term connotes in the popular mind an 
 agreement or combination believed to be formed with the in- 
 tent of monopolizing a certain kind of business, restraining 
 trade, and controlling competition and prices in the given line 
 or several lines of product. 
 
 Thus every large consolidation of industry has been looked 
 upon as a "trust," whether it is made up of several plants or of 
 a hundred, and whether such "trust" actually involves monopo- 
 listic features or not. So long as such an organization has the 
 power to interfere with competition, to control business, and 
 to fix prices, the term "trust" will be applied to it. 
 
 139
 
 140 MACHINERY OF FOREIGN TRADE 
 
 The idea that the trusts are a menace to public welfare and 
 destructive of the freedom of individual endeavor has been so 
 persistently kept before the public mind by writers and public 
 men that it has brought about the enactment of stringent legis- 
 lation against them. 
 
 This legislation resulted, however, in preventing the Ameri- 
 can exporter from meeting the competition of other nations by 
 co-operative methods. A realization of the handicap under 
 which they labored was one reason which led to the enactment 
 of the new law, known as the Webb-Pomerene Act. But per- 
 haps the certainty that after the war the gigantic organization 
 of industry and commerce abroad will proceed at a more accel- 
 erated pace, was the most potent stimulus for haste in passing 
 this new law. 
 
 Doubtless, without any desire to imitate the European sys- 
 tem of governmental supervision over the combines, but guided 
 by a strong conviction that only by means of governmental 
 supervision could the evils of the trust be avoided and their 
 benefits secured, a certain amount of governmental supervision 
 of the concerns wishing to take advantage of the new law has 
 been provided for through the medium of the Federal Trade 
 Commission. 
 
 General Provisions of the Law 
 
 Briefly then, the so-called Webb Law authorizes the forma- 
 tion of an export association to be composed of "any corpora- 
 tion or combination by contract or otherwise, of two or more 
 persons, partnerships or corporations." Such an association 
 for export may be formed whenever conditions make it advis- 
 able that for a better exploitation of foreign markets an ar- 
 rangement should be entered into for co-operation between 
 competing concerns. 
 
 Some of the arrangements which may now be made within 
 the provisions of the law are as follows:
 
 THE WEBB-POMERENE LAW 14I 
 
 Division of sales territory 
 Allocation of foreign markets 
 Apportionment of output for export 
 Allotment of terms of export sales 
 Allotment of export orders 
 Pooling foreign business 
 Allotment of prices to foreign buyers 
 Allotment of grades in export output 
 Joint export sales organization 
 
 But such arrangements or agreements must be entered into 
 "for the sole purpose of engaging in trade or commerce only 
 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," otherwise they will come within the pro- 
 visions of the anti-trust laws. 
 
 In the same act the association so formed is not only re- 
 stricted in its activities to exports alone, but it is specifically 
 provided that the provisions of the law concerning freedom 
 from restraint and exemption from anti-trust laws do not 
 apply to "the production, manufacture, or selling for con- 
 sumption or for resale, within the United States or any 
 Territories thereof, of such goods, wares, or merchandise, or 
 any act in the course of such production, manufacture, or 
 selling for consumption or for resale." 
 
 And furthermore the association ic forbidden to restrain 
 trade within the United States or to commit acts in restraint of 
 the export trade of any domestic competitor of such association, 
 or for the association either in the United States or elsewhere 
 to enter into any agreement, understanding, or conspiracy, or 
 to do any act which artificially or intentionally enhances or 
 depresses prices within the United States of commodities of the 
 class exported by such association. Nor can it "substantially" 
 lessen competition within the United States or otherwise re-
 
 142 MACHINERY OF FOREIGN TRADE 
 
 strain trade therein. (See Appendix A for text of the Webb- 
 Pomerene Law.) 
 
 Methods of Control 
 
 Whenever the Federal Trade Commission may have rea- 
 sons to believe that any unlawful act of the character just men- 
 tioned has been committed it is given power to summon any 
 officer of the association or other persons it may choose for the 
 purpose of conducting an investigation into the acts of the asso- 
 ciation. If it should be found that the law has been violated, 
 the Commission may suggest readjustment in the business of 
 the association, so that it may be conducted according to law. 
 If the association fails to comply with recommendations of the 
 Commission, the case shall be referred to the Attorney-General 
 of the United States "for such action as he may deem proper." 
 
 This is one method of governmental control established by 
 law over the association, which in so far as export trade is con- 
 cerned has all the power of becoming a so-called trust and with- 
 out being subject to the anti-trust laws. 
 
 The other method of control by the government is the spe- 
 cific and mandatory provision in the act that each association 
 organized for export by means of a "contract or otherwise, of 
 two or more persons, partnerships or corporations" must, 
 in 30 days from the time of its formation, file with the Federal 
 Trade Commission the following verified statements and items: 
 
 1. The location of the offices of the association and places 
 
 of business. 
 
 2. The names and addresses of all its officers. 
 
 3. The names and addresses of all Its stockholders or 
 
 members. 
 
 4. If a corporation, a copy of its certificate or articles of 
 
 incorporation and by-laws. 
 
 5. If not a corporation, a copy of articles or contract of 
 
 association.
 
 THE WEBB-POMERENE LAW 143 
 
 On the first of January of each year a like statement with 
 all the changes which have occurred is required to be filed with 
 such other information as the Commission may demand. 
 
 A penalty of forfeiture of certain rights is provided for, 
 and $100 as a fine for each and every day of failure to comply 
 with the law. If those who file the above documents have com- 
 plied with the law in other respects, the mere filing of the pre- 
 scribed papers qualifies them as an export association and 
 entitles them to all the provisions and benefits of the law. 
 
 So much for the general letter and tenor of the law. It is 
 plain enough. In some instances, however, it is not likely to be 
 so easy to put it into practice. 
 
 Forms of Combination 
 
 The course is clear if the exporting concern plans to con- 
 duct foreign business through a subsidiary selling organization 
 of its own, and desires to avail itself of the benefits afforded by 
 the Webb-Pomerene Law only to the extent of making 
 arrangements with other concerns from time to time as the 
 necessity arises. Such arrangements may be a contract for the 
 apportionment of territory, orders, or profits, or may provide 
 for the regulation of prices in one or more foreign markets. 
 
 It is not so easy to make use of the law when one contem- 
 plates the creation of a joint selling organization into which 
 the export activities of a number of competing concerns are 
 merged. There is an infinite variety in types of such selling 
 organizations, which can be devised and oftentimes it is diffi- 
 cult to decide just which type is best suited to a given case. It 
 may be that the participating concerns cannot agree among 
 themselves on a definite arrangement as to the management, the 
 stock distribution, or the method of buying or selling. In such 
 a case a different scheme for a selling combination may effec- 
 tively meet all the requirements. 
 
 The same may be said regarding the agreements authorized
 
 144 
 
 MACHINERY OF FOREIGN TRADE 
 
 by the law between different concerns engaged in foreign trade 
 each of which operates its own selHng organization. Such 
 agreements may relate to the pooling of business, territory, pro- 
 fits, losses, etc. One arrangement may be practical in one mar- 
 ket, another arrangement in another, according to the condi- 
 tions in a particular territory abroad or in the industry at home. 
 
 Wide Range of Possibilities 
 
 The Webb-Pomerene Law allows any exporter in the 
 United States to act in combination with any other American 
 exporting concern at home or abroad, or with as many as he 
 may choose under any agreement which they may make among 
 themselves relative to export trade in America or trade in any 
 foreign market. It requires, however, that such agreement 
 shall not unlawfully interfere with trade within the United 
 States and shall not affect other American exporters with un- 
 fair methods of competition. 
 
 One of the arrangements that may be effected is the crea- 
 tion of a separate organization — be it a corporation, partner- 
 ship, a common sales office abroad, a joint marketing agency, 
 individual foreign sales branch, an exclusive agency, or any 
 kind of an understanding through an agreement. 
 
 The agreements may be made and changed as and when 
 occasions arise in conformity with the widely different require- 
 ments of widely different markets and the demands of industry, 
 product, and selling conditions and methods in the exploited 
 countries. 
 
 The foreign business of the United States has been con- 
 ducted heretofore by various methods and through varied types 
 of selling organizations. There are the export merchants and 
 the export commission houses. When a concern engages in 
 direct exporting, there are several courses open. It may dis- 
 tribute by means of a separate company which may be an 
 allied company, a selling company, or an independent company.
 
 THE WEBB-POMERENE LAW 145 
 
 Again it may conduct its business through a separate export 
 department of the general selHng organization, or the general 
 selling organization may be so planned that it handles both 
 foreign and domestic sales. 
 
 There are foreign and domestic corporations, copartner- 
 ships, or individuals trading under a firm name, but whatever 
 the form of the organization it is entitled to the provisions of 
 the Webb-Pomerene Law. 
 
 The Law Designed to Aid Foreign Trade 
 
 It is obvious that the law was created for the relief of the 
 American export trade and with a view to affording advantages 
 to the American exploitation of foreign markets. It is de- 
 signed solely to assist in the sale of the American products 
 abroad and to aid in overcoming competition in foreign mar- 
 kets. To that end all the instrumentalities already in exis- 
 tence should be utilized to the fullest extent when conditions 
 so require. 
 
 If, for instance, a manufacturer may not find it practicable 
 to organize an export selling combine or may not be desirous 
 of entering such combine, he may make export arrangements 
 with some existing export concern, agreeing to utilize its organ- 
 ization and consenting to some pooling arrangement of terri- 
 tory, prices, export orders, etc. 
 
 It may be that certain domestic concerns or even some of 
 the export houses as now constituted cannot qualify as an asso- 
 ciation under the law by merely filing the agreement with the 
 other documents. In such cases a reorganization with either 
 reincorporation or with the organization of one or more new 
 corporations will be necessary or advisable not only to comply 
 with the law but also for the purpose of carrying on sales and 
 fulfilling the agreements. 
 
 Various pooling arrangements and other selling methods to 
 overcome competition practiced by the trusts are legalized by
 
 146 MACHINERY OF FOREIGN TRADE 
 
 the Webb-Pomerene Law between competing concerns. Such 
 arrangements as the law allows may include an entire industry, 
 or but a few concerns, and it is a matter of indifference 
 whether the concerns so combined for export trade remain com- 
 petitors in the domestic trade. But such arrangements can 
 only be made by means of one or more export associations as 
 provided in the law. 
 
 Frequently it may be most practicable to preserve the indi- 
 viduality and independence of the concerns desirous of making 
 arrangements now permitted, as in the case of a branch house, 
 a special selling concern, a jobber, an export house, or a pro- 
 ducing concern. In such cases the concerns may qualify as 
 separate export associations, after which they can enter into 
 the pooling or other arrangements allowed to such associations. 
 In some cases, as has been said, a reorganization or new incor- 
 poration may be found necessary in order to comply with all the 
 provisions of the act. 
 
 Advantages of the Law 
 
 The advantages accruing to the American trader from the 
 Webb-Pomerene Law are numerous. The law has been 
 framed largely with an eye to the business which will follow the 
 signing of the treaty of peace. But while it will be of vast aid 
 to American industry in overcoming the unified tactics of 
 European manufacturers and traders and in securing our share 
 of the trading that will run into many billions of dollars, it will 
 also serve as well in advancing the world interests of our 
 smaller manufacturers. It has become obvious that in the past 
 extensive competition in foreign trade has been productive of 
 much harm that can be eliminated in the future through the in- 
 strumentality of the new law. The most obscure manufacturer 
 is as much entitled to the benefits of the law as is the largest 
 industrial combine, but he must know how to avail himself of 
 all its provisions and, most important of all, he must act.
 
 THE WEBB-POMERENE LAW 147 
 
 This law should enable the United States to duplicate the 
 achievement of Great Britain after the Napoleonic Wars, when 
 the people of that empire reaped the golden harvest of the re- 
 construction period that followed. It is also an attempt to 
 avoid the overpowering influence of paternalism by providing 
 a means by which the resourcefulness and individuality of the 
 American exporter can assert themselves without governmental 
 interference with the freedom of American commerce. 
 
 The law is far from being perfect. It is not broad enough 
 and not definite enough. But nothing is perfect in the begin- 
 ning. As time goes on the defects will be remedied. With 
 time, experience, and ever-changing conditions the amended 
 law will conform to the spirit of the times. It will not be long 
 before its provisions will find their way into the courts and 
 the interpretation of some of its terms by American tribunals 
 will hasten its complete understanding. 
 
 Many exporters who still feel uncertain as to the full impli- 
 cations of the act and the extent of the possibilities that it 
 opens to them, have consulted with the Federal Trade Com- 
 mission and have sometimes referred their plans to it for 
 approval before putting them into operation. While the law 
 anticipates no such procedure and such advice is unofficial this 
 extra legal function may prove a most useful part of the 
 Commission's duties.
 
 CHAPTER XIX 
 
 EXPORT ORGANIZATIONS AND COMBINATIONS 
 
 Growth of Foreign Sales Combines 
 
 The same forces and tendencies which have resulted in 
 the growth of selling organizations and combines in the United 
 States operate to form similar organizations for the sale of 
 our products abroad. The export combine or selling trust, 
 however, enjoys one important advantage. The acts and 
 policy of the domestic organization frequently incur the ban 
 of the law and may be adjudicated to be "unfair competition" 
 and "in restraint of trade." The acts and policy of the export 
 organization only incur the risk of foreign governmental pro- 
 hibition or control when the methods are considered to be 
 injurious to the trade of the country in which operations are 
 carried on. As foreign governments have hitherto viewed 
 the operations of trusts and combines with much more 
 equanimity than the United States government, it is to be ex- 
 pected that considerable more latitude will be allowed the ac- 
 tivities of the trust or combine working in a foreign field 
 than is allowed when the same activities are carried on in 
 the domestic market. 
 
 Specialty Foreign Sales 
 
 When the individuality and special features of the article 
 to be exported are their chief selling points, the advantages to 
 be derived from co-operative sales efforts are hardly sufficient 
 recompense for the difficulties to be overcome in forming a 
 joint selling organization. The sale of such highly specialized 
 articles as office devices and appliances, machinery, cash regis- 
 
 148
 
 EXPORT COMBINATIONS 149 
 
 ters, sewing machines, automobiles, shoes, farm machinery, 
 and so on, depends largely upon bringing the advantages of 
 the specialties to the attention of the customer and making him 
 acquainted with their utility and the method of their use. 
 Such sales call for highly trained salesmanship. The individual 
 effort which each sale requires is obviously the sole concern 
 of the manufacturer or exporter and cannot be delegated to 
 the representatives of any association of either competing or 
 non-competing exporters. 
 
 It is true that, given a product of merit and individuality, 
 orders will be received for it in a more or less spasmodic 
 fashion from all quarters of the globe. But if the manufac- 
 turer of a specialty is desirous of developing any foreign coun- 
 try intensively, then his sales campaign abroad must be just 
 as much an individual enterprise as his sales campaign at home. 
 When independent action is the logical course to follow, 
 it will usually be found that the methods which have proved 
 effective in the home market will prove equally effective 
 abroad, after any modifications have been made which are dic- 
 tated by custom and the peculiarities of national taste. 
 
 Staple Foreign Sales 
 
 The benefits to be derived from combinations formed to 
 develop foreign trade and cultivate particular fields are prac- 
 tically limited to the producers and manufacturers of certain 
 kinds of staple goods. For instance, American manufacturers 
 of nuts, screws, bolts, and similar hardware, the cheaper lines 
 of cotton piece goods, steel, cement, etc., are able by means of 
 their large-scale methods of production or by superior facilities 
 for the purchase of raw materials, to offer such staples at 
 competitive prices in almost any market of the world. Again, 
 producers of lumber, cotton, copper, and other raw materials 
 which are indigenous to this country find little or no difficulty 
 in entering the foreign markets.
 
 I50 MACHINERY OF FOREIGN TRADE 
 
 One important factor which often represents the margin 
 between profit and loss in the sale of such staples is selling 
 expense. The manufacturer of a specialty can often add a 
 round lOO per cent to his cost to cover selling expense, but 
 if the price of a staple includes a considerable margin for this 
 item, it cannot be offered at a competitive price. One of the 
 means of reducing this factor to the minimum is to sell in large 
 volume. If this volume is big enough for the orders to be 
 pooled among a number of manufacturers and the cost of the 
 sales campaign are also pooled, it is obvious that the selling 
 expense then sinks to a negligible factor in the sales price. 
 
 The manufacturer or producer of any of the commodities 
 listed above and many others besides would find it a difficult 
 if not impossible task to build up a lucrative foreign trade 
 working alone as an independent exporter. He could not carry 
 stocks at strategic points abroad ; the volume of his shipments 
 would not enable him to obtain the lowest freight rates; and 
 in a hundred and one ways he would be handicapped in com- 
 petition with either an e>:port combine or a foreign producer 
 handling his particular product. Therefore for the small man- 
 ufacturers or producers of staple articles, a combination of 
 effort is often the only practical means of gaining a firm foot- 
 ing in foreign markets. 
 
 Types of Sales Organizations 
 
 The types of sales organizations formed by manufacturers 
 and producers of staple articles for the sale of their products 
 abroad may, for purposes of discussion, be divided into: 
 
 1. Jointly controlled selling organizations 
 
 2. Co-operative sales organizations 
 
 3. The selling combine 
 
 As noted above, the general policy of such combinations 
 abroad would be much the same as in the domestic market. The
 
 EXPORT COMBINATIONS 
 
 151 
 
 advantages of combinations in export trade, in addition to 
 those previously discussed, would be derived from the added 
 strength given to particular trades or industries in competition 
 with similar trades or industries abroad. The precise method 
 of forming such a combination is a problem for each trade 
 to solve and the subject here can only be profitably discussed 
 by a very brief statement or description of the methods adopted 
 in particular cases. 
 
 Jointly Controlled Selling Organization 
 
 In the sense in which the term "jointly controlled selling 
 organization" is generally used, it denotes an organization that 
 may have a certain degree of real independence but whose dis- 
 tinguishing characteristic is that it pools the export activities 
 of a number of previously competing concerns into a single 
 selling organization. This is, perhaps, the type of selling or- 
 ganization that has been most benefited by the new law. 
 
 With an organization of this character it is to be expected 
 that there may arise some difficulty in securing the singleness 
 of purpose, unanimity of direction, and steadfastness of policy 
 which are the marked characteristics of the singly controlled 
 organization. Nevertheless with good management, the right 
 sort of organization basis, and the willingness of the participat- 
 ing concerns to subordinate their individual opinions to the 
 common interests, it can be made to work smoothly and most 
 effectively. 
 
 In view of the freedom afforded by the Webb-Pomerene 
 Law to fix prices to foreign buyers, to allot export orders, to 
 allocate foreign markets, to pool foreign business, and to ap- 
 portion foreign territory, it is safe to assume that the joint 
 selling organization will become very popular. The law per- 
 mits a variety of arrangements for its creation and for Its 
 development, a variety limited only by the ingenuity of the pro- 
 moters and their legal advisers.
 
 152 MACHINERY OF FOREIGN TRADE 
 
 Typical Plan of Jointly Controlled Selling Organization 
 
 The following is a typical example of the plan under which 
 a joint selling organization may be formed and operated: 
 
 A number of competing manufacturers in a given industry 
 get together and organize a joint selling organization for ex- 
 port with a capital stock, say, of $300,000, of which two-thirds 
 is 8 per cent cumulative preferred stock and the rest common 
 stock without par value. The common stock is to be used as 
 a bonus, one share of common stock being given with each two 
 shares of the preferred stock. The preferred stock will be sub- 
 scribed by the concerns actually participating in the joint selling 
 arrangement. These concerns will be the only holders of stock 
 in the new company, and their holdings will be apportioned 
 according to the amount of their export output. But no par- 
 ticipating concern will have more than one vote regardless of 
 the amount of stock it holds, and no concern can obtain con- 
 trol of the majority of the stock. The terms of payments for 
 stock may be one-half down and the balance subject to call in 
 amounts of from 10 to 50 per cent at a time. Each concern is 
 to be represented on the board of directors of the selling organ- 
 ization which will determine the policies of the organization 
 and direct their execution. The active direction may be vested 
 in a small executive committee of from three to five members, 
 composed perhaps of the principal employees of the company. 
 Each participating concern may agree to sell its entire ex- 
 port output through the joint company during the life of the 
 agreement and to standardize, mark, label, pack and ship, and 
 pay all freight and other charges to the seaboard as and when 
 directed by the joint company. The export shipments will con- 
 sist of a certain percentage allotted to each producer by the 
 joint company, this percentage to be in proportion to the whole 
 production in each case and to consist of specified grades. The 
 joint concern will fix the prices at which each participating con- 
 cern may sell its product. It will bill and collect the purchase
 
 EXPORT COMBINATIONS 1 53 
 
 price in its own name and according to its own terms. For the 
 products shipped by the participating concerns at its order, the 
 joint corporation will pay according to the system in vogue in 
 the particular industry (usually 90 days in domestic shipments, 
 with a discount of 2^ per cent for cash). The prices may be 
 arrived at in several ways — either by allotting some orders to 
 the concern quoting the lowest prices, or by making an agree- 
 ment from time to time in advance to buy from each concern 
 certain quantities and grades at specified prices, or merely by 
 taking an option on them. The excess obtained over the pur- 
 chase price may be used either in paying dividends on the 
 preferred stock or for setting aside funds for reserves and the 
 budget. The balance, if any, can be used in making a rebate 
 to each participating concern in the proportion which the 
 amount of export output guaranteed by each participant bears 
 to the aggregate amount of similar export output guaranteed 
 by all participants, or the surplus balance may be distributed 
 in the form of dividends to each participating concern accord- 
 ing to the amount of its holdings in the joint company. 
 
 It goes without saying that before the corporation is defi- 
 nitely organized a man experienced in foreign trade should be 
 secured as a manager. He will formulate plans for the selling 
 campaign. A connection should also be established with one 
 or two strong banks, which have either branches abroad or 
 influential representatives on the ground. 
 
 Co-operative Sales Organization 
 
 Another expedient for a jointly controlled selling organiza- 
 tion that does not care to undertake its own distribution either 
 in whole or in part, is to become a member of a co-operative 
 sales association. The term "co-operative" is generally under- 
 stood among exporters to apply to non-competitive producers. 
 There are already many such concerns. The fact that they 
 are non-competitive does not prevent them from qualifying
 
 154 MACHINERY OF FOREIGN TRADE 
 
 under the Webb-Pomerene Law or from combining their or- 
 ganizations in some markets abroad with competitive concerns 
 under the agreements authorized by the law. 
 
 There are numerous systems of co-operative distribution 
 and purchasing in England and on the Continent. Great 
 Britain has made a greater advance in social-economic co- 
 operation than any other country in the world. It is calculated 
 that more than one-sixth of the British population has its 
 economic wants wholly or partly supplied through the co- 
 operative methods of such organizations as the North of Eng- 
 land Wholesale Society and The Scottish Wholesale Society. 
 Some of these, including the famous Rochdale Society, own 
 purchasing and forwarding depots in New York, Hamburg, 
 Copenhagen, and other cities in different parts of the world. 
 A number of such co-operative societies in England have their 
 own steamship lines and banks and operate their own dis- 
 tributing and retail centers. With these organizations, as well 
 as with purchasing and selling syndicates and combines of 
 England and of the Continent, the American exporters will 
 have to reckon seriously. 
 
 Co-operative organizations for foreign trade are not very 
 numerous in America, although some concerns which could 
 be placed in this class, such as the National Paper and 
 Type Company and the Parsons Trading Company, are doing 
 very well. The co-operative type of selling organization for 
 export is especially well adapted to non-competing products 
 and there is not the least doubt that, as the development of our 
 foreign trade progresses, this type of organization will come 
 more and more into its own. We have a vast army of pro- 
 ducers who either feel that they are as yet too small to enter 
 foreign trade alone or even as a part of a joint sales arrange- 
 ment with a competing concern, or who have but a very small 
 output for export because of the demand for their product in 
 home markets.
 
 EXPORT COMBINATIONS 155 
 
 Some observers believe that the co-operative type of selling 
 organization will become the predominant type in the foreign 
 field, competing successfully with every other type of export 
 sales organization and ultimately supplanting it in the same 
 way that our department and chain stores are supplanting the 
 older methods of retail distribution. 
 
 Example of Co-operative Sales Organization 
 
 The following case is typical, in broad outline, of the 
 methods of forming a co-operative sales organization. The 
 details of the agreement will of course vary with circumstances 
 and the kind of product to be sold. In this example, the or- 
 ganization consists of a corporation formed by a number of 
 manufacturers of non-competing food products. Many of 
 these products can be more readily handled as a complete line 
 than they can be sold separately. 
 
 The capital of the corporation is $100,000 obtained by 
 an issue of partly paid common stock, the balance being subject 
 to call in case of necessity. A prerequisite to membership in 
 the organization is the signing of an agreement which binds 
 the manufacturer to grant the exclusive foreign sale of his 
 goods to the corporation. The corporation on its part buys 
 from the manufacturer at a price determined by market quota- 
 tions, less a commission of 3^ per cent for expenses, and 
 retains any further profit on the sale if the selling price to the 
 consumer results in such profit. When an order is obtained 
 which cannot be filled by an individual manufacturer within the 
 delivery date specified, the sale is divided among two or more 
 producers in proportion to their average domestic sales. 
 
 Shipments are paid for either on the delivery of the goods 
 at the port of embarkation and the receipt of the bills of lading, 
 less 2 per cent discount; or net cash is paid ten days after 
 receipt of the shipment. The manufacturer pays freight and 
 other expenses incurred in the delivery of the goods f.o.b.
 
 156 MACHINERY OF FOREIGN TRADE 
 
 The profits of the corporation are in part disposed of by 
 paying a dividend of not more than 7 per cent on its capital 
 stock, after carrying to reserve any sums that the board of 
 directors deems proper. Any balance remaining is divided 
 am.ong the participating concerns in proportion to the amount 
 of the sales in each case. In prosperous years when market 
 prices are high, a considerable surplus is available for distribu- 
 tion ; in lean years the reserves may be drawn upon to maintain 
 the regular 7 per cent dividend on the capital stock. 
 
 The Selling Combine 
 
 The selling combine consists of a number of competing 
 organizations operating through one selling organization which 
 may, for the sake of expediency, be called a "selling combine," 
 thus avoiding the odium which is attached to the term trust 
 and which is at the same time a more exact description of a 
 large combination of capital and resources. 
 
 A combine on a vast scale bordering on monopoly would 
 hardly be feasible in export trade for two reasons: First, the 
 VVebb-Pomerene Law has its limitations so long as the anti- 
 trust laws continue to express our governmental policy towards 
 combinations in production and trade within the United 
 States. The other reason is that, as many economists assert, 
 beyond a certain point combinations are not economical except 
 in raw materials. Even at home the history of large combina- 
 tions shows that they were effected almost exclusively in con- 
 nection with production and distribution of raw products and 
 in what the Germans call "heavy industries," such as iron, oil, 
 coal, alcohol, sugar, and the like. 
 
 Export trade has been carried on in respectable volume by 
 many concerns which were organized on a comparatively 
 modest scale; and it is most likely that these concerns will 
 continue to adhere to the same policy, endeavoring to preserve 
 their individuality and independence. Considering all things,
 
 EXPORT COMBINATIONS 1 57 
 
 and not the least of them the policy of the Federal Trade 
 Commission to protect the humblest American exporter from 
 unfair dealings, it may be assumed that under the Webb- 
 Pomerene Act, no combines for export trade will be formed 
 which will be destructive to the individual welfare of the 
 smaller exporters. 
 
 We may look, however, for very large combines in some 
 "heavy industries," for these are for the most part operated 
 even at home by large combinations. We may also look for 
 combines in many other industries but they will be formed 
 rather through joint agreements than through cleverly central- 
 ized management. 
 
 Example of Selling Combine 
 
 Before the war the foreign trade of one American industry 
 suffered greatly from the effect of the competition of its 
 members in foreign markets. Upon the return of normal 
 conditions, it seemed certain that trade would be resumed with 
 a recurrence of the former unsatisfactory conditions. For- 
 eign buyers, as formerly, would combine to present a united 
 front against the American exporter, and the playing of one 
 against another would lead to underbidding, with the result 
 that, as so often had occurred in the past, the combined foreign 
 buyers would obtain the product below a fair and reasonable 
 price. Most of the concerns in the industry had suffered so 
 much in the past from this competition and were so fully con- 
 vinced of the wastes involved that they were ready to co- 
 operate by forming any practicable kind of joint selling or- 
 ganization. 
 
 Tentative plans were first drawn up which included the 
 finding of a man who had made his mark as the foreign sales 
 manager for one of the concerns, and whose integritv and 
 impartiality were approved by all. He was to be engaged as 
 general manager. Desirable locations in a number of foreign
 
 158 MACHINERY OF FOREIGN TRADE 
 
 markets were then to be secured simply by taking over branches 
 already maintained there by one or another of the participating 
 concerns. There was abundant past experience from which to 
 plan the office management and sales organization, to work 
 out the details of selling, credits, financing, shipping, and traf- 
 fic, and to draw up a budget of probable financial require- 
 ments for a joint selling campaign. 
 
 Form of Incorporation 
 
 A corporation was finally organized under the laws of one 
 of the western states, with $150,000 capitalization, entirely 
 of paid-up common stock, and its purposes carefully limited to 
 those permitted by the Webb-Pomerene Law. Only concerns 
 which would agree to sell their entire export output through 
 the corporation were eligible to become stockholders ; no con- 
 cern was entitled to more than one vote, regardless of the num- 
 ber of shares it might own; and no concern, or group of con- 
 cerns, was ever to obtain a majority interest or dominating 
 control. 
 
 To carry out these provisions, all shares of stock, excepting 
 the qualifying shares, were indorsed in blank by the stock- 
 holder and deposited in trust with the stock trustees. Upon 
 this stock the corporation had a first lien as security for the 
 faithful observance by the stockholders of the corporate by- 
 laws and resolutions and the performance of any agreements 
 entered into or obligations incurred with respect to the cor- 
 poration. In event of the stockholder's default in this regard, 
 the board of directors was to tender to the stockholder the 
 book value, not exceeding the par value, of his stock, less any 
 indebtedness owing to the corporation. The stock held by the 
 defaulter was then to be canceled and reissued 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
 
 EXPORT COMBINATIONS 159 
 
 stockholders were always to be entitled to a specified number 
 of directors on the board and in the executive committee. 
 Dividends were limited to 7 per cent 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 
 might determine. 
 
 Agreements with Participating Concerns 
 
 Each participating concern executed an agreement with 
 the corporation, constituting the latter the exclusive agent for 
 the sale of its product abroad during the life of the agreement. 
 This export product consisted of a specified quota determined 
 from time to time by the board of directors of the corporation. 
 The corporation was to sell at the best prices obtainable and 
 was to allot its orders fairly and impartially among the partici- 
 pating concerns in accordance with the quotas determined from 
 time to time by the board of directors. Each participating 
 concern agreed to accept and execute such orders as the cor- 
 poration might assign to it. The corporation was to guarantee 
 the payment of all open accounts and to settle for each ship- 
 ment within thirty days, retaining for its services a commis- 
 sion of 2^ per cent. The agreement provided for no rebate 
 upon this commission, and the only refund of any kind to 
 which the participating concern was to be entitled was in the 
 form of dividends upon the stock owned in the corporation. 
 
 Suggested District Sales Company 
 
 Of late, suggestions have been made at several foreign 
 trade conventions for the formation of a district sales company. 
 The proposition consists. in subdividing this country into geo- 
 graphical districts, each district comprising about a dozen 
 towns In reasonable proximity, one of which will be the head- 
 quarters of the company which shall include all the exporting 
 concerns within the district. These concerns would make,
 
 l6o MACHINERY OF FOREIGN TRADE 
 
 through the district export sales company, a combined effort 
 to market their products abroad, to secure competent help, 
 develop export salesmen, cultivate foreign buyers visiting the 
 United States, and provide for frequent meetings of its mem- 
 bers. The details as to the nature of the organization, the 
 amount of subscriptions for stock, the method of carrying on 
 sales, and the distribution of orders, would be determined in 
 each case by local conditions and the desires of the members. 
 
 The idea behind this plan is new and it has not, at this 
 writing, been put into actual practice. No doubt sooner or later 
 some such method will be put to a practical test. It will be 
 particularly welcome to the manufacturers who are a consider- 
 able distance from the seaboard, to whom export activities are 
 a novelty and who are not producing for export in quantities 
 large enough to justify their making export efforts through 
 one of the types of the selling organizations already tested and 
 found effective. 
 
 It must be remembered, of course, that the full value of 
 the Webb-Pomerene Law will be uncertain until some of its 
 provisions have been tested by the courts. In the meantime, 
 however, it appears to be a boon to the exporter — to offer a 
 freedom of action in the matter of organization and expansion 
 which the exporter has sadly needed hitherto. If he is wise 
 he will give the new law careful study and ask himself how 
 best it may be applied to his type of selling organization or 
 to his export plans.
 
 CHAPTER XX 
 
 GOVERNMENTAL SUPPORT OF FOREIGN TRADE 
 
 Achievement in Foreign Trade 
 
 Most of the world's trading nations have taken centuries 
 to bring their foreign trade to a high state of development. 
 For hundreds of years, England, Holland, France, and Belgium 
 have chartered companies with political powers and purposes 
 for the promotion of trade in foreign lands. The foreign 
 trade of Germany on the other hand has been developed within 
 twenty years. Despite certain features which are unworthy 
 of commendation or imitation, Germany's rapid expansion in 
 foreign trade constitutes a genuine achievement. For America, 
 it contains a valuable lesson so far as it was due to careful 
 preparation, co-operative methods, and governmental assist- 
 ance. The question of governmental assistance constitutes 
 the subject matter of this chapter. 
 
 Germany's foreign trade organization was centered in 
 Berlin and rested on the Reichsbank which gathered into one 
 center of influence the threads of the network of commerce 
 scattered throughout the world. To this center, the govern- 
 ment lent all the assistance in its power, and to it the banks, 
 transportation companies, manufacturers, and every other 
 essential factor lent their effective co-operation. 
 
 By means of this organization everything that w?.s poten- 
 tially harmful to commercial expansion vvas eliininated and 
 all that was beneficial was acquired. Foreign trade was 
 aided by the German government in every possible way and 
 the conquest of foreign markets became a great national ideal 
 and aspiration. 
 
 i6i
 
 l62 MACHINERY OF FOREIGN TRADE 
 
 Basic American Organization 
 
 What America most needs to advance her commercial 
 expansion is the estabHshment of a center of co-ordination of 
 all the essential factors within the nation. These are the 
 manufacturers, the bankers, the transportation interests, and 
 the political and governmental factors. 
 
 There is no one more vitally interested in such a plan from 
 the standpoint of self-interest than the manufacturer, and 
 on him rests the burden of initiative. The manufacturing 
 interests are just awakening to their opportunities but there 
 is still much to be desired among them in organization, under- 
 standing, initiative, and co-operation. 
 
 The banking and financial interests can be of great service 
 in the extension of credit facilities, the financing of exports, 
 the establishment of branches in foreign countries, and in 
 other ways essential to the conquest of the world's trade. 
 
 The transportation companies can, if permitted by law, 
 make their rates suit the exigencies of our foreign trade 
 expansion and provide the facilities that shall help instead 
 of hinder our Importing as well as our exporting activities. 
 
 Perhaps the most important of all factors are the political 
 and governmental. Unfortunately the United States has 
 no continuous foreign policy except in the broadest sense. A 
 policy which is casual and extemporaneous is worse than 
 useless. The present situation is due largely to the fact that 
 our political parties have no definite foreign aim. Onlv when 
 each party feels itself responsible for definite results will there 
 be an improvement in the political agencies by which the 
 results are attained. We cannot even hope to ameliorate 
 conditions, or to improve the administrative and legislative 
 attitude toward foreign trade, until the commercial interests 
 are sufficiently organized and influential to make the extension 
 of foreign trade by definite means a plank in the platform of 
 each political party.
 
 GOVERNMENTAL SUPPORT 163 
 
 Need of Governmental Help in Foreign Trade 
 
 The United States should support our foreign trade not 
 so much in the hope of duplicating Germany's rapid expansion 
 as to neutralize certain present deficiencies that now operate 
 against success. These deficiencies are: 
 
 1. The lack of trained diplomats. 
 
 2. The lack of definite national aims 
 
 3. Our general unpreparedness. 
 
 Only those who are thoroughly familiar with the require- 
 ments of foreign trade can fully realize how much the diplo- 
 matic service can aid in its promotion. Diplomacy embodies 
 in most countries the policies of parties, the desires of the 
 people, and the acts of the government. Without a consistent 
 policy, so that the ends to be served are definite and clear, 
 American diplomats must always be at a disadvantage. The 
 American diplomat, lacking in special training and without a 
 policy to guide him, must generally fail in dealing with the 
 skilled representative of a foreign power who, in addition to 
 his special eciuipment, brings to his task the well-laid plans 
 and clearly defined policies of his government. 
 
 The American representative abroad is as a rule unable 
 to safeguard the industrial, commercial, and financial interests 
 of the United States in the country which he represents because 
 of his lack of a comprehensive grasp of the conditions of 
 trade and policies of government throughout the world, and 
 his government's failure to provide him with a well-defined 
 policy. 
 
 Even with an adequate governmental representation and 
 policy we should still be in a state of unpreparedness. We 
 do not yet realize the Immense benefits of foreign trade to 
 the nation engaged in it up to capacity. The vehicle by which 
 our country will become completely ready is public opinion. It 
 is the dynamo that will set in motion all the separate activities
 
 164 MACHINERY OF FOREIGN TRADE 
 
 toward the great design that should become our great national 
 ambition. When the time comes the great problem will be how 
 to mobilize speedily and effectively. Then even the man in 
 the street will feel the imperative need of a strong central 
 organization. 
 
 Form of Organization 
 
 Americans are generally averse to direct governmental 
 control of private enterprise and we may well hesitate to 
 advocate a center of co-ordination of effort in which the 
 government is a controlling factor. Under the former German 
 plan of organization the control of the central body rested 
 in but three men, the Secretary of the Treasury, who repre- 
 sented the government, the President of the Reichsbank, who 
 spoke for the financial interests, and the head of the steamship 
 combine, who represented the transportation and business in- 
 terests. Were we to organize a similar body, the corresponding 
 officials would have great power but they need not necessarily 
 be autocrats. The influence and power of the majority would 
 come from the co-operation of the organized factors of com- 
 merce to whom they would be responsible and for whom they 
 would act. The board would then serve as an intermediary 
 between organized politics and organized commerce and 
 become a veritable balance wheel of progress. 
 
 As has been pointed out in Chapter XVI, there are many 
 useful organizations which are performing valuable and im- 
 portant work in this direction. They do not pretend, however, 
 to be able to mobilize the resources of the nation nor to provide 
 an immediate means for a thoroughly aggressive and scien- 
 tific exploitation of foreign trade. But if we are to utilize our 
 present opportunities and to secure our full share of the 
 world's markets, we shall need a central co-ordinating body. 
 In no other way can we truly nationalize American foreign 
 trade.
 
 GOVERNMENTAL SUPPORT 165 
 
 An American Board of Foreign Trade 
 
 The creation of an American Board of Foreign Trade 
 would furnish and would hasten our evolution as world 
 traders. On such an American Board of Foreign Trade 
 would sit the representatives of the factors mentioned above 
 who are directly concerned in our foreign commerce, viz: 
 the manufacturer, the banker, the transportation companies, 
 and the government. A fifth member might be chosen by 
 these four. 
 
 The President of tlie United States might appoint a 
 representative of the government, the manufacturing and the 
 other interests could each have a suitable man appointed 
 through their national associations. It would not then be a 
 self-constituted body, representing only certain interests and 
 aiming to promote only those purposes that are agreeable to 
 those special interests, but it would represent and aim to pro- 
 mote aU the interests within the nation. Only such an organi- 
 zation can mobilize all the resources of the nation for our 
 commercial expansion abroad. 
 
 Specific Activities of Board of Trade 
 
 The representative of the bankers of the country could 
 arrange for the establishment of enough American banks 
 abroad to afford facilities for American investments in foreign 
 countries. Trade no longer follows the flag to such an extent 
 as it follows invested capital and banking, both of which 
 co-operate with the trader in his campaign for business. 
 
 The representative of the transportation interests could 
 bring about a thorough understanding and continual co-opera- 
 tion in providing the American trader with adequate shipping 
 facilities. He could mobilize the American-owned merchant 
 marine, and supervise its co-operation with the American 
 railways, enlarging their service and providing a joint rate 
 for all foreign shipments from whatever part of the country.
 
 l66 MACHINERY OF FOREIGN TRADE 
 
 The representative of the manufacturing interests would 
 perhaps have the hardest task of all. He would have to 
 establish such selling facilities abroad as to afford the smallest 
 manufacturer an opportunity to sell his goods in foreign 
 markets. At present only the largest manufacturers enter 
 foreign trade under favorable conditions and even then they 
 work under a severe handicap and in the face of numerous 
 obstacles which could easily and quickly be overcome if there 
 were anyone who had authority to act for all. Such an official 
 might devise a method by which smaller manufacturers, either 
 of competing or non-competing products, could establish joint 
 selling agencies abroad on a co-operative plan and thus he 
 might become an effective means of organizing co-operation 
 amongst other manufacturers. 
 
 The representative of the government would serve as a 
 necessary link between the commercial organizations on the 
 one hand and the governmental support on the other, securing 
 the perfect co-ordination of the two and promoting the 
 adjustment of legislative acts, public policies, and diplomatic 
 service to the highest requirements of foreign trade. 
 
 Importance of Proper Organization 
 
 It Is most essential that such an Institution should contain 
 the representation that has been suggested. Unless it were so 
 constructed and had the backing of great Interests directly 
 concerned with foreign trade. It would not be able to accom- 
 plish the desired results since It would not have the necessary 
 authority to speak for the great interests, nor would It have 
 the financial support required to engineer a movement on such 
 a vast scale. If, however, It Is constituted as outlined above, 
 it can enlist the entire time and services of the men capable 
 of administering such an organization. It is useless to try to 
 work out the solution of the problem in the manner here 
 advocated by means of the usual methods employed by the
 
 GOVERNMENTAL SUPPORT 167 
 
 forms of trade organization considered in the discussion of 
 foreign trade auxiliaries (Chapters XIV, XVI). The calibre 
 of the men required by such an institution would be similar 
 at least to that of the men who constitute the Federal Reserve 
 Board. 
 
 General Functions oi the Board 
 
 The board advocated could in a measure supplement the 
 activities of our Department of Commerce in so far as it 
 concerns itself with foreign trade, but its primary function 
 should be to mobilize the resources of the nation in behalf of 
 the extension of our foreign trade. This it would do, not so 
 much through the collection and dissemination of useful 
 information, as by acting as the center into which all the lines 
 of our national endeavor in the direction of foreign trade 
 would converge, and which would not only promote the 
 necessary activities, but also devise a means therefor, and in 
 a measure supervise their execution throughout the world. 
 Its usefulness would also be great in the formation of public 
 opinion and its proper direction towards the creation of a 
 nation-wide enthusiasm for foreign trade. Such a body could 
 enlist the proper attitude of Congress, as our commercial 
 expansion abroad should receive the favorable support of 
 everyone. 
 
 Again it may be emphasized that in order to fulfil its pur- 
 pose such a board must be a body representing all the great 
 interests directly concerned in foreign trade, and be guided 
 and administered by men of experience, prestige, and ability. 
 
 Such a board of trade could engineer the project of main- 
 taining national selling agencies abroad by means of exhibits 
 of our products and of sample distributions in all the great 
 trade centers of the world. It could also operate an effective 
 trade intelligence bureau. Through its commissioners in 
 foreign countries it could supplement our diplomatic and
 
 l68 MACHINERY OF FOREIGN TRADE 
 
 consular service with a highly trained staff of experts in 
 foreign trade through whom an intelligent and forceful 
 co-operation with our foreign service in every part of the 
 globe would be assured. It might even, through its depart- 
 ments or branches, undertake to conduct commercial negotia- 
 tions and even to make sales of American goods abroad. 
 
 Certainly, an institution of this sort would be a powerful 
 stimulus to our foreign trade, co-ordinating various activities 
 now working in that direction and presenting a strong, 
 aggressive, intelligent, and organized front wherever the 
 interests of our international commerce demand it. 
 
 There would seem to be no other way in which the 
 resources of our nation could be so quickly mobilized for scien- 
 tific foreign trade expansion, although a central co-ordinating 
 body might, of course, be established by some other means or 
 be called by some other name.
 
 PART III 
 
 OPERATING A FOREIGN TRADE 
 ORGANIZATION
 
 CHAPTER XXI 
 
 THE DEVELOPMENT OF A FOREIGN MARKET 
 
 Attitude Toward the Foreign Field 
 
 The United States is a most progressive country. In less 
 than a century it has accompHshed more in the way of inven- 
 tion, finance, and general commercial progress than any 
 country of the old world in twice that length of time. Since 
 the war has seriously crippled the other great nations and 
 impaired their leadership in the world's progress, it falls to 
 our lot to place our unimpaired resources at the world's service 
 and to take the lead in continuing the world's progress and 
 in preserving its commercial and financial balance. The 
 expenditure of even a part of the business energy that we 
 have shown at home can accomplish these results abroad, if 
 our efforts are properly directed. We can aid in revolution- 
 izing methods now in vogue and in the setting of new stand- 
 ards and the raising of new ideals in commerce. 
 
 The first step is to cease to consider our country as the 
 only possible field for business operaticns and to begin to think 
 of the whole world as our market. Nor must we be content 
 with selling our goods abroad. We should extend our busi- 
 ness operations in foreign countries to investments, banking, 
 and the constructive development of natural resources. If we 
 wish to develop extensive markets abroad for our manufac- 
 turers we must use our surplus funds to help develop the re- 
 sources of the countries with which we are dealing. We must 
 go even further — we must not only act as bankers but we must 
 aid in the industrial developments in foreign countries as we 
 have done at home. 
 
 171
 
 \'J2 
 
 OPERATING THE ORGANIZATION 
 
 Our men of brains and initiative must build railways, de- 
 velop mines, and with the introduction of newer and better 
 machinery and implements improve the agricultural methods 
 of foreign countries. Railway construction will keep our fac- 
 tories busy in manufacturing locomotives, cars, and tracks, 
 and the other developments will give us employment in sup- 
 plying tools, machinery, and other finished products. The 
 building of a railway opens the surrounding country, and 
 creates new fields in which our salesmen may sell their goods. 
 
 The stability of our manufacturing interests can be at- 
 tained only by creating the widest possible market for our 
 products. In investing our surplus funds in the developments 
 of foreign countries, we encourage the countries thus bene- 
 fited to favor us with their trade and to prefer us in various 
 other ways. 
 
 Not only should our bankers and the public be educated 
 to appreciate the advantage accruing to us as a nation through 
 the extension of short- and long-term loans to foreign gov- 
 ernments and corporations, but the business man should be 
 taught to realize that in many instances the expansion of his 
 export trade may be greatly facilitated by creating extensive 
 local channels of distribution. Thus for example, in some 
 instances a manufacturer will find it to his advantage to estab- 
 lish retail stores in the country which offers special oppor- 
 tunities for his product. Again, it may be advisable to estab- 
 lish distribution centers necessitating in some cases the build- 
 ing of warehouses and of assembling plants. 
 
 Developing a Foreign Market 
 
 The first steps in developing a foreign market will be iden- 
 tical with those employed in the expansion of any business. 
 Next we must cease to rely entirely on the middleman or even 
 on the local importer and seek mainly, strongly, persistently, 
 and intelligently the ultimate consumer in foreign countries.
 
 DEVELOPING A FOREIGN MARKET 173 
 
 To accomplish this necessitates wise planning, sufficient capi- 
 tal, and the nucleus of an organization. 
 
 The first field of operation must then be decided upon and 
 where the interests are large enough to justify the expense, 
 a competent man be sent to investigate and to pave the way. 
 To select such man is no easy task. What sort of man must 
 he be? 
 
 The Investigator 
 
 The man who will be successful on a business mission of 
 the sort under discussion must be a man of parts. It would be 
 very desirable if su«ch a man had been abroad on former occa- 
 sions and had had experience in meeting foreigners even if 
 only in a social way and casually. A college education may 
 help but it does not necessarily fit a man for such a position. 
 
 It is a difficult thing to find properly qualified men for such 
 a task. The matter would be greatly facilitated if the govern- 
 ment — say the Department of Commerce — were to keep a 
 record of the men available for this purpose and supply in- 
 formation concerning them, so that a manufacturer could 
 readily obtain such assistance when needed. 
 
 Sometimes it is easier to find a suitable man than to pro- 
 vide for his remuneration and expense. Good men command 
 good pay, and a worthy business mission should be properly 
 staged. For these reasons the expense is usually considerable 
 and this explains why many firms, though ambitious for for- 
 eign trade, do not enter the field. 
 
 Investigation Procedure 
 
 To consider the course to be pursued by the commercial 
 investigator will aid in obtaining some idea of his expenses. 
 
 In a country where class distinctions are strong and where 
 the people are thoroughly influenced by external appearances, 
 it is a good policy, in some lines of business, for the commer-
 
 174 OPERATING THE ORGANIZATION 
 
 cial investigator to have a private secretary who is best a 
 native. The secretary would answer telephone calls, write 
 letters, secure appointments, call on officials and merchants for 
 the purpose of making business engagements or extending invi- 
 tations on behalf of his principal, and otherwise help him to 
 maintain a dignified and proper position. 
 
 Letters of Introduction 
 
 The investigator's letters of introduction should be mailed 
 to reach their destination a few days before he calls in person. 
 Too much value should not be attributed to the stereotyped 
 introductions from governmental sources, unless they are of a 
 personal nature. As a rule the United States representatives 
 abroad do not pay any particular attention to such letters. 
 
 A stereotyped copy of the letter issued by the Secretary of 
 State when solicited through proper channels is here given: 
 
 Department of State 
 United States of America 
 To The Diplomatic and Consular Officers 
 of the United States. 
 
 Gentlemen : 
 
 At the instance of the Honorable Mr. X., a representative of 
 
 the United States from the State of , I take pleasure in 
 
 introducing to you Mr. Y. of , who is about to proceed abroad. 
 
 I cordially bespeak for him such courtesies and assistance as you 
 may be able to render consistently with your official duties. 
 
 I am, gentlemen, 
 
 Your obedient servant, 
 
 John Doe, 
 
 Secretary of State. 
 
 Such letters, however valuable they may be as a means of 
 identification, should not be overestimated as an aid to getting 
 business. Their practical commercial value is very doubtful. 
 
 Personal letters from Congressmen and officials to consuls 
 and ambassadors are of more value, particularly if such ofifi-
 
 DEVELOPING A FOREIGN MARKET 175 
 
 cials are personally acquainted with the foreign representative 
 to whom they address the introduction. 
 
 Letters of introduction from banks are, as a rule, of little 
 value except as a means of identification and in securing bank- 
 ing courtesies. 
 
 The best of all are personal letters from friends, relatives, 
 or business associates at home to those abroad. 
 
 Deportment 
 
 It should always be remembered that the commercial rep- 
 resentative, particularly if he is of the competent type described 
 above, will meet with a great deal of courtesy abroad, espe- 
 cially from bankers and business men. He will receive much 
 more consideration there than he will in America, and he 
 should be capable of turning it to good account by making the 
 most of his many opportunities. 
 
 Manners and politeness count for more in foreign coun- 
 tries than external appearances or the display of wealth. One 
 must never be insistent or pressing if one wishes to enter into 
 satisfactory business relations with foreigners. They are apt 
 to construe insistence as rudeness. If the representative 
 is tactful, however, and if he will proceed in the manner per- 
 mitted by the customs of the country, he can get what he wants 
 at the proper time and place. 
 
 In some countries the representative may be lavishly enter- 
 tained. However strong the salesman's inclinations he must 
 remember that abroad it is considered rude to "treat" a person 
 while you are a guest. The usual thing is to accept all the 
 courtesies that are offered, without any effort to reciprocate ; 
 but within a certain time the host should be made the guest. 
 
 The entertainment of a person on a business mission still 
 prevails extensively abroad, and the commercial diplomat 
 should inform himself on his arrival in the country as to the 
 custom and etiquette upon this point.
 
 176 OPERATING THE ORGANIZATION 
 
 Although ill most foreign countries display of any kind 
 is considered bad form, there are exceptions to the rule. In 
 Russia, before the revolution, some large transactions were 
 negotiated and important contracts closed as a result of lavish 
 entertainment. 
 
 Obtaining Data 
 
 The first thing for the investigator is to obtain all avail- 
 able data bearing on his business and to verify such data 
 as have already been obtained at home, so that a chart can 
 readily be prepared which will be scientifically correct. The 
 next thing is to ascertain the names of the managers of all 
 the principal houses dealing in the products in which he is in- 
 terested. He should then make appointments to see them. 
 Sometimes the merchant can even be brought to call on the 
 representative, instead of the latter calling on the merchant. 
 
 As a rule, more data of a general character can be learned 
 from the tradespeople than from all other sources combined. 
 The representative must use his judgment as to how to abstract 
 such information, but he should have the qualifications that 
 will assure his obtaining it. He may also endeavor to estab- 
 lish business wherever convenient, but this task should be 
 deferred until all the data have been secured and the trade 
 diplomat has become convinced that the opportunity is there 
 and the market is ready for his product. 
 
 It is always well to remember that hurry is not a part of 
 the foreigner's scheme of life. On the contrary it is rather 
 distasteful to him and therefore is to be avoided. In many 
 countries all business life moves slowly, but once trade is estab- 
 lished, it is usually firm and steady. 
 
 All the preliminary study of the foreign market should be 
 directed towards the end of procuring the necessary data for 
 the preparation of the charts shown in Appendix D. Once 
 the chart is available, the business strategist or the strategic
 
 DEVELOPING A FOREIGN MARKET 177 
 
 board is ready to decide whether the particular field is worth 
 cultivating. Thereafter the chart will serve as the basis for the 
 preparation of the selling plan and the selling campaign. With 
 the completion of the chart of the market the representative's 
 mission is ended. He should, however, be freely consulted by 
 those who are to decide upon sales plans. 
 
 Time 
 
 The time required for an investigation will vary with the 
 country to be exploited and the nature of the goods to be sold. 
 In any event the investigator should have at least three weeks 
 in which to secure the necessary first-hand information. If 
 he is to form connections or to make sales, or both, the length 
 of his stay should be correspondingly longer. 
 
 As a general rule, if a man is to go abroad to secure in- 
 formation and to form trade connections, or even to try to 
 make introductory sales, his stay should be at least six weeks. 
 
 Expense of an Investigator or a Sales Representative 
 
 It is a fair estimate that not less than $600 per month 
 should be provided for the expenses of the investigator. Hotel 
 bills and transportation will be but a part of the necessary 
 expenses. Not infrequently he is obliged to entertain. In 
 many countries a social basis must first be established between 
 the buyer and the seller and this involves expenditures for 
 dinners, suppers, theater parties, etc. Almost invariably the 
 representative must solicit help from foreign government offi- 
 cials. United States consuls, and officials of trade organiza- 
 tions, asking for information or introductions. He can 
 acknowledge these favors by entertainment of one kind or 
 another. Very often he must actually pay for the aid rendered, 
 either through the employment of some intermediary or by 
 employing assistants in each case. 
 
 Six hundred dollars will not go very far as a usual thing,
 
 178 OPERATING THE ORGANIZATION 
 
 even under normal conditions and in a country where normal 
 prices prevail, as will readily be seen from the following typi- 
 cal items: 
 
 Room in a first-class hotel ($4-$5 per day) $I20-$I50 
 
 Meals, carfares, and small miscellaneous items 
 
 ($8-$io per day) 240- 300 
 
 Cables home 5° 
 
 Entertainments 150 
 
 Secretarial expense 100 
 
 Or a total of $66o-$75o per month. 
 
 Export Office 
 
 Next to consider is the question of an export office. On 
 this subject a great deal has been said and written. Some 
 advocate that an export office should be established in New 
 York. Others are satisfied to have it at the factory. Some 
 insist on a separate and distinct export organization — others 
 advise half-way measures. It does not really matter where the 
 export office is located. At the outset the exporter should re- 
 gard his foreign trade merely as an extension of his business 
 and as much a part of the whole undertaking as a concern 
 located in Rhode Island regards its trade with California. A 
 Rhode Island concern undertaking to develop a national busi- 
 ness will not at the outset establish an office in New York, nor 
 necessarily create a separate organization. It will proceed to 
 do business with California precisely as it does business in 
 Connecticut and other near-by states. It will simply add suffi- 
 ciently to its forces and to its resources to provide for the 
 extension of its business. Exactly the same course should be 
 pursued when foreign trade is contemplated. 
 
 In export trade there are, of course, intricacies not met 
 with in domestic trade, but to overcome these one need not 
 add more intricacies and thereby complicate the situation. If 
 foreign trade problems are treated as domestic trade problems 
 are treated, all will come right in the end.
 
 DEVELOPING A FOREIGN MARKET 179 
 
 Organizations to handle exports will differ according to 
 the export policies in each case. If the house proposes to con- 
 duct a vigorous mail campaign with foreign countries and to 
 deal largely with export merchants instead of engaging in 
 direct trade, a separate office located preferably in New York 
 would be advisable. If, on the other hand, the concern pro- 
 poses to employ travelers or to establish branch offices abroad, 
 it makes little difference where the office is located and it 
 might be a distinct advantage to have the export department 
 located at the factory. 
 
 Expenses and Returns 
 
 In an estimation of what it will cost to establish a for- 
 eign trade and how long it will be before the money thus 
 invested will come back, it must be remembered that the devel- 
 opment of foreign trade is a slow process. Those who would 
 be successful in their overseas commercial expansion must be 
 willing to wait for the seed to grow up. Overseas trade must 
 be patiently and constantly cultivated. If the goods are of 
 the proper quality and the foreign connections are intelli- 
 gently made and judiciously kept, one can rest assured that the 
 business will pay handsomely in the end. 
 
 As already stated, a concern which is not prepared to ex- 
 pend a reasonable amount on preliminary work in establishing 
 its trade abroad should keep out of the field. It should not 
 even contemplate a serious foreign trade propaganda. Should 
 the project, however, be attempted, it is sometimes pos- 
 sible to develop two and even three near-by countries with 
 but little more expense than the cost of developing one. 
 
 Ordinarily a year should be allowed before the money 
 invested in a foreign enterprise is expected to begin to show 
 appreciable results or before the business can be considered 
 to be upon a paying basis. 
 
 It is not a good policy to expect large profits during the
 
 l8o OPERATING THE ORGANIZATION 
 
 time the concern is establishing itself in a particular market 
 or unduly to push its activities in order the quicker to realize 
 financial benefits. To pursue such a course would be to run 
 the risk of endangering the stablity and permanence of the 
 whole undertaking. 
 
 Co-operation 
 
 Oftentimes it is just as easy to secure information for a 
 dozen concerns in the same line as for one concern; hence 
 it would often be economy if a number of manufacturers, 
 particularly non-competing producers in the same line, would 
 combine and send a first-class man on a joint investigating 
 mission. They could then be properly represented, and at 
 the same time the individual expense would be comparatively 
 small. 
 
 But whatever else is omitted, no one who intends to ven- 
 ture into a foreign field on a fairly large scale should dispense 
 with the proper reconnoitering of the field for his proposed 
 venture. Such survey saves in the end both time and money. 
 
 Self-Developing Foreign Trade 
 
 Of course, what has been said as to expenses and the in- 
 advisability of launching into foreign trade without an ex- 
 tended and costly preliminary investigation does not apply to 
 the smaller concern which sells abroad as opportunity offers 
 through exporters, or foreign dealers, or by mail order adver- 
 tising. Such a venture requires no investigation and usually 
 but little preliminary work or expense of any kind. On the 
 other hand, when such a concern is ready to go into foreign 
 trade on a larger scale, the experience gained will frequently 
 supplement or take the place of the investigation usually 
 deemed advisable and thus greatly reduce the cost of the more 
 ambitious undertaking.
 
 CHAPTER XXII 
 
 PREPARING A FOREIGN SALES PLAN 
 
 The Sales Plan 
 
 The term "selling plan" is today applied to the general 
 marketing scheme which includes the work to be done by 
 salesmen and sales managers, the plan of advertising, and the 
 basic selling appeals on which the attempt is to be made to 
 get business for a specific product. It includes the size and 
 kind of packages in which the product is to be marketed, the 
 schedule of selling prices to the wholesaler, the retailer, and 
 the ultimate consumer, the nature of the label, the guarantee, 
 if any, and all the so-called "selling points." 
 
 Preparation of the plan of sales or the general marketing 
 scheme is one of the most important matters of foreign trade 
 strategy. 
 
 In each problem of distribution there are distinctive 
 features, and every master of strategy must formulate the 
 rules which are best applicable to the matter in hand. But 
 there are general rules to be borne in mind in every instance 
 and these may here be sketched. 
 
 The same order and thoroughness which guide military 
 operations should prevail in every well-ordered commercial 
 undertaking. This statement applies with peculiar force to 
 the preparation of selling plans. The general staff of an army 
 reduces all its plans to records which are carefully preserved. 
 These are changed as the march of events changes the condi- 
 tions and makes the old plans useless. A careful sales man- 
 ager can make no mistake in employing similar methods. 
 
 There is certainly a place for the strategist in the formu- 
 
 i8i
 
 i82 OPERATING THE ORGANIZATION 
 
 lation of a plan to capture a new market. The first step in 
 the building of a sales plan is usually to analyze the forces of 
 the enemy, represented by the established competition which 
 it will be necessary to overcome in order to market the product 
 or merchandise to be offered for sale. 
 
 Information Required 
 
 The first principle to be observed in the preparation of the 
 plan of sales is, as has already been pointed out, the securing 
 of accurate and complete information and recording it. If 
 the information is incomplete or, worse still, is inaccurate, the 
 plans will be defective, for, obviously, one cannot build 
 right conclusions on wrong premises. The word "informa- 
 tion" is here used in a broad sense including all the knowledge 
 necessary to qualify one as a strategist able to arrange a sell- 
 ing plan for a particular line of product. Such information 
 is as varied as it is extensive. It includes the study of the 
 market in the foreign country under investigation, its supply 
 and demand, the general conditions — political, social, and 
 economic — the psychology of its people, the methods of sale 
 and of distribution, facilities of transportation, advertising 
 mediums, tariffs and laws bearing on the problem, costs, and 
 so on. 
 
 In planning to market an American product in a foreign 
 field, the first step must be an analysis of the complete data 
 bearing on the distribution of the same or similar articles in 
 the field to be undertaken. These data would include: 
 
 1. The character, or quality, and the quantity of the 
 
 article sold. 
 
 2. The prices which are being obtained from the con- 
 
 sumer, the retailer, the wholesaler, and the im- 
 porter, if these middlemen are used, and, in any 
 case, full information as to the methods of distribu- 
 tion.
 
 PREPARING A FOREIGN SALES PLAN 183 
 
 3. The sales organization and personnel used by existing 
 
 competitors to extend and maintain their business. 
 
 4. The advertising methods followed by competitors in 
 
 distributing such goods. 
 
 5. The habits and prejudices to be overcome in the suc- 
 
 cessful marketing of the new product or the profit- 
 able exploitation of a new field with an old product. 
 
 6. A careful estimation of the comparative cost of 
 
 the merchandise, of the probable marketing expense, 
 and of the investment apparently necessary for the 
 establishment of a profitable business with the mer- 
 chandise to be sold, considered with relation to the 
 possible profits from the market as a whole and the 
 likelihood of retaining the market, once secured. 
 
 Correlation of Selling Plan and Selling Organization 
 
 The second principle to be borne in mind is to fit the plan 
 of sales to the selling organization and the selling organiza- 
 tion to the plan. An executive may conceive a very brilliant 
 and feasible plan of campaign for the conquest of some foreign 
 market. But he cannot execute the plan unless he has an 
 organization for selling competent to carry it out. 
 
 It may happen the trader fails on both counts, as where 
 he is carried away by the idea, not justified by investiga- 
 tion, that what he has to offer is superior to any similar 
 product in the world. With this conviction he starts to carry 
 out in foreign lands the most ambitious projects with a staff 
 of assistants who, although thoroughly fitted for domestic 
 business, are thoroughly unfitted and untrained for foreign 
 business, with the result that his plans come to grief. 
 
 Elasticity of Selling Plan 
 
 The next principle is: Other things being equal, that 
 plan is the best which has the greatest elasticity.
 
 l84 OPERATING THE ORGANIZATION 
 
 Elasticity does not mean indefiniteness or uncertainty. 
 Tliese are fatal to any project. It means adaptability and 
 flexibility. Conditions may change cjuickly and new circum- 
 stances arise which demand realignments. An unforeseen 
 factor coming into play may at once necessitate a change in 
 the direction or in the mode of operation. The plan must 
 be so drawn that small alterations will not destroy the integrity 
 of the whole. 
 
 Some people conceive the idea of promoting their sales 
 through a novel way of advertising or by some original means 
 of creating an artificial demand which they attempt to substi- 
 tute for a selling plan. It is merely a method — a part of a 
 plan. If one conducts his affairs by relying on one or on a 
 number of such "plans" his business will depend on casual 
 inspirations and extemporaneous, oftentimes inconsistent, 
 policies and it will lack continuity of action, permanency, 
 stability, and certainty of execution. 
 
 The plan of sales for any serious undertaking on a large 
 scale should be comprehensive enough to include the funda- 
 mental policies of the concern and to provide a general plan 
 of action including at least several special plans for extra- 
 ordinary efforts to be made in one or more directions. Thus, 
 the kind of publicity to be employed, the method or manner of 
 selling to the trade, the number of salesmen to be employed, 
 whether or not the concern should establish its office in certain 
 countries, the amounts of money to be appropriated for 
 different purposes, the expected volume of sales, and similar 
 matters belong to the general plan. 
 
 Special Selling Plans 
 
 A special plan is concerned rather with the details of execu- 
 tion when extraordinary efforts are to be made. If a com- 
 pany engaged in foreign trade aims, for instance, to secure 
 a joint selling agency, by co-operating with non-competitive
 
 PREPARING A FOREIGN SALES PLAN 185 
 
 producers, or to form a combine to control prices, such matters 
 properly belong to a special plan which, while a part of the 
 general plan, is fairly complete in itself and might be dropped 
 or changed without seriously affecting the general plan. 
 
 The whole plan of sales should be definite and certain. It 
 should contain the statement of the ends to be attained, and 
 the practical means of realizing these ends. These means 
 must be sufficiently flexible to adjust themselves to the ever- 
 fluctuating conditions. 
 
 The foreign trade strategist must bear clearly in mind 
 that in pursuing an immediate end, remote contingencies must 
 never be left out of account. Many a time the tide of victory 
 has been turned by some such unexpected occurrence. 
 
 Local Sources of Information 
 
 One exceedingly important item that is usually omitted 
 from the sales plan is a provision for the continuous flow of 
 information regarding trade conditions in a particular foreign 
 country. 
 
 It is the province of trade diplomacy to keep an eye on 
 everything that transpires which may be of interest to the 
 country which the diplomat represents and to transmit it to 
 the executive who is responsible for the selling plans. This 
 executive must know every detail of what is occurring in the 
 country in which he conducts his selling campaigns, for some- 
 times a bit of information may indicate timely changes to be 
 made in his plan of sales. Amongst the most important 
 things on which he should always be kept posted are the 
 activities of his competitors. 
 
 Concentration 
 
 The principle of concentration has a wide range in foreign 
 trade. A common offence against this principle is the use of 
 too many mediums at the same time without special effort
 
 l86 OPERATING THE ORGANIZATION 
 
 in any one direction. Some manufacturer gets an idea that 
 he should try to reach out for a distant overseas market. He 
 then starts to experiment; he tries this and he tries that — 
 not seriously, it is true, but strenuously enough to find at the 
 end of the year that he has expended much valuable time with- 
 out anything definite to show for it except an expense account, 
 some little knowledge, and his experience. Such wastage is 
 nearly always due to the fact that there has been no definite 
 trade strategy formulated and to the consequent absence of 
 any firm policy or rational plan of campaign. 
 
 Certainty of action cannot exist without a well-defined 
 policy and plan. A writer of fiction may succeed by depending 
 on the inspirations of the moment, but a business undertaking 
 calls for systematic action, based upon preconceived ideas, 
 which, to be of permanent value, must be woven into a system, 
 reduced to writing, and placed on record for reference at all 
 times. Foreign business is no exception to this rule. 
 
 Follow-Up Methods 
 
 The follow-up plan to be used while salesmen are can- 
 vassing foreign territory should be more elaborate than the 
 domestic follow-up plan. The salesman's call should usually 
 be preceded by a preliminary communication from the house 
 to the desirable trade abroad, announcing the prospective visit 
 of the representative and sending such literature and sugges- 
 tions as may create an interest on the part of prospective 
 foreign buyers. The dispatch or the letters should be sent so 
 that they may reach the prospect a few days ahead of the sales- 
 man's call. The continental companies usually leave it to their 
 salesmen to announce their visit on their arrival in the country, 
 but it would seem to be the better plan to have the announce- 
 ment come from the home office and from the head of the 
 concern, in the language of the country to which the salesman 
 is sent. This letter should be written in the most formal and
 
 PREPARING A FOREIGN SALES PLAN 187 
 
 courteous manner. Direct solicitation of business should be 
 avoided. That should be left entirely with the salesman. The 
 tone of the letter should be complimentary and dignified, 
 aiming rather to convey the impression that the exporter is 
 desirous of establishing friendly relations with the foreign 
 house than to promote immediate sales. The following is a 
 sample of such a letter: 
 
 Messrs. J. H. Arroya and Company, 
 Buenos Aires, 
 Argentina. 
 Gentlemen : 
 
 We take great pleasure in announcing that we have decided to 
 send a representative to your city, Mr. X. Y., who has instructions to 
 learn as much as possible about the conditions in your country in our 
 line of business. He is leaving on the 15th instant. 
 
 We have directed Mr. X. Y. to call upon you on his arrival in 
 your city and to convey to you our kindest regards. 
 
 No doubt Mr. X. Y. will be able to learn a great deal during 
 his stay in your city and to bring back the knowledge which will be 
 most useful to us in the establishment of cordial relations with the 
 principal business houses in your country, and in improving our 
 methods. We earnestly bespeak for Mr. X. Y. your favors, which 
 we hope to be able to reciprocate in the near future. 
 With our best regards, we beg to remain. 
 
 Very cordially and sincerely yours. 
 
 President of Company. 
 
 The stationery upon which such letters are written should 
 bear reference to banks and rating agencies at home, and, if 
 possible, in the country to which they are sent. If the concern 
 has satisfied influential customers in the country which the 
 salesman is about to visit, such customers might be mentioned 
 in a delicate way in the body of the letter. 
 
 Occasionally it may be advisable to send under separate 
 cover a catalogue of the firm. As a general rule, how^ever, 
 this should not be done and the task of actually introducing
 
 l88 OPERATING THE ORGANIZATION 
 
 the goods and making the sale should, as stated above, be left 
 to the salesman. The preliminary letter ordinarily insures the 
 salesman a better reception. After he has made his call, his 
 personal reports — with full details of the situation in every 
 case — will be the best basis for the future follow-up work. 
 There seems to be no better rule for handling this matter than 
 the principle of requiring an accurate and complete report of 
 every call made by the salesman and of the conditions of 
 every established account, with the salesman's suggestions and 
 recommendations for the follow-up work to be done. 
 
 Advertising as a Follow-Up 
 
 Advertising is, of course, a follow-up means employed 
 wherever practicable by the successful houses in foreign trade. 
 It must necessarily be adjusted to local conditions and it is 
 subject to the same special handling as any other form of 
 follow-up work. 
 
 Certainly the house that sends its salesman out to call on 
 the foreign trade and does nothing to keep in touch with such 
 trade from the time the salesman leaves until he returns, 
 perhaps a year later, is not realizing the full benefit from the 
 personal work of its foreign representative. The work of the 
 salesman should always be supplemented by correspondence 
 and literature, as well as by seasonable quotations. 
 
 In some lines of business, and particularly in those which 
 do not admit of the salesman's carrying samples on account 
 of their bulk, it would be advisable to establish either perma- 
 nent or temporary exhibition rooms for displaying samples. 
 
 It is not a good policy, however, to mention sales details 
 of any kind in the letter which announces the salesman's trip. 
 The representative of the right sort will find a proper way 
 of bringing his proposed customers to the place where these 
 samples are exhibited. 
 
 The salesman should be supplied with letters of introduc-
 
 PREPARING A FOREIGN SALES PLAN 189 
 
 tion to the concerns or the individuals whose acquaintance 
 the home office has already made through correspondence or 
 otherwise. These people, including the officials of the United 
 States government, should be asked to supply the salesman in 
 turn with letters of introduction to various concerns of 
 prominence. All such letters should be sent by the salesman 
 after his arrival to the concerns to which they are addressed 
 and should state the day on which he will call. 
 
 The average American business man may think that this 
 Is entirely too much ceremony and possibly in some lines this 
 may be the case. As a rule, however, if the proposed sales 
 are to be of any magnitude, these preliminary arrangements 
 are almost indispensable to the selling plan. 
 
 Closing Sales by Mail 
 
 On the receipt of the first report from the salesman the 
 home office should adopt proper means for further facilitating 
 the work of the man on the ground. Especially should he be 
 aided in any way possible in closing sales which he may have 
 had trouble in putting through. 
 
 If a sale fails because the prices or credit arrangements 
 which the salesman is authorized to make are unsatisfactory, it 
 may be found necessary to write to the buyer direct, but in 
 most cases the policy should be to write or cable to the 
 representative on the ground and not to the buyer. 
 
 While the home office is aiming to assist the salesman by 
 such means as have been suggested and in other directions, his 
 "morale" should also receive proper attention. An American 
 in a foreign country is apt to be more easily discouraged and 
 disheartened than at home. And as his state of mind plays 
 an exceedingly important role in his undertaking, the concern 
 employing him should frequently show that it takes an interest 
 in his success. He should be communicated with by cable at 
 least weekly and by letter as often as the mails can reach him.
 
 I90 OPERATING THE ORGANIZATION 
 
 Co-operation in Foreign Sales 
 
 There is one other highly important point to which every 
 wise trade strategist should give most careful consideration 
 and that is, whether it is better to enter the field alone or in 
 co-operation with others. Those who are novices in interna- 
 tional trade or whose business is comparatively small may do 
 better in co-operation with others, either by establishing a 
 joint selling agency or combining otherwise in the exploitation 
 of the market. In such an event the plan of sales may have 
 to be worked out on entirely different lines, necessitating a 
 great deal of preliminary investigation which would not have 
 been required if the plan were strictly individual. 
 
 The fact has already been stated but cannot be too strongly 
 emphasized that the subject of co-operation has not as yet 
 received in the United States the attention it deserves. In 
 other countries, particularly Great Britain and Germany, great 
 things have been accomplished in foreign trade through wise 
 co-operation of the producers in non-competing lines. They 
 have discovered profitable ways of combined advertising, dis- 
 tribution, and marketing of the product. As a matter of fact, 
 export trade otherwise unattainable has in many instances been 
 built and placed upon a stable and enduring basis through wise 
 and proper co-operation. 
 
 Of course, co-operative methods are not restricted to buy- 
 ing and selling. There is co-operation between the commercial 
 interests and the government, between the producer and the 
 shipper, and also between the exporter and .the banking in- 
 terests. 
 
 If one form of co-operation is found to be unnecessary or 
 impracticable there is generally some form of it which will be 
 found suitable to commerce in foreign lands. For that reason 
 alone, a wise sales engineer will give the subject of co-opera- 
 tion proper attention while he is drawing his plans for a 
 selling campaign abroad.
 
 PREPARING A FOREIGN SALES PLAN 191 
 
 The International Sales Manager 
 
 To know the cardinal rules which enter into an efficient 
 sales plan is to anticipate the difficulties of successful trade 
 engineering — difficulties which can only be surmounted by an 
 expert. A wise manufacturer will find that in the preparation 
 of a permanent plan of sales he should enlist the services of an 
 expert trade strategist if he can find such a one. The problem 
 is not only where to find him, but by what qualities he may 
 be recognized or should be selected. He should be a successful 
 domestic trade builder engaged in the study of a particular 
 market and in touch with men who know from personal 
 experience the different angles of marketing, such as adver- 
 tising, distribution, etc., in the particular field. A man of the 
 right calibre will be worth all that he costs. 
 
 It is always wiser to spend more money on the preparation 
 of sales plans with the certainty of getting it back, knowing 
 that through such preparation the success of the project is 
 insured, than to economize in working up the plans and fail 
 in the end.
 
 CHAPTER XXIII 
 
 SELECTING MEN FOR FOREIGN SERVICE 
 
 The Elements of Success 
 
 It has been asserted that the elements of success in the 
 average commercial undertaking are lo per cent luck, lo per 
 cent the nature of the business, and 80 per cent the character 
 and personality of the selling and executive forces. Whatever 
 may be the true proportions it is certain that in foreign trade 
 the character, training, and personality of the salesmen play 
 a far larger part in determining success than they do in 
 domestic trade, and that properly qualified men are exceed- 
 ingly difficult to find. 
 
 Foreign trade is not a simple thing. There is no more 
 intricately adjusted mechanism than the trade of nations. Its 
 undertaking on a large scale is always costly and the firm that 
 is not prepared to send a properly equipped and highly quali- 
 fied representative provided with ample funds and with full 
 authority to act within the general policy previously determined 
 upon, would better not enter the field of direct selling. The 
 man selected should possess the following essential qualities: 
 
 1. Aptitude and adaptability 
 
 2. Special knowledge and training 
 
 3. The proper personality 
 
 Aptitude and Adaptability 
 
 The successful salesman may be assumed to have a natural 
 aptitude for his work. One does not turn to salesmanship as 
 the means of earning a living without some natural aptitude 
 for approaching the stranger and winning his business. 
 
 192
 
 SELECTING MEN FOR FOREIGN SERVICE 193 
 
 Nevertheless, considering all that is at stake, it would appear 
 to be a sound policy not to select a man for the foreign field 
 until ke has demonstrated his selling capacity in the domestic 
 field and has shown some evidence of his ability to work 
 effectively under varied conditions. 
 
 Of even greater consideration is the man's ability to adapt 
 himself to a strange environment and to do business under 
 conditions which are vastly different from any he has hitherto 
 experienced. He must be at once a diplomat and a psychologist 
 and above all he must have the quality of sympathy. Unless 
 he can cultivate a strong personal regard for the people with 
 whom he deals and a sympathy for their problems, the rest 
 of his equipment will count for little. Sympathy is the secret 
 of adaptability. Arrogance and condescension are fatal. The 
 man who would succeed with the foreigner must fall into his 
 gait and walk with him as a friend and equal. All this is, of 
 course, necessary for any good salesman anywhere, but in the 
 foreign field it is more needed than at home. 
 
 A "man of the world" is after all merely one who has 
 learned the requirements of human association common to 
 well-bred people everywhere and who can adapt himself with 
 ease to the exigencies of every occasion, be it social or business. 
 But even the most accomplished cosmopolitan is not to be 
 expected to be equally at home everywhere. One of the sales 
 manager's most important tasks is the selection of the type of 
 salesman best adapted to the particular field he has in mind. 
 
 If the candidate is not well adapted to the selected field 
 he will be neither happy nor successful. It is easier and wiser 
 to find the one who is best suited to the field than to attempt 
 to fit another to it. Until recently there were not a few 
 ambitious American manufacturers who were inclined to 
 attempt to fit the foreign environment to themselves. But 
 in those cases also the lines of least resistance were eventually 
 found to be the shortest distance to the objective.
 
 194 
 
 OPERATING THE ORGANIZATION 
 
 Special Knowledge and Training 
 
 There are still those who say that the only equipment 
 necessary for the American salesman is his ability to sell 
 goods and that special training — even a knowledge of the 
 language of the country — is superfluous. All such talk is 
 sheer nonsense so far as the type of man here under consider- 
 ation is concerned. 
 
 Some lines of merchandise may sell without any great 
 effort ; they may sell at sight and a salesman is sent merely 
 to show the goods and take the orders. These are rare in- 
 stances ; there are few lines in which an international salesman 
 needs no special qualifications. 
 
 Generally speaking the salesman needs, besides his mastery 
 of his line, some knowledge of the languages and the psychol- 
 ogy of the races among whom he is to work, with some fami- 
 liarity with their economic and social conditions. 
 
 Outside of highly technical lines, factory experience is 
 seldorri necessary in export salesmanship. 
 
 The knowledge of language, of course, is almost indis- 
 pensable, and yet, in many countries, and especially in dealing 
 with importers, commission men, and jobbers, a foreign repre- 
 sentative will get along if he can talk French fairly well, and 
 sometimes if he knows only English. This is especially true 
 of nearly all the European countries and partly true of 
 Latin America. 
 
 The great foreign-trading nations develop their foreign 
 sales staff by first giving them a fundamental, theoretical train- 
 ing. They send them as clerks into foreign countries where 
 they are educated in languages, in the ways of the people, and 
 in all the practical aspects of foreign business. Finallv they 
 are brought back home for special training in their particular 
 line of business. Only then are these young men considered 
 to be ready to act as representatives. 
 
 A man can best be trained to act as an International sales-
 
 SELECTING MEN FOR FOREIGN SERVICE 195 
 
 man or representative in those countries where the same lan- 
 guage is spoken as in the country to which he is eventually to 
 be assigned. Even the greatest amount of training may fre- 
 quently yield but poor results otherwise. The man who is 
 successful in Latin America may be useless in Russia and con- 
 versely. In the case of foreign trade managers or advisers, 
 no such intimate knowledge of the languages or of the 
 conditions of trade in any particular country is ordinarily 
 required. 
 
 Personality 
 
 Personality must always be the most important element in 
 determining the qualifications of the international salesman 
 for his work. Under this head may be included besides those 
 qualities of sympathy and savoir-faire , considered in connec- 
 tion with his adaptability, the salesman's selling ability, his 
 character, his magnetism and persuasive powers, his physical 
 condition, mental equipqient, moral status, and working habits. 
 
 It requires a very delicate analysis to resolve the per- 
 sonal equation into its component parts. The easiest way is 
 usually the natural way and one's intuitions are not often, 
 very far wrong. 
 
 In many countries international trade is still conducted 
 upon a social basis. Even in Anglo-Saxon countries large 
 sales are not usually made over the counter but in fashionable 
 clubs, hotels, and not infrequently in private residences after 
 a friendly dinner or at an informal luncheon. The Chinese 
 call it "friend pidgin." 
 
 Here personal liking and respect play a large role and the 
 salesman's personality and his adaptability is tested in the 
 highest degree. 
 
 Given the right sort of personality the salesman will not 
 lack an opportunity to bring his other qualities into play with 
 some confidence of success. He should be able to establish
 
 196 OPERATING THE ORGANIZATION 
 
 not only a receptive state of mind in his prospects, but that 
 sympathetic interest which wins for him a decided preference, 
 other things being equal. Then if he has his share of the other 
 qualities which make for a proper personal equipment his 
 success is sure. 
 
 The Right Man for the Right Field 
 
 In selecting salesmen for the foreign field the sales man- 
 ager will be called upon to show the same nice discrimination 
 that he uses in choosing men for the different localities of 
 this country. He sends one type of man South and a widely 
 different type to New England or the Northwest. 
 
 In choosing men for Latin countries, Italians or French- 
 men should be given preference. They have the temperament 
 and the manner best adapted to make them welcome. Native 
 salesmen seldom do as well in these countries as the foreigner. 
 
 Americans are more successful in France, England, a.id 
 in fact in all of the continental countries except Spain, Portu- 
 gal, and such Slavic states as Russia, Poland, and Bohemia. 
 In these latter countries a Slav who has lived long enough in 
 America to become fully Americanized will be found most 
 effective. 
 
 Americans also do well in Holland, Belgium, and in the 
 Scandinavian countries. The English know best how to 
 handle the oriental races. In Japan, China, India, Siam, 
 Egypt, Persia, and in all the oriental countries an English- 
 man will do better, perhaps, than men of any other nationality. 
 
 Selecting the Man 
 
 The process of selection of employees in America is too 
 often highly mechanical and does not always meet the best 
 business requirements. Too many men are selected by rule 
 of thumb, except in cases where they may owe their positions 
 to personal influence. The eternal application blank may be
 
 SELECTING MEN FOR FOREIGN SERVICE 197 
 
 effective and may save time in the case of routine employees, 
 but it fails completely when it is applied to many of the excep- 
 tionally gifted and highly qualified individuals of foreign 
 birth who might be so valuable to the exporter. To them it 
 is often not only inexplicable but it is above all offensive to 
 their susceptibilities. Until the would-be foreign trader is 
 ready to understand the causes for what may at first seem to 
 be the exaggerated "touchiness" of the foreigner, he is ill 
 qualified for his calling. 
 
 In any event it is well to see every candidate. Frequently 
 the man who is not inclined to write much or, perhaps, any- 
 thing about himself is most worth seeing. 
 
 Age and Experience 
 
 While in certain lines it is necessary to employ only men 
 of successful experience, very often men of exceptional abili- 
 ties who have had no business experience would and do 
 make excellent executives or salesmen, excelling by far those 
 with experience and special knowledge of the particular line. 
 It is a poor policy to pass over such men without taking 
 the opportunity of judging their personality. 
 
 The continental method of selecting men for foreign serv- 
 ice never confines itself to young men. The managers of 
 large exporting concerns are constantly on the lookout for 
 remarkable men of exceptional ability and fitness regardless 
 of age. They know that one such man when discovered is 
 worth half a dozen young men of average ability. They also 
 know that there are many instances of men who have missed 
 their true vocation in life or, like Caesar, have only come to 
 realize when no longer youths their natural calling and real 
 ambition. So the continental business man generally keeps 
 an open door as well as an open mind to all applicants of 
 mature years who may come to convince him that they have 
 a special aptitude or qualification for his business.
 
 198 OPERATING THE ORGANIZATION 
 
 In England, Holland, and in Germany, men have been 
 found in middle life who have proved themselves veritable 
 geniuses in the promotion of foreign trade but who had no 
 earlier training and indeed no previous business experience. 
 
 Tests of Candidates 
 
 Personnel being the essential part of an organization, one 
 must have a method of applying an adequate and proper test 
 in its selection. This is determined by the aid of: ( i ) impres- 
 sions, (2) demonstrations, and (3) analysis. 
 
 Impression is an unconscious form of analysis which is 
 never a final test of personal qualification. Some men are 
 gifted with die power to analyze a personality with great 
 correctness through impressions which is in reality the gift 
 of intuition. Most men who achieve great success as leaders 
 have that power. It is advisable, however, only to use this 
 test in connection with the other two. 
 
 Generally it is thought that demonstration is the most re- 
 liable test of personal qualities, but it is impossible to apply 
 it always in conformity with the laws of continuity and change. 
 
 The most reliable test can be made onl> by an analysis of 
 qualities. For instance, if a man is employed for a certain 
 position you must, in addition to his special qualifications, con- 
 sider his general qualifications, as physical and mental condi- 
 tion, moral status, habits of industry, and so on. 
 
 The employer should be guided by personal impressions 
 formed through an actual demonstration of these qualities. 
 Scientific analysis of character thus far has been applied in a 
 very limited number of cases, but it should be a rule of our 
 modern executive to apply such a test as far as possible. It 
 would, obviously, save time and expense if an employee were 
 to demonstrate his qualities before he is hired or promoted, 
 rather than to depend upon the impressions formed of him 
 by his superior.
 
 SELECTING MEN FOR FOREIGN SERVICE igg 
 
 It will be found that it will pay to take all these points 
 into consideration and, in choosing a salesman for a foreign 
 field, to make as careful an analysis of character as possible 
 from every angle or point of view that may present itself.
 
 CHAPTER XXIV 
 
 EDUCATION FOR FOREIGN TRADE 
 
 Requisites for Salesmanship Success 
 
 Salesmanship, like everything else in life, succeeds best 
 when there is an innate ability, but to be most successful the 
 salesman must have, in addition to his ability, a thorough 
 knowledge of the article he is. selling; he must be deeply in- 
 terested in his work and enthused with his proposition and he 
 should have fully decided to make salesmanship his life-work. 
 Then, and not until then, will he have all the fundamental 
 elements of success. 
 
 This applies to salesmanship in general. In considering 
 international salesmanship a more difficult problem is pre- 
 sented, for the best domestic salesman will have much to 
 learn when he enters the field of foreign trade. A smattering 
 of the language of the country into which he is to be sent, 
 his samples, and a steamship ticket never made an interna- 
 tional salesman. In addition to all the qualifications of the 
 domestic salesman he must know the people among whom he 
 is to do business — their ways and their requirements, as well as 
 their language. If he has never lived among the people with 
 whom he is going to do business, instead of acquiring enthu- 
 siasm, he may receive a shock to his self-esteem. 
 
 European Methods 
 
 A man, no matter what his innate ability, cannot become 
 a great lawyer without the right sort of preparation. The 
 same thing is true in foreign trade and the science of foreign 
 trade, like any other science, has its theory and its practice. 
 
 200
 
 EDUCATION FOR FOREIGN TRADE 201 
 
 The great foreign trading countries, recognizing this, have 
 brought international business to the point of a science. They 
 educate and train their youth for the work in foreign coun- 
 tries with special care and according to scientific principles. 
 
 There are technical commercial schools in France, Switzer- 
 land, Belgium, and even in Canada, called by the French 
 "Ecoles des Hautes Etudes en sciences commercials," which 
 teach commerce as a science and confer degrees in commercial 
 sciences. 
 
 There are two methods of scientifically developing the 
 selling force. One is a technical school education followed 
 by actual field experience, a clinical course so to speak; the 
 other consists of substituting office training at home and 
 abroad for the technical school education. Both aim to teach 
 the same thing in a different way. Such methods are appar- 
 ent in other lines of endeavor — law students, for example, 
 frequently receive their entire education in law offices and in 
 the courts, and army officers are frequently raised from the 
 ranks. 
 
 These two methods may now be briefly surveyed and their 
 requirements and scope noted. 
 
 Technical Education 
 
 The technical schools where foreign trade is taught treat 
 the following subjects: commercial geography and history, 
 commercial policies of different countries, consular systems 
 and requirements, transportation, insurance, packing, tariff 
 laws and procedure and the commercial laws of the princi- 
 pal countries, industrial technology, the science of finance and 
 of banking, languages, commercial usages of foreign coun- 
 tries, the theory and practice of statistics, and comparative 
 trade psychology. From the variety of these subjects it can 
 be inferred that the aim is not merely to prepare a man for 
 salesmanship but also to give him a general education in the
 
 202 OPERATING THE ORGANIZATION 
 
 domain of commerce, which, if followed by practical training 
 and experience, will be helpful in qualifying him for any 
 position. 
 
 Having completed the course in school, the youth is placed 
 in the factory and later in the office where he learns thoroughly 
 the particular business in which he is to engage. Finally, if 
 he is destined for foreign trade, he is sent abroad as a clerk 
 in some foreign house where he learns all the intricacies of 
 the business as it is transacted there. In this way he gains a 
 practical knowledge of foreign languages and learns the psy- 
 chology and customs of the natives. After that he is ready 
 for his w^ork as a salesman or agent in the foreign field. 
 
 Practical Education 
 
 The other method of preparing a man for foreign trade is 
 to take a promising youth and give him a thoroughly prac- 
 tical education, without sending him to any technical school. 
 He works in a factory for a few months and there learns the 
 process of manufacturing and the nature of the goods he is 
 to sell. Then he goes abroad to study under a local manager. 
 When his superiors are satisfied that he knows enough he is 
 given field work. Then, having gained practical experience, 
 he comes home for final instructions after which he is ready 
 for a permanent position as salesman in the country in which 
 he received his training. 
 
 Much that is taught in technical schools is omitted in office 
 training and the subjects which are taught are of more direct 
 practical value. They are as follows: knowledge of the business 
 and of the goods he is to sell ; knowledge of competitors' goods 
 and methods of competition in vogue ; knowledge of the people 
 — their language, customs, and the trade conditions prevailing 
 among them; familiarity with the technique of salesmanship, 
 Including the methods of approaching a customer, closing a 
 sale, renewing an order, and keeping a customer ; consular and
 
 EDUCATION FOR FOREIGN TRADE 203 
 
 custom house formalities and all that pertains to shipping, 
 maritime insurance, etc. 
 
 Whether it is worth while to spend three years in a tech- 
 nical school and then to go practically over the same ground 
 in an office, is a problem that each must solve for himself. 
 Undoubtedly school training combined with office training is 
 apt to bring the best results ; but while school education may 
 be dispensed with, a thorough office and business training in 
 the field is considered as indispensable everywhere except in 
 our own country. 
 
 American Education in Foreign Trade 
 
 In America, formal instruction in foreign trade is given 
 in the special schools of some colleges and universities. Among 
 the best-known institutions offering such courses are: the 
 Amos Tuck School of Business Administration and Finance 
 of Dartmouth College, the Graduate School of Business Ad- 
 ministration of Harvard University, the Wharton School of 
 Finance and Commerce of the University of Pennsylvania, 
 the Schools of Commerce at Columbia and at New York Uni- 
 versity, and of the Universities of Pittsburgh, California, Chi- 
 cago, Michigan, Illinois, Cincinnati, and Tulane University. 
 The methods and the curricula in all these American schools 
 of commerce closely resemble each other. On the whole they 
 bear a very close resemblance to the English institutions of 
 similar kind, with some tendency to give instruction in the 
 subjects taught by the continental high schools of com- 
 merce. 
 
 The main defect In the courses in these schools is that 
 they differ little from the ordinary collegiate education, that 
 only the most insignificant attempt has been made so far to 
 teach the theory of foreign trade and that no attempt to teach 
 its practice is yet evident. It is true that the fundamental 
 studies leading to the knowledge of foreign trade need not be
 
 204 OPERATING THE ORGANIZATION 
 
 markedly differentiated from those in the preparation for do- 
 mestic trade. For instance, training in the principles of account- 
 ing, in the organization of corporations, in finance, in com- 
 mercial law, and in commercial history and geography should 
 be equally required from all students. But when it comes to 
 the study of marketing methods and policies, if the educator 
 wishes to initiate the student into the central activities of 
 business, the mysteries of buying and of selling and the variety 
 of interdependent factors, he should not be satisfied with 
 teaching him the ordinary commercial geography and a jumble 
 of miscellaneous information which, however interesting it 
 may be, leads nowhere. 
 
 Signs of departure from this worn-out practice are be- 
 ginning to appear. Colleges are opening special classes for 
 the study of foreign trade ; Y. M. C. A.'s are doing likewise. 
 Some special schools are being opened and there are a few 
 correspondence courses on the subject. 
 
 Status of American Education in Foreign Trade 
 
 In so far as school training for foreign trade is concerned, 
 the United States is merely in the initial stages. The attempts 
 of our colleges and universities to establish special courses in 
 foreign trade have too often presented defects such as those 
 mentioned above, viz: 
 
 1. Too much reliance is placed upon purely theoretical 
 
 and academic training without any background of 
 practical experience or of business experimenta- 
 tion. 
 
 2. The courses are as a rule too general, embracing a 
 
 great variety of subjects without proper specializa- 
 tion or sufficient concentration on the matters most 
 vital to the future foreign trader. 
 
 3. The employment of the so-called "experts" In a spe- 
 
 cial line as supplemental teachers or lecturers has
 
 EDUCATION FOR FOREIGN TRADE 205 
 
 not been adequately supervised and has resulted 
 in lectures on unrelated subjects and in a failure 
 to secure proper co-ordination between theory 
 and practice. 
 
 The attempts of the Y. M. C. A.'s, the mail courses, and 
 the schools established by business concerns are defective in 
 that: 
 
 1. The courses are, for the most part, inadequate and 
 
 give no more than a superficial idea of the sub- 
 jects taught. 
 
 2. They attempt to teach matters which to be under- 
 
 stood properly require a mature mind or a broad 
 preliminary school education which is not always 
 possessed by the student of these courses. 
 
 3. There is an absence of actual practice in matters 
 
 which cannot be mastered sufficiently from books 
 and lectures, as for example the languages and 
 a knowledge of the national characteristics of for- 
 eign peoples. 
 
 In so far as self -education is concerned there is a lack of 
 properly correlated literature on the subjects that deal with 
 foreign trade and there is also the difficulty of securing proper 
 guidance. 
 
 Practical Training for Foreign Trade 
 
 One of the greatest experts in the United States has this 
 
 to say about training men for foreign work: 
 
 In a broad way, it seems that if the article were a piece of 
 machinery or some technical product, the best place to train men for 
 marketing it would be at the factory where it is made, bringing men 
 from the countries where it was desired to market the product for a 
 six months' or a year's study at the factory in America. Then have 
 American factory men, versed in the language of such foreign coun- 
 tries, accompany the new recruit back to the proposed field of en-
 
 2o6 OPERATING THE ORGANIZATION 
 
 deavor, forming a team composed of the man from the country where 
 the marketing is to be done, who has had this factory training on the 
 article made abroad, and another man, not necessarily a factory trained 
 man, but a scientifically trained salesman who is familiar with the 
 language and represents the factory and the American idea of market- 
 ing, to the end that this combination, representing the viewpoints of 
 both America and the market, should successfully impress the trade 
 and the consumers, through proper organization and advertising, with 
 the merits of the merchandise to be sold. 
 
 There is much to be said in favor of bringing the foreigner to 
 America to be trained on our products here, with the idea of sending 
 him back to market them; on the other hand, there is much to be 
 said for sending the trained American, who is entirely familiar not 
 only with our products but also with our marketing methods and the 
 policies behind our marketing manufacturers and companies, into the 
 foreign field to study the people and the language and to represent 
 us. The combination of the two would be the best means with which 
 to begin the capture of a foreign market or to retain it permanently. 
 
 But whether the youth has been trained in an office and 
 factory, or both in the factory and the school, it does not mat- 
 ter so long as he receives an adequate training. The question 
 is how seriously handicapped is the salesman who has had no 
 such training when he faces a well-trained competitor? 
 
 Natural Qualifications Required in Foreign Trade 
 
 It must not be assumed that foreigners train their young 
 men in foreign trade without due regard to their inborn quali- 
 fications, for they pay as much attention to these factors in 
 selecting their trade representatives as they do in the case of 
 their army officers. 
 
 Among the natural qualifications there is none more impor- 
 tant outside of strong personality and capacity for work than 
 "nerve." This term is not to be understood as implying the 
 quality sometimes known among Americans as "gall" which 
 Is a species of arrogant independence and pertinacity that is 
 impervious to any feeling of insult or consideration of the
 
 EDUCATION FOR FOREIGN TRADE 207 
 
 other man's rights. By "nerve" is meant that state of mind 
 which is not subject to discouragement and mental depres- 
 sion. This quahty the world traders rank highest among in- 
 nate qualifications. It is only too easy to become discouraged 
 and depressed in a strange land among strange people. Once 
 that state of mind overcomes a salesman he cannot be effi- 
 cient any more than a coward can be an efficient fighter. Nerve 
 is the salesman's courage. 
 
 Haphazard Training for Foreign Trade 
 
 The usual way in which the American exporters enlist men 
 for foreign work is first to find a man who speaks the lan- 
 guage of the country with which the concern wishes to de- 
 velop trade. Then if his character and previous record are 
 found to be satisfactory he is sent abroad. Frequently such 
 men are natives of the country into which they are sent but 
 their sales experience, if they have had any, has usually been 
 only in the United States. 
 
 Another way is to pick out one of the office force and in- 
 duce him to study the language of the country with which 
 tr'ade is contemplated, give him some lessons in salesmanship, 
 and then hand him a sample case and a steamship ticket and 
 away he goes to battle for the conquest of the world's trade. 
 
 Sometimes the training in foreign salesmanship begins and 
 ends by having the prospective salesman learn by heart a "sales 
 talk" which he is to recite before those whom he will try to 
 win as customers. Such a sales talk may have been written 
 by a man who never saw a foreign country and who knows 
 absolutely nothing of the conditions there or of the charac- 
 teristics of the people. Frequently these talks are written by 
 a person who never interviewed a prospect or sold a penny's 
 worth of goods. What wonder that the American salesman 
 with such preparation finds himself tremendously handicapped 
 in the race against his European competitors.
 
 2o8 OPERATING THE ORGANIZATION 
 
 Some firms attach much importance to the sales talk but, 
 after an extensive study of the subject, no case has been found 
 in which it has been used successfully in foreign trade. It is 
 seldom used by the best salesmen even in the home trade. Its 
 usefulness consists largely in strengthening the memory on 
 principal points of merit, or arguments in favor of the mer- 
 chandise. 
 
 The manufacturers who insist that their salesmen should 
 know the manufacturing end of the business as thoroughly as 
 it is known to the technical staff of engineers are also often 
 wrong. The idea that the man who knows all the intricacies 
 of the manufacture of a given article will necessarily be able 
 to explain the proposition better to the prospective purchaser is 
 a mistaken idea. It is often more difficult for a highly trained 
 technical man than for one of less technical knowledge to ex- 
 plain a complicated mechanism so that the layman can easily 
 understand it. Some knowledge of the manufacturing end of 
 the business is, however, a valuable asset and there are times 
 when technical training is indispensable. 
 
 They are also mistaken who think that a man must have a 
 long association with a particular line in order to qualify as 
 a finished salesman in that line. A born salesman can, after 
 a brief study, sell locomotives as easily as he can sell peanuts 
 and popcorn. 
 
 Why We Have Few Salesmen Qualified for Foreign Trade 
 
 While, as has been pointed out, an increasing number of 
 our American institutions are offering opportunities for the 
 study of foreign trade, there are not as yet any institutions 
 that offer the complete technical and practical training ac- 
 corded to the salesmen of our European competitors. Our 
 business schools until recently prepared youths only for cler- 
 ical work. Unfortunately also we have no sources from which 
 to draw the supply of our international sales staff". All our
 
 EDUCATION FOR FOREIGN TRADE 209 
 
 preparation up to the present time has been desultory and 
 empirical. 
 
 For these reasons salesmen properly trained for foreign 
 trade are few in number and difficult to find, which accounts 
 in a measure for the transaction of so much of our business 
 through the commission houses. 
 
 It would seem that the best way for a concern to develop 
 its foreign sales staff would be to select a number of capable 
 young men, give them the necessary theoretical education, 
 train them in its business, and send them abroad into the 
 countries where the firm proposes to trade. They should re- 
 main there at least a year and learn the languages, the ways 
 of the people, and trade customs. 
 
 In some few cases it may be possible to secure former em- 
 ployees of the Department of Commerce who have served 
 in the country where the concern is interested. Satisfactory 
 results are not necessarily obtained by employing foreigners 
 as salesmen abroad. The thing for the exporter to do is to 
 develop his own staff for foreign work as he develops it for 
 local work, and if he understands his business he need not 
 fear the results.
 
 CHAPTER XXV 
 
 EDUCATION FOR FOREIGN TRADE (Continued) 
 
 The Export Office as a Training School 
 
 When a business man begins to study ways and means of 
 extending the methods of marketing his product to foreign 
 countries and seeks to learn something about the mechanism 
 of exporting, he is beginning to take a course in foreign trade 
 in the school of practical experience. In many cases this is 
 the only school in which the exporter studies and under simple 
 conditions it is all that is required. But the modern educa- 
 tional tendency is to combine where possible practical expe- 
 rience with a thorough grounding in principles and theory, and 
 the wider the range of a business man's commercial knowledge, 
 the better equipped is he. 
 
 Until our American educational institutions begin to grad- 
 uate men thoroughly trained in both the theory and the prac- 
 tice of foreign trade, the task of training his staff will continue 
 to devolve upon the exporter himself. When he becomes 
 convinced of the futility of sending unqualified representa- 
 tives into the foreign field, and becomes tired of having in- 
 competent clerks encumber his office, he will realize that it 
 is not only necessary for him to train his own men, but that 
 such training offers to him an opportunity of producing a staff 
 which will be far better equipped than that of many of his com- 
 petitors. The exporter himself in many cases is better qualified 
 for this task than are some of the professional instructors. 
 
 If he uses common sense and keeps his objective clearly in 
 mind, he may produce results that will compare favorably with 
 those of professional schools in practical results. 
 
 210
 
 EDUCATION FOR FOREIGN TRADE 211 
 
 The School and Shop Method 
 
 There is an increasing trend in modern education towards 
 vocational instruction conducted simultaneously with the more 
 formal and conventional work of the classroom. This has 
 found expression in what is sometimes called 'The School 
 and Shop Method" by which boys are enabled to spend part 
 of their day in acquiring the rudiments of a trade in a shop 
 or factory, returning to school for formal instruction later 
 in the day. This system has brought such boys a small income, 
 has satisfied their desire to earn money, has supplied the shop 
 with picked apprentices, and has not deprived the boys of 
 the school training without which they would be handicapped 
 all their lives. 
 
 So far such opportunities have been almost entirely re- 
 stricted to the shop and factory. Many boys have fiailed to 
 take advantage of it, owing to the more or less mistaken prej- 
 udice against "overalls and jumper." Were similar chances 
 in an exporter's office open to our youth of high school and 
 college age, there would be more applicants than places to be 
 filled. Such young men would command a relatively small 
 salary, they would have a very definite idea of what they 
 wanted to become, and from them the exporter could recruit 
 a picked staff that would be of great value to him. 
 
 Again, considering the subjects which form a part of the 
 instruction for foreign trade in Europe, it will be evident that 
 there are many of them to which the exporter could not do 
 justice and might better leave to the evening school, the special 
 school, or to the college lecture. Such subjects are economic 
 theory, money and banking, history of foreign countries, com- 
 mercial geography, foreign languages, psychology. At the 
 same time there is not one of these subjects that will not be 
 motivated, made more interesting, and transferred from the 
 realm of theory to that of the pupil's own vocation by reason 
 of his simultaneous training in the exporter's office.
 
 212 OPERATING THE ORGANIZATION 
 
 On the other hand, the subjects the essentials of which 
 are best acquired in the exporter's office, will take on a new 
 and broader significance when the pupil receives the point of 
 view of the college lecturer, treating them from an instruc- 
 tional and theoretical standpoint. In other words, the stu- 
 dent cannot afford to confine himself exclusively to either 
 the classroom or the office in his attempts to master any one 
 
 topic. 
 
 When the exporter has selected his young men for train- 
 ing he should consider it a part of his business to see that 
 they register in the proper institutions, attend their classes 
 regularly, and make satisfactory progress. 
 
 Opportunities for Study of Foreign Trade 
 
 In New York there are plenty of opportunities for the 
 study of foreign trade, as indicated in the preceding chapter. 
 These courses are offered at times that make it possible for 
 the student to confine his study to evening and afternoon 
 classes, or even exclusively to evening work. 
 
 In most of the larger cities the Y. M. C. A. offers courses 
 covering at least a part of the subject. When such courses 
 are not available there is the possibility of a mail order course. 
 As already noted, all of these courses have their limitations, 
 but their short comings can, in a large measure, be offset by 
 the exporter's suggestions and his supervision of the student's 
 progress. 
 
 When, for one reason or another, no formal instruction is 
 available the student, if he is made of the right stuff, may 
 rely entirely on text-books and educate himself. Here there 
 is the great danger of becoming lost in the mazes of the 
 subject. Foreign trade offers a vast field for study and its 
 domain is not clearly delimited. A public library in one of our 
 large cities once attempted a classification of books which relate 
 more or less directly to foreign trade, but the classification
 
 EDUCATION FOR FOREIGN TRADE 213 
 
 collapsed under its own weight when it became apparent that 
 a majority of the books in the library, outside of the realm 
 of fiction and the arts, had their bearing on this most com- 
 prehensive subject. 
 
 A Practical Course in Foreign Trade 
 
 For the sake of the student who is willing to attempt to 
 educate himself, as well as for the exporter who proposes to 
 train his own staff, the following suggestive course in the 
 study of foreign trade is offered. 
 
 In preparing an outline of a practical course in foreign 
 trade the different types of position to be filled have been 
 borne in mind. The curriculum should fit every demand and 
 cover the entire range of practical foreign trade knowledge. 
 While the student should give his attention to every item in the 
 course, the guiding idea should be specialization. 
 
 The positions open in export service come under three gen- 
 eral heads: (i) the investigator, (2) the salesman, and (3) the 
 office man. To the first class belong the commercial in- 
 vestigators; to the second class the sales managers, traveling 
 men, buyers, branch managers, and the active sales exec- 
 utive; to the third class the exporter, shipping clerk, book- 
 keeper, correspondent, and the office executive. It is obvious 
 that w4iile the student of every class must possess a general 
 knowledge of foreign trade land that each class must special- 
 ize more intensively in some subjects than in others, those 
 planning to go to a certain country must specialize further 
 in what pertains especially to that country. 
 
 At the outset it must be assumed that everyone under- 
 taking a course in foreign trade has a fairly good general 
 education, that he knows his own language, some history, 
 geography, arithmetic, and is familiar with the rudimentary 
 business principles, organization, land commercial usages in 
 his own country. If he has had a high school education, that
 
 214 OPERATING THE ORGANIZATION 
 
 is a start. If he has had collegiate training it will help, but 
 it is more important that he be level-headed, wide-awake, 
 with some practical business experience. He will then be able 
 to master this course of practical foreign trade w^ithin a period 
 of two years. In some cases from six months to a year will 
 be sufficient. 
 
 The course should include the following subjects: 
 
 1. Languages 
 
 2. Essentials of Economics and Business Technique 
 
 3. Foreign Trade Strategy 
 
 4. Salesmanship (Domestic and Foreign) 
 
 5. Commercial Law 
 
 6. Commercial Geography and History 
 
 7. Foreign Trade Machinery 
 
 8. Foreign Trade Psychology 
 
 9. Foreign Trade Technology 
 
 10. Banking and Finance 
 
 11. Practice in Foreign Trade 
 
 1. Languages. French and the language of the country 
 in which one proposes to act should both be studied until they 
 can be read, spoken, and written with ease and correctness. 
 This can, of course, be done most easily and to best advantage 
 by daily contact with those wlio claim the language as their 
 native tongue. 
 
 French is particularly useful because it gives the founda- 
 tion for other romance languages and because it is so gen- 
 erally spoken by foreigners. International business corre- 
 spondence should be studied in detail in connection with the 
 study of the languages. 
 
 2. Essentials of Economics and Business Technique. 
 Under the head of economics and business technique should 
 be taught something of the essentials of organization and 
 machinery of modern business enterprises. Amone^ the sub-
 
 EDUCATION FOR FOREIGN TRADE 215 
 
 jects studied should be advanced accounting, statistics, for- 
 eign policies and practices in the principal businesses both at 
 home and abroad, relation of imports to exports, and of 
 finance, transportation, and banking to foreign trade. Prin- 
 ciples of business, wholesale and retail merchandising, ques- 
 tions of the day, export problems, the elements of political 
 economy, and business procedure in the selected field, should 
 receive careful attention. 
 
 3. Foreign Trade Strategy. The student should be taught 
 how to obtain strategic business information. For this pur- 
 pose he should study from the directories, the names, loca- 
 tions, and functions of trade organizations and government 
 bureaus from which trade information can be obtained. He 
 should also learn something of the principal foreign markets 
 and the names of some of the most prominent foreign firms 
 and dealers throughout the world. He should familiarize 
 himself with governmental activities in foreign trade in the 
 principal countries with the lists of official publications, adver- 
 tising mediums, and books and articles bearing on the subject. 
 
 4. Salesmanship. Under the head of salesmanship will 
 be taught the art of buying and selling, the psychology of 
 the sale, with special reference to conditions and methods in 
 different countries. Not merely barter and sale, but selling 
 methods, sales organizations, the manner of approach in dif- 
 ferent countries, and the different classes of merchandise 
 should be considered. Selling by mail, marketing plans, poli- 
 cies and methods, the framing of circular letters and of 
 letters of inquiry, the use of cables and office practices abroad 
 should also be included in the course of study. 
 
 5. Commercial Law. The student should know some- 
 thing of commercial law in general with special reference to 
 its status in the different countries of the world. It is most 
 essential that he should know the consular requirements and 
 formalities, custom laws and regulations, laws relating to
 
 2i6 OPERATING THE ORGANIZATION 
 
 samples, travelers, and printed matter, the law relating to 
 trade-marks, patents, maritime law, and marine insurance. 
 
 6. Commercial Geography and History. The value and 
 necessity of the study of commercial geography and history 
 are self-evident. The one gives the most essential and concrete 
 information concerning those elements that determine trade 
 opportunities; the other assists in the understanding of pres- 
 ent conditions by a study of the past. 
 
 7. Foreign Trade Machinery. The student should be 
 taught the theory upon which export and import business is 
 built and conducted and the detailed functions of each factor 
 in foreign trade. He must learn the principal export and 
 import organizations in his own country, their types and their 
 methods of operation, the workings of exchanges, of insur- 
 ance concerns, and of transportation lines. 
 
 8. Foreign Tirade Psychology. By foreign trade psychol- 
 ogy is meant the study of the principal markets of the world 
 as regards their structure, the character, temperament, tend- 
 encies, and usages of the people whose desires, mode of liv- 
 ing, wants, and aspirlations are represented by the market in 
 which they are concerned. This study of conditions is usually 
 first carried on at long range and later followed up by actual 
 observations by the student on the ground. It should include 
 also the psychology of sale by advertising and mail order. 
 
 9. Foreign Trade Technology. Foreign trade technology 
 includes the study of the principal negotiable products as re- 
 gards characteristics, species, qualities, and defects of mechan- 
 dise. It embraces also an analysis of the methods of receiving, 
 packing, carriage, storage, and manufacturing for export, and 
 of the systems of ocean trade routes and land transportation in 
 the principal foreign countries. 
 
 10. Banking and Finance. The theory of money and 
 banking should be mastered and the student should be familiar 
 with international banking, its functions and operations. The
 
 EDUCATION FOR FOREIGN TRADE 217 
 
 workings of exchanges, corporate finance, credits, collections, 
 securities, and every practical detail of the foreign banking 
 business should be thoroughly studied. 
 
 II. Practice in Foreign Trade. Practice in foreign trade 
 should consist of frequent visits — individual and group — to 
 the business, banking, industrial, and other establishments en- 
 gaged in foreign trade for the purpose of observation. 
 
 Practical Experience in Foreign Trade 
 
 In the previous chapter the practical education in the field 
 given the European students of foreign trade was described. 
 There is no reason why the American exporter who has estab- 
 lished himself abroad should not give to each of his young 
 men a brief but valuable experience in his foreign branch 
 office, or even in the selling field itself in company with one 
 of the older salesmen, if he can afford the expense. 
 
 If the exporter has not yet reached the stage in his opera- 
 tions that permits him to do this he may still be able to obtain 
 places for his men with other foreign wholesalers or impor- 
 ters, and it will profit him to do so even if he has to pay their 
 salaries and expenses himself. 
 
 The exporter may as well realize that not all of those he 
 trains will be worth the effort. The speedy elimination of 
 those who fail to show promise is a kindness to them and a 
 business necessity to the employer. 
 
 In conclusion it may be said that perhaps the chief ele- 
 ments of the future foreign trader's equipment are, after all, 
 breadth of vision, a faith in American ideals and traditions, 
 and a broad sympathy with the ideals and traditions of for- 
 eigners. Without these traits the best planned equipment and 
 training will not count for very much.
 
 CHAPTER XXVI 
 
 THE EFFICIENCY OF THE ORGANIZATION 
 
 Fundamental Efficiency Principles 
 
 The basic principles of efficiency which govern the de- 
 velopment and management of commercial organizations may 
 be stated briefly as follows: 
 
 1. The policy of the management should be based on 
 
 co-operation with its employees whose prosperity 
 should balance that of the employer. 
 
 2. The organization should be built on the harmonious 
 
 correlation of the parts with the whole, the duties 
 and functions of each employee being clearly de- 
 fined and definitely known. 
 
 3. The principles of econom.y should be understood and 
 
 practiced so as to attain an adequate equipment 
 and effective personnel with the least expense. 
 
 4. The organization should be based on faith in the 
 
 product and enthusiasrn for the work. 
 
 The analogy between war and business has already been 
 pointed out. Nowhere is this analogy more striking than in 
 the matter of organization. 
 
 The efficiency of army organization is the result of the 
 strict enforcement of the rigid scientific principles upon w^hich 
 the structure of the entire army is based. These principles 
 are, in the order of their importance, as follows: 
 
 1. Clearly defined ideals and purpose. 
 
 2. An unvarying system of responsible leaders from the 
 
 top down. 
 
 218
 
 EFFICIENCY OF THE ORGANIZATION 219 
 
 3. Strong and constant impulse from superior officers. 
 
 4. Unswerving loyalty of subordinate officers. 
 
 5. Thorough training of the individual units. 
 
 6. Intense esprit de corps. 
 
 These elements of successful organization are applicable 
 to any enterprise which aims to achieve the greatest possible 
 results. They constitute a working ideal towards which 
 every manager must aim. 
 
 Organization 
 
 The general form of organization must differ according 
 to the nature of the business. Experience, however, has shown 
 that a centralized type of organization is best suited to the 
 modern requirements of foreign commerce. It is the type 
 where individual arbitrariness and usurpation do not exist, 
 but where all authority radiates from one center. It is dele- 
 gated from the top down the line to the lowest subordinate, 
 but is distributed through intelligent co-operation. 
 
 An illustration of a common type of an industrial organ- 
 ization is that in which the head of the concern delegates his 
 power to his managers, they in turn delegate their authority 
 to different superintendents, the superintendent passes it to 
 the foreman, and so it goes down the line to the lowest "boss." 
 The responsibility in each case rests upon the person who 
 wields the immediate authority, although nominally at the top. 
 The evil of this system is that the man at the bottom really 
 runs the business and he is usually the man with the least 
 training and knowledge. It is a system that depends upon 
 the loyalty, energy, resourcefulness, and ability of each subor- 
 dinate head. If any one of them, goes wrong the whole edifice 
 is endangered. 
 
 The modern type of organization of the constructive type 
 gathers all the executive authority at the top, nominally in 
 the individual head, but really in the staff of specialists who
 
 220 OPERATING THE ORGANIZATION 
 
 advise the individual head of the concern and all his subordi- 
 nates upon the matters in their special lines and who form a 
 sort of general staff. In this case the authority permeates the 
 entire structure and the organization draws its impulse to 
 action from the counsel of the specialists at the top. 
 
 The management, like the organization, may be of a single 
 or of a double standard. If a single standard, the export 
 activities are interwoven into the fabric of the entire concern 
 and although there may be a subordinate manager for the 
 foreign activities yet such a department has no more signifi- 
 cance than the accounting department. Under the double 
 standard of organization, the export activities are entirely 
 sej>arated from the general business, in so far as their work- 
 ings are concerned. The policies must of course, be formu- 
 lated by, and the source of responsibility vested in, the head 
 of the concern. 
 
 If the business is small and the venture into the foreign 
 fields is experimental, it is of course foolish to create a sep- 
 arate export organization. The most that is necessary in such 
 case is to employ an export manager and his clerical assis- 
 tants. But when the organization for the conduct of the 
 foreign sales of a large concern is extensive, it is always wise 
 to vest the export activities in a separate department or organi- 
 zation. The advantages overbalance any saving of overhead 
 expenses. 
 
 Specialized Effort 
 
 It is a dictum of modern science that specialized effort is 
 a necessary element in every development of a higher order. 
 Credit matters, shipments, collections, advertising, and even 
 production itself, in some cases, are matters so radically dif- 
 ferent in foreign trade that, other things being equal, these 
 differences alone justify a separate organization and man- 
 agement to handle it properly.
 
 EFFICIENCY OF THE ORGANIZATION 221 
 
 The active head of the entire organization should never 
 delegate his responsibiHty for foreign work entirely to the 
 head of the export department. If he does this the export 
 department becomes practically a distinct organization. As a 
 rule, separate export organizations are created, not because 
 they will be productive of greater efficiency, but rather for 
 financial reasons, especially when several independent concerns 
 co-operate for a joint exploitation of foreign fields. In such 
 cases this kind of organization has a distinct advantage. 
 
 Formulation of General Policies 
 
 The management of every undertaking should have its 
 general policies reduced to writing and made known to the 
 employees; this is particularly advisable in foreign trade, be- 
 cause of its greater complexity. 
 
 It should also be made clear to the salesmen and other 
 representatives of the concern that it is the fundamental policy 
 of the house to give the customers what they want and not 
 what the representative thinks they should have. This nat- 
 urally tends to cure overzealousness on the part of the selling 
 force. 
 
 Handling Salesmen 
 
 The main trouble with sales organizations is usually the 
 breaking down of the sales force. The salesman may secure 
 a better position elsewhere, he may go into business for him- 
 self, or he may become ill. It more frequently happens, how- 
 ever, that he fails to make good and as a result becomes dis- 
 couraged and abandons his position. There is one way and 
 only one to guard against the disease of discouragement, and 
 that way is to keep up to a certain standard of efficiency in 
 all things, business and personal. 
 
 According to some writers, sales efficiency is the resultant 
 of the salesman's appearance, knowledge of the goods he sells,
 
 222 OPERATING THE ORGANIZATION 
 
 fluency of language, knowledge of human nature, general 
 Information, jovial disposition, physical strength and endur- 
 ance, adaptation, ingenuity, etc. The sum of these qualities 
 makes success. 
 
 It would seem, however, that something else should be 
 added which is equal to all these elements put together, and 
 this is the state of mind of the salesman — the disposition to 
 push on and on and on until he conquers and wins permanent 
 success. Morale is as necessary to the salesman as to the 
 soldier. 
 
 A man is a very small man if he is mainly physical. The 
 greatest part of his manhood is his mental make-up, his tem- 
 perament, his psychological status. It is far more sensitive 
 and far more easily put out of gear than his physical make-up. 
 We are all creatures of our temperaments and many a good 
 salesman has been demoralized by a poor sales manager. Dis- 
 cipline is necessary in every organization, but a wise manager 
 knows how to distinguish between a commercial and a military 
 system of discipline. He will refrain himself, and will prohibit 
 his subordinates from employing any bullying or driving tac- 
 tics which can only result in degrading the employee and 
 making him disgusted with the management. 
 
 The Manager's Duty — Inspiration 
 
 Except in a business employing a low grade of men, arro- 
 gance on the part of the management has never been found 
 to be a commercial asset. That manager is the best who can 
 win his subordinates' personal confidence and who can inspire 
 them to greater exertions by such means as are known to (all 
 leaders of men. It is because an important part of a man- 
 ager's duties is to inspire the men under him that it is a bad 
 policy to put a man in the position of control who is not espe- 
 cially qualified for his work both by nature and training. 
 Yet this procedure is frequently adopted by the heads of
 
 EFFICIENCY OF THE ORGANIZATION 223 
 
 large undertakings, and the policy almost always means 
 failure. 
 
 In foreign work, where it is necessary for the salesman 
 to be far from home and friends, in a strange land, among 
 strange people, this factor of executive inspiration is of great 
 psychological significance. Needless to say, the manager and 
 his field workers should not only be personally acquainted but 
 should be on the closest terms of intimacy compatible with 
 discipline and nianagcrial dignity. 
 
 Liberal and Fair Treatment 
 
 Salesmanship in far-off foreign countries is often a very 
 trying task but, as more and more foreign territories become 
 developed, the reward of successful work is correspondingly 
 larger, both for the salesman and for the house. It pays the 
 manager to be liberal and even generous with his representa- 
 tives abroad. As a matter of fact, generosity toward the sales- 
 man has been usually found to be the best possible invest- 
 ment in view of the fact that selling is the vital work indis- 
 pensable to the life of every enterprise. 
 
 Generosity is not merely a matter of money, but of rela- 
 tionship and methods of handling. The management may 
 perhaps encourage the employees to spy upon each other re- 
 garding their demeanor or their attitude tow/ard the con- 
 cern. This is a very poor policy. It creates an atmosphere of 
 suspicion, destroys the esprit de corps, and makes the em- 
 ployee who discovers the espionage disgusted with every- 
 body, to the impairment of his future efficiency and useful- 
 ness. 
 
 Keeping in Touch 
 
 Every foreign trade manager should have some system 
 which will keep him in close touch with his salesmen abroad, 
 not alone receiving reports from the latter, but from time to
 
 224 OPERATING THE ORGANIZATION 
 
 time sending them a word of cheer and encouragement. It 
 never pays to spare the stenographer at the expense of the 
 salesman. Hence the stereotyped letter patterned to fit all 
 men, and all occasions, should be sparingly used in corre- 
 spondence with salesmen in foreign fields. 
 
 A manager who quarrels with salesmen in correspond- 
 ence is not fit for any kind of executive position. He does 
 not know the first principle of a manager's business, which is 
 the management of men so as to secure from them the maxi- 
 mum of enthusiastic co-operation in the work at hand. This 
 effect is never secured by petulant fault-finding or abusive cor- 
 respondence.
 
 CHAPTER XXVII 
 
 SELLING METHODS IN FOREIGN TRADE 
 
 Adaptability of Selling Methods 
 
 The people of every nation have their peculiarities and 
 distinctive needs determined by the country's location, its 
 natural resources, its environment, the character of its popu- 
 lation, and many other fixed conditions. The methods of 
 trade in each country are as different as the conditions which 
 govern them. No general plan of sales campaign can be 
 formulated which would be applicable to every country and 
 every case. 
 
 The Germans were successful in foreign trade, because 
 they recognized the principle of commercial adaptability, 
 whereas some English and American exporters still hold to 
 the idea that what is good in their own country should be 
 good everywhere. This principle cannot be maintained 
 against intelligent competition. The sooner our exporters 
 recognize the law of commercial adaptation the better for 
 them. 
 
 Selling Methods Must Conform to Custom 
 
 The people of the United States have been accustomed 
 to do things in a hurry. They have learned to value speed 
 and to count time as a monetary asset. They do not realize 
 that speed frequently degenerates into haste and that head- 
 long hurry sometimes means repentance at leisure. 
 
 For example, an American company heard that there was 
 a great opportunity in its line in South America. Forthwith 
 the manager of the company picked out his best salesman, 
 
 225
 
 226 OPERATING THE ORGANIZATION 
 
 noted for quick work, and sent him down on the first steamer. 
 The salesman had no experience in foreign trade. He looked 
 at the map and decided upon the towns that were to supply 
 his golden harvest, and upon the length of time that he would 
 spend in each. He allowed two days to the smaller towns and 
 a week to the larger ones. He arrived, hurried his sample 
 trunks ashore at the first port, and spread out his wares at 
 the best hotel. Next he called on the local dealers and in- 
 vited them to look at his samples, announcing at the same 
 time that his steamer was to leave in two days and that he 
 had to go with it. To his great astonishment no one responded 
 to his invitation. He waited another day but with no better 
 results. He concluded that this time he had struck a dead 
 town. 
 
 When he disembarked at his next landing he repeated 
 the performance, but with the same results. Then he called 
 again on the local merchants and urged them not to lose the 
 great opportunity of inspecting his stock. But the mer- 
 chants did not seem to appreciate their opportunity. Again 
 they failed to appear, in spite of the fact that the sales- 
 man had pointed out to them the deficiencies in their stock. 
 The entire trip of this energetic pioneer brought no appre- 
 ciable results and the concern became convinced that the 
 South Americans were uneducated in modern business ways, 
 and impervious to knowledge. 
 
 It so happened that a few days later this American sales- 
 man was followed by a representative of a European house 
 in the same line of trade. He came with letters of intro- 
 duction, which he sent to the merchants soon after his 
 arrival. Later he made personal calls on them, looked over 
 their stores, and expressed his admiration for the way in 
 which they were conducting their afifairs. The merchants 
 returned his call and the salesman established with all of them 
 a basis of friendly intercourse. He continued his casual call*
 
 SELLING METHODS IN FOREIGN TRADE 227 
 
 until in a day or so they began to show curiosity as to the sort 
 of merchandise he was handhng. To this he repHed that if 
 they wished to see his stock he would be glad to exhibit it to 
 them at their convenience, but at present he was not in a hurry 
 to sell them anything. Such methods strongly appealed to 
 their Latin temperament and before he left m.any of the mer- 
 chants gave him large orders. He did the same thing in the 
 other towns, staying in each from four to five days longer then 
 did our American friend, but selling freely where the Ameri- 
 can sold not at all. 
 
 The American went into the strange land prepared to do 
 a large amount of business in a hurry and rush out again, all 
 with no method of procedure. The European knew the people, 
 knew how to approach and how to win them, and above all 
 he went there with a preconceived plan of action. 
 
 The coercive attitude toward a customer is seldom con- 
 ducive to success anywhere, :and it is fatal with a people of 
 an emotional temperament. 
 
 Suiting Methods to Conditions 
 
 The fundamental rule of trade in foreign lands is to study 
 the people and their ways and adapt oneself to them. In 
 China, for instance, all foreign business must be transacted 
 through an intermediary. In Russia before the Great War, 
 large sales could not have been made without establishing 
 oneself socially. 
 
 In some countries the distribution in certain lines of mer- 
 chandise is monopolized by small groups of houses. There 
 are still countries where bargaining prevails and in such cases 
 it is necessary to demand higher prices than those for which 
 one is willing to sell. In each case a special method must be 
 devised for securing the distribution and influencing sales. 
 
 Foreign houses generally give their salesmen a great deal 
 of latitude and authority in dealing with a new customer.
 
 228 OPERATING THE ORGANIZATION 
 
 They are authorized to ^accept credit in cases in which it seems 
 to them advisable, to arrange the details of shipment and to 
 offer such guarantees as may be required. As a general rule 
 it is a good policy to empower salesmen to meet any emergen- 
 cies, as overseias communications are expensive, slow, and 
 unsatisfactory. 
 
 Often what is at home called "persistence" is construed 
 abroad as importunity and instead of being fruitful of results 
 it is likely to be feelingly resented. Of course this has no 
 reference to the pressure which is exerted continuously but 
 gently with a nice regard to the prospects feelings. Persis- 
 tence is a valuable quality to possess and to exercise, but in 
 selling wares abroad it has to be used sparingly, at longer 
 intervals, and in ways requiring ingenuity and diplomacy 
 rather than push. 
 
 The Leisurely Approach 
 
 An obvious difference between the American and European 
 selling methods is that the European places greater reliance on 
 friendship and sociability than does the American. The 
 European will not generally do business with the man he has 
 not met, at least in a semisocial way. 
 
 The quality which renders the American salesm'an invinc- 
 ible at home is his self-hypnotism which makes him a glowing 
 enthusiast. Enthusiasm being contagious he spreads it wher- 
 ever he goes and in time it captures his prospect. The Euro- 
 peans are for the most part little subject to autosuggestion 
 in trade matters. They are neither hypnotizers nor can they 
 easily be hypnotized. They regard trade as a necessary evil 
 which supplies them with life's comforts, not as a thing of 
 any interest in itself. Their enthusiasm runs rather in the 
 direction of getting the most enjoyment out of life than in 
 buying and selling goods. 
 
 Generally speaking, business people in foreign countries
 
 SELLING METHODS IN FOREIGN TRADE 229 
 
 take life easily, and although money has a charm for them, 
 it is not desired at the sacrifice of ease or of pride. He who 
 wishes to succeed with them must choose to succeed leisurely 
 and to conform otherwise to their ways. If the foreigner's 
 nature or custom is to be slow, it is his privilege, and there 
 is no profit in quarreling with his ways. He may be alto- 
 gether wrong in taking life so easily, but what a waste of 
 time it is to try to reform him. Absurd as it seems, a great 
 many American business men, not content to complain of 
 the ways of the foreigner, try to force him to adopt the Ameri- 
 can business ways and methods. It is certainly a vain effort 
 at reform and it is one which a practical man should dis- 
 dain. 
 
 It is well to bear in mind this difference between foreign 
 and American methods and to remember that the foreigner 
 will not trade in haste, and generally cannot be convinced at 
 the first interview. Foreign orders come in large quantities, 
 and a customer once secured is oftentimes a customer for 
 life. It pays to be contented to wait until he is ready to do 
 business. 
 
 Methods for Promoting Foreign Trade 
 
 The methods for promoting foreign trade are national, co- 
 operative, general, or special. When a country devises means 
 of assisting its people in their commerce abroad through di- 
 plomacy or other means, it should have a method or policy to 
 that end. When two or more concerns join to do business in 
 a foreign country they must have a method which is essen- 
 tially co-operative. Every concern entering a given foreign 
 field usually has a general preconceived way or method of 
 reaching the market and of securing and keeping customers. 
 Special methods of sale or for overcoming competition are 
 invented to suit the exigencies of the special occasion, and it 
 is best to leave them out of the general plan of sale and trust
 
 230 OPERATING THE ORGANIZATION 
 
 to the ingenuity and resourcefulness of the salesman for 
 their application. 
 
 A special method hastily devised to conquer an unfore- 
 seen obstacle may be illustrated by the experience of a sales- 
 man who went to Russia for the purpose of securing a large 
 contract for a special kind of electrical bulb. On arriving 
 at his destination he found that a British firm was ahead of 
 him, and although the contract had not yet been closed, he 
 could not secure a hearing from the officials who had the 
 matter in charge. He then conceived the idea of showing 
 them his goods in an unusual way. Through some friends 
 he invited the officials of the concern to an elaborate dinner. 
 At a given signal the lights of the dining-room were put out 
 and another set of lights, equipped with his own bulbs, were 
 turned on displaying a startling difference and accentuating the 
 superiority of the bulbs he had for sale over those of his 
 competitor. The salesman then explained to the surprised 
 officials that he did not wish to leave their town without ac- 
 quainting them with the excellence of the goods he car- 
 ried. Since his proposition was meritorious on the face of 
 it, his unusual method of displaying his wares brought him 
 complete success and his trip resulted in a large order. 
 
 Competitors' Methods 
 
 Before deciding upon a method of sale a good rule to 
 follow is to study not only the people with whom one is to 
 trade, but also the methods employed by successful competi- 
 tors. No matter what method is chosen it should have due 
 regard to the important elements which enter into every sell- 
 ing campaign and which together constitute and contain the 
 principles of foreign trade. These elements are as follows: 
 adaptation, reciprocity, veracity, diplomacy, and tact. 
 
 The commercial aspects of adaptation and of reciprocity 
 in the world's trade have already been considered. Veracity
 
 SELLING METHODS IN FOREIGN TRADE 231 
 
 is not used here in the sense of merely being truthful and 
 never misrepresenting things. It means much more than 
 that; it is the maintenance of the integrity of the trading 
 concern at all costs and at all times and places and to all people 
 equally. 
 
 Trade diplomacy is practiced in the Anglo-Saxon world 
 chiefly in large transactions in which principals trade in per- 
 son. With salesmen it is not even of secondary considera- 
 tion. But tact is of the greatest importance in foreign trade, 
 whether the deal is between the principals or between their 
 representatives. In America push and persistence, even when 
 bordering on impertinence, find many an admirer who will 
 give an order to the fellow that tries the hardest. Abroad, 
 trading people stand more on their dignity and may resent 
 even a hearty handshake. Diplomacy with these imperturb- 
 able foreigners means courtesy, tact, extreme consideration 
 of the feelings of others, and above all things sympathy and re- 
 spect for his susceptibihties. He who understands the value of 
 tact and diplomacy is bound to succeed, no matter what he 
 sells nor where he sells it.
 
 CHAPTER XXVIII 
 
 SUGGESTIONS FOR INTERNATIONAL 
 SALESMEN 
 
 The International Salesman 
 
 The international salesman should be more mature in years 
 and sounder in judgment than the prevailing domestic type. 
 He should have a more extensive general knowledge of the 
 world. His manners should be cultivated and be adapted to 
 the particular type of customer in hand. 
 
 His poise should be good. There should be no vehe- 
 mence in his manner of approaching his customers but on 
 the contrary, the most studied formality, especially in the 
 closing of the sale. He should have a social temperament 
 and enjoy the entertaining of his prospective customers, with- 
 out letting it be too apparent that he does it for business 
 reasons. He should be in appearance all that his talk and 
 his actions convey that he is. 
 
 Aggressive Salesmanship 
 
 Some people think that aggressive salesmanship means 
 an arrogant, boorish, dictatorial attitude toward the cus- 
 tomer with an occasional display of bulldozing tactics. This 
 is never at any time advisable even in domestic salesmanship, 
 and certainly not in the foreign field. There are instances 
 when a man will buy because he is driven to it, but they are 
 rare and it is wiser for a salesman never to try to scare a pros- 
 pective customer into giving an order. Those who act on 
 the principle that more flies are caught with honey than with 
 vinegar will invariably do the better. The truly aggressive 
 
 232
 
 SUGGESTIONS FOR SALESMEN 233 
 
 salesman hustles for business from eight to ten hours a day. 
 He will even teach himself to smile at rudeness, and he will 
 never let anything so small as a refusal deter him from trying 
 again. But he must try in the right way. 
 
 A salesman who after an unsuccessful call on a number 
 of dealers goes to his hotel and prepares to leave for his 
 next stopping place before having thoroughly canvassed the 
 local situation is not an aggressive salesman, and lacks the 
 essential quality of persistency. 
 
 But even persistence has its limits. One must never annoy 
 a customer; a little patient waiting and a friendly attitude 
 will yield far better results. It is certainly not business 
 aggressiveness to become angry or to enter into a controversy 
 with the customer. Such conduct is unpardonable, and espe- 
 cially so from the foreigner's point of view. 
 
 One must be a philosopher to get along in this world. 
 Successful men are usually kind, good-natured, even-tem- 
 pered, and tolerant of the faults in others. He who wishes to 
 be a prince among men should know by heart the qualities 
 of human kindness. 
 
 The quality called aggressiveness in a commercial sense 
 has its varied applications. Sometimes it is physical persist- 
 ence, sometimes it is concentration, and sometimes it is prac- 
 tical ingenuity. The writer has known very successful sales- 
 men in the domestic field who rarely called on a customer in 
 large cities without first getting in touch with him on the 
 telephone. On arriving in town he would call up a number 
 of prospects, a short talk determining which ones he should 
 see first. Later, he would call up those he had not yet seen 
 and announce that he was likely to leave town and that he 
 hoped to call as he had something extraordinary to offer. 
 Then again he would decide on whom he should call until 
 ultimately he would see all of them and generally leave town 
 loaded with orders.
 
 234 
 
 OPERATING THE ORGANIZATION 
 
 Overcoming Customers' Excuses 
 
 One of the greatest difficulties the salesman has to over- 
 come is the customers' excuses. He becomes tired of hearing 
 such expressions from the dealers as the foreign equivalents 
 of "nothing doing," "loaded to the brim," "have plenty of 
 that in stock," "have just replenished my stock," and similar 
 expressions ad infinitum. It is not altogether the salesman's 
 duty to overcome these excuses, for a wise sales manager 
 should provide a means of unloading the dealer's shelves as 
 well as for filling them. The salesman should, however, be 
 able to explain these means by convincing him that the sales- 
 man is just as interested in seeing the goods quickly pass over 
 his dealer's counter as he is in landing them on his shelves. 
 
 No first class salesman depends on the house to furnish 
 him with all the means of overcoming the buyer's excuses. 
 He has his own resources. He remembers that reciprocity is 
 the first principle of commercial life. If you do something 
 for a man, he is more likely to do something for you. When 
 the customer says he is "loaded to the brim," he may or may 
 not be telling the truth. The salesman should then ask him 
 as a favor to inspect the line of samples carried or some 
 selected portion of them, telling him something of interest 
 in regard to them — something new. 
 
 While displaying the samples it can readily be seen by the 
 interest the customer takes whether he was truthful or not in 
 his statement. At the same time the real state of affairs 
 should be ascertained and if possible an offer to help him may 
 diplomatically be made. It may be that he does not display 
 his merchandise properly, or his sales force or sales methods 
 are wrong, or perhaps he does not buy as he should. Perhaps 
 he fails to turn stocks often enough or his lines and brands 
 are not of standard value and are not properly mixed. A 
 suggestion from the salesman may in any such case be of 
 material value to the prospective customer.
 
 SUGGESTIONS FOR SALESMEN 235 
 
 Offering Suggestions 
 
 To be able to offer suggestions successfully the salesman 
 should learn something of general merchandising; but — most 
 important of all — he should make every effort to show a real 
 interest in his customer's success. Thus the principle of reci- 
 procity will begin to operate and the customer will begin to 
 feel a desire to do something in turn for the salesman when 
 he sees that the latter is really interested in doing something 
 for him besides merely selHng him goods. 
 
 The right kind of a salesman will secure the loyalty of his 
 customer by himself being loyal and showing a willingness 
 to be of real service. As a rule, any man is willing to be 
 shown how he can make more money, but this must be done 
 tactfully and in the kindest possible way. The customer's 
 welfare means the salesman's welfare. As the one succeeds 
 so will the other succeed. 
 
 Often it may be best to offer assistance, or give advice 
 before displaying samples or endeavoring to approach the 
 subject of sales. This is especially true when the buyer 
 appears to be unapproachable. Tact is never wasted when 
 dealing with the foreign buyer. It is one of the most valuable 
 assets which the salesman can possess. A compliment on 
 the customer's goods, his manner of displaying them, or his 
 taste in selection, at the same time offering some little hint 
 or suggestion — and his interest, friendship, and patronage 
 are won. 
 
 Keeping a Customer 
 
 Sometimes it is easier to get a customer than to keep him, 
 but it is just as important to keep the old customers as to get 
 new ones. There are many ways of losing them. Misrep- 
 resentation is the most common way. The salesman in his 
 anxiety to sell oftentimes quite unconsciously makes state- 
 ments which cannot be sustained and which his employer
 
 236 OPERATING THE ORGANIZATION 
 
 would never authorize. When the customer finds out that 
 he was practically cheated he tells others and both the sales- 
 man and his house sufifer. 
 
 Customers are lost by taking it for granted that once a 
 customer is always a customer and by failing to give a man 
 as much attention on a later occasion as when he made his 
 first purchase. An old customer is entitled to even better 
 treatment than the new one. It may be human to become in- 
 different to what one possesses, but it is poor business. 
 
 A successful salesman should be able to know the mind 
 of his customer. The golden rule is a good business rule. 
 If the salesman will think what he would do were he in his 
 customer's place he will know when to act and what to do. 
 
 Like honesty, courtesy always pays. If an old customer is 
 treated as an old friend he will always remain a customer 
 (unless there is something radically wrong with the goods) 
 and even become an advertiser. Those who hold their old 
 customers are most likely to win. 
 
 People are like the lower animals — they run after those 
 who feed them. Most people are hungry for human sympathy 
 and much can be accomplished with a cheerful smile. Some 
 people have built their fortunes on a hearty hand-shake backed 
 by a smile. Think of these things when meeting an old cus- 
 tomer and the chances of winning will be vastly increased. 
 
 Approaching a Prospect 
 
 The start and the finish are the two most difficult stages. 
 At these times one must be an adept to be perfectly at ease. 
 Many salesmen are not. Men are invariably averse to stran- 
 gers and it is exceptional for a stranger to be able to walk 
 into an office and attempt to sell his proposition to another 
 stranger without creating at first the unfavorable impression 
 which frequently is the lasting impression. 
 
 The problem then first of all is how to create a 'favorable
 
 SUGGESTIONS FOR SALESMEN 237 
 
 impression on approaching a prospective buyer. This is a 
 particularly important problem for an international sales- 
 man. Of course a neat appearance helps a good deal but it is 
 not everything. More important is what the salesman says, 
 how he says it, how he acts — in other words, how he breaks 
 in upon the stranger. 
 
 As a rule it is well to put in as much time as possible in 
 getting on a friendly basis before attempting to talk business. 
 Generally very few men become rude when they know "what 
 it is all about." And if the salesman succeeds in establishing 
 a friendly basis, it is then a simple matter to make a sale. 
 
 To jump upon the stranger, like a hurricane, and to 
 attempt to make a sale without any preliminaries is fatal in 
 foreign trade. 
 
 A successful international salesman told the writer that 
 when calling on a customer he first asks him about business 
 in general, making his prospect feel that he is the first one on 
 whom he has called, and that his call is the chief reason Avhy 
 he came to the town. When the salesman and the customer 
 have established a cordial basis, what the French call rap- 
 prochement, the business talk and the exhibition of samples 
 follow naturally. 
 
 Not infrequently a salesman gets impatient with the cus- 
 tomer and gives him up on the theory that "there are others," 
 when there is still hope of making a sale. This is a poor policy 
 and against the principles of efficiency and business sense. 
 The time has already been invested which, with little more 
 effort, might be made to pay returns. It is profitable to 
 remain with the customer so long as he is willing to listen. 
 When he begins to argue, success is in sight. Even if after 
 spending some time on him he bids the salesman "good-bye," 
 with the positive indication that he won't buy, it still may be 
 well for the latter to invent an occasion to see him again 
 before leaving the town.
 
 238 OPERATING THE ORGANIZATION 
 
 Closing a Sale 
 
 Closing a sale is the most difficult part of a salesman's 
 task. Many men are good talkers and can interest a customer, 
 but comparatively few are good closers. 
 
 If the customer knows just what he wants, when he wants 
 it, and how much he needs, there should be no difficulty in 
 closing a sale. Usually, however, the buyer is not sure on 
 one or more of these points. Here the salesman should help 
 him. Every buyer has that human element in him called 
 "hesitation." It is the salesman's duty to turn hesitation into 
 decision. 
 
 The salesman should be liked by the customer and should 
 make every effort to that end so that the customer may be 
 placed in a receptive state of mind. When that has been 
 accomplished the next step is to impress the customer with 
 the goods one has to sell. It then is largely a question of the 
 foreign salesman's discretion and tact to know just when and 
 how to close the sale. This should be done before the pro- 
 spective purchaser begins to cool off, but at the same time he 
 must not be unduly hurried. 
 
 When a customer starts to explain his position with a 
 view to postponing his decision, the salesman should know that 
 the cooling off process has set in and instead of attempting 
 to close a sale, he should again explain his proposition and 
 show the merits of his article. 
 
 There are two preliminary requisites before the customer 
 is completely prepared for the closing. One is to have him 
 fully interested in the proposition, and the other, to deter- 
 mine just how much can be sold him. Those who sell goods in 
 small lots find their greatest difficulty, not in making a sale, 
 but in selling a satisfactory quantity. 
 
 The closing argument should contain some entirely new 
 point which has not been previously mentioned and which 
 should be urged with extreme earnestness and force.
 
 SUGGESTIONS FOR SALESMEN 239 
 
 One must know how to use this vantage point properly. 
 Here, as in oratory, the contrast is the most effective. To 
 that end the salesman must at first use an ordinary conversa- 
 tional tone and genial manner while showing the article or 
 explaining the proposition. When he sees that the buyer is 
 ready for the final attack, after he has gauged the latter's 
 state of mind and already has his answer, the salesman should 
 become intensely serious and urge the "vantage point" ear- 
 nestly but in as few words as possible; then, if his work has 
 been well done, he should get his order. This is the usual 
 procedure employed by good closers and proves very suc- 
 cessful. 
 
 What Is Meant by Salesmanship as an Art 
 
 Primarily salesmanship is the man. But it is not the man 
 as a mere animal, not even the man as a thinker; it is the man 
 in all his regalia as a human being with all that is best in 
 him. That is, it is the man as father, friend, lover, patron, 
 humanitarian, bread-winner, and citizen. He must bring all 
 the emotions which represent these designations into play. 
 That is his art to visualize these emotions in the buyer. The 
 extent to which he can reproduce them, within him-self and 
 make the other party feel them, is the measure of his 
 success. 
 
 Some men have no strong emotions, no sentiment-s — they 
 represent nothing but greed for money. Such men — suppos- 
 ing that they are to succeed at all — must be good actors. 
 They must convey the impression by their acting that they 
 have all the best human attributes, such as sympathy for their 
 fellow men, kindness, honor, and friendship, or they will fail 
 
 to sell. 
 
 This ability to display emotions through words and actions 
 and to convey them through the invisible power of suggestion 
 is the highest art of salesmanship. It establishes at once a
 
 240 OPERATING THE ORGANIZATION 
 
 cordial, friendly relationship between the buyer and the seller 
 and begets the willingness of the former to do anything 
 for the latter that is not directly injurious to his own wel- 
 fare.
 
 CHAPTER XXIX 
 
 FOREIGN TRADE BY MAIL ORDER 
 
 Status of Foreign Mail Order Trade 
 
 Foreign trade conducted by mail is nothing new. The mails 
 have always been used with greater or less success in solicit- 
 ing orders, and since the almost universal adoption of the 
 parcel post they have provided the cheapest, quickest, and 
 safest method of transportation for small packages. When 
 it is considered that the commission houses use the mails when- 
 ever it is possible, it is clear that the aggregate of foreign 
 business conducted entirely by mail is enormous. 
 
 On the other hand, the methods of the great American 
 mail order houses are not applicable to foreign trade. These 
 institutions are practically great department stores which sell 
 exclusively by mail everything that can be purchased in the 
 largest stores of our great cities. There is nothing to corre- 
 spond to them abroad and despite their great success in the 
 domestic field their foreign business has, in comparison with 
 the volume of their trade at home, always been insignificant. 
 
 The differences of language, customs, laws, tariff regu- 
 lations, and business methods have all presented almost in- 
 superable obstacles to their success abroad. But perhaps the 
 most serious handicap to the mail order houses in attempt- 
 ing to do business with foreign countries is the distance. It 
 is exceedingly difficult to build up that strong bond of confi- 
 dence and intimacy between the house and its customers — 
 the chief asset of these companies — with a foreign people 
 speaking a different language, and with no particular predi- 
 lection for American fashions or American merchandise. 
 
 241
 
 242 OPERATING THE ORGANIZATION 
 
 The Ordinary Type of Mail Order House 
 
 Most manufacturers, unless restricted by their contracts, 
 follow the elastic policy of taking orders from whatever source 
 they come, whether it be the wholesale dealer, the retailer, 
 or the ultimate consumer. Every house that will fill direct 
 the retail order received by mail is in a sense a mail order 
 house. However, unlike the great mail order houses discussed 
 above, the manufacturer tries to avoid competition with the 
 dealers who handle his goods. He sells goods of his own man- 
 ufacture only, and, while he sells directly to the customer, he 
 charges the regular retail market price for the product and 
 usually adds a charge for postage. 
 
 The manufacturer may well ask himself why he should 
 not conduct his foreign business along similar lines, selling 
 to both dealers and consumers and soliciting orders exclusively 
 by mail with no other expense than that of correspondence 
 and advertising. 
 
 Such a plan involves most patient and persistent work and 
 a most careful consideration of the manufacturer's relations 
 with the local dealer. 
 
 The Dealer and the Mail Order House 
 
 The mail order house is the natural competitor of the 
 dealer. The dealer cannot be expected to show enthusiasm 
 for a method that threatens to dispense with his services as 
 a part of the machinery of distribution. At the same time 
 it is perfectly possible, by allowing him a percentage on sales 
 in his territory however such sales are effected, to place him 
 on the basis of an agent, and to make him an important factor 
 in educating the public in the use of the product and in stim- 
 ulating business all along the line. But he must be brought 
 to share the manufacturer's point of view and to know the 
 goods and how to handle them. He must feel that in serving
 
 FOREIGN TRADE BY MAIL ORDER 243 
 
 his principal he is also serving his own interests. The attrac- 
 tive discounts and commissions and the assurances of increased 
 future business here play their part. 
 
 It is even possible that the wholesale dealer abroad might 
 consent to act as a branch house, which would go far towards 
 overcoming the natural difficulties arising from the distance 
 and the diversity of laws, customs, and language. At the 
 same time he might act as a depository for an adequate stock 
 of the product and as a center from which advertising mate- 
 rial would be distributed and to which letters of inquiry might 
 be sent. 
 
 But the manufacturer cannot eat his cake and have it 
 too. If he depends on the dealer to act as his intermediary 
 he may still conduct his business entirely by mail, but he must 
 give up his idea of selling any great amount directly to the 
 ultimate consumer. It is unreasonable to expect that the 
 dealer, be he wholesaler or retailer, will be a satisfactory 
 agent in the task of encouraging his customers to deal directly 
 with the producer. Whatever he may be paid for his services 
 he prefers to see his customers buying the product over his 
 own counters. 
 
 Perhaps after all, and certainly at the outset, the greatest 
 profit is to be found in dealing directly with the ultimate con- 
 sumer. It is perfectly possible, provided the manufacturer 
 sets about it in the right way. 
 
 If the plan of building business by mail is adopted there 
 are certain fundamental requirements that demand careful 
 thought and preparation. 
 
 Mail Order Advertising 
 
 The foreign public are more interested readers of circtilar 
 letters and of general advertising material than are the Ameri- 
 can public. They have more leisure and they take more time 
 in making up their minds. While this characteristic works
 
 2z^4 OPERATING THE ORGANIZATION 
 
 both ways, it is a distinct advantage to the advertising man 
 v^^ho is eager to make the most of his opportunities. 
 
 Correspondence is the most vital factor in all mail order 
 business. In the foreign field the letters may be longer and 
 must be more ceremonious and personal in tone and appeal 
 than their American prototypes — whether they are of the 
 general promotive type or are individual, dealing with a speci- 
 fic subject. The initial letter should come from the home 
 office in America, should be carefully written in the language 
 of the country to which it is sent, and if possible should be 
 signed by the head of the firm. Follow-up letters should come 
 from the local office to which inquiries and replies should be 
 directed. 
 
 Every letter should show a human interest in the welfare 
 of the buyer. Not until he feels the writer has a personal 
 interest in him will a certain type of foreign customer in- 
 terest himself in a proposition to which he is introduced by 
 letter. 
 
 Follow-up systems must be carefully planned with a view 
 to the national susceptibilities and customs of each country. 
 The number of such letters that can profitably be sent depends 
 largely upon the habits and temperam.ent of the people. As 
 a rule it is not safe to allow a local agent to draft follow-up 
 letters. They should be sent him from the home office after 
 teaching him when and how to send them out. Letters of 
 inquiry must necessarily be left to him to answer. 
 
 The advertising campaign must be planned scientifically 
 and timed to coincide with the seasonal demand. The ex- 
 porter who endeavors to avoid the preliminary personal sur- 
 vey of the field must call into council an advertising expert 
 who is fully qualified to advise him on matters of procedure 
 in his selected market. He himself cannot hope to pass in- 
 telligently on the value of mailing lists or the methods and 
 manner of appeal or on the terms of sale. All things con-
 
 FOREIGN TRADE BY MAIL ORDER 
 
 245 
 
 sidered, suggestions already made about the preliminary pro- 
 cedure in the chapters on trade strategy in direct selling applies 
 with equal force to foreign trade conducted by mail order 
 methods. The man who elects to economize in matters of 
 preliminary preparation multiplies his risks and complicates 
 his problems. 
 
 Good Service 
 
 The American mail order houses owe much of their suc- 
 cess to the promptness and accuracy with which they fill orders 
 and to their readiness to correct mistakes and to avoid dis- 
 satisfaction. All efforts in this direction will be multiplied 
 for the dealer in the foreign field. The delay in filling orders 
 suggests the desirability of a local depository and office just 
 as soon as the volume of the business justifies it. Even then 
 the company cannot be too careful in the construction of its 
 office system, and it must be ready to permit the return, with- 
 out question or expense, of articles which the purchaser finds 
 to be unsatisfactory. 
 
 Credits 
 
 The manufacturer must be particularly careful in the mat- 
 ter of credits. A mail order business usually implies cash in 
 advance. In some foreign markets such terms will be a handi- 
 cap; almost everywhere they are impractical. The customer 
 may well hesitate to send money to a foreign concern of 
 which he knows nothing with the certainty of having to wait 
 months for his purchases and with little or no recourse if 
 they never arrive. 
 
 A "cash on delivery" plan well worked out may succeed if 
 it is accompanied by a schedule of discounts, and in many 
 cases no other method will be safe. If credit is to be granted 
 at all it will necessitate having a credit man on the ground. 
 In selling on credit the claim should be evidenced by bills of
 
 246 OPERATING THE ORGANIZATION 
 
 exchange or promissory notes. There should of course be no 
 distinctions between customers in the sam.e country in the 
 matter of prices. One discount system for all is the wisest 
 rule in the long run. 
 
 The Local Representative 
 
 The local representative would appear to be essential to 
 any great success by mail order methods in the foreign field. 
 His chief function is to serve as a link between the consumer 
 and producer. He has charge of the local center of distribu- 
 tion from which he fills orders and sends out advertising mat- 
 ter. To him letters of inquiry are sent. He may be the 
 source of credit information or even pass on matters of grant- 
 ing credit. 
 
 One of the most im.portant duties of such a representative 
 is to supply his principal with information bearing on the de- 
 mands of the local market and the activities of his competitors. 
 Without this close personal touch on the situation the manu- 
 facturer is at a disadvantage over his competitors who follow 
 the usual methods of distribution.
 
 CHAPTER XXX 
 
 ADVERTISING IN FOREIGN TRADE 
 
 Purpose of Advertising 
 
 The ultimate purpose of all commercial advertising is to 
 promote the sale of goods. It is merchandising by means of 
 publicity. 
 
 Not all advertising is conducted, however, with a view to 
 the immediate sale of goods. A considerable portion of the 
 money spent on advertising is invested to create a favorable 
 introduction, to cause the buyer to notice and to understand 
 the character and quality of the advertised article. Simul- 
 taneously he is being educated in the merit and value of the 
 article so that eventually he may acquire confidence in the 
 responsibility of the producer and the unvarying quality of 
 the product. By such means a thorough understanding be- 
 tween the buyer and the seller is eventually reached and the 
 buyer becomes a permanent customer. 
 
 Another purpose of advertising is to impress the name 
 or trade-mark of the article advertised upon the mind of the 
 consumer, so that even though he has no immediate need for 
 it, he may be prompted to make inquiries which may be fol- 
 lowed by a trial order. This process in course of time results 
 in a well-defined demand for the article represented by the 
 trade-mark. 
 
 To achieve the final purpose of advertising — the promo- 
 tion of the largest number of sales of the articles advertised 
 — requires the closest attention to the principles which gov- 
 ern the scientific merchandising of salable commodities both 
 at home and abroad. 
 
 247
 
 248 OPERATING THE ORGANIZATION 
 
 Adapting the Advertisement to Conditions 
 
 Every advertisement should be planned with a view to the 
 article to be sold, the market in which it is sold, and the 
 method of merchandising employed in its distribution. The 
 actual merchandising begins with the determination of the 
 quality and cost of the article. Once these have been settled 
 upon to the satisfaction of the seller he is face to face with 
 the market, which he must study and learn thoroughly. He 
 must know the avenues of distribution and the machinery 
 through which it is conducted, before he is ready to consider 
 the nature of his advertising campaign. 
 
 While the fundamental principles of purchase and sale 
 in foreign trade are identical with those in domestic trade, the 
 systems of distribution and marketing abroad are radically 
 different from those prevailing in the United States. For 
 instance, in many foreign countries wholesale merchants or 
 jobbers do not exist and the goods are mostly distributed 
 through importers, commission houses, and local agents. Al- 
 though a commission house oftentimes buys goods on its own 
 account it will not stock them, so that whether it buys on its 
 own account or for another, it buys only what it has already 
 sold. 
 
 Channels for Foreign Trade Advertising 
 
 After the prospective advertiser becomes thoroughly famil- 
 iarized with the machinery of trade in a given country, he is 
 ready to study the channels available for his advertising — the 
 structure and requirements of the market, the visible demand 
 for the article in question, and also the means of its dis- 
 tribution. 
 
 Naturally, if a man decides to provide his own channels of 
 distribution his plan of advertising will be different from that 
 of the exporter who aims to reach the consumer through the 
 local importer.
 
 ADVERTISING IN FOREIGN TRADE 
 
 249 
 
 The methods of advertising available to an American trader 
 in foreign markets are as follows: 
 
 1. Home export-trade papers 
 
 2. House organs: export and import 
 
 3. Export editions of home publications 
 
 4. Foreign directories and year-books 
 
 5. Local magazines and papers abroad 
 
 6. Foreign export papers 
 
 7. Catalogues and circular letters 
 
 8. Exhibits 
 
 9. Posters 
 
 Value of Advertising Mediums 
 
 Export-trade papers published in the United States are of 
 some little value as direct advertising mediums both for 
 producing inquiries as to the goods advertised and of securing 
 trial orders. They also serve as a constant reminder to the 
 trade that the concern Is in the field and is looking for orders. 
 They may keep the name and the trade-mark of the adver- 
 tising concern in the buyer's mind so that when he places 
 orders he will necessarily consider the particular product ad- 
 vertised in connection with other products known to him. The 
 advertiser may also choose this way for discovering whether 
 or not there is a demand for his product In the markets In 
 which the paper circulates. 
 
 Unquestionably such publications are valuable in placing 
 one's proposition before the professional traders In foreign 
 markets, but as channels for reaching either the consumer or 
 the retailer In foreign countries their usefulness has not been 
 so fully demonstrated. A careful trial In any particular case 
 would be a legitimate expenditure. 
 
 House organs are issued by some large Importing and 
 exporting houses principally for the purpose of maintaining 
 and extending their prestige and clientele. Their value as
 
 250 OPERATING THE ORGANIZATION 
 
 advertising mediums depends on the sort of entrance the 
 advertiser is desirous of making into foreign markets. If, as 
 in the case of export-trade papers, his desire is to secure trial 
 orders or test the avidity of any market, or to estabHsh his 
 trade-mark more firmly — then he should consider fully the 
 possibilities of each one of these house organs. 
 
 The same can be said concerning the advisability of adver- 
 tising in export editions of local magazines and similar pub- 
 lications of foreign countries and in the various trade direc- 
 tories circulated abroad. 
 
 A list of all the available mediums for export advertising 
 can be secured from the United States Department of Com- 
 merce. With this list at hand the prospective advertiser can 
 secure from those publications which seem most suitable, a 
 statement as to what they can do to promote abroad the in- 
 terests of his product. 
 
 Advertising Specialists 
 
 While the selection of advertising mediums is a task for 
 the expert, unfortunately there are few advertising agencies 
 in this country that specialize in foreign business. No such 
 agency, unless equipped with a staff of specialists which has 
 studied intensively the conditions in the various fields, is in a 
 position to offer sendees of the character it supplies in the 
 domestic markets. 
 
 Every advertising agent, manager, or expert specializing 
 in foreign publicity should, of course, have a list of adver- 
 tising mediums in the territory he covers. He should know 
 their circulation, their rates, the class of readers each reaches, 
 and the other facts necessary for gauging the utility of the 
 publication to the purpose in hand. This statistical knowl- 
 edge is easily obtainable and is, of course, kept on file for 
 reference in the interests of their clients by the few agencies 
 that do specialize in the foreign field.
 
 ADVERTISING IN FOREIGN TRADE 2511 
 
 The advertising expert, in the true sense of the word, 
 whether he confines his efforts to this country or deals abroad, 
 must know at least as much of general conditions as the 
 sales manager. He must know each market, its structure, 
 and its requirements; he must know the people and the busi- 
 ness conditions which obtain among them. He must know 
 whom to reach and how to establish a community of interest 
 in those whom he solicits as his buyers. Such knowledge 
 must be correlated with the knowledge of the product he is 
 to advertise, and both must become -a part of his mental 
 horizon. ' 
 
 The advertising man's job is no school boy's task, but a 
 serious, concentrated effort based upon solid information and 
 constructive, practical knowledge of men and things. The 
 task of selecting the channels for advertising abroad usually 
 falls upon the exporter and his staff. 
 
 Circularizing 
 
 Next to the local press, the quickest and best way of get- 
 ting in touch with the prospective buyers is by means of cir- 
 cular letters. 
 
 In America advertising or selling by means of circular 
 letters is rather a costly undertaking and is not alwa)'S satis- 
 factory. It is quite different abroad where merchants are 
 particularly attentive to letters, especially those coming from 
 a foreign country. If it is the commission man, the jobber, 
 or the retail merchant whom the seller desires to reach, this 
 form of advertising commends itself strongly on account of 
 its numerous advantages. 
 
 Successful circularizing is no bar to any other method or 
 methods of selling or of advertising. To be most effective, 
 however, the seller should always be in a position to supply, 
 on short notice, catalogues and prices of the articles announced 
 in the circular letters. This can be accomplished by having
 
 252 
 
 OPERATING THE ORGANIZATION 
 
 a branch office, or at least an agency in the principal city of 
 the country to which the letters are being sent. Such an 
 agency should be adequately supplied not only with all the lit- 
 erature on the subject but also with a full line of samples. 
 It should furthermore be in the position to handle orders, give 
 the necessary credits, and attend to everything that the seller 
 himself would attend to if he were on the ground in person. 
 Unless such an arrangement is made beforehand, circular let- 
 ters can be of service only as a preliminary means toward be- 
 coming acquainted with foreign buyers before a representative 
 is sent to call on them, or before a local branch or an agency 
 is established. 
 
 Local Advertising Agencies 
 
 The subject of foreign advertising will remain compli- 
 cated and difficult until a class of competent foreign adver- 
 tising experts shall have been developed. While inadequate 
 facilities for handling such matters continue in our country 
 it may be found advisable to have the foreign advertising plans 
 carefully considered by a responsible advertising agency in 
 the country where a selling campaign is contemplated. 
 
 The advertising agency affords the producer expert ser- 
 vice of his own peculiar kind. It is nearly always advisable 
 to secure an analysis of the selling proposition from someone 
 outside of the organization who can bring to its selling prob- 
 lems a disinterested mind, free from fixed opinions and bias. 
 The employment of a competent advertising agency in the 
 foreign field, where such a one is available, not only saves ex- 
 pense but enhances profits by increasing the efficiency of the 
 effort. 
 
 Exhibits 
 
 One feature of advertising abroad which has received too 
 little attention from American manufacturers is the exhibi-
 
 ADVERTISING IN FOREIGN TRADE 253 
 
 tion of the product itself. Perhaps it is because hitherto there 
 has been very httle co-operation between the American manu- 
 facturers in foreign trade that this excellent method of intro- 
 ducing goods into foreign markets has been woefully neg- 
 lected. Those who have made a success in foreign fields 
 consider circular letters, distribution of catalogues, and exhi- 
 bition of products the best possible preliminary means of in- 
 troducing a product into a new market. But, as in the case 
 of circulars, local advertising by means of exhibits requires 
 at least a temporary local representation. 
 
 Posters 
 
 Many large American concerns which advertise on a 
 national scale owe a considerable part of their success to the 
 powerful appeal of the poster. A household product may as 
 a rule be successfully advertised in foreign countries if it is 
 suited to local needs and does not run counter to national 
 custom and habit. It should be noted, however, that in many 
 European countries outdoor advertising is heavily taxed and 
 the facilities for such publicity compare unfavorably with those 
 in the United States. Before the war outdoor publicity on 
 an extensive scale was practically prohibited by the confine- 
 ment of all posters to a limited number of "poster pillars" 
 owned by the municipality. 
 
 Information as an Advertising Basis 
 
 The most important rule of all to follow is that adver- 
 tising cannot be planned scientifically and results cannot be 
 anticipated with certainty unless correct information upon all 
 the phases of the market is obtained in the first place. 
 
 The advertiser must learn the methods of buying in any 
 given market before he can successfully apply selling meth- 
 ods. Unless he is familiar with the existing processes of buy- 
 ing he cannot adjust himself to what to him is an unknown
 
 254 OPERATING THE ORGANIZATION 
 
 quantity. The foreign merchant's habits of buying must be 
 studied for every commodity which it is proposed to advertise. 
 Foreign advertising in the last analysis is the application 
 of specialized knowledge of local merchandising to the thing in 
 hand. 
 
 Preparation for Foreign Advertising 
 
 Before embarking on an advertising campaign the sales 
 manager must give his attention to the following essential 
 matters: 
 
 1. He must master the machinery of distribution in the 
 
 new field and know the market, thoroughly under- 
 standing its structure and psychology. 
 
 2. He should then decide on the extent of his interest in 
 
 that market, determine the amount of money to be 
 spent, and be sure that the full amount is available 
 before going further. 
 
 3. Next he should select a competent advertising manager 
 
 who should be told the plans without reservation and 
 be placed in close touch with the sales manager. 
 
 4. Finally comes the selection of the advertising medi- 
 
 ums, the determination of methods, and the strong, 
 aggressive, continuous prosecution of the campaign. 
 
 With increasing opportunities for the American exporter 
 this is the propitious time for the manufacturer not only to 
 widen his sales activities, but to intensify his efforts in the 
 territory where he is already selling his goods. 
 
 It will, of course, be recognized that the benefit from ad- 
 vertising or any other effort that increases the sale of goods 
 is twofold: (i) a profit in the goods at their production cost 
 before advertising begins; (2) a further profit on the de- 
 creased cost which follows as a consequence of increased pro- 
 duction and sales — due to advertising.
 
 ADVERTISING IN FOREIGN TRADE 255 
 
 As to the general value of advertising, if an article sells 
 well without advertising it is a good article to advertise for 
 it will then sell better. The manufacturer, therefore, who has 
 heretofore managed to sell his product abroad without any 
 publicity effort is perhaps the man to whom advertising would 
 yield the largest returns.
 
 PART IV 
 THE TECHNIQUE OF FOREIGN TRADE
 
 CHAPTER XXXI 
 
 THE TECHNICALITIES OF IMPORTING 
 
 Interrelation of Foreign Trade Machinery 
 
 The machinery of exporting rims into the machinery of 
 importing to such an extent that the two subjects may be 
 considered — as in fact they are — the opposite ends of the same 
 operation. 
 
 The manufacturers who are engaged in exporting on a 
 large scale frequently import raw material for use in making 
 their finished product. If they maintain branches or selHng 
 organizations in a foreign country, they are both importers 
 and exporters abroad as well as at home. 
 
 If there happens to be a manufacturer who is an exporter 
 exclusively, the subject of importing should nevertheless con- 
 cern him, because he cannot have a complete understanding 
 of the machinery and requirements of exporting unless he also 
 knows the principles of importing. 
 
 It should never be forgotten that an export implies an 
 import — that whenever goods are shipped into a foreign 
 country there is always someone to receive them, and that 
 someone is usually the buyer. If the seller does not know 
 the buyer's problems, if he does not understand the situation 
 and appreciate the buyer's difficulties, he may make more 
 difficult both his own sales and deliveries and those of his 
 customers. 
 
 For the better understanding of the details connected with 
 importing and exporting each subject should be treated sep- 
 arately but never one without due consideration also of the 
 other. 
 
 259
 
 26o THE TECHNIQUE OF FOREIGN TRADE 
 
 Classes of Importers 
 
 There are, as was noted in Chapter XIII, many classes of 
 importers. In the United States, perhaps on account of high 
 tariff imposts, while the importations are comparatively small 
 and the machinery is relatively simple, the procedure is more 
 or less elaborate. 
 
 Our large wholesale houses, department stores, and import 
 merchants each have their foreign buyers who go abroad 
 periodically to replenish their stocks. Some large foreign 
 houses maintain branches or agencies in the United States, 
 which in turn employ selling staffs and compete actively with 
 domestic concerns. These two classes represent the most 
 important importing organizations. 
 
 Custom House Procedure 
 
 The most difficult feature to understand and the most im- 
 portant legal part of the importing business in the United 
 States is the custom house procedure. The tariff laws and 
 different schedules for each class of goods are perplexixig, 
 and the legal questions which may arise are very intricate and 
 somewhat difficult to master. Added to this there are com- 
 plicated processes and countless rules. For these reasons the 
 importers themselves rarely attend to the formalities of entry 
 at the custom house. This is usually attended to by the 
 brokers and lawyers who specialize in such matters. Another 
 reason for employing an expert is that the procedure is con- 
 stantly changing to accord with the ever-changing regulations 
 which govern foreign consignments. 
 
 For the benefit of those who should know something of 
 these custom house formalities, however, a brief outline will 
 indicate how difficult it is to get goods into the United States 
 from abroad. But first it is important to consider the form- 
 alities necessary at the other end — the formalities to be ob- 
 served in the country of export.
 
 THE TECHNICALITIES OF IMPORTING 261 
 
 Foreign Preliminaries 
 
 Most American importers transact business with foreign 
 manufacturers and producers direct instead of through com- 
 mission houses or jobbers as is usual with exporters. 
 
 Before the goods are shipped to America from any for- 
 eign country the shipper is obliged to procure a certificate 
 from the American consul in charge of the district from which 
 the goods are shipped. This certificate verifies the correctness 
 of the declaration required by law and must accompany all 
 invoices of merchandise which are imported into the United 
 States. 
 
 The United States law requires that no imported goods 
 exceeding in value $100 shall be admitted into the United 
 States without the production of a duly certified invoice con- 
 taining a description of the merchandise and a statement of 
 its actual value in the country where such merchandise was 
 produced or from which it is exported. Such invoices must 
 be signed by the purchaser, owner, or manufacturer who must 
 indorse thereon a declaration as to the truth of his state- 
 ments. 
 
 American consuls abroad are supposed to have a knowl- 
 edge of the actual value of the goods shipped, and it is their 
 duty to see that the goods are not undervalued by the shipper 
 who is sending them into the United States. 
 
 When merchandise is exported from the United States 
 into a foreign country and is returned without having ad- 
 vanced in its value, it is allowed free entrance to the United 
 States, provided it is accompanied by a declaration made 
 before an American consul stating the facts in each case. 
 
 Each vessel clearing for the United States from a foreign 
 port at which an American consul is stationed is required, 
 under a penalty, to obtain a bill of health from the consul or 
 officer after the consul has satisfied himself as to its sanitary 
 condition. Every master of an American vessel is required
 
 262 THE TECHNIQUE OF FOREIGN TRADE 
 
 on arrival at a foreign port to deposit with the American con- 
 sul or officers at the port of arrival, ship's papers, that is, the 
 register, crew list, and shipping articles. Consular fees are 
 regulated by the tariffs prescribed by order of the President of 
 the United States. 
 
 Domestic Procedure 
 
 The usual procedure on the arrival of imported goods in 
 the United States is as follows: On receipt of the shipper's 
 bill of lading, the shipper's invoice, and the invoice signed by 
 an American consul, the importer makes a declaration on oath. 
 The declaration is a very important part of the procedure as 
 the statements made thereon may involve severe penalties if 
 they are false. The oath is of two kinds — one which is used 
 when the goods have been bought by the importer himself, and 
 the other in case they are merely consigned to him. In either 
 case he must fill out an entry blank. 
 
 Forms of Entry Blanks 
 
 There are seven kinds of entry blanks, viz., entries for: 
 
 1. Consumption or use in this country 
 
 2. Warehouse 
 
 3. Warehouse and transportation 
 
 4. Warehouse and exportation 
 
 5. Immediate transportation without appraisement 
 
 6. Transportation and exportation 
 
 7. Re-warehouse 
 
 Each kind of entry has a separate form which the holder 
 of a properly indorsed bill of lading is entitled to fill in and 
 present with his bill of lading and invoice duly certified before 
 the collector of customs. 
 
 I. Entry for consumption must be made when the importer 
 wishes to pay the duty, if there is any duty to be paid, and to 
 secure the release of his consignment from government cus-
 
 THE TECHNICALITIES OF IMPORTING 263 
 
 tody. The entry must be sworn to before the collector, his 
 deputy, or notary public. The appraisement is made according 
 to the market value of goods, on the day of shipment, in the 
 markets of the country from whence it is imported. 
 
 2. Entry for warehouse is very much the same as the entry 
 for consumption and is made in the usual duplicate form. 
 The importer may designate upon the entry the bonded ware- 
 house in which he desires his merchandise to be deposited and 
 from which it may be withdrawn for consumption within 
 three years from the date of importation on payment of duties 
 and charges. 
 
 3. Entry for warehouse and transportation is made in trip- 
 licate and is similar to the entry for consumption. 
 
 4. Entry for warehouse and exportation is made when 
 goods are ultimately destined for a foreign country without 
 passing through any part of the United States. 
 
 5. Entry for immediate transportation without appraise- 
 ment is made when the merchandise is consigned to a duly 
 designated port of delivery other than the port of entry. 
 
 6. Entry for transportation and exportation is made when 
 the goods merely pass through the United States into another 
 country. 
 
 7. Entry for re-warehousing must correspond with the 
 original warehousing and withdrawals and must be in tripli- 
 cate. 
 
 The entry blanks go to the appraiser who, when appraise- 
 ment is necessary, makes an appraisal of the goods according 
 to law. 
 
 Storing and Bonding 
 
 If a warehouse entry has been properly made the goods are 
 then stored and bonded and may remain under bond and pay- 
 ment of duties be deferred for three years. But if some of 
 the goods imported are desired for immediate use the importer
 
 264 THE TECHNIQUE OF FOREIGN TRADE 
 
 must pay the duty on that part of the shipment which is not 
 placed in the warehouse or, later, is taken out. 
 
 The imported articles may be released to the importer in 
 the United States upon presentation by him to the entry clerk 
 or deputy collector at the port of entry, of his bill of lading, 
 invoice, declaration of the entry, with his certified check or 
 money order for the amount of duty estimated by him; and 
 if the clerk or the deputy collector does not consider the esti- 
 mated duty too low he will give permission for the release of 
 the goods. At least 10 per cent of each consignment to an im- 
 porter must be sent to the appraiser's stores for examination 
 and valuation before it can be delivered to the importer or his 
 agents, or be sent to a warehouse subject to his order. 
 
 After having paid the duty on the value of the goods as 
 previously entered in his invoice the importer executes a 
 bond for a sum twice the value of the goods received, and after 
 undergoing other smaller formalities, he may receive a permit 
 for delivery of all cases of goods consigned to him which have 
 not been sent to the appraiser's stores or office. By presenting 
 this receipt at the steamer's pier, the consignee or his truckmen 
 may obtain the goods. 
 
 The possession of the goods delivered at the appraiser's 
 stores is given to the importer if the officials find that the value 
 and the rate of duty at which the importer entered his invoice 
 are correct. The possession is accomplished by means of a 
 delivery permit issued by the custom house. 
 
 Undervaluation 
 
 In case the examiners should decide that the goods in ques- 
 tion have been undervalued by the importer, a note of the 
 difference is made to that effect on the invoice, which must be 
 countersigned by the appraiser and his assistant. It is then 
 sent to the liquidating division of the custom house where the 
 amount of additional duty is determined and assessed, and
 
 THE TECHNICALITIES OF IMPORTING 265 
 
 also the penalty provided by law for a mistake in an importer's 
 entry which is i per cent additional duty for each i per cent 
 increase in valuation over the invoice value. 
 
 In cases where the advance in value made by the appraiser 
 exceeds 75 per cent of the invoice price, the law presumes at- 
 tempted fraud and the goods are subject to confiscation, while 
 the importer may be prosecuted criminally for his false state- 
 ments made under oath. 
 
 There is a right of appeal from the appraiser's decision in 
 regard to the appraised value of the merchandise. Such appeal 
 must be made within ten days to the collector of the port who 
 presents it to the board of appraisers, one of whom hears the 
 case. After his decision either party — that is, either the gov- 
 ernment or the importer — has a right to appeal to the full 
 board. Three appraisers are assigned this time by the board, 
 to hear the case. The decision of these three men as to the 
 value of the merchandise is final. If the rate of duty is dis- 
 puted, the case may be taken before the United States Court 
 of Customs Appeals in Washington ; the decision of that court 
 is final. 
 
 When settlement of any disputes between the importer and 
 the government are finally made the importer, should the 
 amount of duty he has paid be found excessive, receives the 
 difference between the duty which he has paid and the amount 
 which has been determined. 
 
 There are innumerable blank forms, one for each species of 
 goods, to be filled out according to the nature of the merchan- 
 dise. The designs of some of these forms are a hundred years 
 old. They are sold at stationery stores, or may be obtained 
 free at the custom house. 
 
 Mistaken prices involve trouble and with it penalties for 
 the importer. He should exercise the greatest care in making 
 his entry of invoice prices, as upon him rests the responsibility 
 of correcting any error which the exporter may have made in
 
 266 THE TECHNIQUE OF FOREIGN TRADE 
 
 declaring the value of the shipment. The customs house allows 
 on an entry invoice only a certain percentage of variation from 
 market prices, so that it may be necessary for the importer, 
 in order to meet the customs house requirements and avoid 
 prosecution, to increase the valuation which the exporter has 
 made. 
 
 In most of the countries of the world, the value used as a 
 basis for calculating rates of duty is the value of the goods at 
 the port of exportation. The methods for determining such 
 values vary greatly. 
 
 On the whole it is advisable, if the imports are made in 
 any considerable cjuantity, to retain a custom house broker to 
 attend to the procedure at the custom house on the arrival 
 of goods. Nevertheless the importer and the exporter should 
 both be familiar with the essentials of the procedure stated 
 above.
 
 CHAPTER XXXII 
 
 MANUFACTURING FOR EXPORT 
 
 Meeting the Customer's Demands 
 
 At the outset it may be set down as a fundamental prin- 
 ciple for the manufacturer who is seeking the surest methods 
 of success in the foreign field that he must enter his market 
 with the goods the people want and not with the goods they do 
 not want but that he thinks they ought to buy. This prin- 
 ciple applies to the manufacture of goods for export just as 
 much as to their sale. 
 
 British and American manufacturers have always been cri- 
 ticized both at home and abroad for their shortsightedness in 
 failing to meet the demands of their foreign markets for goods 
 of a particular style, quality, and price. Their "take it or leave 
 it policy" has cost some of them large fortunes and resulted 
 in their failure to educate the market to the merits of an article 
 it did not want, while the more adaptable manufacturers of 
 other nations have profited by their experience and ultimately 
 reaped the golden harvest. Much of this criticism has been 
 justified, but most of it, as far as the American manufacturer 
 is concerned, has failed to take into account American manu- 
 facturing conditions. 
 
 The American Manufacturing System 
 
 Much American manufacturing has aimed at the produc- 
 tion of very large quantities of standardized materials. Ford 
 cars are cheap because of the large daily output and because 
 Mr. Ford has constantly refused to make variations in his 
 standards to suit the tastes of individuals or even of particular 
 
 267
 
 268 THE TECHNIQUE OF FOREIGN TRADE 
 
 markets. The changes in machinery and manufacturing proc- 
 esses necessary to adapt an article to the needs or wishes of a 
 foreign market necessitate a change in the price. In view of 
 the usual uncertainty of the extent of the demand in the for- 
 eign market, the manufacturer may wisely conclude that he 
 prefers to take his chances with the style that has been success- 
 ful at home. The foreign competitor, on the other hand, with 
 low labor cost and more variable standards is usually in a better 
 position to cater to his market. 
 
 The American manufacturer too is disinclined to camou- 
 flage a cheap article as a more expensive one. Complaints are 
 made of the rough and imperfect finish of our low-priced 
 articles. We are told that low-priced American castings, to 
 note a single example, proclaim their cheapness in their rough 
 and generally crude appearance. The American's answer is to 
 point to the low price. An expensive American casting will 
 compare favorably in every way with its foreign competitor. 
 The rougher finish may enable the manufacturer to sell 
 the article for a trifle less money, but it is poor business, espe- 
 cially in view of the fact that the Germans have been most pro- 
 ficient in putting a high-grade finish on a cheap article and 
 selling it at a price between the American prices for similar 
 articles of the cheaper and more expensive grades. 
 
 Manufacturing Details 
 
 If the demand is sufficient It is usually advisable for the 
 manufacturer to adapt his product to the demand of the mar- 
 ket. For instance, a thread on a certain kind of tubing may be 
 required by certain foreign markets to be of particular dimen- 
 sions. If the manufacturer in America does not comply with 
 the specifications of the foreign customer, the whole consign- 
 ment may prove useless to him. The same may be said of ship- 
 ping machinery abroad when no provision has been made that 
 in case parts of it break they can readily be replaced or others
 
 MANUFACTURING FOR EXPORT 269 
 
 substituted. For the most part, this non-compliance with the 
 ordinary common-sense requirements of a foreign order is 
 sheer negHgence. It should be borne in mind that in a country 
 thousands of miles away from the place of manufacture it is 
 a difficult matter to replace parts of machinery. If the cus- 
 tomer neglects to order duplicate parts, the manufacturer 
 should not fail to bring the matter to his attention. 
 
 It is exceedingly expensive to attempt to educate the mar- 
 ket to absorb products irrespective of prevailing conditions, 
 a proceeding of which the American manufacturer has, on 
 many occasions, been guilty. The rational mode of procedure 
 is to study the requirements of a given market and if possible 
 standardize the product to suit these requirements. 
 
 Find out just what the consumer wants, learn how near the 
 product comes to it, and decide whether in view of the extent 
 of the demand it is practicable to meet that want. 
 
 Latent Demand 
 
 There is no difference in the principle of adjusting the 
 product to the foreign market and to the domestic market, 
 except that the distributor plays a very much more important 
 part as a selling factor abroad than he does in the United 
 States. It is from him that the manufacturer can best ascertain 
 the potentialities of the latent demand. Established demand 
 and active demand he should be able to observe himself, tabu- 
 lating his observations so as to standardize his product accord- 
 ingly. Mere surface indications should never be accepted as a 
 final test. 
 
 Latent demand is a dangerous factor to deal with in foreign 
 trade because of the distance of the market from the factory. 
 New conditions may arise which cannot be met satisfactorily. 
 The manufacturer for export will do better to deal only with 
 established and active demand instead of experimenting to 
 determine latent demand.
 
 oyo THE TECHNIQUE OF FOREIGN TRADE 
 
 However, the latent demand in connection with the estab- 
 lished demand must not be lost sight of, for such latent demand 
 may represent the real need of the people and the desire for 
 improvement in the article which has an established market. 
 It is here that the manufacturer reaps the greatest reward if 
 he can anticipate what his competitors fail to see. 
 
 A certain manufacturer of shoes discovered that a large 
 number of laborers and farmers were wearing light, semi- 
 dress shoes instead of the ordinary work shoes with which 
 the market was abundantly supplied. His study and investi- 
 gation revealed that the work shoes were very heavy and ex- 
 ceedingly uncomfortable, designed for durability and for 
 nothing else. A great many people who should have worn them 
 were willing to sacrifice economy for comfort and bought less 
 suitable footwear. The manufacturer in question changed his 
 product by putting more style and comfort into the work shoe 
 until it had not only the strength to stand heavy and rough 
 use, but good appearance and comfort as well. When he placed 
 this improved shoe on the market he was swamped with orders. 
 His ingenuity brought him a fortune in a short time and 
 changed the standards of manufacture of that particular shoe 
 all over the world. This is an illustration of a latent demand 
 which was readily made active. 
 
 Production and Local Methods 
 
 Another important principle for the export manufacturer 
 to bear in mind is that production should be studied in con- 
 nection with the methods and machinery of distribution which 
 prevail in a particular market. 
 
 \i the machinery of the market consists largely of retail 
 dealers, the manufacturer who takes pains to teach the dealer 
 how to stimulate the desire of the consumer or how to realize 
 turnovers and who works with the dealer in close co-operation 
 stands a better chance of selling his product than one whose
 
 MANUFACTURING FOR EXPORT 271 
 
 prices are lower but who is less progressive in his selling 
 
 methods. 
 
 The usual mistake made by manufacturers interested in 
 export is to neglect to take into consideration the mutability of 
 local conditions. In domestic trade, a producer would not 
 think of relaxing his vigilance in watching the activities of 
 his competitors. In foreign markets where changes are more 
 likely to occur, of which on account of the distance he may 
 know nothing, he adopts a laissez-faire policy and lets things 
 care for themselves. There, if anywhere, he should exercise 
 the utmost vigilance by always having someone on the ground 
 to watch the situation and to keep him fully informed. The 
 local demand changes abroad as rapidly as it does at home. 
 New fashions, new uses, new desires — all call for constant 
 watchfulness and continual adaptation to meet the market's 
 fancy and to keep abreast of competition. 
 
 Price and Quality 
 
 Some manufacturers are too prone to assume, in cases 
 where others can undersell them, that there is no market for 
 their goods. 
 
 No complaint is heard more frequently among manufac- 
 turers than that it is difficult to meet foreign prices. 'Tf I 
 could only undersell these people, or even sell as cheaply, I 
 would reap a harvest in no time," is the common complaint. 
 The price of the product is of course an important element 
 in its salability, but it is not everything. Quality also is of 
 vast importance in foreign trade. The term "quality" is 
 not meant to imply merely the intrinsic value of the article 
 nor its appearance. The quality is also found in weight, in 
 adaptability to transportation requirements, in size sometimes, 
 and frequently in added improvements. 
 
 For example, an ordinary bottle may cost less than a non- 
 refillable bottL\ but the latter may drive the former from cer-
 
 272 THE TECHNIQUE OF FOREIGN TRADE 
 
 tain markets in spite of its price. And the same may be said 
 of automobiles fitted up with self-starting devices or with non- 
 skidding tires. Such examples can be multiplied ad infinitum. 
 Sometimes a different color or shape, a more attractive label, 
 a neater container, or a prettier band, lid, or fastener adds to 
 an article's selling quality. 
 
 Conclusion 
 
 In some cases it may be possible for the American manu- 
 facturer, by the use of the advertiser's art, to create a demand 
 in foreign countries for the exact line of goods he is already 
 manufacturing. He does this for the domestic market when- 
 ever he introduces a new line or a new commodity, and it is 
 possible to do the same thing in foreign countries. It requires 
 skill and ability to do work of this kind at home and requires 
 greater skill and ability to work abroad where trade condi- 
 tions are dissimilar. 
 
 But, generally speaking, it would appear to be more advis- 
 able to meet the demands of the foreign market. The manu- 
 facturer should, however, not attempt a radical departure from 
 his standardized product involving changes in machinery and 
 manufacturing methods with corresponding increases of price 
 until he has some assurance that the proposed market can ab- 
 sorb his products in sufficient quantities to make the venture 
 a profitable one.
 
 CHAPTER XXXIII 
 
 FROM FACTORY TO SEAPORT 
 
 The Technicalities of Exporting 
 
 The knowledge pertaining to the shipment of goods into 
 foreign markets should be highly specialized. It is of vast 
 importance, both to the buyer and the seller, that no mistakes 
 occur in the processes involved in delivering the merchandise 
 from the factory to the warehouse of the importer or his 
 place of business. 
 
 The processes which must be undertaken to effect the de- 
 livery of export shipments usually involve seven distinct opera- 
 tions which are as follows: 
 
 1. Packing 
 
 2. Marking 
 
 3. Railroad transportation to the port of export 
 
 4. Transfer at the port of shipment 
 
 5. Shipping arrangements at the port 
 
 6. Insurance 
 
 7. Bank arrangements 
 
 These different steps are taken up in order in this and the 
 following chapters. 
 
 Packing 
 
 This subject has been always at the front whenever Amer- 
 ican exports are discussed, presumably on the ground that our 
 manufacturers are negligent in observing the requirements of 
 proper methods in packing goods for export trade. Writers 
 and lecturers, and even government officials, constantly accuse 
 our novices in foreign trade of not having learned even the 
 
 273
 
 274 THE TECHNIQUE OF FOREIGN TRADE 
 
 most elementary lessons of properly preparing merchandise for 
 foreign shipments. 
 
 Packing for export is as much a technical matter as manu- 
 facturing. The knowledge required is not only highly tech- 
 nical, but it must be practical as well. In other words, one 
 cannot learn everything about packing by reading books on 
 the subject nor by studying different requirements for dif- 
 ferent countries. Such knowledge is useful and necessary, but 
 finished competency comes only through observation and prac- 
 tical experience. 
 
 The fundamental principle is simple. Goods should be 
 packed with a view to both the general and special conditions 
 of ocean transportation, as described below. 
 
 General Conditions to be Considered in Packing 
 
 General conditions of transportation to foreign countries 
 are those which are common to all shipments by water, that is, 
 rough handling, climatic conditions during the voyage, and 
 the exposure of packages to rain and storms. To appreciate 
 some of these conditions of ocean transportation one should 
 go to the dock and see how the freight is handled when it is 
 loaded and unloaded, observing the process not only in the case 
 of one vessel but a dozen different vessels. It does little good 
 to describe the rough handling the goods undergo, the piling 
 of packages one upon the other, as these conditions require 
 I>ersonal observation to be thoroughly realized. To meet them 
 packing must be far more careful and cases and boxes must 
 be stouter and better fastened than in the ordinary domestic 
 shipment. 
 
 Special Conditions to be Considered in Packing 
 
 Special conditions incident to ocean transportation include 
 those which arise at the place of delivery of goods. In many 
 foreign ports the freight is unloaded from the steamers onto
 
 FROM FACTORY TO SEAPORT 275 
 
 the lighters, which in turn unload at the wharf, at times under 
 difficult conditions. Some of these wharves or docks are un- 
 protected by roof or covering of any kind and on these the 
 goods are exposed to all sorts of weather. Again, each country 
 has its own regulations as to packing and marking the pack- 
 ages which, if not complied with by the shipper, will cause 
 trouble and annoyance to the consignee. 
 
 It must not be forgotten that the goods frequently have to 
 be shipped into the interior of the country. The conditions of 
 such transportation should be studied, for merchandise must 
 be packed to suit these conditions. For instance, in some 
 countries the freight to the interior is transported on the backs 
 of mules which method naturally limits the size of the pack- 
 ages. Instructions as how to pack a certain class of goods for 
 a particular destination should invariably be obtained at the 
 consulate of the country to which the shipment is to be made 
 or from the Department of Commerce. 
 
 Instructions from the buyer as to the manner of packing 
 a particular shipment should also be sought and minutely fol- 
 lowed. In fact, the proper packing of goods is a matter of 
 such vast importance that no opportunity should be neglected 
 to examine all available sources of information on the subject. 
 For instance, every shipper should know that the goods he is 
 sending to South America are usually unloaded from the 
 steamer into a lighter and thence to the dock or pier, so that 
 they are handled a number of times and under the most vary- 
 ing conditions before they reach the custom house. 
 
 General Instructions for Packing 
 
 Ocean carriers usually charge according to space so the 
 goods should be packed also with a view to the space they are 
 to occupy. The safest rule to follow is to pack in the strongest 
 boxes possible, designed to occupy the smallest possible space. 
 
 Cases should preferably not exceed 250 lbs. in weight.
 
 276 THE TECHNIQUE OF FOREIGN TRADE 
 
 They should not be too large and they should be packed full. 
 Empty space is not only extravagance but it makes for weak- 
 ness and is a constant cause of damage from breakage. Water- 
 proof protection should be used to avoid the damage which is 
 inevitable to goods left exposed to the rain and sun on the 
 unroofed wharves of South America. Hermetically sealed, 
 metal-lined cases are being used increasingly, but the English 
 still cling to the good old custom of using cloth and tarpaulin. 
 
 Cases should be fastened with iron straps not only to in- 
 crease strength but to afford additional protection against theft. 
 
 Each kind of goods should be packed by itself in order to 
 avoid complications in the matter of import duties. 
 
 Marking 
 
 The manner of marking the packages is also of great 
 importance, because different foreign countries have different 
 requirements as to marking. Some countries require that 
 marks shall be made in stencil instead of with a brush; other 
 countries require the marks to be placed on two or more adja- 
 cent sides of the packages ; still other countries have the pro- 
 vision that net and gross weights in kilograms be noted on 
 each package. Delays, fines, and annoyances of all kinds fol- 
 low if the regulations are not complied with. 
 
 It is customary to mark the packages for export with let- 
 ters and numbers instead of with the name of the consignee. 
 This is done because it requires less work to enter the letters 
 on the bill of lading and various other documents and books 
 and also to prevent competitors from knowing to whom the 
 goods are sent. 
 
 This practice is a great aid in hastening the loading and 
 unloading of vessels. If the exporter uses second-hand cases 
 he should carefully obliterate all the previous marks. Such 
 phrases as "Glass," "Fragile," etc., are as confusing as they 
 are useless. Some countries require that each package of a
 
 FROM FACTORY TO SEAPORT 277 
 
 shipment should receive a serial number. This number to- 
 gether with the consignee's symbol, the gross and net weight, 
 and the port marks are usually all that are essential. The port 
 mark indicates the ultimate destination of the package — the 
 terminus of the voyage, but not necessarily the address of the 
 consignee. 
 
 The letters used should be from 2 to 3 inches in height. 
 Extreme care should be taken with each detail. Weights and 
 measurements should in every case be scrupulously exact. 
 Foreign trade is too expensively obtained and subject to too 
 great a competition to permit it to be jeopardized in its final 
 stage by careless marking. Infallable accuracy is the supreme 
 qualification of the shipping clerk. 
 
 The use of the stencil is usually to be preferred to any 
 other method. Tags and cards are out of the question. Indel- 
 ible ink applied with a brush is the only way to prevent obliter- 
 ation by rain, sea-water, and abrasion. 
 
 The manufacturer doing a fair export business should en- 
 deavor to engage a clerk who is thoroughly familiar with 
 export shipping, which means familiarity with packing, mark- 
 ing the packages, routing the freight, and other formalities 
 incidental to export trade. The manufacturer, especially when 
 he makes only occasional foreign shipments, should not only 
 procure the marking regulations of different countries with 
 which he is dealing and the instructions from the United States 
 Department of Commerce, but he should also visit the plants 
 which do exporting and observe there the methods pursued to 
 comply with the conditions of ocean traffic. 
 
 Railroad Transportation of Exports 
 
 The average American manufacturer needs no instructions 
 on the subject of railroad transportation. A number of up-to- 
 date companies have traffic men who are familiar also with 
 ocean traffic and the methods of handling freight for export.
 
 278 THE TECHNIQUE OF FOREIGN TRADE 
 
 The local transportation company also may be in a position 
 to give advice on all points pertaining to foreign shipments to 
 the manufacturer shipping freight to consignees abroad. 
 
 There are railroads which issue through bills of lading to 
 certain points abroad, and if the manufacturer happens to be 
 on such a road and is shipping to the destination covered by the 
 railroad, he may merely deliver his goods at the depot. But 
 such cases are rare. The manufacturer may do well to com- 
 municate with a reliable export freight forwarder at the port 
 through which he will route his foreign shipment. Such con- 
 cerns may have charge of other freight in the vicinity and by 
 combining the shipments they are frequently able to quote 
 cheaper rates than if the consignments were made in individual 
 lots. 
 
 The ordinary "domestic billing" is not suitable for export 
 shipping. Those railroads which issue through bills of lading 
 do so only for the ports on the Pacific Ocean and only at the 
 points where they have commercial agents. 
 
 Steamship companies covering the routes to South Amer- 
 ica do not permit railroads to issue through bills of lading. 
 These are obtainable only when the goods are on board the 
 ship. 
 
 Transfer at the Port of Shipment 
 
 A large number of our export shipments are made through 
 the port of New York and there the transportation of freight 
 from the railroad pier to the wharf offers a great many prob- 
 lems. A glance at the map of New York City will at once 
 reveal some of these problems. The city has a great length 
 and the distance from the freight depot of the railroad to the 
 nearest steamer is usually several miles. In such cases one fre- 
 quently has to pay for cartage alone more than it costs to send 
 the freight to its destination by steamer. 
 
 It is not unusual to pay for ferriage as well as for truck-
 
 FROM FACTORY TO SEAPORT 279 
 
 age. Many steamships lines leave from the New Jersey coast, 
 and if the goods are consigned by railroad to New York the 
 ferry is the only method of getting them to Hoboken and 
 other Jersey ports. 
 
 Of course, in many cases where free lighterage privileges 
 exist, as when the consignments are made in car-load lots, the 
 shipper need not bother himself on their arrival in New York 
 in so far as cartage is concerned. In other cases, the only 
 advice which can be given on the subject is to study carefully 
 the map of New York City and to take into consideration the 
 relative locations of the steamship companies and railroad 
 freight depots when deciding upon lines and routes for ship- 
 ment.
 
 CHAPTER XXXIV 
 
 SHIPPING ARRANGEMENTS AT THE PORT 
 
 What the Shipping Arrangements Include 
 
 After the shipper has completed his transportation arrange- 
 ments on land he is confronted with making the shipping 
 arrangements at the port. The steps that must yet be accom- 
 plished before his goods are under way may be classified under 
 three heads : 
 
 1. Arrangements with steamship company 
 
 2. Consular formalities 
 
 3. Custom house procedure 
 
 Choosing the Steamship Company 
 
 About two-thirds of the total exports of the country pass 
 through the port of New York. While a large part of our 
 trade with Mexico and Canada is carried by rail, wherever 
 possible the great bulk of our exports will always follow the 
 cheaper ocean traffic routes. 
 
 The shipper should always consult his customer as to the 
 particular route by which he desires to have the consignment 
 sent, and if a preference is expressed should comply with the 
 customer's wishes in the matter. If the latter has no prefer- 
 ence the route may be chosen which is the most convenient to 
 the shipper and which offers him the best rates. 
 
 Among the most prominent ocean carriers before the Great 
 War were: the North German Lloyd, Hamburg-American, 
 Holland-America, Cunard, and the companies which composed 
 the International Mercantile Marine, viz.: the White Star, 
 Leyland, Red Star, Atlantic Transport, and American lines. 
 
 280
 
 SHIPPING ARRANGEMENTS AT THE PORT 281 
 
 The United Fruit Company is probably the largest American 
 company engaged in sea traffic, but it confines its activities to 
 coastwise transportation between the seaports on the Atlantic 
 coast from New England to Central America. 
 
 Rates 
 
 It is understood, when a steamship company makes a 
 quotation on freight "per ton weight or measurement, ship's 
 option" that charges will be made on a weight basis if the 
 weight of the shipment carries a heavier shipping charge than 
 would the cubic measurement, or on a basis of measurement 
 should the cubic measurement freight rate exceed the weight 
 charge. 
 
 Nearly all the foreign steamship lines quote freight rates 
 on the basis of 2,240 lbs., or 40 cu. ft. measurement to the ton, 
 and some domestic companies estimate a ton at 2,000 lbs. 
 When charging so much per 100 lbs., or so much per cubic 
 foot, however, it is immaterial whether they consider the ton 
 as 2,240 or 2,000 lbs. 
 
 Ocean freight rates are continually fluctuating and it is not 
 unusual for a steamship company to change from the weight 
 basis to the measurement basis and vice versa. 
 
 Freight rates are usually prepaid. It is well for the foreign 
 trader to make his customer understand that freight charges 
 if prepaid will appear on the exporter's invoices and drafts. 
 Our foreign competitors in some cases deduct freight charges 
 and consequently some foreign customers expect similar liber- 
 ality from us. The minimum of the bill of lading is usually 
 about $5, this representing the normal freight charge for from 
 I to 2 tons occupying from 40 to 80 cubic feet. Minimum 
 bills of lading can be avoided through a combination of small 
 shipments, which can be arranged through those freight for- 
 warders who specialize in shipping small export orders. 
 
 Transportation by water is normally cheaper than by land.
 
 282 THE TECHNIQUE OF FOREIGN TRADE 
 
 In the one case it is necessary to consider only the deprecia- 
 tion of the vessel, while in the other the depreciation and up- 
 keep must include not only the carrier but the road on which 
 it is carried. The law of supply and demand in its effect upon 
 prices, however, operates in ocean transportation as in any 
 other department of business. Both the amount of tonnage 
 available and the supply of commodities to be shipped are sub- 
 ject to wide variations with a corresponding effect on rates. 
 In normal times the former element fluctuates but slightly, but 
 at the present moment it is as changeable a factor as the supply 
 of goods. Competition among the transportation companies 
 and the question of return cargo also normally have an impor- 
 tant bearing on the matter of ocean rates. 
 
 Regulations Pertaining to the Handling of Freight 
 
 Most companies require that freight room be engaged in 
 advance on large shipments. Some permit shipments con- 
 signed to order, other companies require the name of the con- 
 signee on all bills of lading and also that it be marked on pack- 
 ages. Some companies attend to the clearance of shipments, 
 but most of them require a shipper's manifest with the bill of 
 lading. 
 
 Some carry hazardous cargo by special agreement, but 
 most companies do not handle such shipments at all. Most 
 companies require that valuables be shipped in sealed cases. 
 
 The steamship company usually prescribes how the freight 
 is to be packed, whether it is to be prepaid or not, and whether 
 or not it can be consigned to order. Of course these regula- 
 tions are made so as to conform to the law and customs re- 
 quirements of each country as much as for the convenience 
 and welfare of the company. 
 
 Manifestly the regulations made by the steamship company 
 are as important to know and to comply with as those pre- 
 scribed by the different consulates.
 
 SHIPPING ARRANGEMENTS AT THE PORT 283 
 
 Certain obvious disadvantages exist in connection with 
 those countries which do not permit shipments "to order," or 
 "in care of," because oftentimes credit arrangements largely 
 depend upon the feasiljility of the goods being consigned 
 "to order" or "in care of." 
 
 In studying the problems of exports one is naturally 
 anxious to know the rates charged on shipments, how these 
 charges are made, how and when the shipments are to be paid 
 for, whether they are to be paid by the consignee or by the 
 consignor, what cargo is accepted and what is not, how the 
 shipments should be arranged, and so on. 
 
 Obviously such information is not of a stationary char- 
 acter. The only safe rule to follow in each case is to secure 
 all the available data from steamship companies and the con- 
 sulate of the country with which the trade is carried on or 
 contemplated. 
 
 Notwithstanding this, oftentimes it becomes necessary for 
 the exporter or the prospective exporter to know at once the 
 consular and shipping requirements in one or more countries. 
 Such information can be secured from the different year- 
 books and export encyclopedias. 
 
 A summary of some of the more important of these regula- 
 tions is given in Chapter XLIII, so that those interested 
 may at a glance learn some of the principal formalities which 
 must be observed before goods can be shipped into a given 
 country. 
 
 Shipping Permit 
 
 Some companies require a shipping permit before goods 
 will be received at their dock. This document notifies the re- 
 ceiving clerk at the dock to accept certain quantities of freight 
 on a certain date. Deliveries must be made in accordance with 
 the permit. 
 
 When the goods are delivered a receipt is issued by the
 
 284 THE TECHNIQUE OF FOREIGN TRADE 
 
 receiving clerk at the dock, the dock receipt being ultimately 
 exchanged for a bill of lading at the steamship agent's office. 
 
 The Bill of Lading — Export Invoice 
 
 The bill of lading may be defined as the written evidence 
 for the conveyance and delivery of merchandise sent by sea 
 to certain destinations. It is both a receipt of goods and a 
 contract to deliver the same as freight. It is executed by the 
 captain or the owners of the vessel by which the goods are 
 shipped. Each steamship company has its own peculiar forms 
 of bills of lading. 
 
 The export invoice is a written statement reciting the par- 
 ticulars as to the nature, quantity, quality, weight, price, and 
 description of the merchandise consigned to some person at a 
 distance. It is no evidence of sale, being only an account of 
 goods sent by merchants to their customers or correspondents 
 at home or abroad, indicating the exact nature and value of the 
 things shipped. 
 
 Consular Requirements 
 
 Nearly every country of the world has some consular re- 
 quirements which must be complied with before the merchan- 
 dise is finally dispatched to it. Most countries require that all 
 foreign merchandise entering their ports shall be certified to by 
 their respective consuls stationed at the port from which the 
 goods are shipped. The certification is made upon the invoices, 
 which must be in a prescribed form. Blank forms are to be 
 had at the respective consulates. 
 
 The consuls have rules regulating the number of copies of 
 the invoices to be prepared, the language in which they must 
 be made, when presented, etc. Many countries require that 
 certificates of origin be annexed to these consular invoices and 
 that the bills of lading be certified to by the consul. 
 
 There are other formalities and regulations which in every
 
 SHIPPING ARRANGEMENTS AT THE PORT 285 
 
 case should be carried out minutely, otherwise an infinite 
 amount of trouble may result and the shipper as well as the 
 consignee will be the sufferer in the end. In each case of con- 
 sular service a small fee is exacted. 
 
 Non-dumping- certificates are also required by certain Brit- 
 ish colonies. The non-dumping certificates enable the import- 
 ing country to guard against the dumping of foreign goods 
 into their markets at prices which are lower than the cost of 
 production. They are required chiefly by Canada, Australia, 
 New Zealand, and South Africa. 
 
 In. addition to the above there are consular regulations re- 
 garding the packing and the marking of packages and cases. 
 In every instance an export declaration is required. Some 
 countries prohibit importation of certain articles; others make 
 stringent rules regarding the entry of particular classes of mer- 
 chandise, for instance, patent medicines. 
 
 The shipment of meat and animal products oftentimes 
 necessitates the procuring of health or inspection certificates 
 from the United States authorities. It must be remembered 
 that these regulations are changed by the respective govern- 
 ments without notice. 
 
 When the exporter has decided to enter the markets of a 
 certain country, or when deliberating upon the advisability of 
 the entry, he should thoroughly inform himself at the con- 
 sulate as to the rules and regulations governing incoming ship- 
 ments. Neither should he fail to familiarize himself with the 
 different forms of documents which he is to fill out and sign.
 
 CHAPTER XXXV 
 
 CUSTOM HOUSE EXPORT PROCEDURE 
 
 Shipper's Export Declaration 
 
 The custom house procedure for the exportation of goods 
 to foreign countries is prescribed by the government in the 
 regulations of the Treasury Department. This procedure is 
 subject to change. At the present writing the ruHngs in force 
 are those placed in effect on February i, 1916. 
 
 Before goods can be received at the custom house it is nec- 
 essary for the exporter to fill out a manifest known as the 
 "Shipper's Export Declaration." This export declaration is a 
 statement setting forth source and destination of the goods and 
 containing a complete description of them, their quantity and 
 their value at the time and place of shipment. This manifest 
 must be sworn to by the exporter after which it is filed with 
 the collector of customs at the port of departure. Eventually 
 it will form a part of the material from which the government's 
 export statistics are made up. 
 
 "When merchandise is shipped foreign, four copies of this 
 form must be presented to the collector of customs for each 
 consignment. The collector will retain the original and one 
 copy and deliver the other two copies to the shipper. The 
 shipper will present one copy to the steamship company and 
 deliver the other copy with the goods to the inspector of cus- 
 toms on the dock, without which no goods will be received. 
 The copy delivered to the steamship company must accom- 
 pany the goods on their voyage and be delivered by the master 
 to the American consular officer with the manifest at the point 
 of discharge. The copy delivered to the inspector of customs 
 
 286
 
 CUSTOM HOUSE EXPORT PROCEDURE 287 
 
 upon which he will make his notifications of short shipment, 
 etc., must be delivered to the vessel to be attached to the mani- 
 fest delivered to the collector upon clearance." 
 
 A condensed extract of the information contained in the 
 "Shipper's Export Declaration" must also be prepared. This 
 extract is merely a certificate showing that the shipper's declar- 
 ation is on file at the custom house ; it will be signed by 
 the deputy collector of customs and addressed to the exporting 
 vessel or carrier. 
 
 Shipping Through an Agent 
 
 If as in the case of inland exporters, the shipping trans- 
 actions are conducted through an agent, this agent must file 
 with the collector a copy of his credentials signed by his prin- 
 cipal. Sometimes it is only necessary that the principal confer 
 such authority by placing an indorsement on the declaration 
 itself. 
 
 The government considers all of the information contained 
 In the declaration as strictly confidential. It is filed at the cus- 
 tom house and is never disclosed except on the written author- 
 ity of the shipper. 
 
 Shipments from the Interior 
 
 When the exporter who is not located at a seaport wishes 
 to ship his goods to a foreign country or to colonies situated 
 outside the borders of the United States, he prepares his declar- 
 ation as though at the seaport and delivers it to the carrier. 
 If his shipment is made on a through bill of lading, his declara- 
 tion should be made out at the same time and accompany the 
 shipping papers to the seaport. If the bill of lading Is a local 
 one, the papers may be mailed separately to his agent at the 
 seaport, and the agent will see the goods through the cus- 
 tom house. The declaration, being more or less confidential, 
 may if it Is desirable be addressed directly to the collector of
 
 288 THE TECHNIQUE OF FOREIGN TRADE 
 
 customs. In such case the exporter should indorse and note 
 on the declaration that it is sealed. The carrier can be given 
 the sealed envelope to deliver but the extract must be sent un- 
 sealed. 
 
 Clearance 
 
 When the goods arrive at the seaboard the carrier delivers 
 the declaration and the extract to the collector at the custom 
 house. He will retain the declaration, certify the extract, and 
 return it to the shipper to deliver to the exporting vessel. 
 
 When the master of the vessel bound to a foreign country- 
 has received his certified extract, he notes on his ship's mani- 
 fest the custom house number appearing on the extract. When 
 each consignment has been thus noted he is ready to apply 
 for the clearance of his vessel. This will sometimes be granted 
 — even if the vessel's manifest is incomplete — on the execution 
 of a bond to produce the complete manifest on the day fol- 
 lowing the vessel's departure, together with all the shippers' 
 declarations that he has received, in proper form. Within 
 fifteen days after the clearance of the vessel the remaining 
 declarations must be filed. Should there be declarations still 
 due for merchandise shipped, the master must present with the 
 vessel's manifesto a pro forma declaration enumerating in 
 detail all such shipments. 
 
 Drawback 
 
 It is possible for the manufacturer whose exports are com- 
 posed wholly or in part of imported materials on which a duty 
 has already been paid, to effect a considerable saving by avail- 
 ing himself of the privilege of "drawback," by which he is 
 granted 99 per cent of the duty thus paid when such materials 
 are exported as a part of his product. 
 
 The object of the drawback law, which appears in Appen- 
 dix A, is to enable our manufacturers to meet foreign com-
 
 CUSTOM HOUSE EXPORT PROCEDURE 289 
 
 petition so far as the cost of materials is concerned. If their 
 foreign trade were to be handicapped by a high tariff on im- 
 ported raw materials, the tariff might be destructive rather 
 than protective. 
 
 Of recent years the government has been refunding as 
 drawback as much as $5,000,000 a year. This money has been 
 paid to the manufacturers of articles made of materials on 
 which tariff was imposed when they were imported. Despite 
 the fact that there are thousands of articles on which draw- 
 back may be legally obtained, comparatively little has been 
 recovered. This is perhaps due to the red tape which encumbers 
 the drawback machinery though in many cases it is due to 
 ignorance of the possibilities. 
 
 To obtain the benefit of drawback a formal application 
 must be made to the Treasury Department, which will conduct 
 a special examination of the applicant's business. If the in- 
 vestigator approves the applicant's claims as to the proportion 
 of the imported products he employs in the manufacture of a 
 given quantity of his finished product, the Department grants 
 the claim. Thereafter the manufacturer is required to keep 
 detailed records of the imported materials he uses and must 
 submit to their being verified by the , government from time 
 to time. 
 
 Contrary to a popular impression it is not necessary that 
 the manufacturer himself should have imported the foreign 
 products by virtue of which he claims drawback. Someone 
 else may have paid the duty, but it is necessary that he himself 
 should know the port of entry of the materials and just what 
 duty was paid on them. 
 
 The complicated procedure of obtaining the drawback 
 allowance has given rise to a new factor known as the draw- 
 back specialist or broker who will assume charge of all the 
 details and act as a general intermediary between the govern- 
 ment and the manufacturer.
 
 290 THE TECHNIQUE OF FOREIGN TRADE 
 
 Shipping in Bond 
 
 It is also possible to save on products for export subject 
 to the United States internal revenue tax, if consumed in this 
 country, by shipping such articles in bond. For instance, liquors, 
 tobacco, and certain other commodities can be shipped to New- 
 York for export by bonded carriers without first affixing the 
 revenue stamps. There they are placed on board the vessel 
 in bond. When they reach their destination a certificate of 
 their delivery abroad is filled out and returned to this country 
 whereupon the bond is canceled. 
 
 This arrangement makes it possible to offer such goods to 
 the foreign market at a far lower figure than prevails even in 
 the domestic market and to realize an exceptional profit at 
 the same time. 
 
 On shipments under any form of customs bond the ship- 
 per's export declaration is not required as the customs papers 
 covering the shipment furnish all the necessary statistical data.
 
 CHAPTER XXXVI 
 
 THE PRINCIPLES AND LAWS OF MARINE 
 
 INSURANCE 
 
 Marine Insurance 
 
 A marine insurance policy is not only desirable but indis- 
 pensable for all ocean shipments save where the consignee or 
 buyer directs otherwise. Legal conditions in ocean shipping 
 are radically different from those prevailing on land. A rail- 
 road company is liable to the owner for nearly every kind of 
 damage that may befall the shipment while it is in the custody 
 of the carrier. A steamship company is seldom liable for any 
 claim for loss, so that about 95 per cent of the risk must be 
 borne by the owner of the goods. 
 
 If a cargo is injured in loading or unloading the company 
 may recognize a claim for damages, provided however, that 
 the owner can show that his goods were properly packed, which 
 is always a difficult matter. But if the ship is stranded or is 
 damaged by storm, fire, or collision, or is lost at sea, the com- 
 pany is in no way liable to the shipper. If some goods on 
 board are thrown overboard to save the rest, the company may 
 levy "general average" against the cargo which is saved in 
 favor of the owner of the damaged goods or merchandise 
 which was sacrificed to effect the saving of the property of 
 others. This principle has been in effect for thousands of 
 years and is the earliest example of insurance of which there 
 is any record. 
 
 The ship-owner is not charged with the same responsibility 
 as in the case of carriers on land, for the reason that he under- 
 takes extraordinary risks. By his assumption of such risks and 
 
 291
 
 292 THE TECHNIQUE OF FOREIGN TRADE 
 
 his continuance in a profession so hazardous to himself, he is 
 held to confer a great benefit on the community which he 
 serves. This custom of not charging the mariners with re- 
 sponsibility has been established from time immemorial, origin- 
 ating at a time when no one dreamed that vessels could be pro- 
 pelled by power generated within the vessel itself. 
 
 The Origin of Marine Insurance 
 
 The origin of insurance laws and customs is lost in the 
 obscurity of the past. Our insurance law in America is taken 
 entirely from the British judicature. 
 
 The oldest insurance company in the world is Lloyds which 
 was founded in the year 1770, but contrary to the common 
 impression Lloyds does not take risks as does the ordinary 
 insurance company. It acts simply as agent. Its headc[uarters 
 are at the Royal Exchange in London where all the principal 
 marine insurance brokers have their offices or desks. When 
 risk is to be assumed a "slip" is passed around and a number 
 of these brokers "take a line," that is, underwrite for a certain 
 amount which rarely exceeds $1,000. By this arrangement any 
 loss which may occur is borne by a considerable number of 
 underwriters and their proportionate risk is fairly small. 
 
 Fundamental Regulations 
 
 The rates vary according to the cargo, destination, and 
 character of the vessel. Usually all sorts of clauses are writ- 
 ten into the policy, providing for all sorts of emergencies. 
 An ordinary policy does not cover loss from pilferage, nor 
 claims for damages on all classes of goods, so that many pro- 
 visions must be added to make the poHcy really cover the risk. 
 
 The simplest form of policy covers damages in cases where 
 the vessel is stranded, burned, or sunk in collision. It also in- 
 cludes damages for all general averages and salvage charges 
 that may be assessed on the goods.
 
 MARINE INSURANCE 293 
 
 Insurance does not usually cover the goods for the full 
 period of transit up to the time of delivery to the consignee, 
 unless such arrangements are specifically made. 
 
 Ordinarily the policy covers only the risk from the time the 
 goods are actually laden until they are discharged at the port 
 of destination. 
 
 If goods delivered to the ship's pier are to remain on the 
 dock for some length of time, it is always desirable to insure 
 them against loss by fire or damage through exposure. 
 
 All goods are assumed to be shipped under deck unless 
 otherwise stated when application for insurance is made. 
 When goods are shipped on deck the insurer must be notified, 
 as deck goods are insured free of claims arising from the ex- 
 posure of goods to the elements. 
 
 The Agents 
 
 Marine insurance is frequently effected and losses are ad- 
 justed through the agency of insurance brokers and other 
 factors; therefore it becomes necessary to know the law gov- 
 erning the acts of these agents. 
 
 An insurance agent may be appointed by an instrument in 
 writing or impliedly by the course of business and correspond- 
 ence between himself and the principal. 
 
 In England a broker is held responsible by the underwriter 
 for the payment of the shipper's premium, but the United 
 States laws hold the shipper himself, and not the broker, re- 
 sponsible for such payment. By virtue of a special agreement, 
 however, a broker in the United States may make himself the 
 debtor of the underwriter or a creditor of the shipper; in other 
 words, he becomes the responsible party only by special agree- 
 ment. 
 
 The policy-broker usually keeps a running account with the 
 assured by whom he is employed, charging premiums on his 
 risks. This account is settled between the parties periodically.
 
 294 THE TECHNIQUE OF FOREIGN TRADE 
 
 Similar running accounts are kept by agents, factors, and cor- 
 respondents of assured and underwriters, in so far as the busi- 
 ness of insurance is transacted by the agents. 
 
 Important Features of Marine Insurance 
 
 It is well to remember the following principles in connec- 
 tion with marine insurance: 
 
 1. The same person may be the agent of both the assured 
 and underwriters. 
 
 2. Insurance on the property of a firm may be effected by 
 either partner of the firm, but unless one member only is active 
 in the direction of the enterprise, the prevailing rule is that 
 one alone has no authority to insure for both, 
 
 3. A consignee acting merely as the factor of the con- 
 signor has no authority as such to effect insurance on the object 
 consigned to him, which is in transit. But after the goods have 
 come into the hands of the consignee, he may be bound to 
 effect insurance by the custom in like cases, or by other cir- 
 cumstances which would make it advisable for a merchant of 
 ordinary business intelligence and diligence to take such action. 
 
 4. A party in the possession of the property as an agent 
 or trustee with general authority as to the management of it, 
 is the party to effect insurance, if the circumstances are such 
 that the principal or the party interested in the property has 
 no opportunity to instruct him. 
 
 5. The delivery of the policy to a person at his request con- 
 stitutes him an agent. This agency continues while the policy 
 remains in his possession as agent and he is bound to attend to 
 the matters relating to such policy. But if the undertaking is 
 gratuitous such party is not liable as agent. 
 
 6. The revocation of the authority of the agent will not 
 defeat any agreement he may have made for the insurance 
 before such revocation. 
 
 7. Notice of loss communicated to the agent of the insur-
 
 MARINE INSURANCE 295 
 
 ance company is binding upon the company, even though not 
 communicated to them by the agent. 
 
 8. It has been held that there are three instances in which 
 the order to insure for a correspondent abroad must be obeyed. 
 These are: 
 
 (a) Where a merchant abroad has effects in the hands of 
 
 his correspondent in the United States. 
 
 (b) If the correspondent has effected insurance on pre- 
 
 vious occasions for his principal abroad. 
 
 (c) If the merchant abroad sends bills of lading with an 
 
 order to insure, the correspondent in the United 
 States must obey or himself be liable. 
 
 9. If an agent neglects to insure goods when it becomes 
 necessary to do so, he is personally liable to his principal in 
 the capacity of an underwriter. 
 
 10. If the agent does not comply with the instructions of 
 his principal, he is liable for damages. 
 
 11. A general mercantile agent, who in the course of his 
 agency takes a policy for his principal and retains it in his 
 possession, has a lien upon it for the general balance of his 
 account, as an agent against his principal. 
 
 12. The agent forfeits his lien by parting with the policy. 
 It may also be noted that an agent abroad can insure goods 
 
 exposed to extraordinary risks or when it is customary to in- 
 sure them and thereby bind his principal. 
 
 In determining the liability of the principal or the agent, 
 and also in the construction of the terms of a marine insurance 
 policy, the existing custom and usage are the important factors. 
 
 Liability of Steamship Companies 
 
 An act of Congress, of February 13, 1893, called the Harter 
 Act, defines the Hability of ocean carriers as follows: 
 
 "If the owner of any vessel transporting merchandise or
 
 296 THE TECHNIQUE OF FOREIGN TRADE 
 
 property to or from any port in the United States of America 
 shall exercise the diligence to make the said vessel in all re- 
 spects seaworthy and properly manned, equipped and supplied, 
 neither the vessel, her owner or owners, agent or charterers, 
 shall become or be held responsible for damages or loss result- 
 ing from faults or errors in navigation, or in the management 
 of said vessel, nor shall the vessel, her owner or owners, char- 
 terers, agent or master be held liable for losses arising from 
 damages of the sea or other navigable waters, acts of God or 
 public enemies, or the inherent defect, quality or vice, of the 
 thing carried, or from insufficiency of package, or seizure under 
 legal process, or from loss resulting from any act or omission 
 of the shipper or owner of the goods, his agent or representa- 
 tive, or from saving or attempting to save, life or property at 
 sea, or from any deviation in rendering such service." 
 
 The law applies to coastwise shipping as well as to the ship- 
 ping between domestic and foreign ports. The carrier is bound 
 to supply a seaworthy boat and the officers and crew must be 
 chosen with reasonable care. He is liable for all damages aris- 
 ing from negligence in loading, stowage, or proper decking of 
 the cargo. The ship-owner is not held liable, however, for 
 negligence of officers and crew in navigating the vessel. 
 
 Abandonment 
 
 An abandonment is an act on the part of the assured by 
 which he relinquishes and transfers to the underwriters his 
 insurable interest or the proceeds thereof, or the claims arising 
 therefrom, in so far as they are covered by the policy. It is 
 requisite only in case of technical or constructive total loss. 
 When there is nothing remaining which can be assigned or 
 transferred, an abandonment is not necessary. 
 
 A constructive or technical total loss exists when a part or 
 remnant of the object insured exists, or some claim accrues 
 from it against third persons. When a damaged vessel has
 
 MARINE INSURANCE 297 
 
 been repaired and is bottomried for the expense of the repairs, 
 the owner cannot recover without abandonment. 
 
 In the United States the ship and freight are treated as 
 distinct interests in considering abandonment. According to 
 American procedure if any part of the freight is earned before 
 the event happens there exists the right to abandon freight. 
 No special form of abandonment is necessary, and it need not 
 be in writing to be binding, but the notice must be positive and 
 absolute in its tenor. 
 
 Settlements of Averages 
 
 Losses are general or particular — partial or total. 
 
 General average is based upon the sacrifices made, expenses 
 incurred, or damage sustained for the common benefit. It pre- 
 supposes only partial loss, the assessment for such loss being 
 made on the owners of the surviving cargo. When a general 
 average is fairly settled in a foreign port, and the assured is 
 obliged to pay his proportion of it, he may recover the amount 
 from the insurer, though the average may have been settled 
 in a different manner than it would have been at the home port. 
 (Depau V. Ocean Ins. Co., 5 Co wen 63.) 
 
 A particular average, so called in distinction from a general 
 average to which different parties contribute, is a loss borne 
 wholly by the party upon whose property it takes place. 
 
 If goods are to be insured subject to particular average it 
 must be so provided in the application for insurance. 
 
 Under the British law, loss is computed as "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." 
 
 Valued and Open Policies 
 
 Insurance is a contract under which the underwriters are 
 bound to pay only the losses actually sustained. In case of loss.
 
 298 THE TECHNIQUE OF FOREIGN TRADE 
 
 the purpose of marine insurance is to restore the assured as 
 nearly as possible to the condition in which he was at the out- 
 set. The amount of insurable interest in goods is their market 
 value at the time and place of the commencement of the risk. 
 Should goods be insured for a certain amount in a foreign cur- 
 rency and later be lost at sea, the amount paid to the shipper 
 by the insurance company would be determined by the rate of 
 exchange at the time the goods were shipped, regardless of 
 the rate of exchange prevailing at the time of their loss. 
 
 A valued policy is one in which the value of the goods in- 
 sured is agreed upon between parties. This valuation is bind- 
 ing upon the parties if made without fraud or illegality and 
 proof of value is not necessary in order to recover. 
 
 An open policy is one in which the goods insured are not 
 estimated in the contract at any particular amount or rate. In 
 such case the value is open to inquiry and proof and must be 
 proved by the assured before he can recover his loss. In this 
 type of policy the amount of insurable interest is the value of 
 the goods in the market at the beginning of the risk and it 
 continues the same while insurance is in force. A valuation at 
 a certain rate per pound refers to the pound of the place where 
 the policy is made. 
 
 Marine insurance is most complicated and involved. A full 
 and complete treatment of the subject is obviously impossible 
 in a general work on foreign trade. This chapter has treated 
 but a few of its more salient features.
 
 CHAPTER XXXVII 
 FINANCING FOREIGN SHIPMENTS 
 
 Methods of Export Payment 
 
 The methods of financing foreign trade are the same in 
 principle as those used in domestic trade; all are reducible to: 
 
 1. Cash with order. 
 
 2. Bank credit. 
 
 3. Open accounts. 
 
 4. The use of negotiable paper, commonly termed "bills 
 
 of exchange." 
 
 Much the greater part of the financing of foreign ship- 
 ments is carried on by means of the fourth method which will 
 be discussed in detail after brief consideration is given to the 
 first three methods. 
 
 Cash with Order 
 
 From the collection department's point of view, cash with 
 the order is the ideal procedure; from the point of view of 
 the selling force it is an impossible method. No foreign dealer 
 will willingly tie up his money in goods that will not reach 
 him until three and perhaps six months after he has sent his 
 order and which he may not be able to sell until another six 
 months have elapsed. Moreover, the exporter may be just as 
 unknown to the foreign buyer as the foreign buyer is to the 
 exporter. If the reputation of both parties does not extend 
 beyond their home towns and both have to rely upon agency 
 reports, the demand for cash with order is likely to arouse 
 distrust in the mind of the buyer in addition to resentment. 
 Then any chance of doing business vanishes. The exporter 
 
 209
 
 30O THE TECHNIQUE OF FOREIGN TRADE 
 
 may as well eliminate this method from his plan of proce- 
 dure and concern himself only with those methods of bank 
 credits by means of which the purchaser while not paying 
 actual cash, can both afford the exporter protection and enable 
 him to receive his money promptly. 
 
 The demand for cash with the order may be justifiable 
 when samples are requested for which a nominal payment is 
 enforced to prevent abuse of the privilege, but in no other 
 case. 
 
 Bank Credit 
 
 A bank credit is simply a guarantee of payment by the 
 bank. While there are innumerable variations in the forms 
 of foreign credits in principle, they all amount to this. The 
 customer (buyer or importer) goes to his banker and arranges 
 for a payment or payments, not exceeding a certain sum, 
 to be made by a bank in a foreign coimtry to a designated per- 
 son (the exporter) when the latter has produced documentary 
 and any other requisite evidence that he has fulfilled certain 
 conditions of sale. Whether or not the importer is able to 
 arrange for such a credit depends, of course, wholly upon his 
 business standing. If his credit is good, and the amount of 
 his bank balance is normally sufficient to cover the amount of 
 the credit asked for, his bank will be willing to extend the 
 facility for a small commission, plus interest on the amount 
 paid to the exporter until its repayment by the importer. If 
 the latter 's rating is poor or if the amount of the credit he 
 asks for is disproportionate to his normal bank balance, his 
 banker will probably require security of some kind or a cash 
 payment. But even the last course is preferable to cash with 
 the order, as the importer need not actually pay until the goods 
 are shipped, and may arrange in the country of export for such 
 inspection of the goods as he deems prudent and necessary be- 
 fore this payment is made.
 
 FINANCING FOREIGN SHIPMENTS 30T 
 
 It should be noted that when the foreign buyer arranges 
 for a bank credit in this country he should request that the 
 credit be "confirmed." This means that the bank which is to 
 pay for the goods advises the exporter to whom payment is to 
 be made that a credit has been opened in his favor. Banks 
 do not as a rule notify the persons to whom they are author- 
 ized to extend credit of the fact unless it is stated that the 
 credit is to be confirmed. 
 
 This method of payment, which is known as "cash against 
 documents," is not very desirable from the customer's stand- 
 point and he usually resents the request for a bank credit. 
 
 When, however, the customer's reputation is not good or 
 when business conditions in the foreign country are so un- 
 settled or panicky that ordinary prudence requires some guar- 
 antee of payment before the goods leave the exporter's hands, 
 then the suggestion of a bank credit will usually be favor- 
 ably considered by the customer and will protect the exporter 
 in every way. 
 
 Bank credits cannot be generally demanded by any house 
 ambitious to become a world trader or even to have a mod- 
 erately extensive, direct foreign business. Success in the 
 world's trade of the future will largely rest upon the exten- 
 sion of credit, and the American exporter, to be successful, 
 must needs call upon his ingenuity and ways and means for 
 such extension of credit to foreign buyers as will be just as 
 satisfactory, if not more so, than the terms offered by his com- 
 petitors in other countries. 
 
 Open Accounts 
 
 The necessary delay and the added risk involved in open 
 accounts makes this prevailing method of financing domestic 
 trade almost as unpopular in foreign commerce as cash pay- 
 ments — excepting in rare instances. Such an instance might 
 be that of two concerns with ample resources to draw upon
 
 302 THE TECHNIQUE OF FOREIGN TRADE 
 
 doing a mutual and regular amount of business between their 
 two countries. In such a case remittances would be arranged 
 for at regular intervals, the credit not to exceed a stipulated 
 amount. The remittance might be in the form of a banker's 
 draft, i.e., a check on a foreign bank, or it might be made by 
 the ordinary commercial draft, i.e., bill of exchange. 
 
 Another method of operating such an account, termed 
 "open credit," is when the export house gives its foreign cus- 
 tomer a 6 months' credit, say for $25,000, charging all orders 
 received during the 6 months to this account, and adding to 
 this charge a small commission of 3 or 5 per cent. The cred- 
 itor usually charges the customer an additional 6 per cent on 
 sums actually charged against his account and credits him 
 with 6 per cent interest on his remittances. Owing to the 
 frecjuent turning over of the account, these charges, together 
 with the commission, may amount to a profit of from 6 to 10 
 per cent on the total credit during the year. 
 
 This method of open credit business, which dates from 
 the earliest period of the actual exchange of commodities be- 
 tween foreign houses, has now been generally superseded by 
 the use of the bill of exchange mentioned above. 
 
 Bills of Exchange 
 
 The burden of financing "long distance" transactions may 
 be, and with rare exceptions for reasons to be presently ex- 
 plained, usually is, placed upon the bank with foreign affilia- 
 tions where, in consequence of such affiliations, the burden 
 properly belongs. As previously stated, the exporter is nat- 
 urally reluctant to tie up his capital In goods while they travel 
 on a tramp steamer perhaps half-way around the world and 
 payment for which may take several months to reach him, even 
 assuming that the customer promptly remits on the arrival and 
 inspection of the goods. The customer on his part is equally 
 reluctant to pay for goods before they have left their country
 
 FINANCING FOREIGN SHIPMENTS 303 
 
 of origin — goods which he may be unable to handle and turn 
 into cash for several months to come. So a way out of the diffi- 
 culty is found by recourse to the negotiable form of instru- 
 ment called "bill of exchange." When the credit of both par- 
 ties to the transaction is well established this instrument from 
 the exporter's point of view is almost as satisfactory as cash 
 itself ; to the buyer it furnishes all the credit to which his rating 
 entitles him. 
 
 Negotiable Instruments 
 
 Some confusion may exist as to the precise distinction 
 between the negotiable instruments known as banker's draft, 
 draft or bill of exchange, trade acceptance, bank acceptance, 
 and promissory note. 
 
 A banker's draft, as already noted, is practically the same 
 thing as an ordinary check, in that it is an order for payment 
 by one bank on another in favor of the person w4iose name 
 is designated thereon. 
 
 A draft is an order from one person (the seller) request- 
 ing another (the buyer) to pay a certain sum of money either 
 at sight or at a future date to a third party which is usually the 
 bank designated thereon. This is the ordinary domestic draft 
 with w^hich all business men are familiar. When a draft is 
 drawn on a person doing business in a foreign country it is 
 known as a bill of exchange. When the person on whom the 
 draft is drawn receives it and adds his signature thereto, he 
 "accepts" liability for the sum designated thereon. The bill 
 of exchange then becomes a negotiable "acceptance" and in its 
 legal aspects is exactly the same kind of document as a domes- 
 tic trade acceptance. Thus the only difference between the two 
 (aside from a slight difference in wording to be discussed pres- 
 ently) is that a trade acceptance is a domestic medium of 
 exchange negotiable in this country, whereas a bill of exchange 
 is finally negotiable abroad.
 
 304 THE TECHNIQUE OF FOREIGN TRADE 
 
 When the payment of the bill is guaranteed by a bank, as 
 is frequently done under the conditions to be presently ex- 
 plained, it becomes a bank acceptance. This form of bill, be- 
 cause of the security as to its payment, is negotiable in any 
 of the money markets of the world and is worth the face 
 value of the currency it designates, less the discount. 
 
 A promissory note is merely a promise by its makers to 
 pay and, unless indorsed by others, offers only the security 
 of the maker. A trade acceptance must be drawn by the seller 
 on the purchaser for goods sold; a bill of exchange is usually 
 drawn in the same way for value received, which value gen- 
 erally represents goods sold, the wording being immaterial. 
 The goods are usually named in the bill. The usage in Great 
 Britain, the pioneer in the use of bills of exchange, is to em- 
 ploy the last-named term, while in this country the term, trade 
 acceptance, is now in general use. 
 
 Trade Acceptance 
 
 It may here be noted that a trade acceptance is not a new 
 business device, but only a new name for a particular kind of 
 bill of exchange. Prior to the Civil War the domestic draft 
 or bill of exchange was widely employed in closing ordinary 
 merchandising transactions. These drafts were trade accept- 
 ances in the true sense of the term, but ordinarily were not 
 so called; they were known as drafts or bills of exchange, 
 domestic or foreign, and when accepted were called "accept- 
 ances" or "accepted bills." 
 
 Before the Civil War ordinary credit transactions neces- 
 sarily involved longer terms than at present because of the 
 lack of modern means of rapid communication. That war 
 caused a great disturbance to the whole financial system of the 
 country and introduced new fiscal, financial, banking, and 
 credit situations. The new paper money — the greenback — 
 which was issued at that time, fluctuated greatly In purchasing
 
 FINANCING FOREIGN SHIPMENTS 
 
 305 
 
 power with the changing fortunes of the war and as this 
 paper money was not only the measure and standard of 
 value temporarily, but also the chief medium of exchange 
 in everyday transactions, the check being comparatively 
 undeveloped, the risk and uncertainty of long-time credits was 
 considerable and losses were heavy. This situation led busi- 
 ness men to offer large discounts to induce their customers to 
 make prompt settlements in cash. As a result the open-book 
 account with its accompaniments, the cash discount and single- 
 name paper, came into wide use superseding in large measure 
 the domestic bill of exchange. Furthermore, the national 
 banking system created in 1863 made no provision for making 
 or rediscounting acceptances, a great handicap which has now 
 been removed by the rediscount and related privileges of the 
 federal reserve system. 
 
 The Use of Trade Acceptances 
 
 The advantage of the trade acceptance as created and used 
 in domestic commerce is shown by the following example: 
 
 A firm in Boston buys from a firm in New York $1,000 
 worth of goods. Simultaneously with the shipment the seller 
 draws on the buyer a draft at 90 days from date or sight (ac- 
 cording to the terms of sale) and mails it to the latter with 
 the invoice and the bill of lading. The usual form of draft 
 is used with this additional clause: "the obligation of the 
 acceptor hereof arises out of the purchase of goods from the 
 drawer." 
 
 The buyer accepts the draft by writing across the face of 
 
 it, "Accepted. Payable at Bank, Boston." 
 
 He dates and signs this acceptance and returns the accepted 
 draft to the seller in New York. The document is now a 
 "trade acceptance," becoming due for payment in Boston 90 
 days from the date of the draft, if drawn "after date," but 
 in 90 days from date of acceptance, if drawn "90 days' sight."
 
 3o6 THE TECHNIQUE OF FOREIGN TRADE 
 
 If the seller requires the money represented by this accept- 
 ance he may take the accepted draft to his bank and the bank 
 will purchase it, provided the names appearing thereon seem 
 satisfactory. The bank in turn may rediscount the acceptance 
 with the federal reserve bank, as the obligation arises out of 
 the purchase of goods, and thus falls under the provisions of 
 the Federal Reserve Act. The market rate of discount is 
 charged by the bank for its courtesy. 
 
 Documentary Drafts 
 
 The bill of exchange differs from the trade acceptance 
 only in the method of its handling. If the exporter wishes to 
 realize on his shipment as soon as the goods have been dis- 
 patched, he collects all the documents required to prove title 
 thereto — bill of lading, insurance policy, consular invoice, and 
 so on — attaches them to the draft and presents them to his 
 banker. The banker is usually willing to advance from 50 to 
 90 per cent of the amount of the Invoice, and in some cases 
 the full amount on the strength of the security offered — the 
 title to the goods until payment for them is made. Whether 
 or not the bank has a foreign trade department and thus has 
 affiliations abroad which will enable it to present the draft and 
 collect its value at the lowest possible expense, is immaterial. 
 If it is a small-town bank not equipped to do such business, 
 the documents are forwarded to an export bank. The exporter 
 may have to pay an extra commission for this service, but if 
 his foreign trade is relatively small he may nevertheless prefer 
 to deal with his local bank. 
 
 It should be clearly understood that when an exporter sells 
 his documents for cash in this way, the transaction is neither 
 a sale nor a discount. It simply represents a loan or advance 
 by the banker on the security of the goods in shipment and 
 the probity of the exporter. If the goods are staple commo- 
 dities and readily salable at their place of destination, the
 
 FINANCING FOREIGN SHIPMENTS 307 
 
 banker will generally advance 90 per cent of their value, re- 
 gardless of the credit rating of either seller or buyer. If the 
 rating of both buyer and seller are highly satisfactory the 
 banker may advance the full amount of the invoice, especially 
 if the charges for collection and exchange are to be paid by the 
 acceptor and thus to be added to the face value of the draft. 
 If the goods are specialties or machinery which under a forced 
 sale may have little or no market, the banker may allow only 
 half the invoice price. But as the bank can recover the loan 
 from the exporter if the buyer will not accept the draft and 
 the goods are thrown back on the shipper's hand, the full value 
 of the invoice, less probable expenses and the commission, is 
 often advanced by the bank to its regular customers. 
 
 Bank Acceptance 
 
 When the foreign importer has ample resources he may 
 instruct his own bank to establish his credit abroad for a cer- 
 tain amount by authorizing a bank in the exporting country 
 to pay drafts drawn upon him by that country's shippers. This 
 authorization is the bank credit already referred to. In any 
 such cases the correspond^t bank places its acceptance on the 
 seller's drafts which are then readily negotiated in the open 
 market at current rates of discount. Such bank acceptances 
 are usually sold on the discount market either in this country 
 or abroad. 
 
 Sometimes the importer arranges with a bank in his own 
 country to honor drafts made upon him by exporters, or, if 
 he is doing business on a large scale, he may open an accep- 
 tance credit with a bank in any of the great financial centers 
 abroad, irrespective of the points of shipment. In that case 
 the credit is opened in dollars, pounds, or francs, as may be 
 most profitable in effecting exchanges and in taking advan- 
 tage of current rates of discount. Under such an arrange- 
 ment, the exporter in this country draws against the accep-
 
 3o8 THE TECHNIQUE OF FOREIGN TRADE 
 
 tance bank abroad and sells the draft, with the full set of docu- 
 ments, to his own bank. The bank purchasing the draft sends 
 it for acceptance to the bank abroad and the accepting bank 
 looks of course to the importer or to his bank for reimburse- 
 ment at maturity. 
 
 The exporter is not concerned with the arrangements the 
 importer has made with his bank in order to obtain credit. 
 It may be that the bank will not deliver the goods to the pur- 
 chaser until the latter pays for them; or it may deliver only 
 part of the goods to the importer and until these are sold and 
 paid for may refuse to deliver the rest. 
 
 Financing the Import Shipment 
 
 The methods of financing imports have been indicated 
 more or less fully in connection with export shipments since 
 one method is obviously indicated by the other. 
 
 Drafts in payment of imports may be time or sight, with 
 documents or without. In case of a documentary time draft the 
 delivery is made against payment or acceptance, usually the 
 latter. Drafts may be drawn for the invoice amount alone or: 
 
 1. For the invoice plus collection charges. 
 
 2. For the invoice plus collection expenses and interest 
 
 charges. 
 
 They may be discounted, pledged, or merely placed for 
 collection. They may be drawn "without recourse" but this 
 happens very rarely. 
 
 The importer, if his credit or his funds permit, may secure 
 credit from a bank abroad by means of a letter of credit which 
 varies in its terms and the methods of sending it. Each bank 
 has its own policy regarding these letters which are not al- 
 ways alike and frequently vary in substance as well as in form. 
 The importer in America may raise the money to pay for his 
 purchases abroad by the following means:
 
 FINANCING FOREIGN SHIPMENTS 
 
 I. Discounting his own note. 
 
 309 
 
 2. Discounting his customer's paper, if he is well known, 
 
 with his indorsement. 
 
 3. Negotiating a loan with the imported merchandise 
 
 placed in a warehouse as collateral and delivered in 
 parts against a trust receipt. 
 
 Both importers and exporters are dependent upon banks 
 in their operations. The selection of the proper bank and the 
 making of advantageous arrangements with it are therefore 
 of prime importance to the success of both.
 
 CHAPTER XXXVIII 
 
 FOREIGN CREDITS AND COLLECTIONS 
 
 Credit Customs 
 
 In view of the fact that long credits are the basis of suc- 
 cessful foreign trading, it would seem that the exporter must 
 be prepared to do business on a credit basis. But, as indicated 
 in the preceding cliapter, tlie bank is generally willing for a 
 consideration to carry the burden of financing the transaction 
 so that the idea of long foreign credits is to a great extent a 
 theory. While many European houses give as long as 12 
 months' credit to their customers, they can and do receive 
 cash as soon as they place their goods on board the steamer. 
 The exporter surrenders to the bank the bill of lading, the 
 bank pays him the face figure of his bill, and the consignee 
 pays the interest on the money to the bank, instead of paying 
 it to the consignor. From this point the transaction is be- 
 tween the bank and the consignee. Frequently the buyer does 
 not settle with the bank for years if he needs the money and 
 his credit is good, the bank being well satisfied with the in- 
 terest; in this way both parties profit. 
 
 In order to bring about such an agreement, two things are 
 necessary — the customer's financial standing must be satisfac- 
 tory, and the bank must be willing to discount the bill. The 
 export bank will not ordinarily discount an exporter's bill 
 unless it knows or can be shown that the buyer's credit stand- 
 ing is satisfactory. One justification for the existence of the 
 commission man is that he knows the standing of his custom- 
 ers, he is willing to accept their credit, and he knows where 
 to find a bank which will discount his customers' bills. 
 
 310
 
 FOREIGN CREDITS AND COLLECTIONS 311 
 
 Credit Information 
 
 British and other European banks having branch houses 
 in different parts of the world make it their business to ac- 
 cumulate exact information as to the rating, responsibility, 
 character, etc., of local merchants as do the branch offices of 
 a mercantile agency which is doing international business. 
 The most reliable report is that which is obtained from an 
 overseas bank and by personal representatives of the exporter. 
 Bankers are very careful to whom they give credit and their 
 information is being constantly brought up to date, for they 
 not only have the means but the opportunities to check and 
 renew it at frequent intervals. In consequence it constitutes 
 a valuable business asset and foreign bankers are usually un- 
 willing to make reports as to credit rating to any but their 
 own customers. When the exporter's bank has no affiliation 
 with a bank in the part of the world to which the goods are 
 to be shipped it may be unable to furnish a report, in which 
 case recourse must be had to a mercantile agency. Entire re- 
 liance should not be placed upon information received from 
 these agencies. They are not, of course, infallible and their 
 reports should be corroborated by information from other 
 sources unless the financial reputation of the party is already 
 fairly well known. 
 
 If an exporter wishes to ascertain personally the standing 
 of his customers, the usual method of procedure is about a^ 
 follows. 
 
 First, he should find out from the records of the concern, 
 whenever he can, whether it is a corporation, what is its capi- 
 talization, and who are the directors. In most countries there 
 are commercial courts and registration bureaus where infor- 
 mation pertaining to the firm must be filed by the concern 
 itself, as also the reports of some of Its transactions. 
 
 Second, he should get all the information he is able to 
 obtain from the concern itself in as tactful a manner as pos-
 
 312 THE TECHNIQUE OF FOREIGN TRADE 
 
 sible — for the more desirable the customer, the more will the 
 latter resent the distrust implied in a curt request for credit 
 information. 
 
 The third step is to go to some of the parties with whom 
 the particular concern is dealing and ascertain from them and 
 from the general mercantile public what they think of the firm. 
 
 The indispensable information will include the age of the 
 concern, its legal status, how closely it is supervised by the 
 government, its history, and its present management and poH- 
 cies. Such information should be embodied in a special re- 
 port, and kept on file so that such changes as may occur from 
 time to time can readily be made. 
 
 Discounting Drafts 
 
 As a bank is primarily an institution which per- 
 mits a person to create credits either by deposit of funds or 
 by borrowing at a certain rate of interest, its business con- 
 sists largely in providing working funds — for a consideration. 
 This consideration, in case of foreign exchange, is the dis- 
 count which the banker deducts from the face of the draft 
 which he purchases or accepts. This discounting is a separate 
 business transacted on a large scale by the so-called "bill brok- 
 ers." Their function is to discount time drafts for persons who 
 desire to realize their funds immediately and who are willing 
 to pay a consideration therefor. 
 
 International Banking 
 
 In nearly every South American country there are strong 
 European banks with branches everywhere. Before the war 
 there were in Argentina five great British banks with a total 
 capitalization of about $675,000,000, and several German 
 banks with branches throughout the country and a total capi- 
 talization of $15,000,000. Similar conditions prevailed in 
 Brazil, Chile, Peru, and other South and Central American
 
 FOREIGN CREDITS AND COLLECTIONS 313 
 
 countries. Some of these banks had agencies in New York and 
 many of them speciaHzed — some in South American business, 
 others in far eastern credits, some in coffee credits, others in 
 silk or dry goods, and so on. 
 
 Since the passing of the Federal Bank Act, New York City 
 has been coming into its own as a banking center of the world, 
 and a bill on New York is now recognized as legitimate and 
 proper in overseas transactions. Formerly the financing of 
 imports and exports was confined to a few private banks which 
 made a specialty of foreign exchange. At present a bank in 
 any large city of our country is hardly considered of the first 
 importance unless it is engaged in foreign transactions, and 
 there is scarcely any foreign exchange manager who is not 
 doing some sort of international credit business. The result 
 of this change is the development of the foreign commercial 
 credit business, which has become an integral part of our bank- 
 ing methods and which is growing in importance every year. 
 This development is the most auspicious omen of a thorough 
 understanding between our banking interests and other kinds 
 of business. The bankers and the traders are coming to realize 
 that their interests in the extension of foreign trade are iden- 
 tical. 
 
 Effect of Federal Reserve Act 
 
 The Federal Reserve Bank Act now permits the national 
 banks of the United States to accept time drafts or bills of 
 exchange covering international transactions. The establish- 
 ment of an open discount market in which foreign bills may 
 be bought and sold is a natural sequence. The fact that ac- 
 ceptances can be freely sold in New York has created a mar- 
 ket in the different parts of the world for bills on New York 
 for which formerly there was no demand. The export bank 
 is now willing, especially during a crop-moving season, to 
 carry the bill for the voyage. When the voyage is over and
 
 314 THE TECHNIQUE OF FOREIGN TRADE 
 
 the draft is accepted it is more profitable for the bank to dis- 
 count the acceptances than it is to hold them, and in this way 
 it secures funds for reinvestment in other bills of exchange. 
 When these acceptances are indorsed by the bank they do not, 
 in their buying and selling power, depend upon the credit of 
 the drawer but are good wherever the name of the accepting 
 bank is known. (See Appendix A for sections of Federal Re- 
 serve Act bearing on this subject.) 
 
 Trust Receipts 
 
 Not infrequently before meeting payment on his import 
 letter of credit the importer is allowed by his own bank to 
 receive the bill of lading which means that he can also receive 
 his consignment of goods. The local bank thus risks both 
 the amount of the credit letter and the value of the goods, but 
 trusts his customer to settle as soon as he sells the goods. 
 
 This kind of credit is extended by means of the "trust re- 
 ceipt" which the importer gives to his banker and which 
 contains a statement that the merchandise has been duly re- 
 ceived and that the proceeds from its sale will be applied first 
 of all toward paying off his sight draft before or at maturity. 
 Such receipts usually contain reservations to the effect that the 
 merchandise in question is to be kept separately and that the 
 proceeds from its sale will be kept apart and be distinct from 
 the firm's other assets and that they are to be delivered to the 
 banker on the day they are received. 
 
 On the receipt of the money from its client the local bank 
 may send it to the bank in London or New York in payment 
 of the bill which the bank had previously accepted; thus the 
 whole amount of the draft is covered before its maturity. 
 
 Finance Bills 
 
 "Finance bills" are of importance in the banking transac- 
 tions between the United States and England, because by
 
 FOREIGN CREDITS AND COLLECTIONS 315 
 
 means of these bills the interest rates of the two countries 
 are equalized. When a banker in this country wishes to real- 
 ize funds here for the time being, intending to meet his 
 draft at maturity by the purchase of demand sterling or cables, 
 he simply draws his draft upon a foreign bank and sells it in 
 the discount market. It is a method by which a banker bor- 
 rows in a cheap market and lends in a dear one. 
 
 Margraff ("International Exchange," page 14) points out 
 the following advantages to a bank in maintaining a foreign 
 exchange department: 
 
 "i. It affords complete facilities for an all around bank- 
 ing business thereby preventing the possibility of losing a 
 profitable account. 
 
 "2. It is a valuable auxiliary to attract depositors. 
 
 "3. It commands added prestige among bankers in its own 
 country and through the world, who accept drafts against its 
 letters of credit. 
 
 "4. The bank is thereby converted into an international 
 institution, thus vastly increasing its field of operations, by 
 placing it in touch with the long established monetary centers. 
 
 "5. The bank is afforded an opportunity of placing loans 
 at profitable rates of interest in the great money markets of 
 the world where favorable conditions may prevail, by the 
 purchase of the bills of exchange as an investment. 
 
 "6. It affords the bank an opportunity to borrow funds by 
 means of finance bills in any money market of the globe."
 
 CHAPTER XXXIX 
 
 FOREIGN COMMERCE LAWS 
 
 Necessity for an Elementary Knowledge 
 
 By the laws of commerce the nations of the earth are 
 brought into closer comradeship and mutual good-will. These 
 laws not only safeguard the peoples of the world in their re- 
 ciprocal relationships, but they tend to develop a homogeneity 
 of interests between nations, as the tendency of the commer- 
 cial laws of each country is toward uniformity and agreement 
 with those of other countries. Like the trade of the world, 
 the laws of commerce are becoming more and more cosmopol- 
 itan and universal in their character. The world trader of 
 today must, then, fit himself to become a member of a greater 
 state and a citizen of the world. 
 
 Trade activities in foreign lands multiply the trader's re- 
 sponsibilities and involve the question of the responsibility of 
 others to him. All such responsibilities are necessarily regu- 
 lated by the laws of the countries of which the parties are 
 citizens or residents. There may be occurrences involving the 
 laws of four or five different countries simultaneously. 
 
 It follows, therefore, that not only the merchants and man- 
 ufacturers but the student preparing himself to make foreign 
 trade his vocation should know something of the legal require- 
 ments as related to commercial activities of other countries 
 as well as of his own. He must know their fundamental laws 
 and trade usages. Nowhere on earth does ignorance of the 
 law excuse a man's acts or tolerate his illegal commissions. 
 
 The trader should not, however, be his own lawyer and 
 dispense with the services of an experienced attorney. The 
 
 316
 
 FOREIGN COMMERCE LAWS 317 
 
 question arises, where is he to look for such services in the 
 United States? If we are to become world traders we must 
 eventually develop a class of international lawyers who are 
 familiar not only with the principles involved in public and 
 private international law, but also with the laws of commerce 
 of at least the principal countries of the world. At present 
 there are but few such lawyers in this country. 
 
 The Commercial Codes 
 
 The Anglo-Saxon system of law is divided into two main 
 classes: the civil and the criminal. Accordingly those states 
 which have adopted a code system have two codes — a civil 
 and a criminal code. Under these codes all actions at law are 
 conducted and all citizens can be reached no matter what their 
 vocation or standing. But this procedure holds good only in 
 the Anglo-Saxon countries. 
 
 The rest of the civilized world in addition to civil and 
 penal law has. a third distinct legal entity, viz. : the commerce 
 law embodied in a special code called the commercial code. 
 
 Thus a man abroad who wishes to sue another man in con- 
 nection with a business matter must do so under the commercial 
 code and not under the civil code as in the United States. 
 The commercial code is administered by special tribunals 
 called "commerce courts." These courts have the advantage 
 over other courts in that they are more expeditious and more 
 free from the usual technicalities, resembling in this respect 
 our municipal or justices' courts. 
 
 There are two distinct models — the French and the Ger- 
 man — upon which the commerce laws of the different coun- 
 tries of the world are based. Their thorough organization 
 dates from the latter part of the last century. The commerce 
 laws patterned on the French model are very similar. Thus, 
 for example, the commercial codes of Honduras, Guatemala, 
 Paraguay, Uruguay, Cuba, and Argentina, are similar and in
 
 3i8 THE TECHNIQUE OF FOREIGN TRADE 
 
 many cases identical, because they are substantially the same 
 as those of Spain which patterns its law on the French model. 
 Those of Venezuela, Peru, Austria, and Japan show German 
 influence. Those of Sweden, Norway, and Denmark are al- 
 most identical and show the influence of both standard types. 
 
 Registration 
 
 Commerce courts in every country have a registry office 
 which resembles our registry of deeds. This registry bureau is 
 a very important factor in trade. Here every individual busi- 
 ness man and every corporation or firm doing business within 
 a certain area is compelled by law to register and in some 
 cases to file periodical reports regarding its business and a 
 sworn statement concerning its financial status. Non-com- 
 pliance with this law is visited with severe penalties. Fre- 
 quently business men are directed to file sworn reports as to the 
 personnel of their firm and as to any changes which occur. 
 
 In most countries agents must have power of attorney 
 from their principals with the exact description of their au- 
 thority. Such documents are also filed at the registry bureau 
 as are also notices of changes in them. Revocation of power 
 of attorney must always be recorded lest the principal be held 
 responsible for the acts of the agent, although the latter may 
 no longer be employed by him. 
 
 The registration is prescribed to take place usually within 
 15 days from the commencement of business or from the revo- 
 cation of authority or other change which the law requires 
 to be recorded. Specimen signatures of the heads of enterprises 
 and of their agents must oftentimes be registered also. 
 
 Foreign corporations have greater scope of action in coun- 
 tries under the commerce code, and greater elasticity in their 
 business methods is allowed, although they are more strictly 
 supervised by the government. The documents which they 
 register are usually the certificate of incorporation, which
 
 FOREIGN COMMERCE LAWS 319 
 
 should be verified by the embassy or the consulate of the coun- 
 try where it is to be filed, the minutes of the first meeting, 
 proof that the capital required by law has been paid, proof of 
 publication in local papers of notice of registration and of the 
 issuing of the license to do business, which is usually required 
 in the permit. 
 
 The registration meets two ends — it protects the registrant 
 and it protects the third parties by giving them notice of the 
 existing status. 
 
 In America a man who buys real estate and fails to register 
 his deed, or who buys land without first looking up its rec- 
 ord, would be considered as foolish and fully deserving of the 
 consequences of his folly. In the countries under the commerce 
 code the same principle is extended to many business docu- 
 ments and if a man is foolish enough not to register a docu- 
 ment when he is required to do so, or fails to look up a record 
 when such a course is advisable, he is liable to suffer accord- 
 ingly. 
 
 Miscellaneous Provisions 
 
 In all cases foreign corporations should comply with every 
 requirement for domestic corporations. The same is true of 
 the subsidiary companies organized to do business in one or 
 more foreign countries. There are in many cases special ad- 
 vantages to be had by organizing in the country where business 
 is to be conducted and it is always advisable to consult a lawyer 
 famihar with the laws of that country before the details 
 of organization are decided upon. Frequently American com- 
 panies have been refused admittance to foreign countries on 
 such seemingly trivial grounds as that their home charters were 
 perpetual when local law limited the life of a corporation to 
 a certain period of years. Most countries do not draw a sharp 
 distinction between a stock corporation and copartnership. 
 
 Notaries have great power in code countries. They usually
 
 y 
 
 320 THE TECHNIQUE OF FOREIGN TRADE 
 
 keep in their files or on their record books the originals of 
 deeds, mortgages, contracts, and copartnership agreements exe- 
 cuted by them, issuing certified copies only. 
 
 Power of attorney is a most important factor in transac- 
 tions abroad, since it takes so long to communicate with one's 
 representative. Great care should be exercised in giving this 
 power ; preferably it should be granted to a lawyer or a banker 
 of high standing. 
 
 Married women in Latin America and in other countries 
 under commerce codes do not manage their own property. 
 As it passes to the husband the moment they marry, it may go 
 into his business. In cases of bankruptcy, creditors in many 
 cases are subordinated to the rights of the wife so that it is 
 sometimes important to know whether or not a customer is 
 married and if so if he is doing business with his wife's money. 
 
 Bankruptcy Laws 
 
 Bankruptcy laws are very much stricter in the coun- 
 tries where commercial codes prevail and it is sometimes dif- 
 ficult if not impossible for the bankrupt to secure rehabilitation. 
 In a number of countries bankrupts are arrested and held until 
 released by creditors. Extravagant living, selling at a loss, 
 taking unnecessary business risks, and failure to keep books 
 prescribed by law, make bankruptcy fraudulent in most coun- 
 tries and prevent the rehabilitation of the bankrupt. 
 
 Foreign creditors of the bankrupt debtor are generally 
 treated on equal terms with domestic creditors. All licensed 
 brokers who fail in their business are deemed by law and are 
 treated as fraudulent bankrupts. Their powers while in busi- 
 ness are closely regulated by the government. 
 
 Compulsory Bookkeeping 
 
 The countries which have established a commercial code 
 as a rule make it compulsory for all who are engaged in busi-
 
 FOREIGN COMMERCE LAWS 321 
 
 ness to keep a certain number of books — in some countries as 
 many as eight. But that is not all. The law also prescribes 
 the manner and method of keeping the books. For instance, 
 the pages must be initialed by a judge of the commerce court 
 and his signature must appear at the opening and the closing 
 of all books. This law of course applies to the branch offices 
 established in such foreign countries. It is also required that 
 copies of letters and telegrams be kept on file. 
 
 The books usually required to be kept under the code are a: 
 
 1. Journal 
 
 2. Ledger 
 
 3. Press copy letter book 
 
 These books must be preserved for a period of from 10 
 to 30 years. In case this law is not complied with or the books 
 are lost and a litigation results, a judgment is rendered on 
 the entries in the books of the adverse parties. 
 
 General Governmental Supervision 
 
 As the usual thing, business in all foreign countries gov- 
 erned by a commercial code is more closely supervised by the 
 government than is the case in the United States. For that 
 reason the creditors are better protected from fraud and impo- 
 sition than in our home markets. As a general rule it is safe 
 enough to deal abroad on credit with a well-established and 
 reputable concern, and if it were not for the distance separating 
 a foreign customer from the seller in the United States there 
 would seem to be no reason why the foreigner should not be 
 at least as worthy of credit as our domestic customers of the 
 same standing. 
 
 A foreigner who lives under a commerce code is far more 
 severely dealt with by law than he would be in the United 
 States in case of his inability to meet his commercial obliga- 
 tions. Foreign creditors are almost invariably treated justly
 
 322 THE TECHNIQUE OF FOREIGN TRADE 
 
 by the commerce courts and in a number of countries — Russia 
 and Turkey, for example — they have had a preference over 
 the domestic creditors. 
 
 Commercial Paper 
 
 Commercial paper in nearly every country of the world 
 is governed very much by the same general law which exists 
 in the Anglo-Saxon countries. There are of course minor dif- 
 ferences here and there and these must be carefully observed. 
 Protest is necessary in nearly every country and days of grace 
 are usually allowed. Actions under a commerce code are 
 barred by a limitation in a very much shorter time than is the 
 case in the United States or Great Britain, and very often a 
 suit must be brought within a period of 3 months if recourse 
 to law is to be had. 
 
 As a general rule, commercial paper should be presented 
 without delay on the day it is due and some countries provide 
 that tmless a check is presented within a period of from 5 
 days to 3 weeks, the claim may be declared void and no legal 
 responsibility can be attached thereto. 
 
 Other countries have a provision of law as to what con- 
 stitutes a complete indorsement of a bill of exchange. This 
 document generally should contain the date on which it is 
 made, the name of the party to whom it is transferred, the 
 declaration of value received, and the signature of the in- 
 dorsee 
 
 In France bills payable at sight should be presented within 
 3 months from their date and are barred by limitations after 
 5 years. Checks must be presented for payment within from 
 5 to 12 days, and sight drafts within 4 days from date of 
 protest. 
 
 In Peru a commercial paper with blank spaces or altera- 
 tions can be declared void and the indorsements should be dated 
 and state the value received. The same rule obtains in Ecuador.
 
 FOREIGN COMMERCE LAWS 323 
 
 In Argentina and Chile a bill of exchange must be pre- 
 sented for payment on the date due and in case of refusal must 
 be protested without delay ; otherwise the holder will be liable 
 for damages. The notice of protest must be sent to all in- 
 dorsers, usually within 1 5 days. 
 
 In Japan actions on commercial paper are barred by limita- 
 tion after 6 months. 
 
 In Turkey after a bill is protested for non-payment the 
 bearer may proceed to attach the property of the drawee or 
 any of the indorsers. 
 
 Peculiar Trade Customs 
 
 Each country has its own peculiar trade usages and cus- 
 toms which enter into its legal fabric and are generally en- 
 forced as if they were the law of the land. 
 
 In some parts of the world these customs are most unu- 
 sual. China, for instance, has no stable commercial law and its 
 general legal edifice rests largely upon ancient customs, which 
 differ in each province. The keynote of the entire Chinese 
 legal system is the doctrine of mutual responsibility. This is 
 to say, that those related to or closely connected with a guilty 
 person are held responsible for his acts on the theory that they 
 should have seen to it that he behaved himself. Such persons 
 oftentimes have been punished severely for the acts of relative 
 or friend, whether these acts were of a criminal or business 
 nature, on the ground of dereliction of duty in not exerting 
 strong enough moral influence over the wrong-doer. 
 
 In Japan foreign business is largely in the hands of im- 
 porters who are reached through a native salesman who acts 
 as an intermediary between buyer and seller. It is always 
 safer in dealing with this salesman to stipulate that his author- 
 ity is transferable or can be terminated at the will of the prin- 
 cipal — otherwise, if working on salary as well as commission, 
 he often claims that he was engaged for a year or more.
 
 324 THE TECHNIQUE OF FOREIGN TRADE 
 
 Commercial Travelers 
 
 Many if not most of the countries of the world have strict 
 regulations concerning commercial travelers. Such travelers 
 are generally required to take out a license and pay a tax before 
 they can do business, some countries going so far as to demand 
 a certificate of identification from the firm with a photograph 
 of the traveler duly certified to by the consul. In most Latin- 
 American countries a license and trade tax are required from 
 all persons engaged in business. 
 
 To equalize taxation between domestic and foreign busi- 
 ness a tax is levied on all foreign travelers. Such taxes can 
 usually be escaped in Latin America by the traveler associat- 
 ing himself temporarily with a local concern and acting 
 as its agent. Also in these countries commercial travelers 
 should carry power of attorney from their principals and in 
 some cases they are required to have health certificates. In- 
 variably it is good policy to carry passports in order to avoid 
 legal entanglements. 
 
 The regulations in force in the various countries are given 
 in Chapters XLI and XLII. 
 
 Law of Agency 
 
 The main principles of the law of agency are very similar 
 in all civilized countries. In China, Turkey, Egypt, and some 
 other oriental countries there have been established by treaty, 
 federal courts and mixed tribunals where action between na- 
 tives and foreigners are tried. These courts and tribunals are 
 composed of judges of the foreign countries which are the 
 parties to the treaty. In all the semicivilized countries and in 
 nearly all of the Orient there are consular courts in which the 
 minor differences between the subjects of each particular 
 country represented by the consulate are tried. 
 
 Sometimes stoppage in transitu of the goods for a foreign 
 country becomes necessary. It was held that in such cases the
 
 FOREIGN COMMERCE LAWS 325 
 
 stoppage does not rescind the contract of sale, merely suspend- 
 ing the delivery, and that the seller has the right of stoppage. 
 
 It has been held that goods sold F. O. B. or C. I. F. are 
 the property of the buyer and are at his risk the moment they 
 are put on board the ship. Under C. I. F. contract of sale the 
 vender, however, is in duty bound to ship the goods under such 
 bill of lading as will insure their delivery at the port of des- 
 tination. It has also been decided that the principle governing 
 recovery of damages Is not applicable to conveyance by sea. 
 These decisions, which have been generally followed by the 
 United States courts, have been secured under the so-called 
 Harter Act, which differs from the English law in that it pro- 
 hibits the insertion of negligence clauses by which the ocean 
 carrier is relieved from liability in "loading, stowage, custody, 
 care, and proper delivery and seaworthiness." 
 
 Sources of Information 
 
 There is no one source of complete information on the 
 subject of commercial laws of all the countries of the world. 
 The year-books of different countries usually give a fair out- 
 line of the commercial laws of the countries which publish 
 them. Few of them have been translated into English. 
 
 There are very few lawyers in the United States today 
 who are familiar with the commercial laws of foreign coun- 
 tries and these few specialize in the laws of but one or two 
 countries. For practical purposes in intricate legal matters it is 
 best to employ a local attorney of the particular country. 
 
 In matters where legal information is desired immediately, 
 the aid of the Bureau of Foreign and Domestic Commerce of 
 the United States, or of the Pan-American Union regarding 
 the laws of Latin America should be sought. 
 
 In some cases the consulate of the country involved or even 
 the embassy may be willing to render assistance, but these 
 offices usually refer such inquiries to their lawyers.
 
 CHAPTER XL 
 
 SUMMARY OF TRADE-MARK, PATENT, AND 
 
 TARIFF LAWS 
 
 A Knowledge of Trade-Mark Laws Essential in Foreign Trade 
 
 The protection against the use by others of the manufac- 
 turer's trade-mark is perhaps more important abroad than at 
 home. There the customer may not be famihar with the lan- 
 guage of the country to which the trader belongs and he rec- 
 ognizes the goods largely by the brand or trade-mark which 
 they bear. 
 
 In order to hold trade in foreign lands it is of great im- 
 portance to be in a position legally to prevent competitors from 
 using the trade-mark by which a particular owner's goods are 
 known. Its appropriation or even imitation results in injury 
 to the trade of the manufacturer of the genuine article and 
 this injury may be twofold. He is not only deprived of the 
 use of a mark which he established through his effort but 
 oftentimes it is made impossible for him to send his goods 
 to the market in which his trade-mark has been usurped since 
 the reputation of his goods mav there have been discredited 
 by the sale of imitations under the name by which the genuine 
 article is known. Such imitations are invariably of inferior 
 quality in order that they may be sold at a lower price. 
 
 Classes of Trade-Mark Laws 
 
 Trade-mark laws of foreign countries may be divided into 
 two classes: first, those under which the right of ownership is 
 acquired by adoption and use and the registration is secondary, 
 as in the United States; second, those under which the right of 
 
 326
 
 TRADE-MARK, PATENT, AND TARIFF LAWS 327 
 
 ownership is derived exclusively from registration, irrespective 
 of whether or not the trade-mark has been in actual use prior 
 to registration. 
 
 By far the greatest number of foreign trade-mark laws 
 belong to the second class, which means that the ownership of 
 the trade-mark begins with its registration and exists so long 
 as the registration is in force. In many countries, especially 
 in South America, its absolute ownership is given by law to 
 the person who first files an application for registry, whether 
 he is the owner of the trade-mark in question or not. It then 
 becomes possible for the infringer to secure legal rights and to 
 sue the original owner as an infringer to prevent the selling 
 of his goods in the countries where the owner failed to register 
 his trade-mark. 
 
 Where such laws prevail, the original user of the trade- 
 mark is without a remedy at law should someone else first 
 register it. and the only way for him to protect himself against 
 usurpation, which is but too common in many countries, is to 
 have the trade-mark registered as promptly after its adoption 
 as possible, especially in those countries where trade is con- 
 templated. 
 
 Regulations of the International Convention 
 
 In considering foreign trade-mark laws, one must always 
 inquire whether or not the country under consideration is a 
 party to the International Convention; if it is a party, its laws 
 on the subject of trade-marks should be considered in connec- 
 tion with the provisions of the convention to which each sig- 
 natory country is subject. The rules of the convention are as 
 follows: 
 
 The International Convention provides that each of the 
 countries party to the convention shall register and protect the 
 trade-marks of citizens and residents of each of the countries 
 which are parties to the same to the extent that domestic trade-
 
 328 THE TECHNIQUE OF FOREIGN TRADE 
 
 marks are protected. It further provides that each country 
 which is a party to the convention shall register the trade-marks 
 of citizens or residents of the other countries in the form in 
 which they are registered in the country of their origin. It also 
 provides that application for registration made in any of the 
 countries within four months from the date of application for 
 registration in the country of origin shall be given the same 
 effect as if made simultaneously with the application in the 
 country of origin. 
 
 The following countries are now parties to the Interna- 
 tional Convention: 
 
 Belgium 
 
 Netherlands with Dutch In- 
 
 Brazil 
 
 dies 
 
 Denmark 
 
 Norway 
 
 Dominican Republic 
 
 Portugal 
 
 France and her Colonies 
 
 Serbia 
 
 Great Britain, including Can- 
 
 Spain 
 
 ada, New Zealand, and 
 
 Sweden 
 
 Queensland 
 
 Switzerland 
 
 Italy 
 
 Tunis 
 
 Japan 
 
 United States 
 
 Registration 
 
 Registration fees are frequently insignificant ; in some 
 countries they do not exceed $5, and in only a few of the coun- 
 tries of the world do the charges exceed those existing in the 
 United States. 
 
 The requirements of registration are generally few and 
 simple. Usually all that is required is the statement in the 
 language of the country in which registration is desired de- 
 scribing the identity of the applicant, with a few printed copies 
 of the trade-mark and a statement as to the class of goods on 
 which the trade-mark is to be used, the power of attorney, pro- 
 vided the applicant does not appear in person, and of course the 
 fee.
 
 TRADE-MARK, PATENT, AND TARIFF LAWS 329 
 
 Usually the term for which registration is granted is short 
 — 10 to 20 years — but renewal is possible in every case. If 
 the trade-mark is not used in the country where it is registered 
 it will, after a certain period of time, be considered abandoned. 
 
 Formalities of registration in Latin-American countries 
 may be obtained from Tariff Series No. 31 of the Department 
 of Commerce. 
 
 The definition of what may be registered as a trade-mark 
 is generally broad enough to include any distinguishing mark. 
 
 What May Not be Registered 
 
 Most of the countries of the world do not permit the regis- 
 tration of trade-marks which contain one of the following: 
 
 1. Letters, words, coats-of-arms, or armorial bearings of 
 
 royalty, and public or official insignia used or that 
 may be used by the state. 
 
 2. If exclusively composed of portraits of the king or 
 
 emperor or of the members of the royal house. 
 
 3. Scandalous matter or representations contrary to good 
 
 morals. 
 
 4. Marks previously registered or which so closely re- 
 
 semble the previously registered marks as to cause 
 confusion or tend to deceive. 
 
 5. Marks composed exclusively of numerals, letters, or 
 
 words. 
 
 6. Form, color, and terms usually employed to indicate 
 
 the nature of the goods or the class to which they 
 belong, or which do not constitute distinctive marks. 
 
 7. Portraits of living persons if used without their con- 
 
 sent. 
 
 Rules Regarding Registration 
 
 In foreign countries the protection against infringement of 
 registered trade-marks is better than in this country. As a rule,
 
 330 THE TECHNIQUE OF FOREIGN TRADE 
 
 provision is made for criminal as well as civil punishment for 
 wilful infringement of duly registered trade-marks. Such 
 remedy is provided in addition to the right on the part of the 
 legal owner of a registered trade-mark to recover damages for 
 past infringement. It is also possible to obtain an injunction 
 against future infringement. 
 
 Nearly all foreign countries recognize the distinction be- 
 tween commercial names and trade-marks, and in practically 
 every country of the world commercial names will be protected 
 without registration. 
 
 It must be noted that in many foreign countries imported 
 goods must be marked with the name of the country in which 
 they are manufactured and false marking in this respect is 
 usually punishable. 
 
 In a number of Latin-American countries, distinction is 
 made between the manufacturer's mark used to designate the 
 products of a particular factory or concern, and the dealer's 
 mark used to distinguish the articles handled by a particular 
 dealer. 
 
 The appointment of an attorney is usually necessary to 
 register trade-marks unless the applicant appears in person. 
 Some countries require the power of attorney and the certifi- 
 cate of previous registration in the country of origin, and both 
 must be legalized or authenticated by the consul in the country 
 where the mark is to be registered. 
 
 Applications usually must be in duplicate form, and in some 
 countries like Cuba and Argentina, from 6 to 15 copies are 
 required. In Latin-American countries the application must 
 be made on stamped paper. As a rule it should contain a 
 description of the mark in the language of the country, the 
 name and address of the applicant and of the factory, a de- 
 scription of the kind of industry, etc. It is generally required 
 that a certain sized electrotype of the mark be presented with 
 the application. Some countries require that the size and color
 
 TRADE-MARK, PATENT, AND TARIFF LAWS 331 
 
 of the mark be indicated, and a number of countries that the 
 application be published before registration may be effected. 
 It is generally provided that if the application should be re- 
 jected, the fee is to be returned. 
 
 Patent Laws 
 
 Delay in applying for patent protection may result in the 
 loss of right to a patent even though the delay in applying for 
 the patent has been very short. It is the general rule that an 
 invention which has become generally known for a period of 
 time cannot obtain patent in any country. Patents are granted 
 usually in all countries only for new inventions. Hence, a 
 manufacturer desirous of obtaining a monopoly on his patent- 
 able product should apply for a patent at once in those coun- 
 tries where there is likelihood that the product may be manu- 
 factured. 
 
 In more than seventy countries a patent may be applied for, 
 but as there is so little manufacturing carried on in many of 
 them the danger of infringement is not large enough to justify 
 the expense. It is usually advisable, however, to apply for a 
 patent in about ten or twelve countries, because otherwise the 
 expense of maintaining a patent would in many cases be pro- 
 hibitive. 
 
 The International Convention regulations referred to in the 
 discussion of trade-marks also contain important provisions 
 concerning patents. These provisions protect the applicant for 
 a patent in all of the countries which are parties to the con- 
 vention to the extent that he is accorded priority. Accordingly, 
 the applications subsequently made in any of the other coun- 
 tries are given the same effect as if filed on the date of the 
 application made in the country of the origin, provided that 
 such subsequent applications are filed within a certain period 
 of time. 
 
 The applicant under the provisions of the convention is free
 
 332 THE TECHNIQUE OF FOREIGN TRADE 
 
 to make public use of this invention during the period between 
 the date of appHcation in the country of origin and the fihng 
 of the subsequent applications in other countries. 
 
 The articles of the convention also provide that importation 
 of goods embodying the invention into any country shall not 
 invalidate the patent, provided the requirements of that coun- 
 try regarding the vi^orking of the patent are fulfilled. 
 
 Tariff Laws 
 
 Every tariff act usually has an introductory chapter vv^herein 
 are enumerated articles which are admitted duty-free (if there 
 be any such articles) also the articles which are denied admis- 
 sion, such as salt in some countries, ammunition and absinth in 
 other countries, and so on. 
 
 The tariffs are usually classified and the articles taxed are 
 arranged systematically according to various schedules. This 
 is where the trouble generally arises between the importer and 
 the custom house officials. The importer oftentimes claims 
 that his importations should be classed under a different sched- 
 ule or classification from that under which the customs offi- 
 cials claim it belongs. It may mean a great deal to him in 
 the amount of duty to be paid. Such differences give rise to 
 litigation in which oftentimes large amounts of money are 
 involved. 
 
 Some countries tax imports at so much per unit, other 
 countries levy taxes ad valorem, but usually a certain per cent 
 on net or gross weight is charged. Therefore it is usually nec- 
 essary that legal and gross weight be stated upon the package 
 to be exported. 
 
 There are general and conventional tariffs ; the former is 
 levied in all cases, the latter only according to the agreement 
 between different nations. 
 
 It is within the province of the act prescribing tariff to 
 set forth also the custom house machinery explaining the func-
 
 TRADE-MARK, PATENT, AND TARIFF LAWS 333 
 
 tions and duties of various officials charged with the adminis- 
 tration of customs, and the procedure regarding the entry of 
 goods from foreign countries. 
 Tariff is levied: 
 
 1. For revenue. 
 
 2. To safeguard and protect home markets. 
 
 3. To extend foreign trade by being in a position to nego- 
 
 tiate better terms of entry. 
 
 4. For political purposes. 
 
 5. To solve the problem of colonial markets. 
 
 It is not necessary to go into the differences of opinion that 
 everywhere exist relative to the wisdom of high or low tar- 
 iffs. The exporter should, however, familiarize himself with 
 the tariff acts of countries in which he is interested. For that 
 purpose some of the publications treating of this subject or the 
 Department of Commerce publications may be consulted. 
 
 The laws in foreign countries change as they do in Amer- 
 ica and it is impossible to quote laws specifically even if space 
 permitted.
 
 PART V 
 TRADE REGULATIONS
 
 CHAPTER XLI 
 
 COMMERCIAL TRAVELERS 
 
 Knowledge of Regulations Indispensable to the Exporter 
 
 As has been previously stated, nearly every country has 
 some regulations pertaining to commercial travelers. It is im- 
 portant that the exporter know these regulations, not only that 
 he may figure accurately the expense of conducting a selling 
 campaign in any given territory, but also that he may provide 
 his representative with the necessary documents and facilities 
 for carrying out that campaign successfully. 
 
 As an aid in obtaining this knowledge, the digest of the 
 regulations pertaining to commercial travelers in every coun- 
 try of the world, which appears later in this chapter, has been 
 compiled from the most reliable sources available. It may 
 serve a very useful purpose in giving the exporter an idea of 
 the cost and the formalities which will be involved in conduct- 
 ing his proposed foreign campaign, both of which factors he 
 may wish to consider beforehand. 
 
 The fees, laws, and even railroad regulations pertaining 
 to commercial travelers in foreign countries change fre- 
 quently. Notwithstanding this circumstance, the changes are 
 never radical and there is always a very great similarity be- 
 tween the old and the new regulations ; the substance usually 
 remains unchanged. In view of this fact, the exporter will get 
 from the digest a pretty good and certain idea as to what 
 the requirements in a given country are, so that he may esti- 
 mate the probable cost and know formalities to be undergone 
 with fair approximation even though he be unable to learn 
 the current rates and regulations from other sources. The 
 
 337
 
 338 TRADE REGULATIONS 
 
 digest has been made as brief as possible so that the exporter 
 may obtain the desired information at a glance. Further de- 
 tails or changes which occur may usually Ije ol^tained from the 
 Bureau of Foreign and Domestic Commerce, Washington, 
 D. C, or the general consulate in New York of the country 
 under consideration. 
 
 License Fees and Taxes 
 
 An examination of these laws will show that in some 
 countries the license fees charged and the taxes levied on trav- 
 elers are quite large. In some countries, moreover, such taxes 
 are imposed by both federal and municipal governments, while 
 an additional province tax is not exceptional. It is true that 
 in most South American countries these taxes can be avoided 
 by the foreign traveler if he makes arrangements to act also 
 as the representative of a local concern, but this is not pos- 
 sible in every case. It should be noted further that in many 
 countries an income tax is levied in addition to the license 
 tax, and also that the license tax is usually personal, not trans- 
 ferable, and is higher if the traveler represents more than one 
 firm. 
 
 Recent Treaties with South American Countries 
 
 A distinct tendency toward a simplification of the now 
 complicated regulations existing in the countries of South 
 America is indicated by the treaties recently concluded be- 
 tween the United States and Uruguay and between the United 
 States and Guatemala. The chief feature of these treaties is 
 that they provide for substitution of a single license fee in 
 place of the numerous local taxes and fees previously collected 
 from commercial travelers in most of the South American 
 countries. By this provision, and by others of less importance, 
 the operations of United States travelers in the countries men- 
 tioned are greatly facilitated.
 
 COMMERCIAL TRAVELERS 339 
 
 The strength of this tendency to promote foreign trade 
 through the simpHfication of regulations is borne out by the 
 fact that negotiations are understood to be in progress for 
 the conchision of similar treaties with more than half the 
 countries comprising the Pan American Union. These nego- 
 tiations seem to be received with particular favor by agencies 
 influential in the foreign trade affairs of Argentina, one of 
 the largest of our South American neighbors. 
 
 Documents Required 
 
 Many countries reciuire of commercial travelers in addition 
 to a license and a tax payment, documents of identity and 
 power of attorney from their principal showing authority to 
 act and proving that they represent a certain firm. In cases 
 where countries do not by law require such documents, it is 
 invariably advisable to carry them, for one can never know 
 when a need for them may arise. In addition to the power 
 of attorney, British and other foreign travelers frequently 
 carry certificates and letters of introduction from chambers of 
 commerce, boards of trade, banks, and merchants whose stand- 
 ing and reputation are well known to the country which they 
 propose to visit. 
 
 Admission and Sale of Samples 
 
 The laws pertaining to the admission of samples without 
 any commercial value are practically uniform, in that such 
 articles are admitted free of charge, whereas samples of com- 
 mercial value are usually admitted upon deposit of security, 
 which is refunded if the goods are taken out of the country 
 within some specific period. If the refund is desired, the sam- 
 ples must be sent back from the same port through which they 
 originally entered. It is the custom in a great many countries, 
 however, for commercial travelers to sell their samples before 
 they leave the territory.
 
 340 TRADE REGULATIONS 
 
 It will be noted also that there is a different regulation for 
 travelers who propose actually to sell goods instead of merely 
 to take orders. Some countries or states within countries in 
 which there is no tax upon travelers taking orders, require a 
 pedler's tax in case they make actual sales. Moreover, most 
 of those states in which there is an ordinary tax for travelers 
 require an additional license if samples are to be sold. 
 
 Other Important Factors 
 
 Generally speaking, no tax is levied on printed matter. In 
 most of the Latin-American countries such a tax exists, but 
 is seldom enforced. 
 
 Railroads abroad generally do not give commercial trav- 
 elers preferential treatment. The railroads in some countries, 
 however, are an exception to this rule and grant a consider- 
 able reduction, as will be noted in the digest of regulations. 
 Furthermore, in certain countries railroads make a reduction 
 in rates for carrying the sample trunks of commercial travelers. 
 In some cases this reduction is large and it will be found worth 
 while to secure definite information on the subject before mak- 
 ing plans for a selling campaign in a particular territory. 
 
 The exporter must bear in mind that the season during 
 which a campaign is conducted is of great importance. He 
 should send his traveler into a country during the season which 
 is likely to afford the best climatic conditions for a selling 
 campaign, and should bear in mind the fact that in most foreign 
 countries business is much more brisk at certain times of the 
 year than at others and that certain seasons exist there as 
 in the United States for the sale of certain classes of goods. 
 
 New Republics and Enemy Countries 
 
 No regulations are given of the various new republics 
 which have come into being as a result of the war because at 
 this time it is not known what the regulations will be. It is
 
 COMMERCIAL TRAVELERS 341 
 
 safe to assume, however, that duruig the reconstruction period 
 travelers will generally be admitted free, especially representa- 
 tives of those firms which deal in articles greatly in demand. 
 The firm sending a traveler to any of these countries should get 
 in touch with the Department of Commerce regarding the 
 regulations. If no information can there be obtained, he 
 should cable directly to the American consulate in the coun- 
 try with which intercourse is desired. 
 
 In all those European countries in which, since the begin- 
 ning of the war, there have been radical changes in govern- 
 ment and policies the old laws must be observed with very 
 much greater caution than in other countries, and proportionate 
 effort should be made to ascertain the latest recjuirements. 
 
 Abyssinia 
 
 No special regulations exist in Abyssinia concerning com- 
 mercial travelers. Samples are treated as ordinary merchan- 
 dise or property. 
 
 Afghanistan 
 
 No special regulations exist concerning commercial trav- 
 elers. 
 
 Antigua 
 
 See "British Possessions and Protectorates." 
 
 Arabia 
 
 No special regulations exist concerning commercial trav- 
 elers. 
 
 Argentina 
 
 Whether selling goods, showing samples, or soliciting or- 
 ders, commercial travelers must secure a license. The charge 
 for a license is different in each state and varies according
 
 342 TRADE REGULATIONS 
 
 to the type of merchandise sold. In the city of Buenos Aires the 
 annual license tax is 500 pesos, but it sometimes runs as high 
 as 1,000 pesos (Argentine currency). 
 
 The following is a list of the license fees charged in the 
 various states. The amount in each case is given in Argentine 
 currency. 
 
 Buenos Aires. 400 pesos per annum. 
 
 Catamarca. 300 pesos per annum. A license for the privilege of 
 
 selling a single article in mercers' or grocers' goods and of boots 
 
 and shoes, costs only 200 pesos. Licenses must be taken out for 
 
 the whole year and are not transferable. 
 Chubut. 50 to 500 pesos. 
 Cordoba. 400 pesos per year ; half-yearly licenses, given only after 
 
 June 30, 300 pesos. Licenses are transferable in case they are 
 
 taken out by a business house for an employee. 
 Entre Rios. 600 pesos per annum ; after June 30, 300 pesos. Licenses 
 
 are not transferable. 
 Gran Chaco. According to \zw, 50 to 700 pesos per annum ; in actual 
 
 practice the local office collects only 50 to 100 pesos. 
 JujuY. For selling one kind of merchandise, 100 pesos; for each 
 
 other class of merchandise sold, an additional 100 pesos. 
 La Pampa. 100 to 700 pesos per annum; if the license is taken out 
 
 after the middle of the year the fee is proportionate to the time 
 
 during which the license is to be held. 
 Mendoza. 700 pesos per annum; January to April, 600 pesos; May 
 
 to August, 600 pesos; September to December, 400 pesos. 
 
 Licenses are not transferable. 
 MisiONES. 100 pesos per annum. 
 National Territories. 100 pesos per annum. 
 Nequen. No license is required. 
 
 RiojA. 200 pesos per annum ; after July 8, 100 pesos. 
 Rio Negro. 100 pesos per annum. 
 Salta. For selling tissues, 1,000 pesos; haberdashery, 600 pesos; 
 
 groceries, 400 pesos; hardware, 550 pesos; china and glassware, 
 
 250 pesos ; boots and shoes, 400 pc<;os ; hats, 200 pesos ; men's 
 
 and boy's clothing, 800 pesos ; women's clothing, 200 pesos ; sugar, 
 
 1,000 pesos; wines, 200 pesos; drugs, 300 pesos; perfumery, 300 
 
 pesos.
 
 COMMERCIAL TRAVELERS 343 
 
 Licenses in this province may be taken out for 6 months, 
 counting from January i to June 30 and from July i to 
 December 31. Their cost must be paid before operations are 
 commenced. The fact of withdrawing samples from any railway 
 station in the province or of offering merchandise for sale by 
 means of catalogues or references is understood as implying that 
 the commercial traveler has commenced doing business. 
 
 San Juan. 400 pesos per annum. Licenses are not transferable and 
 cannot be taken out for a portion of a year. 
 
 San Luis. 400 pesos per annum ; licenses are issued also for 3 or 6 
 months. 
 
 Santa Fe. 400 pesos per annum. 
 
 Santiago del Estero. 300 pesos per annum. Licenses terminate on 
 December 31, irrespective of the date on which they are taken out. 
 
 Tucuman. 600 pesos per annum ; after June 30, 300 pesos. Licenses 
 are personal but are transferable by authorization of the business 
 house by which they are taken out. 
 
 Samples without commercial value are passed by the Ar- 
 gentine customs without payment of import duty. An import 
 duty is charged on samples of value. It is refunded if the 
 samples are re-exported within 6 months. 
 
 Printed circulars, cards, pamphlets, and catalogues im- 
 ported in quantities by commercial travelers are subject to duty. 
 The duty on advertising matter printed on cardboard is 42 
 per cent on the fixed valuation, or 0.60 pesos gold per kilogram, 
 which is equivalent to about $1 1 per 100 lbs. ; on matter printed 
 on bristol-board the duty is slightly higher, about $11.38 per 
 100 lbs. Advertising matter printed on paper and ordinary 
 matter printed on cardloard, are subject to a duty of $4.73 
 per 100 lbs. 
 
 A commercial treaty between the United States and Ar- 
 gentina, similar to those already consummated between the 
 United States and Uruguay and between the United States 
 and Guatemala, regarding the regulations concerning commer- 
 cial travelers is being favorably discussed at the present time. 
 (See "Uruguay.")
 
 344 TRADE REGULATIONS 
 
 Australian Commonwealth 
 
 Generally speaking, in the provisions of the Australian 
 Commonwealth concerning commercial travelers, no regula- 
 tions exist which require them to take out licenses. An income 
 tax is required from resident agents in Victoria, New South 
 Wales, Queensland, Western Australia, and Tasmania. In 
 South Australia an income tax on profits is legalized but not 
 enforced. The amount of this tax varies from 5 per cent on 
 gross sales to 5 per cent on the net amount for which the 
 goods have been sold. In Queensland resident agents of British 
 firms have to take out a business license which costs £2 (about 
 $10). 
 
 Duty is usually levied on all samples of commercial value, 
 but is refunded if samples are taken out of the country within 
 12 months. 
 
 The railroads usually make concessions to travelers. In 
 Tasmania, for instance, every commercial traveler is allowed 
 to take 112 lbs. of samples free of charge. Commercial trav- 
 elers holding first-class season tickets are allowed to carry 
 2 cwt. of luggage free. Resident agents of foreign firms must 
 pay f 10 per annum for an importer's license. 
 
 Austria* 
 
 Foreign commercial travelers must provide themselves with 
 "Certificates of Legitimation," which may be issued by any 
 chamber of commerce or by the mayor of a city in the United 
 States. 
 
 Commercial travelers, whether native or foreign, are 
 strictly forbidden to solicit orders from private individuals. 
 The regulations prescribe that the dealings of all travelers or 
 agents must be confined to such firms or individuals as in the 
 course of their business actually make use of the goods ordered, 
 excepting in certain specific cases. Travelers may seek orders 
 
 *These are the regulations which were in force before the war.
 
 COMMERCIAL TRAVELERS 345 
 
 from anyone for the following classes of goods, whether the 
 person whose business is being solicited deals in the goods or 
 not: 
 
 1. Machines of all kinds for plants, including motors and 
 
 their component parts. 
 
 2. Building material, including artificial stonework of all 
 
 kinds. 
 
 3. Motor cars. 
 
 4. Engineering requisites for heating and lighting appara- 
 
 tus and for waterworks. 
 
 5. Dies. 
 
 6. Wooden roller and Venetian blinds. 
 
 7. Fine or embroidered linen. 
 
 8. Sewing machines, typewriters, and bicycles. 
 
 Solicitation of orders for other classes of goods from per- 
 sons not trading in such goods, is permitted only if the person 
 giving the order expressly invites the soliciting party. Such 
 invitations must be spontaneous and must be specific, not gen- 
 eral, in character. These regulations are enforced with par- 
 ticular vigor with regard to the solicitation of orders for gro- 
 cers' and druggists' goods from persons neither dealing in nor 
 making business use of such goods. 
 
 Goods carried by commercial travelers must serve merely 
 as samples and must not be sold. 
 
 In some cases the railroads make a reduction in rates for 
 the conveyance of cases of patterns and samples. 
 
 The samples imported by commercial travelers are exempt 
 from import duty, if the same privilege is accorded Austrian 
 representatives by the government of the country from which 
 the traveler comes. 
 
 Bahamas 
 
 See "British Possessions and Protectorates."
 
 346 TRADE REGULATIONS 
 
 Barbados 
 
 See "British Possessions and Protectorates." 
 
 Bechuanaland 
 
 See "British Possessions and Protectorates." 
 
 Beira 
 
 A license tax of $50 is levied on the commercial traveler 
 for each visit which does not exceed one month in duration. 
 
 Belgium 
 
 The following are recent regulations covering imports into 
 Belgium and exports from that country. 
 
 "All foodstuffs can be imported without license except 
 sugar, cereals for the making of bread, barley, oats, wines, and 
 spirituous liquors. Licenses for these products are issued by 
 the Ministry of Industry, Labor and Revictualling. The same 
 ministry likewise issues import licenses for raw tobacco. 
 
 "Clothing and shoes, generally speaking, can be imported 
 without license. Licenses are likewise eliminated for certain 
 raw materials and for a number of manufactured products. 
 Manufactures of cotton goods are not subject to license. 
 
 "For the importation of raw tobacco, licenses must be re- 
 quested by Belgian purchasers through a group, the. delegate 
 of which is Mr. Jacobs, 5 rue Vandermaelen, Brussels. Li- 
 censes for raw cotton must be requested by the purchasers in 
 Belgium. 
 
 "All merchandise subject to import licenses can be stored 
 on arrival in bonded warehouses in Antwerp, pending the 
 obtaining of the licenses." 
 
 All exports from Belgium are subject to licenses which are 
 issued by the Ministry of Industry, Labor and Revictualling 
 and by the Ministry of Economic Affairs, on individual re- 
 quests of exporters.
 
 COMMERCIAL TRAVELERS 347 
 
 The treatment accorded to commercial travelers from for- 
 eign countries varies according to the reciprocal arrangement 
 between the traveler's country and Belgium. Usually no li- 
 cense fee is charged if the country from which the traveler 
 comes does not require such fees from Belgian travelers, un- 
 less by the occupation of a house he becomes ratable as a house- 
 holder. In all cases, however, travelers must furnish proof of 
 their nationality by means of passports and other documents. 
 
 There are special railroad regulations in Belgium for com- 
 mercial travelers. Sample trunks weighing less than 80 kilo- 
 grams and less than one-half cubic metre in volume must be 
 carried in the baggage car of a passenger train and must be 
 paid for at the ordinary carriage rate. When weighing over 
 50 kilograms such trunks must be furnished with two solid 
 handles and broad straps. Trunks exceeding 80 kilograms in 
 weight or one-half cubic metre in volume must be sent sep- 
 arately by goods train and are subject to the ordinary rate. 
 Moreover, in common with other passengers, commercial trav- 
 elers have a right to take, free of charge, personal baggage 
 which does not weigh more than 25 kilograms. 
 
 Belgium has separate arrangements with every country 
 concerning the entry of samples. The arrangement with the 
 United States in this matter may be ascertained from the De- 
 partments of State or Commerce. 
 
 Belgian Congo 
 
 License and a fee are required from all firms doing busi- 
 ness in Belgian Congo, which have no establishments in that 
 country on which the ordinary local taxes are payable. The 
 fee is 500 francs if the business includes the purchase or sale 
 of rubber, copal, or ivory, or the sale of goods other than 
 fresh goods on board vessels anchored in the Lower Congo 
 River; and 200 francs if the business of the firm is of any 
 other nature. On payment of the fee a permit is issued to the
 
 348 TRADE REGULATIONS 
 
 traveler authorizing him to do business in any part of the 
 country. 
 
 An income tax is levied on travelers who are domiciled in 
 the country or have offices or warehouses therein. 
 
 Samples without commercial value are admitted free. A 
 deposit of the amount of duty payable on samples of value is 
 required. 
 
 No duty is levied on imported catalogues. 
 
 Bermuda 
 
 See "British Possessions and Protectorates." 
 
 Bolivia 
 
 Commercial travelers in Bolivia are obliged to pay a tax 
 in every city they visit. A small duty averaging from 3 to 8 
 cents per pound is levied on advertising matter carried by 
 travelers for complimentary distribution. The regulations in 
 force and the taxes levied in the principal towns of each de- 
 partment are as follows: 
 
 CocHABAMBA. The tax is 1,000 bolivianos per annum. 
 
 La Paz. The tax is 250 bohvianos per annum. 
 
 Oruro. The tax is 250 bohvianos per annum. If the traveler should 
 arrive in July, he must pay a full year's tax and becomes liable 
 to tax again on January i of the following year. 
 
 PoTOSi. The tax is 200 bolivianos per annum. 
 
 Santa Cruz. An annual tax of 400 to 1,000 bolivianos is levied. The 
 amount assessed varies according to the class in which the 
 traveler is placed by the municipal authorities. 
 
 Sucre. All commercial travelers entering Sucre are required to report 
 to the Intendente Municipal and pay a tax, valid for the year, 
 according to the following schedule : 
 
 ist class 300 bolivianos 
 
 2nd class 100 bolivianos 
 
 3rd class 100 bolivianos 
 
 Traveling merchants 50 bolivianos 
 
 Pedlers 20 bolivianos
 
 COMAIERCIAL TRAVELERS 
 
 349 
 
 The Finance Committee of the Municipal Council determines 
 the class to which the traveler or agent belong-s. 
 
 Tarija. The tax is 200 bolivianos per annum. 
 
 TupiZA. The tax is 200 bolivianos per annum. 
 
 Uyuni. Travelers are supposed to be taxed from 100 to 200 bolivianos 
 for each visit, but these tax regulations are rarely enforced. 
 Usually a sum somewhat less than the above amount is collected, 
 if the traveler reports his arrival to the authorities. Should he 
 fail to do so, however, he is liable for the full tax. 
 
 Brazil 
 
 There is no federal tax levied, but travelers are taxed in 
 many individual states, while in others they are required to 
 take out a trader's license if acting in such a capacity. A 
 good many municipalities, moreover, require the traveler to 
 take out a hawker's license if he can be shown to be in this 
 class. The regulations in force and the taxes levied in the 
 various states and municipalities are as follows: 
 
 Bahia (State). 100 milreis per annum. If the traveler leaves the 
 
 country and returns the same year, a new license is required. 
 Maranham (State). 250 milreis per annum. 
 
 (Municipal). 100 milreis per annum. 
 MiNAS Geraes (State). 55 milreis per annum. If a trader's license 
 
 is taken out both state and municipal taxes are levied; if, however, 
 
 merely a hawker's license is required there is a charge only by the 
 
 municipality. 
 
 (Municipal). Lavras. 300 milreis per annum, if travelers do 
 
 business with private individuals. Otherwise no tax is levied. 
 
 Para (State). 300 milreis per annum. The authorities in this state 
 
 are very lax in enforcing the tax regulations. 
 
 (Municipal). 365 milreis for each visit. A trader's license is 
 necessary if the traveler sells the goods he carries. 
 Pernambuco (State). 600 milreis per annum. Travelers usually 
 
 avoid this license tax by making business connections with some 
 
 local merchant. 
 Rio DE Janeiro (State). No tax is levied. If, however, travelers sell 
 
 the goods they carry, they must take out a trader's license for 
 
 which a state or municipal tax of varying amount is charged.
 
 350 TRADE REGULATIONS 
 
 Rio Grande do Sul (State). 200 milreis per annum. 
 
 (Municipal) : Bage, 800 milreis per annum; Pelotas, 200 milreis 
 per annum; Porto Alegre, 100 milreis per annum; Rio 
 Grande, no taxes levied ; Sao Borga, 60 milreis per annum ; 
 Sao Gabriel, 200 milreis per annum ; Uruguayana, 300 milreis 
 per annum. 
 Sao Paulo (State). No tax is levied. 
 
 (Municipal): Santos, 500 milreis per annum; Sao Paulo, 1,000 
 milreis per annum. 
 
 Usually power of attorney is necessary for a traveler re- 
 ceiving payment for sales. Such power must be registered be- 
 fore a notary public. A small fee is charged for registration. 
 
 The Brazilian Budget Law in effect January i, 1916, pro- 
 vided for the free admission under bond of samples carried 
 by commercial travelers. Such samples are subject to the pay- 
 ment of a tax of 5 per cent of their official valuation and to 
 other charges, such as port taxes, storage, handling fees, etc. 
 
 No rebates to commercial travelers are granted by the rail- 
 ways, except by the Leopoldine Railway, which grants 20 per 
 cent reduction on travelers' samples and fares. 
 
 British Guiana 
 
 See "British Possessions and Protectorates" just below. 
 
 British Honduras 
 
 See "British Possessions and Protectorates" just below. 
 
 British Possessions and Protectorates 
 
 The regulations governing commercial travelers in the fol- 
 lowing protectorates and possessions of Great Britain are simi- 
 lar and for this reason are given here in group form. The 
 British possessions not included in this group will be found 
 elsewhere in the digest in their proper alphabetical position. 
 
 1. Antigua 3. Barbados 
 
 2. Bahamas 4. Bechuanaland
 
 COMMERCIAL TRAVELERS 
 
 351 
 
 5- 
 
 Bermuda 
 
 
 22. 
 
 Mauritius 
 
 6. 
 
 British Guiana 
 
 
 2Z- 
 
 Montserrat 
 
 7- 
 
 British Honduras 
 
 
 24. 
 
 North Borneo 
 
 8. 
 
 Ceylon 
 
 
 25- 
 
 Northern Nigeria 
 
 9- 
 
 Cyprus 
 
 
 26. 
 
 Nyasaland Protectorate 
 
 10. 
 
 Dominica 
 
 
 27. 
 
 Rhodesia 
 
 II. 
 
 East Africa Protectorate 
 
 28. 
 
 St. Helena 
 
 12. 
 
 Falkland Islands 
 
 
 29. 
 
 St. Lucia 
 
 13- 
 
 Federated Malay 
 
 States 
 
 30. 
 
 St, Vincent 
 
 14. 
 
 Fiji 
 
 
 31- 
 
 Seychelles 
 
 15- 
 
 Gambia 
 
 
 32. 
 
 Sierra Leone 
 
 16. 
 
 Gibraltar 
 
 
 33- 
 
 Southern Nigeria 
 
 17- 
 
 Gold Coast 
 
 
 34- 
 
 Straits Settlements 
 
 18. 
 
 Grenada 
 
 
 35- 
 
 Sudan, Anglo-Egyptian 
 
 19. 
 
 Hong Kong 
 
 
 36. 
 
 Trinidad 
 
 20. 
 
 Jamaica 
 
 
 37- 
 
 Uganda 
 
 21. 
 
 Malta 
 
 
 38. 
 
 Zanzibar 
 
 In the above mentioned British possessions and protector- 
 ates a license is usually required and a fee is charged if trav- 
 elers sell samples or goods. Also, resident agents and mer- 
 chants require a trade license. The fees vary from £1 to £20. 
 In Dominica travelers disposing of goods must obtain a license 
 costing from 15s. to £5, and in British Honduras a fee of 
 £10, 8s., 4d. is charged. Licenses remain in force until De- 
 cember 31. Income taxes are levied on resident agents, the 
 income tax in Dominica being 3 J/ per cent. Generally, how- 
 ever, only a trade license is required from resident traders. 
 
 Samples of value are admitted on deposit of security, v^^hich 
 is refunded if the samples are taken out of the country within 
 a specified period varying from 3 months to i year. 
 
 In St. Lucia and Hong Kong no duties are levied and no 
 deposit is required even though the samples are of commercial 
 value. Alcoholic liquors brought in by commercial travelers 
 are an exception to this rule. 
 
 Certain privileges are accorded on some of the railways in 
 respect to reduced fares or freight rates. This is particularly
 
 352 TRADE REGULATIONS 
 
 true in the case of the Cape government railways, the Rhodesia 
 railways south of Bulawayo in the Bechuanaland Protectorate. 
 On these roads travelers regularly employed by a firm, on pro- 
 duction of proof, will be furnished with a permit to travel 
 first-class with a second-class ticket. They are also granted 
 the free conveyance of samples of 200 lbs. in weight — twice 
 the amount granted other passengers on the railways of British 
 Guiana. 
 
 On the railways of the Federated Malay States, commer- 
 cial travelers are allowed 400 lbs. of personal luggage free. 
 The allowance to ordinary passengers is about one-third of 
 this amount. On any excess weight commercial travelers pay 
 only half of the ordinary excess baggage rates. 
 
 In Southern Nigeria first-class tickets at half the tariff rate 
 for each single journey are issued to representatives of any 
 firm whose railway consignments aggregate in freight charges 
 £2,500 per annum, and a first-class ticket is issued free of 
 charge for the year to the agent or to the head of the firm 
 whose consignments aggregate in freight charges £15,000 or 
 over per annum. 
 
 Bulgaria 
 
 Commercial travelers in Bulgaria must be provided with 
 a legitimation certificate. This certificate must be issued in 
 the form and manner prescribed by law and according to the 
 agreement between Bulgaria and the country from which the 
 traveler comes. 
 
 Licenses are required for all commercial travelers. The 
 license is issued by the ministry of commerce and is delivered, 
 to the traveler by the custom house of the first town he enters 
 in Bulgaria. The application for the license must contain a 
 description of the goods to be sold, the name of the firm rep- 
 resented by the traveler, and the name of the person for whom 
 the license is requested. The application must also be accom-
 
 COMAIERCIAL TRAVELERS 353 
 
 panied by a certificate of identity and a power of attorney 
 from the firm represented. 
 
 The fees are determined according to the nature of the 
 business and are as follows: 
 
 Fees for One Year 
 
 ist class — 150 francs; if more than one firm is represented, lOO 
 
 francs additional. 
 2nd " — 100 francs ; if more than one firm is represented, 75 
 
 francs additional. 
 3rd " — 50 francs; if more than one firm is represented, 50 
 
 francs additional. 
 
 Fees for Six Months 
 
 ist class — 100 francs; 50 francs additional if more than one firm 
 
 is represented. 
 2nd " — 75 francs; 35 francs additional if more than one firm 
 
 is represented. 
 3rd " — 35 francs; 25 francs additional if more than one firm 
 
 is represented. 
 
 Travelers are strictly forbidden to sell the samples or goods 
 they carry. 
 
 Canada 
 
 There are no special regulations affecting commercial trav- 
 elers, but those who sell goods or carry on a hawker's trade 
 must take out a pedler's license. They are not subject to in- 
 come tax, nor are they required to produce any document au- 
 thorizing them to transact business on behalf of their principal. 
 In some municipahties travelers selling direct to consumers 
 may be required to pay a fee. 
 
 In British Columbia no person may act as the representative 
 or agent of a foreign joint-stock company which has not been 
 licensed in the Province of British Columbia. The fees for such 
 licenses are assessed on the nominal capital of the company and 
 vary from $25, in the case of a company with a capital of
 
 354 
 
 TRADE REGULATIONS 
 
 $10,000, to $277,50 in the case of a company with a capital 
 of $500,000. For every $5,000 of capital in excess of $500,- 
 000 an additional $25 is charged. If the company will show 
 that the greater part of the capital is invested outside the prov- 
 ince the tax may be fixed at $250. 
 
 A company is liable to a fine of $50 per day and agents and 
 travelers to a penalty of $20 per day for every day on which 
 they carry on business so long as the company remains un- 
 registered or unlicensed. During such time the company is 
 also unable to sue in the courts of the province. 
 
 In the Yukon Territory commercial travelers must secure 
 a license at the cost of $500, unless their company has an 
 established place of business within the city of Dawson. Li- 
 censes expire on the 31st of December succeeding the date of 
 issue. 
 
 Samples of commercial value are admitted on the deposit 
 of a sum equal to the duty. This payment is refunded if the 
 samples are re-exported within 12 months from the time of 
 entry. This ruling does not extend to cards, portfolios, paste- 
 board boxes, and other coverings containing samples of cloth, 
 edgings, textile fabrics, buttons, and other articles for use 
 only as samples. These and other articles of no commercial 
 value are admitted free. 
 
 Ceylon 
 
 See "British Possessions and Protectorates." 
 
 Chile 
 
 No regulations of any kind exist concerning travelers and 
 consequently no license is required. 
 
 Samples, provided they are not whole pieces of stuff or 
 complete sets of merchandise, are admitted free, if dispensed 
 to private warehouses. If designed for general consumption 
 throughout the country, duty must be paid within 6 months
 
 COMMERCIAL TRAVELERS 355 
 
 1 
 
 after importation. If the samples are re-exported within 6 
 months, they are not subject to duty. 
 
 A certain amount of advertising matter is admitted free. 
 What this amount shall be in any particular case is wholly at 
 the discretion of the custom house officials. The rate of duty 
 established by law varies according to the nature of the mat- 
 ter from I peso to 2 pesos per kilogram. 
 
 China 
 
 No special regulations affecting travelers exist in China, no 
 fees or license taxes are levied, and the power of attorney 
 is not required to do business. 
 
 The Chinese railroads grant no special rate reductions for 
 commercial travelers. 
 
 Samples are not liable to duty if imported in reasonable 
 quantities for exhibition and not for sale. Travelers may, 
 nevertheless, sell their samples without having to procure a 
 license. 
 
 Colombia 
 
 Commercial travelers must pay taxes and local dues, which 
 vary according to the class of operations in which they are 
 engaged. There are no federal taxes, all dues being levied by 
 individual municipalities. The following is the schedule of 
 local dues : 
 
 Barranquilla. Neither local dues nor taxes exist. 
 
 Bogota, Neither local dues nor taxes exist. 
 
 Call A municipal tax of about $30 is levied, good for 130 days. 
 
 If the traveler remains longer he must pay $5 per month 
 
 additional. 
 Cartagena. $10 to $25 per annum for commercial travelers; $60 
 
 per annum for permanent agents. 
 Honda. Neither local dues nor taxes exist. 
 Manizales. $10 per month. 
 Medellin. The minimum charge is about $40 for 4 months. If
 
 356 
 
 TRADE REGULATIONS 
 
 the traveler intends to remain longer than 4 months, he should 
 notify the municipal authorities hefore beginning operations. 
 Failure to observe these regulations subjects him to a fine. 
 
 Santa Marta. $5 per month. 
 
 TuMACO. Neither local dues nor taxes exist. 
 
 If samples consist of wares which can be put to indus- 
 trial use, duty is levied on them according to the class to which 
 they belong. This duty, minus 2 per cent per month interest, 
 is refunded if the samples are re-exported. Samples unfit for 
 industrial uses are admitted free. All samples may be sold 
 without the procuring of a license. 
 
 Advertising matter is subject to a small duty. 
 
 Corea 
 
 No special regulations exist concerning commercial travel- 
 ers and no tax is levied on their selling activities. 
 
 Samples are usually admitted free of duty whether of value 
 or not. If of undue quantity, however, they are regarded as 
 ordinary merchandise and duty is then levied on them. If 
 they are re-exported within 13 months, this duty will be re- 
 funded. 
 
 Costa Rica 
 
 Costa Rica levies no state taxes and requires the payment 
 of no license fees. In the municipalities of San Jose, Limon, 
 and Puntarenas municipal taxes which vary from 15 to 100 
 colones are levied. In practice these taxes are not enforced 
 unless a showroom is hired, and even then they are enforced 
 only occasionally. 
 
 Some railways grant a rebate of 50 per cent on cases of 
 samples when they accompany a traveler. 
 
 Duty must be paid on samples of commercial value, but 
 this payment, less a charge of 5 cents per kilogram, is re- 
 funded if the samples leave the country within 90 days. On
 
 COMMERCIAL TRAVELERS 357 
 
 samples of jewelry and all manufactured articles of gold or 
 silver no refund duty is granted. 
 
 Cuba 
 
 All persons engaged in commerce are required to take out 
 a license in each municipal division of the republic. No fee 
 is charged for this license. No other special regulations exist 
 regarding commercial travelers, though it is advisable for them 
 to be provided with passports, power of attorney, and other 
 documents. 
 
 There are lengthy regulations concernmg the importation 
 of samples. Certain kinds of samples are admitted free, 
 whether of commercial value or not. On other kinds a deposit 
 of duty is required and is refunded, with a deduction of a cer- 
 tain percentage by the custom house, if the samples are re- 
 exported. Duty is levied on advertising matter according to 
 the character of the article advertised. 
 
 Curacao 
 
 No regulations for commercial travelers exist. Samples 
 other than those of no commercial value are inspected by the 
 customs officials. At the time of this inspection security must 
 be given for the payment of import duties. The security is 
 refunded if the articles are re-exported. 
 
 Cyprus 
 
 See "British Possessions and Protectorates." 
 
 Denmark 
 
 The cost of a license for a traveler representing one firm 
 is 160 kroner (about $45). A supplementary tax of 80 kroner 
 is payable for each additional firm which the traveler repre- 
 sents. When applying for a license, a certificate of identifi- 
 cation from the firm represented is necessary. The license
 
 358 TRADE REGULATIONS 
 
 holds good for one year from the date of issue. It must be 
 indorsed by both poHce and customs authorities in each town 
 the traveler visits. 
 
 Travelers are not supposed to sell samples except as part 
 of an order for not less than 40 kroner worth of goods. Duty, 
 returned if re-exportation takes place within 6 months, is pay- 
 able on samples brought in by travelers. A fee of about $2 
 is paid on exportation. 
 
 In Danish Iceland and Faroe Islands, commercial travelers 
 must take out a license and pay a fee. For such license, or 
 certificate, a payment must be made varying from 10 to 200 
 kroner. If the traveler represents more than one firm, an ad- 
 ditional fee is levied which varies from 10 to 50 kroner. Trav- 
 elers domiciled in the country must take out a trading license 
 in addition to the ordinary license. 
 
 Dominica 
 
 ' See "British Possessions and Protectorates." 
 
 Dominican Republic 
 
 Commercial travelers must pay for a license, which costs 
 $10 annually. There is no tax on advertising matter. Sam- 
 ples not exceeding $2,000 in value are admitted free under 
 bond, which is remitted if the articles leave the republic within 
 4 months. This period may be extended. Power of attorney 
 is desirable, but must be legalized at a cost of $3. 
 
 Dutch East Indies 
 
 Travelers must report to the chief of the local adminis- 
 tration within 3 days after their arrival. Samples other than 
 those of no commercial value are inspected by the customs 
 officials. At the time of this inspection security must be given 
 for the payment of import duties. The security is refunded if 
 the articles are re-exported.
 
 commercial: travelers 359 
 
 East Africa Protectorate 
 
 See "British Possessions and Protectorates." 
 
 Ecuador 
 
 A tax of lOO sucres (about $50) is levied each time the 
 traveler enters the republic. A municipal permit costing 100 
 sucres is required in a number of cities in addition to the state 
 license. 
 
 It is advisable for travelers to carry a certificate of identity, 
 passports, and power of attorney. 
 
 Samples of no value are exempt from duty ; those of value 
 are admitted free of duty temporarily, if guarantee is furnished 
 that they will be re-exported. Advertising matter is admitted 
 free, but should be marked in such a way as to indicate that it 
 is for complimentary distribution. 
 
 The Guayaquil and Quito Railway Company grants to 
 commercial travelers a 25 per cent reduction in rates on 
 baggage shipped over its lines by express. 
 
 Egypt 
 
 No special regulations exist and no license fees of any 
 kind are required from travelers, even though they sell their 
 samples. Samples of value are admitted on payment of the 
 deposit of duty. This deposit is refunded if the samples are 
 re-exported within 12 months. 
 
 Commercial catalogues and advertising matter imported 
 into Egypt are dutiable, although in practice this duty is never 
 collected except on a nominal valuation. 
 
 Equatorial Africa 
 
 Travelers are required to pay a tax of about $50 per month. 
 
 Falkland Islands 
 
 See "British Possessions and Protectorates."
 
 360 TRADE REGULATIONS 
 
 Federated Malay States 
 
 See "British Possessions and Protectorates." 
 
 Fiji 
 
 See "British Possessions and Protectorates." 
 
 France 
 
 France receives the commercial traveler in a manner corre- 
 sponding to the treatment accorded French travelers in the 
 homeland of the visitor. If a traveler represents several firms, 
 entirely on a commission basis, he will have to take out a 
 trading license. Those selling the actual goods they carry are 
 liable also to an additional tax which in practice is seldom 
 collected. 
 
 All foreigners resident in France are required to register 
 at police headquarters and to take out a certificate for which 
 23^ francs (about 50 cents) is charged. 
 
 Special privileges may be obtained from the railroads on 
 payment of a given sum and by special arrangement which, 
 in normal times, saves 20 to 50 per cent of the usual rate. 
 
 Samples of commercial value are admitted on deposit. All 
 duty is refunded if the samples are taken out of the country 
 within a year. A certificate of identity is necessary when such 
 refund is claimed by the traveler. 
 
 Gambia 
 
 See "British Possessions and Protectorates." 
 
 Germany 
 
 Conditions In Germany at this time are so uncertain that 
 it is impossible to say with any definiteness what the regula- 
 tions will be. Before the war the following conditions and 
 re.s:ulations existed: 
 
 'Handlungsreisende," or commercial traveler as used in the 

 
 COMMERCIAL TRAVELERS 361 
 
 German "Codified Trading Regulations," had a wider meaning 
 than in English. It inchided two classes of travelers: 
 
 1. Commercial travelers proper, viz., travelers for com- 
 
 mercial houses endeavoring to secure contracts for 
 the sale of goods on the strength of samples, etc. 
 
 2. Ambulant traders selling commodities from a stock 
 
 which they carried with them. 
 
 From travelers of the first class the law required a proof 
 of identity or permit and from those of the second class an 
 ambulant certificate, hereinafter called a "certificate." 
 
 The regulations concerning permits were briefly as follows: 
 A traveler was required to address an application to the police 
 authorities at the place of his sojourn, this application to be 
 accompanied by a certificate of good conduct for the 3 pre- 
 ceding years. Such certificate might be obtained from any of 
 the municipal authorities of the town from which the traveler 
 came, and was required to be certified by the German consul 
 and to be a statement to the effect that the applicant's reputa- 
 tion was good, that he had not been committed to jail, etc. 
 Only samples and patterns of merchandise regarding which 
 the trip was undertaken could be carried. Travelers were not 
 as a rule permitted to solicit orders from private individuals. 
 
 The regulations concerning certificates were as follows: 
 A certificate was required if travelers without orders from the 
 customers to be visited: 
 
 1. Offered for sale merchandise which they carried. 
 
 2. Called for orders or purchased goods, with a view to 
 
 selling them, from persons other than merchants or 
 at places other than places of business. 
 
 Application for a certificate was made in the same manner 
 as for a permit. A certificate was good only within the district 
 where it was granted. A fee was charged which varied accord- 
 ing to the nature of the enterprise. (In Prussia the average
 
 362 TRADE REGULATIONS 
 
 fee rate was 48 marks.) The granting of a certificate was 
 dependent to a great extent upon the discretion of the prefect 
 of pohce. Certificates might be refused if the appHcant was: 
 
 1. Under 25 years and had not held a certificate during 
 
 the previous year. 
 
 2. A suspected person. 
 
 3. Deaf, mentally unsound, etc. 
 
 4. A gipsy. 
 
 Samples of no value were admitted free of duty and also 
 certain kinds of samples of value. Duty was required to be 
 paid on all other samples of value unless they were duty- 
 exempt by reason of a commercial treaty between Germany 
 and the country of the traveler. 
 
 Gibraltar 
 
 See "British Possessions and Protectorates." 
 
 Gold Coast 
 
 See "British Possessions and Protectorates." 
 
 Grenada 
 
 See "British Possessions and Protectorates." 
 
 Greece 
 
 No formalities or license of any kind are required of the 
 commercial traveler in Greece. Agents resident in Greece are 
 required to take out a trade license. 
 
 Samples of value are admitted upon deposit of security for 
 the import duty. This deposit is refunded in case the samples 
 leave the country within 12 months. 
 
 Guatemala 
 
 No special regulations regarding commercial travelers exist 
 and no fees or taxes of any kind are required of them. Neither
 
 COMMERCIAL TRAVELERS 363 
 
 do travelers who sell samples of goods need any license, unless 
 they sell wines, spirits, or tobacco. In these three cases an 
 ordinary license is required, as in the case of local merchants 
 selling similar commodities. 
 
 Samples are liable to duty according to the classification 
 given them in the town to which they go. If they leave the 
 country, the duty is refunded. Samples imported by parcel 
 post are, without exception, admitted free of duty. 
 
 Catalogues are liable to the same duties imposed on other 
 printed matter, but the regulations are not as a rule enforced 
 in connection with this class of goods. 
 
 It Is advisable for travelers to be provided with power of 
 attorney authorizing them to do business for their firms. 
 
 The treatment of commercial travelers from the United 
 States Is now determined by the treaty of December 20, 19 18, 
 between the United States and Guatemala. The provisions of 
 this treaty follow the same general lines as do those of the 
 treaty of October 10, 1918, with Uruguay. The chief feature 
 of these provisions is the replacing of the various separate 
 provincial taxes on commercial travelers by a single uniform 
 tax for the whole country. (See "Uruguay.") 
 
 Haiti 
 
 A license and patente are required from all travelers; the 
 latter costs 100 and the former 50 gourdes. One gourde 
 (paper) is equivalent to about 25 cents. 
 
 No license Is required for commercial travelers from the 
 United States or any fee, except one of $4 for a passport. The 
 passport must be secured from the Department of Interior in 
 case the traveler wishes to visit the interior of the country. 
 
 Foreigners are not allowed to practice hawking in the 
 country. 
 
 Samples of value are admitted upon deposit of duty. The 
 deposit is refunded when the samples are re-exported.
 
 364 TRADE REGULATIONS 
 
 Hawaii 
 
 Travelers engaged in the actual buying and selling of goods 
 or in soliciting orders on a commission basis pay an annual 
 license fee of $100. The annual fee for the license merely to 
 sell goods is $25. Special licenses are required for persons 
 selling tobacco, wine, opium, etc. 
 
 Import regulations regarding samples are the same as in 
 the United States. 
 
 Honduras 
 
 A municipal license, good for 90 days is required in most 
 cases. The tax is usually about 50 pesos for each visit, but in 
 Puerto Cortez is only 25 pesos. A peso is about 50 cents. 
 
 Samples of no value, but weighing more than 25 pounds, 
 are subject to a small duty. Samples of commercial value are 
 admitted on compliance with certain formalities and upon the 
 deposit of duty, which is refunded, with a deduction of a very 
 small fee, if samples are re-exported within 90 days. 
 
 There is a duty on advertising matter based on the gross 
 weight of the shipment. This duty in some cases is quite high. 
 In order to make it lower, advertising matter should be carried 
 in a separate trunk. 
 
 Hong Kong 
 
 See "British Possessions and Protectorates." 
 
 Hungary 
 
 The following regulations were in force before the war. 
 Solicitation of orders by commercial travelers was 
 permitted: 
 
 1. From tradesmen who, in the ordinary course of their 
 
 business, made use of the articles offered. 
 
 2. From tradesmen for office and warehouse fittings and
 
 COMMERCIAL TRAVELERS 365 
 
 requisites; for instance, business books, shelves, 
 safes, typewriting machines, etc., for the use of the 
 tradesman in his business. 
 
 3. From farmers who within the Hmits of their business 
 
 carried on some branch of manufacture, such as mill, 
 dairy produce, etc. 
 
 4. From any person and for any sort of goods on receipt 
 
 of written invitation to call in regard to certain 
 articles. 
 
 5. From any person for articles specified below: 
 
 (a) Literary and artistic products. 
 
 (b) Articles of certified "home" industry. 
 
 (c) Instruments and scientific apparatus. 
 
 (d) Sewing machines. 
 
 (e) Larger agricultural machines. 
 
 (f) Plant for the transmission of electrical power. 
 
 The solicitation of orders by travelers in Hungary was 
 prohibited in all other cases. 
 
 Reductions of railway fare were offered to travelers of 
 certain nationalities. 
 
 Samples were admitted on deposit of security for their full 
 market value in addition to the custom house duties and the 
 expenses of valuation and registration. The samples were 
 required to be re-exported within a certain time, otherwise the 
 security was forfeited.
 
 CHAPTER XLII 
 
 COMMERCIAL TRAVELERS (Continued) 
 
 India 
 
 No special regulations exist affecting commercial travelers. 
 Foreigners are prohibited from entering the state of Jammu 
 and Kashmir and the Baghelkhand State without a pass from 
 the political agent or the durbar. In the state of Sirohi all 
 travelers must take a guide for the protection of their lives and 
 property. 
 
 No general license is required except for the sale of arms, 
 ammunition, liquors, and opium. Municipalities do not usually 
 require licenses for commercial travelers even though they sell 
 their samples of goods. There are, however, a few exceptions 
 to these general rules. Ordinarily, no certificates or power 
 of attorney from the firms represented are required. 
 
 In Calcutta commercial travelers who sell precious stones 
 are obliged to take out a license and pay a fee of 25 rupees. 
 
 In the native state of Marwar a license must be obtained 
 in order to sell foreign liquors ; in Mauritius, to sell sugar, etc. 
 
 In the Madras presidency travelers must pay a profession 
 tax if they exercise their calling within a municipality for a 
 period of 60 days. 
 
 In Baroda commercial travelers are required to pay an in- 
 come tax. 
 
 The luggage of commercial travelers is carried by practi- 
 cally all railways in India at half-parcels rates, provided the 
 travelers represent reliable firms. The quantity which may be 
 carried by mail train is limited to 410 lbs. and full rates are 
 charged. 
 
 366
 
 COMMERCIAL TRAVELERS 367' 
 
 Samples of commercial value whether brought personally 
 by commercial travelers or imported subsequently by them are 
 liable to import duty at the rates specified in the tariff. De- 
 posit or bond is required, but is refunded if the samples are 
 later taken out of the country again. Re-exportation must take 
 place within 12 months if duty is to be refunded. 
 
 Indo-China 
 
 No regulations for commercial travelers exist. 
 
 Italy 
 
 No certificates of identity or licenses are required except 
 in the case of travelers from countries which have adopted re- 
 strictive measures against Italian commercial travelers. 
 
 Samples of no commercial value are admitted free of duty, 
 but the admission of those of commercial value is regulated 
 according to the agreement between Italy and the country from 
 which the traveler comes. Usually security must be deposited 
 when such samples are imported; this payment is refunded in 
 case they leave the country within a period of 12 months. On 
 importing the samples, the traveler must obtain a permit from 
 the Italian authorities giving particulars concerning the 
 samples, the duty to be levied, etc. 
 
 Jamaica 
 
 See "British Possessions and Protectorates." 
 
 Japan 
 
 Regulations affecting commercial travelers in Japan show 
 that in some cases it is necessary for them to obtain licenses. 
 It depends largely upon the nature of the goods, as the fee is 
 levied according to the class of goods to be sold. A commercial 
 traveler who carries with him or sells samples of goods must 
 obtain a license and also permission to do business.
 
 368 
 
 TRADE REGULATIONS 
 
 Articles temporarily imported as samples are not subject 
 to import duty provided they are re-exported within 6 months 
 and provided security equal to the amount of the duty leviable 
 is furnished at the time of importation. 
 
 The details regarding rail transportation may be found 
 among the regulations available at the Department of Com- 
 
 merce 
 
 Liberia 
 
 There are usually no state taxes levied in Liberia, but mu- 
 nicipal authorities often require a traveler to take out an 
 agent's license costing about $26.50 per annum. Those trav- 
 elers who sell samples may be required to take out a wholesale 
 trade license, the cost of which is also about $26.50 per annum. 
 If the goods are sold retail, the cost of a license is about $17 
 per annum. 
 
 Municipal licenses are valid only for the town in which 
 they are issued. Travelers proposing to stay a short time may 
 make arrangements for a quarterly license at a proportionate 
 rate. 
 
 Samples of no value are not subject to duty. Samples of 
 commercial value are subject to an import duty which may 
 be refunded in case of re-exportation. There are, however, 
 no special regulations in regard to this matter. 
 
 It is advisable in all cases for travelers to carry power of 
 attorney from their principals. Certificates from their firms 
 authorizing them to collect debts are also desirable if such 
 work is to form a part of their duties. 
 
 Madagascar 
 
 Travelers are required to pay a tax of about $3 per month. 
 
 Malta 
 
 See "British Possessions and Protectorates."
 
 COMMERCIAL TRAVELERS 369 
 
 Mauritius 
 
 See "British Possessions and Protectorates." 
 
 Mexico 
 
 The regulations pertaining to commercial travelers in 
 Mexico are very numerous, cumbersome, and complicated, so 
 that they fill a good-sized pamphlet. Consequently the sub- 
 ject can be treated here only very briefly. The reason for these 
 compHcated regulations is that there are in Mexico 27 states, 
 each of which individually regulates commercial travelers, as 
 do also some of the municipalities. As a result a tax is levied 
 by both the states and the cities. Besides, these taxes are sub- 
 ject to the federal provision which requires that 20 per cent 
 be added to all taxation for the benefit of the federal govern- 
 ment. The latter tax is levied in the form of stamps affixed 
 to the receipt for payment of state or municipal licenses, and 
 amounts to 20 per cent of the actual rate of assessment. 
 
 Duty is levied on samples according to the class of goods 
 to which they belong. Certain kinds of samples are admitted 
 free. In other cases a deposit of the amount of the duties pay- 
 able on the goods is required. If the goods are re-exported 
 within the time provided by law such duty is refunded. The 
 period during which re-exportation should take place in order 
 to derive the benefit of a refund is not supposed to exceed 6 
 months, although it may be extended to 2 years by the Central 
 Customs Administration. 
 
 There is a duty on catalogues and on advertisements in the 
 form of pamphlets if they are bound, as they are then classified 
 under Article 602 of the Customs Tariff and the rate of 5 
 centavos per kilogram gross weight is charged. Catalogues 
 and advertisements, if unbound, are admitted free. Adver- 
 tisements of all kinds on paper or cardboard, if unframed, pay 
 a duty of 22 centavos per kilogram. 
 
 The following table, showing the payments to be made
 
 370 
 
 TRADE REGULATIONS 
 
 by commercial travelers in the municipalities of the state of 
 Coahuila, will illustrate the difficulties and complications await- 
 ing the traveler in Mexico. 
 
 State of Coahuila 
 
 Name of 
 Municipality 
 
 Agents' Tax Lev 
 
 lED On 
 
 Observations* 
 
 AUende 
 
 Commercial 
 
 travelers. 
 
 
 $3 to $5 on each 
 journey. 
 
 
 Sewing machine agent-. 
 
 
 $3 to $10 per 
 month. 
 
 
 Insurance agents. 
 
 . 
 
 $3 to $5 per 
 month. 
 
 General Zepeda 
 
 Commercial 
 
 travelers. 
 
 
 $5 to $10 per 
 month. 
 
 Gigedo 
 
 No agents' 
 
 tax exists. 
 
 
 
 Guerrero 
 
 No agents' 
 
 tax exists. 
 
 
 
 Hidalgo' 
 
 Sewing machine agents. 
 
 
 $1 per month. 
 
 
 Commercial 
 
 travelers. 
 
 
 2% on value of 
 sales. 
 
 Jimenez 
 
 No agents' 
 
 tax exists. 
 
 
 
 Juarez 
 
 Commercial 
 
 and other travelers. 
 
 $5 on each visit; 
 $5 ,to $100 per 
 month. 
 
 Matamoros 
 
 Commercial 
 
 travelers. 
 
 
 $5 to $io per visit. 
 
 Monclova 
 
 Commercial 
 
 travelers. 
 
 
 $2 to $io per 
 month. 
 
 Muzquiz 
 
 Commercial 
 
 travelers. 
 
 
 $8 to $25 on each 
 transaction. 
 
 Nadadores 
 
 Commercial 
 
 travelers. 
 
 
 $1 to $3 per da3^ 
 
 Nava 
 
 Commercial 
 
 travelers. 
 
 
 $3 per month. 
 
 Parras 
 
 Insurance agents and 
 agents. 
 
 clothing club 
 
 $5 to $10 per 
 month. 
 
 Porfirio Diaz 
 
 Native and 
 elers. 
 
 foreign commercial trav- 
 
 $5 to $io for each 
 journey. 
 
 $ represents Mexican money.
 
 COMMERCIAL TRAVELERS 
 State of Coahuila (Continued) 
 
 3/1 
 
 Name of 
 Municipality 
 
 Porfirio Diaz 
 (Cont.) 
 
 Progreso 
 Ram^s Ari::pe 
 Sabinas 
 
 Sacramento 
 Saltillo 
 
 Agents' Tax Levied On 
 
 San Buenaven- 
 tura 
 
 San Pedro 
 
 Sierra Mojada 
 
 Book and paper agents. 
 Agents established in the town. 
 Insurance agents. 
 
 Sewing machine agents. 
 
 No agents' tax exists. 
 Commercial travelers. 
 Insurance agents. 
 
 Commercial travelers. 
 
 Commercial travelers. 
 
 Travelers who bring their goods 
 with them and effect sales in 
 jewelry, textiles, or other unspeci- 
 fied wares. 
 
 Agents for india rubber stamps or 
 office requisites. 
 
 Sewing machine agents. 
 
 Insurance agents. 
 Lottery agents. 
 
 Sewing machine agents. 
 Commercial travelers. 
 Insurance agents. 
 
 Commercial travelers. 
 
 No agents' tax exists. 
 
 Observations* 
 
 $3 per month. 
 
 $10 per month. 
 
 $5 to $io per 
 journey. 
 
 $10 per month. 
 
 $1 to $5 per diem. 
 
 $3 to $5 per 
 month. 
 
 $4 to $5 per 
 month. 
 
 1% on sales. 
 
 $50 to $500 per 
 month. 
 
 $2 to $5 per 
 month. 
 
 $30 to $40 per 
 month. 
 
 $10 per month. 
 
 $2 to $5 per 
 month. 
 
 $1 to $3 per day. 
 $2 to $5 per day. 
 $2 per day. 
 
 From $2 to $20 
 and from $20 to 
 $100 per month 
 on sale. 
 
 $ represents Mexican money.
 
 572 
 
 TRADE REGULATIONS 
 
 State of Coahuila (Continued) 
 
 Name of 
 Municipality 
 
 Torreon 
 
 Viesca 
 Zaragoza 
 
 Agents' Tax Levied On 
 
 Commercial travelers. 
 
 Machinery agents, commercial trav- 
 elers, and insurance agents. 
 
 Commercial travelers. 
 
 Observations* 
 
 $5 to $50 per 
 month accord- 
 ing to the arti- 
 cle for sale. 
 
 From $3 upw^ards. 
 $2 to $10 per visit. 
 
 $ represents Mexican money. 
 
 Taxes in the other states of Mexico vary from $5 to $100 
 per month (Mexican money). It is understood, of course, that 
 as a commercial traveler goes from one state into another, 
 he has to pay a tax in each state in which he transacts business. 
 Otherwise he incurs a fine which ranges from $25 to $100 for 
 each violation. A Mexican dollar is worth about 50 cents in 
 United States money. 
 
 As the conditions and laws are at present uncertain and 
 questionable in Mexico, it is advisable that current informa- 
 tion be sought from the Department of Commerce. 
 
 Montenegro 
 
 No special regulations existed before the war regarding 
 commercial travelers. They were required, however, to pro- 
 duce power of attorney or certificates showing that they were 
 authorized to conduct business on their employers' behalf. 
 
 Samples of commercial value were dutiable. The duty was 
 refunded at any time they were re-exported. At the present 
 time the status of regulations in Montenegro is uncertain. 
 
 Montserrat 
 
 See "British Possessions and Protectorates."
 
 COMMERCIAL TRAVELERS 373 
 
 Morocco 
 
 No regulations of any kind exist concerning commercial 
 travelers and no restrictions are imposed upon them. 
 
 All samples are admitted free of duty, provided they are 
 re-exported within 6 months. Re-exportation must take place 
 through the custom house at which the entry of the goods was 
 effected. 
 
 Netherlands 
 
 Strictly speaking, no licenses are required. The only tax 
 to which travelers are liable, provided they are not domiciled 
 in the country, is on their professional income. The amount 
 of such tax is fixed at 15 guilders a year (about $6). Trav- 
 elers are compelled to send in their name, their domicile, and 
 a statement of the nature of their business to the municipal 
 authorities, who then issue to them free of charge a certificate 
 permitting them to do business. Unless this certificate is pro- 
 duced on the demand of the officials who are charged with 
 levying a tax on professional incomes, travelers are liable to 
 a penalty of 25 guilders (about $10.50). 
 
 Samples of no commercial value are admitted free of duty. 
 All samples of value must be presented for marking and iden- 
 tification and their admission is regulated by the customs offi- 
 cials. After the value of the samples has been declared, a tran- 
 sit passport is used. Security for payment of duty must be 
 given at this time. This security is refunded when the goods 
 are re-exported. Gold and silver articles imported as samples 
 are subject to special regulations. 
 
 Newfoundland 
 
 No special regulations exist concerning commercial trav- 
 elers, and no licenses are required. Railroads grant no special 
 privileges. Samples of commercial value are subject to duty, 
 which is refunded if articles are re-exported within 6 months.
 
 374 
 
 TRADE REGULATIONS 
 
 New Zealand 
 
 Commercial travelers in New Zealand who sell their sam- 
 ples or make sales of goods must procure annual licenses. 
 They are also required, on their arrival, to make a deposit of 
 £io (about $50) as a guarantee that the income tax on business 
 done in the colony will be paid. This deposit is held until the 
 traveler furnishes a report of the total business transacted dur- 
 ing his visit. When the adjustment of taxes is made a refund 
 is granted if the deposit amounts to more than the tax. Prin- 
 cipals of firms who travel to take orders or to visit customers 
 are subject to the same provisions as are other commercial 
 travelers. 
 
 A deposit is required on all samples of value entering the 
 country but is refunded if the samples are re-exported within 
 6 months. No certificates or power of attorney are necessary 
 unless the traveler is brought in contact with legal proceedings. 
 It is advisable, nevertheless, to carry such documents. 
 
 In New Zealand, railways allow commercial travelers to 
 carry 112 lbs. of luggage and samples free of charge. The 
 excess over that amount up to 10 cwt. is charged at the rate 
 of 6d. for every 56 lbs. or fraction thereof for every 50 miles 
 or fraction thereof. This is half the rate charged the public. 
 
 Nicaragua 
 
 No special regulations concerning commercial travelers 
 exist and travelers are permitted to sell without license the 
 samples and goods they carry. 
 
 Only samples of value are liable to duty. This duty is 
 refunded if the traveler at the time of importation makes a 
 declaration of his intention to re-export the articles. They 
 must be re-exported from the port of entry within 2 months 
 if advantage of this privilege is to be taken. Arrangements 
 can, however, be made for the prolongation of this period. 
 
 Circulars, cards, pamphlets, and catalogues are admitted
 
 COMMElRClAi: TRAVELERS 375 
 
 free of duty, but calendars, even when printed for compli- 
 mentary distribution, are dutiable at a rate of a little over 12 
 cents a pound. 
 
 North Borneo 
 
 See "British Possessions and Protectorates." 
 
 Northern Nigeria 
 
 See "British Possessions and Protectorates." 
 
 Norway 
 
 A trading license is required and must be obtained imme- 
 diately upon the arrival of the traveler in Norway. The charge 
 for this license, which is good for only i month, is 100 kroner 
 (about $27). The license may be obtained from the nearest 
 police authority. 
 
 Commercial travelers visiting customers who are local 
 agents must also take out a trading license. A traveler will- 
 ing to do business must, on arriving in a new town, submit his 
 license for certification to the director of police. For this 
 certification no charge is made. 
 
 It is illegal for a foreign traveler to offer goods for sale 
 to private customers in Norway. He may, however, sell his 
 samples direct from the ship or carriage in which they are 
 imported, but such sales may be made only to Norwegian 
 merchants or tradespeople for retail trade, or to those desiring 
 the implements or raw materials for use in their business. 
 
 On certain conditions drawback is granted of duty paid on 
 samples of commercial value, if they are re-exported in the 
 same condition as imported, and if notice has been given of 
 their importation. Samples may be re-exported from any 
 port. No regulations exist as to the time in which re-exporting 
 must take place. 
 
 There is a duty on all catalogues of 25 ore per kilogram
 
 276 TRADE REGULATIONS 
 
 (about $.067), but there are no customs regulations specially 
 affecting catalogues brought in by commercial travelers. 
 
 Nyasaland Protectorate 
 
 See "British Possessions and Protectorates." 
 
 Panama 
 
 Upon payment of a municipal tax of $10 per month, trav- 
 elers are permitted to take orders with or without samples. 
 The license must be renewed each month if the traveler 
 continues business. A separate license is required for each 
 municipal district visited for the purpose of taking new orders, 
 but no charge is made if travelers visit only their former cus- 
 tomers or come only to collect debts. 
 
 Samples of value must be declared to the Treasury Office 
 on their arrival at the port of debarkation. A landing permit 
 will then be issued. Ten per cent of the invoice value must be 
 deposited on all such samples, and it is desirable that the bond 
 should be certified by the consul for payment in the country 
 from which the traveler comes. This bond is returned on 
 the presentation of a custom house certificate which states that 
 none of the samples have been sold by the salesman during his 
 stay in the republic. 
 
 Panama Canal Zone 
 
 There are no restrictions placed upon the activities of com- 
 mercial travelers in the Canal Zone provided they merely take 
 orders from samples, but if they desire to sell the samples they 
 must obtain a pedler's license, costing $2 for each month or 
 part of a month during which the goods are offered for sale. 
 
 Paraguay 
 
 All travelers are required to take out a license before they 
 may sell goods, the cost varying according to the importance
 
 COMMERCIAL TRAVELERS 
 
 377 
 
 of the firm, which is decided by a board of local merchants. 
 The following are the fees which must be paid at Asuncion, 
 Villa Rica, Encarnacian, Concepcion, and Villa del Pillar: 
 
 1st class — $5,500 paper, per half-year (about $341 American money) 
 2nd " 4,000 " " " ' " 
 3rd " 2,500 " " " 
 4th " 1,800 " " " 
 5th " 1,200 " " " 
 
 Principals and commercial travelers of firms represented 
 by an agent or business house of Paraguay may carry on their 
 business without taking out a license. The license fees are 
 usually avoided by travelers by forming a connection with a 
 local agent who has an importer's license. This local agent 
 either accompanies the traveler on his trips through Paraguay 
 or sends an employee to do so. Such an arrangement may be 
 made with almost any local firm licensed as an importer. For 
 this service the local firm usually receives a small percentage 
 of the profit on the sales made. 
 
 Samples of commercial value are admitted on a deposit 
 which is refunded if re-exportation takes place within 6 
 months. There is no duty on advertising matter. 
 
 Persia 
 
 There are no regulations concerning travelers and conse- 
 quently no license is required nor is any tax levied. On the 
 other hand a passport properly authorized by the official repre- 
 sentative of the Persian government in the country from which 
 the traveler comes is absolutely necessary. Samples of piece 
 goods of not more than 30 centimetres in length are admitted 
 free. The importation of firearms is prohibited. 
 
 Peru 
 
 There are no special regulations affecting commercial trav- 
 elers. The admission of travelers' samples is governed by
 
 378 TRADE REGULATIONS 
 
 the law of June 26, 19 12, and a considerable number of for- 
 malities are to be observed. Among these are the presentation 
 of an inventory containing particulars regarding weight, mark, 
 tariff classification, individual numbering of each article, etc. 
 Generally speaking, however, samples of any kind, the entry of 
 which is not prohibited by the custom laws, are admitted on 
 the deposit of security which is refunded if they are taken out 
 of the country within a certain period of time. It is often the 
 custom of travelers visiting Peru to place their trunks of sam- 
 ples in the hands of a customs broker, who furnishes a personal 
 bond for the customs duty on samples and attends to other 
 formalities. Samples of no commercial value are admitted 
 free, though such admittance is at the discretion of the 
 appraiser. 
 
 It is advisable in all cases for the traveler to carry with him 
 power of attorney from his firm, a letter from the chamber 
 of commerce of the city in which his firm is located, and at 
 least one letter of recommendation to some local merchant in 
 the port at which he enters. 
 
 The Arequipa municipality compels commercial travelers 
 to take out a license the cost of which is about $12.50 per 
 quarter. 
 
 There is a tax of 50 soles (about $24) per visit in Cuzco 
 also. A limited amount of advertising is admitted free. 
 
 Philippine Islands 
 
 There are no regulations affecting travelers unless they 
 constitute themselves merchants, in which case they are liable 
 to the percentage tax of one-third of i per cent upon the 
 amount received. 
 
 Poland 
 
 No special regulations concerning foreign travelers exist 
 in Poland at this time, but inquiry should be made at the
 
 COMMERCIAL TRAVELERS 379 
 
 Department of Commerce by those expecting to send a repre- 
 sentative into that country. 
 
 Portugal 
 
 There are no rules or regulations concerning travelers. 
 Should the traveler, however, for the purpose of his business 
 occupy land or expose for sale goods subject to taxes accord- 
 ing to the municipal or local tariff, he may be called upon to 
 pay municipal imposts which vary in different cities. Trav- 
 elers are subject, moreover, to a local industrial tax which 
 is assessed according to local classification, a duty rate vary- 
 ing from $5 to $28 being levied in various towns. 
 
 Portuguese railway systems have season tickets and kilo- 
 meter passes of which travelers may avail themselves in secur- 
 ing a special rate. 
 
 The importation of samples is permitted upon deposit of 
 duty, which can be recovered if the samples are re-exported 
 within I year. 
 
 Rhodesia 
 
 See "British Possessions and Protectorates." 
 
 Roumania 
 
 Foreign travelers are not subject to tax, but must exhibit, 
 besides their passport, a certificate of legitimation. 
 
 Principals of firms who travel to take orders are subject 
 to the same regulations as are ordinary commercial travelers. 
 If one man represents more than one firm, the names of all 
 firms represented must be specified on the certificate. 
 
 Travelers are subject to penalty if they sell any samples of 
 goods they carry. If samples of commercial value are re- 
 exported within 12 months no duty is charged, but a bond must 
 be filed or security deposited when the application for entry 
 is made.
 
 380 TRADE REGULATIONS 
 
 Foreigners who intend to remain more than 8 days must 
 procure permits from the prefect of the district within 24 hours 
 after arriving in the country. 
 
 Russia 
 
 Owing to unsettled conditions at this writing, there is 
 no certainty regarding the regulations for commercial travelers 
 in Russia. Previous to the revolution, commercial travelers 
 arriving in Russia had to obtain a personal license at the cost 
 of about $26 and a trading license for the firms they repre- 
 sented at a further cost of about $50. In addition, provincial 
 duties at the rate of 10 and 15 per cent were charged and town 
 duties of the same amount, varying according to locality. A 
 great many formalities were required before one could obtain 
 a license to trade. Further information may be obtained from 
 the Department of Commerce. 
 
 St. Helena 
 
 See "British Possessions and Protectorates." 
 
 St. Lucia 
 
 See "British Possessions and Protectorates." 
 
 St. Vincent 
 
 See "British Possessions and Protectorates," 
 
 Salvador 
 
 No special regulations exist regarding travelers who merely 
 canvass for orders. Those who carry samples for sale to 
 wholesale merchants pay a tax when entering the republic of 
 100 pesos (about $40), if their stay is not to exceed 2 months. 
 For every month over this period they will be charged about 
 $10 extra, the amount being collected by the administrator of 
 customs at the time. of their departure.
 
 COMMERCIAL TRAVELERS 381 
 
 Municipalities levy also a local tax on commercial travelers. 
 This tax in San Salvador, for instance, is 50 pesos, but an 
 additional tax of $20 is levied on all representatives of for- 
 eign houses. Other municipalities levy taxes, valid for i year, 
 of 10 pesos or less. 
 
 It is advisable in all cases for the traveler to carry letters 
 from the firms for which he is doing business. 
 
 All samples, whether of commercial value or not, are liable 
 to duty. If the goods are intended for re-exportation the 
 duties may be deposited with a view to their return when the 
 traveler leaves the country. 
 
 Advertising matter, including chromos and almanacs, is 
 dutiable at about $1.50 per 100 lbs. 
 
 Santo Domingo 
 
 There are no regulations concerning travelers and no for- 
 mality need be complied with except, perhaps, that which 
 makes commercial travelers who dispose of their goods liable 
 to a tax of about $53 in each center in which they do business, 
 and to a tax of about $10 in each locality in which a sale is 
 made if they dispose of samples. This law, however, is rarely, 
 if ever, enforced. 
 
 Samples to a value not exceeding $2,000, introduced by 
 travelers for use in their business, may be admitted temporarily 
 free of duty provided they do not remain in the country more 
 than 4 months and provided the importer gives satisfactory 
 security. 
 
 Seychelles 
 
 See "British Possessions and Protectorates." 
 
 Siam 
 
 No special regulations exist affecting commercial travelers, 
 and no duties are levied on samples except on those of commer-
 
 382 TRADE REGULATIONS 
 
 cial value. Such samples are dutiable as ordinary goods. The 
 duty is refunded if re-exportation takes place within 6 months. 
 A list of the samples must be given to the custom house. 
 
 Sierra Leone 
 
 See "British Possessions and Protectorates." 
 
 Southern Nigeria 
 
 See "British Possessions and Protectorates." 
 
 Spain 
 
 The treatment accorded travelers from foreign countries 
 is regulated in Spain partly by the Spanish Industrial Contribu- 
 tions Law of 1896 and partly by the Hispano-Swiss Commer- 
 cial Treaty of 1906 and other commercial treaties. 
 
 Travelers who possess no fixed residence in Spain, who 
 neither sell their samples nor take orders from private individ- 
 uals, and who confine themselves to taking orders from com- 
 mercial houses are entirely exempt from taxation. 
 
 Those with fixed residence, such as managers of branch 
 houses, and those who merely sell from samples or catalogues, 
 have to pay a tax of from 164 to 300 pesetas. The tax varies 
 according to the city in which the business is transacted. Trav- 
 elers who sell the samples brought with them or who take 
 orders by means of those samples from private individuals are 
 subject to a tax of 2,000 pesetas. 
 
 There are special regulations concerning the sale of jewelry. 
 
 According to the Finance Act passed in December, 1910, 
 heavy additional taxes were established. The schedule of these 
 taxes may be secured from the Spanish consulate or from the 
 United States Department of Commerce. 
 
 Samples of commercial value are admitted free on declara- 
 tion of the maximum period during which they are to remain 
 in the country.
 
 COMMERCIAL TRAVELERS 383 
 
 A document of identification is necessary for all commercial 
 travelers. It may be said in general that the Spanish regula- 
 tions are very complicated, so that it is advisable for the 
 merchant contemplating trade activities in this field to obtain 
 detailed information from the Spanish consulate or embassy 
 in this country. 
 
 Straits Settlements 
 
 See "British Possessions and Protectorates." 
 
 Sudan, Anglo-Egyptian 
 
 See "British Possessions and Protectorates." 
 
 Surinam 
 
 No license is required except for those travelers dealing 
 in spirits. Such dealers must pay the same tax that is levied on 
 the local traders in such articles. Samples other than those 
 of no commercial value are inspected by the customs officials. 
 At the time of this inspection security must be given for the 
 payment of import duties. The security is refunded if the 
 articles are re-exported. 
 
 Sweden 
 
 All commercial travelers must obtain a license, the cost 
 of which is 100 kronor (about $27). This license is good for 
 30 days only and an additional 50 kronor (about $13.40) is 
 charged for every 15 days over the first 30 days. This license 
 entitles the traveler to sell goods in any part of the country. 
 He may not, however, sell any of his samples. 
 
 The principal of a firm, traveling to take orders or to visit his 
 customers, is required to take out a license in the same way 
 as any other commercial traveler. 
 
 Samples of value are liable to the ordinary rates of duty. 
 The duty paid may be recovered, however, if the samples are
 
 384 TRADE REGULATIONS 
 
 re-exported within 6 months. This period may be extended 
 by special arrangement with the authorities for 3 additional 
 months. 
 
 It is well for a traveler to carry documents while traveling 
 in Sweden. 
 
 Switzerland 
 
 A license called "carte de legitimation" must be obtained 
 by commercial travelers before they are permitted to do busi- 
 ness in Switzerland. This license is issued free of charge and 
 applies only to the dealings of commercial travelers with firms. 
 In case travelers deal with private individuals they are re- 
 quired to obtain another license, good for 6 months, for which 
 a charge of 100 francs (about $20) is made. The cost of an 
 annual license is 150 francs. To obtain a license a traveler 
 must produce a certificate of identity issued by a chamber of 
 commerce or other competent authority, stating that the firm 
 for which he is acting is authorized to do business in his own 
 country. 
 
 There are no other taxes. Sometimes permission can be 
 obtained to carry merchandise for sale as distinct from sam- 
 ples. Application for such permission should be made to the 
 government of the canton which the traveler proposes to visit. 
 He must, however, first obtain federal assent from the De- 
 partment of Commerce at Berne. 
 
 As regards customs duties, different countries are differ- 
 ently treated according to the decisions of the Franco-Swiss 
 Convention of October 26, 1906. The status of the United 
 States in this regard may be ascertained from the Depart- 
 ment of Commerce. As a general rule, however, it may be 
 said that samples of commercial value are admitted on deposit 
 of security as in many other countries, and that this deposit 
 Is refunded in case the samples are taken out of the country 
 within I year.
 
 COMMERCIAL TRAVELERS 385 
 
 Trinidad 
 
 See "British Possessions and Protectorates." 
 
 Tunis 
 
 No regulations exist affecting commercial travelers. A 
 firm proposing to do business with a traveler might, neverthe- 
 less, require some evidence of authority from him provino; 
 that he really represents the firm whose emissary he claims 
 to be. 
 
 A deposit of duty must be made on samples of retail value. 
 This deposit is refunded if the samples are re-exported within 
 6 months. 
 
 Turkey 
 
 The latest regulations concerning trade relations between 
 this country and Turkey can best be obtained from the Depart- 
 ments of State and Commerce. 
 
 Before the war no regulations existed affecting commer- 
 cial travelers. No special licenses were required even though 
 the traveler sold the samples he carried. He was invariably 
 obliged, however, to carry passports duly registered by the 
 Turkish consul. 
 
 Samples of value were admitted upon a casli deposit of 
 the customs duty or upon the deposit of a bond. If the sam- 
 ples were re-exported within 6 months, the customs office at 
 the port of exportation refunded the whole amount deposited, 
 provided the traveler presented the receipt furnished him at 
 the time of importation as well as a copy of the declaration 
 made by him at that time. These regulations varied according 
 to the commercial treaty between Turkey and the homeland 
 of the traveler. 
 
 Uganda 
 
 See "British Possessions and Protectorates."
 
 386 TRADE REGULATIONS 
 
 Union of South Africa 
 
 Generally speaking, a license is required. In Cape Colony 
 a license costs £50 per annum or £25 per half-year, if but one 
 firm is represented. If more than one firm is represented, £5 or 
 £2 los. is charged for every additional firm up to a maximum 
 charge of £100 or £50 respectively. Half-yearly licenses can 
 be taken out only after June 30 and all licenses expire on De- 
 cember 31. The same rule applies to agents and representatives 
 of foreign firms. 
 
 Under ordinary circumstances duty Is levied on all samples 
 of value imported by travelers. If re-exportation takes place 
 within the year the duty is refunded. Travelers wishing to re- 
 move their samples from one colony to another within the 
 union must obtain a permit from the customs authorities. 
 
 In Natal there is a stamp tax amounting to £10 per year. 
 All licenses expire December 31, but if taken after June 30 only 
 £6 is charged. One license is sufficient for the traveler regard- 
 less of the number of firms which he represents. Principals of 
 firms who travel only to visit customers are not required to take 
 out a license. Travelers are subject to an income tax on all 
 income earned in Natal. 
 
 In Orange Free State £5 is charged for a license which is 
 valid for only 3 months. The license to sell liquor costs £20 
 for 3 months. All licenses are personal. Travelers selling 
 samples require In addition a general dealer's license or a 
 hawker's license, according to whether the goods are sold at 
 the premises of the customer or of the agent. Principals visit- 
 ing customers do not need a license. No income tax is levied 
 on commercial travelers in Orange Free State. 
 
 In Transvaal all commercial travelers must take out a 
 license at a cost of £10 yearly or £6 half-yearly; all licenses 
 expire December 31. No income tax is levied In Transvaal. 
 The principal of a firm taking orders must take out a license 
 as in the case of the ordinary traveler.
 
 COMMERCIAL TRAVELERS 387 
 
 On the lines of the South African government railways 
 commercial travelers are allowed to carry double the weight of 
 free luggage permitted in the case of ordinary passengers, and 
 are also allowed to carry an excess weight up to a total of 
 1,500 lbs. at half-parcel rates. Concession orders signed by a 
 district transportation officer must be produced In order to take 
 advantage of these privileges. The luggage must consist of 
 personal luggage or samples intended solely for display and not 
 for sale. 
 
 On the Natal government railways commercial travelers, 
 on the production of credentials, are allowed double the weight 
 of free luggage granted to ordinary passengers and excess 
 weights are charged at half-parcel rates. Their luggage must 
 consist of personal luggage or samples intended solely for dis- 
 play and not for selling purposes. Such luggage may be booked 
 through to ultimate destination, but must accompany the 
 passenger. 
 
 Resident agents of companies not domiciled in Natal are 
 required to take out a license bearing a stamp value of £5. 
 A joint-stock company must take out an annual license bearing 
 stamps of the value of £1 for every £1,000 or fraction of 
 £1,000 of paid-up capital. 
 
 In Orange Free State also railroads grant certain special 
 facilities to commercial travelers. Full information on this 
 subject may be obtained from the Commercial Intelligence 
 Branch of the Board of Trade, London, England. 
 
 United Kingdom of Great Britain and Ireland 
 
 No special taxes are levied nor is a license required by 
 travelers unless they solicit or take orders for certain specified 
 goods. In such cases they must take out a license, unless their 
 principals abroad are duly licensed in the United Kingdom. 
 
 Samples and patterns of commercial value brought in by 
 commercial travelers must be declared at the custom house on
 
 388 TRADE REGULATIONS 
 
 entry and must be marked for the purpose of identification. 
 Also the duty leviable must be deposited or security given. The 
 deposit is refunded if re-exportation occurs within 12 months. 
 By virtue of the arrangement between the British and the 
 United States governments the following facilities are ac- 
 corded by the British customs for the clearance of samples of 
 commercial travelers from America. On the production of 
 a list or declaration officially attested by the proper authority 
 in the country of exportation and containing a description of 
 the samples brought by the traveler, examination of the sam- 
 ples by customs officers may be limited to ascertaining that they 
 are fully enumerated on the list produced. Further, should the 
 samples bear the marks, stamps, or seals of the country of 
 exportation, no additional marks or seals for purposes of iden- 
 tification will, as a rule, be affixed by customs officers in the 
 United Kingdom. 
 
 United States 
 
 No regulations or taxes affecting foreign travelers exist. 
 There are, on the other hand, many formalities and customs 
 regulations to be complied with before the entry of goods and 
 samples is permitted. A copy of these regulations may be 
 obtained from the custom house. 
 
 Uruguay 
 
 Travelers must obtain a license costing $100 (about $105 in 
 American money). A license is good for one year, but if it 
 is taken out at any time after January i, it is good only to the 
 end of December. Persons desirous of obtaining a license 
 should apply in writing to the chief of police of Montevideo 
 on a paper bearing a 50-centavo stamp. The license tax in 
 the Department of Montevideo is 200 pesos (about $206) ; in 
 the other departments of Uruguay it is 100 pesos (about 
 $103.50). A general license for the entire country may be
 
 COMMERCIAL TRAVELERS 389 
 
 taken out for 300 pesos (about $310). Travelers must regis- 
 ter, the cost of registration being 12 pesos or $12.50. 
 
 The regulations for commercial travelers from the United 
 States to Uruguay are determined by the treaty of October 
 10, 19 1 8. By the terms of this treaty, commercial travelers 
 from the United States may obtain, upon the payment of a sin- 
 gle fee, a license which entitles them to do business in any part 
 of the country. In order to obtain this license the traveler 
 must present a certificate of good character viseed by the consul 
 of Uruguay in the United States. 
 
 Travelers may sell their samples without obtaining a special 
 license as an importer. Samples without commercial value are 
 admitted free of duty and samples of value are granted tem- 
 porary free admission under bond for their re-exportation 
 within 6 months. 
 
 Venezuela 
 
 There are no special regulations concerning commercial 
 travelers. A license is required only in case the traveler sells 
 the samples or goods he carries. The cost of a license varies 
 in different towns, but it is not in any case exorbitant; indeed, 
 the license seldom is really necessary. 
 
 All persons entering Venezuela are required to produce a 
 certificate of vaccination legalized by the Venezuelan govern- 
 ment. Samples over 25 kilograms in weight are liable to duty 
 at the rate of a bolivar per kilogram. 
 
 Catalogues are admitted free of duty. Pamphlets and ad- 
 vertising matter in general, including calendars, are dutiable at 
 $1.37 per 100 lbs. gross weight. Lithographed advertising or 
 printed designs are dutiable at $17.13 per 100 lbs. gross weight. 
 
 Zanzibar 
 
 See "British Possessions and Protectorates."
 
 CHAPTER XLIII 
 
 CONSULAR AND SHIPPING REQUIREMENTS 
 IN WORLD TRADE 
 
 Each country of the world regulates the entry of foreign 
 merchandise through its ports by means of tariff laws, custom 
 house requirements, and consular form.alities. 
 
 The regulations in some countries are comparatively 
 simple, but in others the recjuirements are quite complicated. 
 The summary which follows has been compiled with great care, 
 but owing to the unsettled conditions prevailing at present 
 throughout the world, it must be recognized that a number of 
 these requirements are subject to change. 
 
 Africa 
 
 On the East Coast no consular documents of any kind are 
 reciuired, but in the Portuguese possessions bills of lading 
 must show the gross and net weight of the shipment, the 
 country in which it originated, and its value. French posses- 
 sions frequently require that a certificate of origin be pro- 
 cured and that the bills of lading be signed by the shipper or 
 his agent. 
 
 On the North Coast no consular documents of any kind 
 are required. In the Union of South Africa a certificate must 
 accompany all shipments and certain conditions for invoicing 
 goods must be complied with. 
 
 On the West Coast of Africa no consular documents are 
 recpired except for Liberia. In that country it is required 
 that three copies of the shipper's invoice be secured from 
 the consul. 
 
 390
 
 CONSULAR AND SHIPPING REQUIREMENTS 391 
 
 Arabia 
 
 No consular documents are necessary for shipments to 
 Aden and to Bahrein, hut the rest of Arabia is governed by 
 the same regulations as Turkey. 
 
 Argentina 
 
 In Argentina the consul's certification, for which there is 
 a charge of $2, is required on the bills of lading (three copies) 
 signed by the steamship company. No consular invoice is 
 required. Three copies of the certificate of origin must be 
 filled out and attached to these bills of lading. Shipments may 
 be made direct or "to order." Health certificates are re- 
 quired for all shipments of animal products, canned goods, 
 or potatoes. 
 
 Parcel receipts must be certified. Regulations pertaining 
 to the shipment of food products are quite lengthy and the 
 shipper of such products will do well to obtain the full text 
 from the consulate. 
 
 Packages for shipment should be marked with stencil or 
 brush and should bear the name of the steamer by which they 
 are shipped ; the shipping mark and number should appear on 
 two adjacent sides. Merchandise of value should be shipped 
 in clinched cases, so that in case the clinches are broken and 
 shortages occur, the responsibility can readily be placed. 
 
 Australia 
 
 No consular documents of any kind are required, but cer- 
 tain strict regulations exist concerning imports under the so- 
 called "Trade Descriptions Act of 1905." The merchant ex- 
 porting goods into Australia should obtain a copy of the act 
 and familiarize himself fully with its requirements. It may 
 be said in a general way that under this act the description of 
 goods must be particularly accurate, as all merchandise bear- 
 ing false or exaggerated description is barred from the coun-
 
 392 TRADE REGULATIONS 
 
 try. The act was aimed primarily at the importers of patent 
 medicines and food products ; consequently, the manufacturer 
 of these lines should carefully study all its provisions before 
 venturing to make a shipment. 
 
 Austria 
 
 Before the war no consular documents of any kind were 
 required. United States inspection certificates were necessary, 
 however, on all shipments of meat products. 
 
 Belgium 
 
 No consular regulations or government restrictions of any 
 kind are in force in Belgium. 
 
 Bolivia 
 
 Very extensive and intricate regulations exist concerning 
 packing, marking, weighing, and shipping. It will be advis- 
 able for the exporter to obtain detailed rulings from the con- 
 sulate, as the regulations change frequently and vary accord- 
 ing to the route over which the shipment is made. 
 
 The consular fee for certifyi»ng an invoice for goods less 
 than $200 in value is $3; more than $200 in value, 2 per 
 cent. Four copies of the consular invoice are necessary for 
 shipments via Chile, Argentina, or Brazil ; five copies for ship- 
 ments via Peru. Consular invoices must be in Spanish and 
 must be accompanied by bills of lading, commercial invoices, 
 and other documents indicating the market value of the ship- 
 ment. Name of consignee at both points of transshipment 
 and destination must be given, as well as the custom house 
 destination. 
 
 Brazil 
 
 A consular invoice is required and must be in quadrupli- 
 cate form, the consul retaining three copies. It should be
 
 CONSULAR AND SHIPPING REQUIREMENTS 393 
 
 prepared in Portuguese ; if it is in English, a charge for trans- 
 lation will be made. No consular invoice is required on ship- 
 ments the total value of which, including freight and expenses, 
 is less than $48.88, but such consignments must be shipped 
 on parcel receipt. Duty is payable on weight ; in some cases 
 on legal net weight, in some on gross weight, and in some on 
 the actual net weight. The laws of Brazil prohibit the sale 
 of goods bearing a false label as to their origin. The con- 
 sular fee is $2.20, $1.38 of which is collected by the steam- 
 ship company. 
 
 The exporter must sign an affidavit or declaration of con- 
 tents and value for each shipment. The total declared value 
 should include freight and shipping expenses. 
 
 Canada 
 
 No consular regulations of any kind exist. The "Official 
 Circular to Exporters," issued by the Canadian customs author- 
 ities gives in detail the various formalities necessary in im- 
 porting goods into Canada. The regulations concerning medi- 
 cines are particularly strict. Certified invoices in duplicate 
 are required for customs entry, but they may be mailed to 
 the consignee and need not accompany the shipment. The 
 consignee's full name and address, the marks, and number of 
 packages in the shipment must be given on the way-bills. 
 
 Chile 
 
 In shipping to Chile, four copies of consular invoices, 
 written in Spanish, are required except in the case of parcel 
 post shipments or samples. Bills of lading must be furnished 
 and must be certified to by the consul, who keeps one copy. 
 The bill of lading must show both gross and net weight in 
 kilograms. Consul's fees average about % per cent of the 
 value of the shipment, while an additional charge of 75 cents 
 is made for certification of the bill of lading.
 
 294 TRADE REGULATIONS 
 
 In marking packages a stencil must be used, as it is not 
 permissible to mark with a brush. Each package must bear 
 a shipping number, agreeing with the number stated in the 
 consular invoice and in other shipping documents. The weight 
 in kilograms should be marked on packages. 
 
 No erasures are permitted on invoices. If an error is 
 made a separate letter of correction must be written in Spanish 
 and presented to the consul in triplicate. Shipments "to 
 order" are permissible. 
 
 China 
 
 • 
 
 Except for Korea, no consular documents of any sort are 
 required. In importing into Korea the manufacturer's invoice 
 should be signed by the manufacturer or the seller of the 
 goods. Importation into any part of China of firearms or 
 ammunition can be made only by permission of the govern- 
 ment. 
 
 Colombia 
 
 In Colombia, as in other South and Central American 
 countries, consular and shipping regulations are extensive; 
 hence it is advisable to obtain a copy of regulations from the 
 consulate. These regulations are especially complicated con- 
 cerning the importation of meats, as goods of this kind, 
 should antiseptics have been used for their preservation, may 
 not be imported at all. 
 
 Five copies of a consular invoice in Spanish are required; 
 four of these must be presented to the consul the day before 
 the vessel sails. Each invoice must show name of shipper, 
 consignee, owner, name of vessel, mark and number, con- 
 tents and gross weight of each package, as well as value per 
 package and total f.o.b. value of shipment; also freight, in- 
 surance, and commission to port of entry. Consul's fees range 
 from I to 3 per cent of value.
 
 CONSULAR AND SHIPPING REQUIREMENTS 
 
 395 
 
 Shipments "to order" are not permitted. Goods destined 
 for the interior of the country must be consigned to an agent 
 at the port of entry. 
 
 Cuba 
 
 Consular invoices are required in Cuba; five copies for 
 Havana and four for other ports. They must be written in 
 Spanish and certified. Bills of lading must also be certified 
 by the consul. The consul's fee is about i per cent of the 
 value of the shipment, while an additional charge of $i is 
 made for certification of the bill of lading. There are special 
 regulations concerning the importation of firearms and patent 
 medicines. Shipments "to order" are accepted. 
 
 Denmark 
 
 No consular formalities are recjuired by Danish authorities 
 and no government regulations exist as to weights, marks, 
 etc. The laws do, however, prohibit the importation and sale 
 of any goods bearing a false indication as to the country of 
 origin. 
 
 Ecuador 
 
 Ecuador has very strict entry regulations and complicated 
 consular recjuirements for imports. Seven copies of consular 
 invoices in Spanish are recjuired. The consul keeps four 
 copies, the steamship company one, the shipper one, and the 
 remaining one is sent to the consignee. Invoices must be 
 presented to the consul not later than 4 p.m. on the day of 
 the vessel's departure. 
 
 There are special regulations concerning the marking and 
 weighing of packages, one of which is that a separate invoice 
 is required for each mark. Packages should be marked with 
 stencil and should show gross weight in kilograms. Ship- 
 ments "to order" are permitted. Consul's fees for shipments
 
 396 TRADE REGULATIONS 
 
 are: up to $50 in value, $1 ; worth more than $50, 3 per cent 
 of their value. A set of six blanks costs 50 cents, while a 
 certificate for lists of small shipments costs 12^ cents. 
 
 Egypt 
 
 In making shipments to Egypt, the consignee must file a 
 declaration as to weight, number, contents of packages, etc. 
 Sometimes the original invoice of the exporter is demanded 
 at the custom house. The British consul should be con- 
 sulted for detailed information. 
 
 France 
 
 A certificate of origin and one consular invoice are required 
 in most cases in shipping to France. On shipments of meat 
 and food products from this country a United States inspec- 
 tion certificate is required. The consular invoice is issued at 
 a charge of $2.50; a vise of certificate of origin at $2.20. 
 There are many other formalities to be complied with in all 
 cases of shipment of goods to France, especially in connection 
 with shipments of medicines and tobacco. 
 
 Germany 
 
 Before the war, there were no consular requirements or 
 government restrictions of any kind regarding shipments to 
 Germany. The laws of Germany forbade placing on sale 
 the goods of those concerns by whom trade-marks have been 
 wrongfully appropriated. The United States certificate of 
 inspection was required for shipments of meat. 
 
 Great Britain 
 
 No consular regulations exist in Great Britain. There 
 are lengthy regulations concerning the importation of goods 
 where the trade-mark has been registered in another country. 
 The United States certificate is required for shipments of meat.
 
 CONSULAR AND SHIPPING REQUIREMENTS 397 
 
 Greece 
 
 No regulations of any kind exist in Greece. The United 
 States certificate of inspection is required on all meat ship- 
 ments from this country. There are no government restric- 
 tions as to marks, weights, etc. 
 
 Guatemala 
 
 The regulations in Guatemala are similar to those of other 
 Latin-American countries. Five consular invoices, prepared 
 in Spanish, are necessary. Certain regulations exist as to the 
 manner in which the declarations for the invoices should be 
 made. The consular fee is 2 per cent of the value of the 
 shipment; $1 is charged for certification of the bill of lading. 
 The name of shipper and consignee, place of origin and des- 
 tination, name of vessel, mark, number, gross weight of con- 
 tents and character of each package, total value of invoice, and 
 details of packages must be stated in the invoice. Packages 
 may be marked with a stencil or brush. Weights need not 
 appear on the package. Packages for different ports cannot 
 be put on the same invoice. Special permits are required for 
 arms, ammunition, and so on. Shipments "to order" are per- 
 mitted. 
 
 Haiti 
 
 For Haiti, consular invoices are necessary, while five signed 
 copies of the bills of lading are required at the consulate for 
 certification. Invoices may be prepared either in English or 
 French. The consular fee is $1. Packages may be marked 
 with stencil or brush, and shipments "to order" are permitted. 
 
 Holland 
 
 No consular requirements or government restrictions of 
 any kind exist In Holland.
 
 398 
 
 TRADE REGULATIONS 
 
 Honduras 
 
 For Honduras, four consular invoices, prepared in Spanish, 
 are required for each different mark. The consul's fee ranges 
 from $1 upward according to the value of the shipment. A 
 commercial invoice, certified to by the consul, is also required. 
 The importation of intoxicating liquors is prohibited. A spe- 
 cial permit is necessary for the importation of firearms. 
 
 Italy 
 
 In Italy a certificate of origin is usually required. A 
 charge of $4.40 is made for vise of the certification. Special 
 regulations exist in regard to some articles, such as tobacco, 
 leather, salt, etc. Gross and net weight should be stated in 
 the bill of lading on shipments of tobacco, while all bills of 
 lading must show the name of the consignee. 
 
 Japan 
 
 A certificate of origin, which must be vised by the consul 
 of Japan, is required only on shipments of certain kinds of 
 goods. A charge of $2 is made for vise of this certificate of 
 origin. Firearms, salt, and tobacco cannot be shipped to 
 Japan. 
 
 Mexico 
 
 In Mexico consular invoices must be sworn to before a 
 notary and presented in quadruplicate form. They may be 
 prepared in either English or Spanish. A set of four consular 
 blanks costs 15 cents. The consul's fee is 3 per cent of the 
 value of the shipment. On the date of shipment, invoices 
 should be forwarded by registered mail to the collector of 
 customs at the port of entry and also to the department of 
 customs ; postmasters' receipts to go to the consignee. Special 
 instructions as to shipping, packing, and marking must be 
 followed. Packages may be marked with stencil or brush.
 
 CONSULAR AND SHIPPING REQUIREMENTS 399 
 
 Nicaragua 
 
 Six copies of consular invoices, prepared in Spanish, are 
 necessary in Nicaragua. Bills of lading prepared in Spanish 
 must be presented to the consul for certification, and the fee 
 of $3 must be paid by the shipper. A commercial invoice 
 must also be presented. Consular blanks in sets of six cost 
 25 cents. The consular regulations are very lengthy. Special 
 instructions as to packing and shipping should be carefully 
 followed. In case of raw materials, a certificate of origin 
 is required. 
 
 Norway 
 
 No consular or shipping requirements or restrictions of 
 any kind exist in Norway. 
 
 Panama 
 
 Six consular invoices in Spanish are required in Panama; 
 also four copies of the bill of lading certified by the consul. 
 The consul's fee must be paid by the consignee at the port of 
 entry. The shipment may not be consigned "to order" or 
 "care of." Only the official form of consular invoice may be 
 used. If the material is for transshipment, notice of that 
 fact must be given. Panama Canal Commission goods are 
 exempt from all regulations. 
 
 Paraguay 
 
 Consular invoices from the point of shipment are not re- 
 quired by the laws of Paraguay, but for goods going via Mon- 
 tevideo, Uruguay requires invoices and bills of lading certi- 
 fied by a consul of Paraguay at the point of shipment. If 
 goods are shipped via Buenos Aires, bills of lading must be 
 viseed by the consul of Argentina. The consul's fee is $2 
 for the certificate of origin, but there is no charge for the 
 viseing.
 
 400 TRADE REGULATIONS 
 
 Persia 
 
 No consular documents of any kind are required, and no 
 government regulations as to marks, weights, etc., exist in 
 Persia. A shipping permit must be obtained before delivery 
 is made at the steamship's dock. No parcel receipts are 
 issued. 
 
 Peru 
 
 In Peru consular invoices must be prepared in quadrupli- 
 cate and must be in Spanish. Certified bills of lading are also 
 required. Regulations exist concerning the manner of mark- 
 ing packages and preparing goods for shipment, which must 
 be strictly followed. Marks may be in stencil or brush. Goods 
 may be consigned "to order." The consul's fee is 2 per cent 
 of the value of the shipment. 
 
 Portugal 
 
 For Portugal the consular invoice should be in triplicate 
 and may be prepared in English or Portuguese. There are 
 special regulations concerning shipments of tobacco and patent 
 medicines. A certificate of origin in many cases is necessary. 
 Usually a different number must be marked on each package 
 in one shipment and these numbers must agree with the num- 
 bers in the consular invoices. The consul's fee varies from 
 $2.20 to $2.50. 
 
 Roumania and the Balkan States 
 
 There are no consular requirements or restrictions of any 
 kind for the Balkan States, except for Serbia. (See page 401 
 for regulations for Serbia.) 
 
 Russia 
 
 No consular requirements existed in Russia before the 
 revolution but there were important formalities to be com-
 
 CONSULAR AND SHIPPING REQUIREMENTS 401 
 
 plied with in making shipments. It is advisable to secure a 
 complete set of regulations from the consulate or from the 
 American-Russian Chamber of Commerce before making a 
 shipment to Russia. 
 
 Salvador 
 
 Consular invoices in quadruplicate must be prepared in 
 Spanish and bills of lading must be certified at the consulate. 
 The certification of bills of lading costs $1. Shipments "to 
 order" are allowed. Brush or stencil marking is permitted and 
 weights need not be stated on packages. 
 
 San Domingo 
 
 In San Domingo certification at the consulate of the con- 
 sular invoices and bills of lading is necessary, but consular 
 charges are collected at the port of entry. Shipments may 
 be consigned "to order" and separate invoices must be pre- 
 pared for each mark. Four consular invoices and bills of 
 lading must be prepared in Spanish. 
 
 Serbia 
 
 For Serbia, three copies of the shipper's invoice are re- 
 quired by the consul, also a declaration on the face of every 
 invoice. A form of this declaration may be procured from 
 the consul. The consular fees vary according to the value 
 of merchandise shipped. For instance, for the certification 
 of a shipper's invoice of the value of $480 or upwards the fee 
 is $3. 
 
 Spain 
 
 No consular restrictions exist in Spain, but a certificate 
 of origin and a certificate of destination are necessary on 
 shipments of certain kinds of goods. A fee of 40 cents is 
 made for vise of the certificate of origin.
 
 402 TRADE REGULATIONS 
 
 Sweden 
 
 No consular documents are required in normal times in 
 Sweden, but strict regulations exist in reference to commer- 
 cial invoices. The country of origin must be clearly indicated 
 on all shipments and the word "import" must appear with 
 the name and address of the manufacturer. 
 
 Switzerland 
 
 No consular regulations of any kind concerning foreign 
 shipments exist in normal times in Switzerland. 
 
 Turkey 
 
 Declaration of merchandise is usually necessary; also a 
 certificate of origin, made out in French and certified by the 
 Turkish consul at the point of shipment. Charge for this 
 certification is $2. Ordinarily no consular documents are 
 required unless requested by the Turkish importer. 
 
 Uruguay 
 
 Three bills of lading for each shipment to Uruguay must 
 be certified by the consul. Certificates of origin are required 
 in duplicate. Packages may be marked with brush or stencil. 
 Shipments "to order" are allowed. Petroleum shipments re- 
 quire first test certificates, while a certificate from the Depart- 
 ment of Agriculture is necessary for shipments of plants into 
 the country. 
 
 Three certificates are required for all shipments of animals 
 — one from a veterinarian showing that the animals are phys- 
 ically sound, one from the railroad company stating that their 
 cars have been disinfected, and one from the steamship com- 
 pany stating that the animal's quarters on the ship have been 
 disinfected. 
 
 The importation of many kinds of goods, such as alcohol, 
 edible oils, etc., is prohibited.
 
 CONSULAR AND SHIPPING REQUIREMENTS 403 
 
 Venezuela 
 
 For Venezuela a consular invoice, prepared in Spanish, is 
 required. Four copies of this invoice should be presented for 
 certification at the consulate. Goods cannot be shipped "to 
 order." Firearms can be imported only by special permission 
 from the government. Foodstuffs shipped to Venezuela from 
 this country should bear the United States stamp of inspection, 
 as strict pure-food regulations exist. When an invoice has 
 more than one mark, an extra 25 per cent is added to the con- 
 sular charges for each additional mark. 
 
 New Countries 
 
 Several countries where unsettled conditions prevail have 
 not been mentioned as the many new political alignments 
 which are being made at this time render it impossible to com- 
 plete in an authentic way the data presented in this chapter. 
 Such countries as Poland, Bohemia, Lithuania, Bavaria, 
 Czecho-Slovakia, and others of like status have been omitted 
 from the preceding list on account of the unsettled conditions 
 prevailing within their borders. The Department of State 
 at Washington will be able to give as authentic information 
 concerning any regulations these countries may now have, 
 as is obtainable anywhere.
 
 CHAPTER XLIV 
 
 CREDIT CUSTOMS OF THE WORLD 
 
 A digest of the usual credit customs in each of the various 
 foreign countries follows. 
 
 Argentina 
 
 The wholesale trade usually requires 6 months' credit but 
 small dealers require only from i to 3 months. These small 
 dealers frequently pay cash for either a whole or part of the 
 order, but in large transactions cash payments are rare. The 
 prevalent rate of discount runs as high as 6 per cent. For 
 payment within 30 days a discount of 5 per cent is given, 
 with I per cent less for each additional month that payment 
 is deferred. 
 
 Australia and New Zealand 
 
 Many Australian firms maintain branches in London 
 through which foreign purchases are made. Several credit cus- 
 toms prevail in connection with goods sold to Australian mer- 
 chants. The principal ones may be summarized as follows: 
 
 1. When the seller delivers the order at the ship's side. 
 
 handing the buyer the ship's receipt for his invoice, 
 the usual custom is to allow 30 days' credit. 
 
 2. When there is neither a branch office nor an agent, a 
 
 letter of credit is established wnth the banker and the 
 shipper's draft against documents at 90 to 120 days 
 after sight is paid, charges being borne by buyer. 
 
 3. The buyer's banker receives the documents and pays 
 
 cash for the face value. 
 
 404
 
 CREDIT CUSTOMS OF THE WORLD 405 
 
 4. The indent is forwarded to the suppHer, who presents 
 
 the documents to the banker and obtains from 75 
 to 80 per cent cash and the balance on 60 to 120 
 days' credit. 
 
 5. Bank references are demanded on a draft for the full 
 
 value pending the ascertainment of proof of buyer's 
 responsibility. 
 
 Austria 
 
 Credit varies according to the lines of merchandise or 
 articles sold. Some articles sell for cash, others at 10, 20, or 
 30 days and even from 2 to 6 months' credit, according to 
 the code of commercial "usances" which regulates credit. 
 Flour is sold on a 30 to 60 days' basis, dry goods 3 to 6 months, 
 groceries 2 to 4 months. The general discount for cash is 
 2 per cent. 
 
 Belgium 
 
 Large firms demand 90 days' time and sometimes insist 
 on as long as i year. Short credits, however, are the general 
 rule and the cash payment basis is not uncommon. The rate 
 of discount varies from 2 to 6 per cent and is usually allowed 
 on payments made in from 30 to 60 days. Discount is allowed 
 also on drafts, which circulate extensively like bank notes 
 before being cashed. 
 
 Bolivia 
 
 European traders allow from 3 to 6 months' credit. A 
 renewed acceptance is not valid unless it bears the signature 
 of both drawer and drawee. Before the war Germans held the 
 preponderance of trade in Bolivia, and it was difficult to over- 
 come their competition as they were exceedingly generous in 
 their terms to the natives. Trade is rather difficult on account 
 of transportation and local conditions.
 
 4o6 TRADE REGULATIONS 
 
 Brazil 
 
 Credit at 90 days' sight is the prevailing custom in doing 
 business with the best class of Brazilian merchants. The time 
 is often lengthened to 120 days in outposts, and for heavy 
 machinery runs from 6 to 9 months. The indents are made 
 out, as a rule, on a basis of 90 days from the date of arrival 
 of goods from Europe and 30 days from the date of arrival 
 from the United States. Discounts are allowed for short 
 credits as well as for cash, the terms being somewhat similar 
 to those prevailing in New York, but varying both according 
 to circumstances and to the line of merchandise. 
 
 British Honduras 
 
 The prevalent custom is for settlements to be made every 
 month or two, but British merchants grant 4 to 6 months' 
 credit and allow a 2^ per cent discount for cash. In some 
 cases, however, as much as 5 per cent discount is allowed, 
 each line of trade having its special rate. A bill of lading, 
 if properly certified, is negotiable, and banks in Honduras will 
 make advances on them on a basis of 3 to 6 months. 
 
 British South Africa 
 
 Ninety days' draft is the prevailing practice, but unless a 
 draft is accompanied by special instructions no document giv- 
 ing title, such as a bill of lading, is handed over. Many large 
 houses pay for their shipments on delivery and orders are fre- 
 quently resold before they are fully delivered. All the large 
 trading concerns have running accounts in London and on the 
 Continent. 
 
 British West Indies 
 
 The prevailing custom is to grant credit for 3 months from 
 the receipt of goods or for 4 months from the date of ship- 
 ment. American bills are discounted by some local merchants
 
 CREDIT CUSTOMS OF THE WORLD 407 
 
 for cash at 2 per cent. Invoices are usually settled by the 
 acceptance of a draft drawn upon the Colonial Bank. The 
 customary rate of interest is 6 per cent. 
 
 Bulgaria and Balkan States 
 
 Long credits extending from 6 months to i year are the 
 custom and are granted by concerns which have a personal 
 representative on the ground. Unless it is feasible to send 
 such a representative, foreign business in this field does not 
 seem practical. 
 
 Canada 
 
 The customary credit granted is 2 to 6 months, according 
 to the size of the firm and the line of goods. Dry goods are 
 sold on 4 to 6 months' credit. Prevailing rates of discount 
 are 4 to 7 per cent, but these rates are graded differently 
 from those allowed in the United States. 
 
 Chili 
 
 The credit time generally granted by the Germans, the 
 French, and the English is 6 months. Cash payments are very 
 rare and international trade is difficult to carry on in Chili 
 unless branches of home banks are established there. 
 
 China 
 
 Transactions are usually conducted on the basis of 60 days' 
 draft for goods sent from England and 30, 60, 90, or 120 
 days' draft for imports from the Continent. The draft is 
 placed in the bank together with the titular documents, such 
 as the invoice, bill of lading, and insurance papers, which al- 
 ways accompany it. 
 
 On the arrival of these documents in China, the draft is 
 accepted by the drawee, and if the terms so require the docu- 
 ments are delivered to him. If the documents are deposited
 
 4o8 TRADE REGULATIONS 
 
 against payment instead of against acceptance, it is then only 
 on the date of expiration of the draft that the merchant re- 
 ceives the merchandise. The bank, in the meantime, unloads 
 and stores the shipments. In some cases, the bank allows the 
 merchant to make a part payment and to take the quantity 
 of goods for which he has paid. 
 
 Colombia 
 
 The terms of credit required and often allowed are 6 to 
 12 months, as bills owed local firms by their debtors are 
 frequently paid in coffee, which they in turn must sell before 
 they can meet their obligations. A 5 per cent discount is 
 allowed for cash. 
 
 Cuba 
 
 Terms of payment vary from 3 to 12 months according to 
 the line of merchandise, but long credits are the rule rather 
 than the exception. The rate of discount varies according to 
 agreement between the parties, but it is ordinarily about 5 or 
 6 per cent. 
 
 Denmark 
 
 The credit usually granted is 3 to 9 months. The Ger- 
 mans, who had a large portion of Denmark's trade, gave the 
 natives 5 to 6 per cent on payments made within 3 months 
 after the date of delivery. 
 
 Ecuador 
 
 Cash business is very rare, the general custom being to 
 grant between 3 and 6 months' credit. The standing of the 
 firm, the nature of goods, and other circumstances enter into 
 the determination of what this time shall be in a particular case. 
 .\s cash payments are so unusual, little is known in Ecuador 
 about discounts.
 
 CREDIT CUSTOMS OF THE WORLD 409 
 
 Egypt 
 
 The usual arrangement is a 3 months' draft, with the bill 
 of lading and insurance papers attached. Houses of high 
 standing buy goods on draft at 30 days' sight. Drafts are 
 generally sent through the banks, while a discount of 2 per 
 cent is usually allowed for cash. 
 
 France 
 
 The average length of credit term is 90 days, though terms 
 of 30 and 60 days are quite common. Payments are usually 
 made by drafts drawn by the sender on the buyer. French 
 bankers cash these drafts at a discount. At the French ship- 
 ping ports payments are made by bank credits or documentary 
 drafts. 
 
 This means, in the first instance, that the shipper or 
 the French buyer gives the seller a written guarantee from 
 a bank that it will accept the seller's drafts and pay them at 
 maturity on delivery of titular documents. The banker may 
 deliver the documents to the buyer against payment or give 
 credit at his own risk. In case a bank fails while in posses- 
 sion of the documents guaranteeing title to the property, the 
 buyer will be held responsible for the full amount of the pur- 
 chase price. 
 
 Germany 
 
 The credit granted before the war was often 3 to 6 months, 
 but 30 to 90 days were the usual terms on which business was 
 conducted throughout the country. The rules of different 
 houses and the nature of the goods had an influence on the 
 terms of credit. When a purchaser was of doubtful financial 
 standing cash payment was demanded. Discounts were gen- 
 erally allowed, but they varied so much that no general rule 
 was established. In general, German credit terms are more 
 generous than those offered in this country.
 
 4IO TRADE REGULATIONS 
 
 Greece 
 
 Nearly all of the local merchants do business on credit, 
 frequently granting very long terms to their customers. For 
 this reason the importing business of Greece is conducted on 
 long credits. The general term of credit is 6 months, and 
 6 per cent is allowed for cash payments. Local banks accept 
 drafts and will deal with foreign firms on recommendation of 
 any reputable local concern. 
 
 Guatemala 
 
 The terms of credit run from 6 months to i year. Such 
 long credit is indispensable on account of local conditions. 
 A discount of 3 and 4 per cent is allowed on cash payments. 
 
 Haiti 
 
 From 60 days to i year or longer are the usual credit terms. 
 The business of the country is conducted almost entirely on 
 credit. 
 
 Honduras 
 
 Credit is often allowed for from 4 to 9 months, but Amer- 
 ican shippers usually allow but 90 days to the buyer. 
 
 India 
 
 Long credits are usually granted and large discounts are 
 given for cash payments. Nearly all the import business is 
 done by British firms. 
 
 Italy 
 
 The customary credit allowance is 90 days to 8 months, 
 the nature of the goods having much to do with the matter. 
 Some classes of goods sell on 30 days', others on 90 days' 
 credit. A rate of 5 per cent is charged by the banks on drafts 
 remaining unpaid after maturity.
 
 CREDIT CUSTOMS OF THE WORLD 411 
 
 Japan 
 
 The prevalent practice in Japan, in so far as the foreign 
 trade is concerned, seems to be to pay cash. Of course there 
 are many exceptions to this rule, among which are the tranS' 
 actions on open account. If the seller finds that he can dis- 
 count the promissory notes of the buyer he usually does busi- 
 ness by accepting them and charging the discount to the 
 drawee. Under the laws of Japan, a promissory note, if in 
 proper legal form, amounts to a judgment. These notes 
 usually are drawn on 30 to 60 days' time. It is best to arrange 
 with the buyer through bankers in the United States for a 
 confirmed letter of credit which enables the shipper to secure 
 cash against documents the moment he places the goods in 
 the custody of a steamship company. 
 
 Mexico 
 
 American firms usually insist on the entire amount of 
 their invoice being deposited in some American bank before 
 shipping the goods, although Mexico in normal times is in 
 good repute throughout the commercial world. European 
 houses usually allow 4 to 6 months' credit to responsible con- 
 cerns in Mexico, and a number of manufacturers in the United 
 States are now selling on the basis of 30 to 90 days' credit. 
 A discount of 2 per cent is given when cash accompanies the 
 order. 
 
 Netherlands 
 
 The business of Holland is conducted on the basis of 6 
 months' credit, and even i year accounts are not unusual. 
 Since all the domestic business is dependent on long terms 
 of credit, foreign houses which transact business in the Nether- 
 lands are obliged to conform to the policy of granting long 
 terms of credit. A discount of from 2 to 4 per cent is given 
 on cash payments.
 
 412 TRADE REGULATIONS 
 
 Nicaragua 
 
 The general credit agreement is 6 months to i year, 
 and cash payments are almost unheard of among merchants 
 in Nicaragua. Discounts for such payments run as high as 
 6 per cent. 
 
 Paraguay 
 
 Credit is usually extended for about 6 months, but some- 
 times for as long as a year. 
 
 Peru 
 
 The basis upon which business is conducted in Peru is 6 
 to 12 months' credit. In special cases credit is extended for 
 an even longer time. European exporters who control trade 
 in Peru usually give 90 days' to 6 months' credit from the date 
 of delivery. 
 
 Portugal 
 
 From I to 6 months is the customary credit allowed by 
 foreign shippers, but in prosperous times many Portuguese 
 merchants will be found ready to pay cash. A discount rate 
 of 6 per cent is obtainable for payment within 30 days in cer- 
 tain lines of merchandise. 
 
 Roumania 
 
 Countries near Roumania usually give long credits, but 
 the far-off countries are in the habit of demanding cash 
 against documents, 
 
 Russia 
 
 The present political and economic status of Russia is 
 such that no phase of the country's commercial procedure can 
 be referred to as "customary." Consequently, there can be 
 at present no authentic information as to credit customs.
 
 CREDIT CUSTOMS OF THE WORLD 413 
 
 Salvador 
 
 European exporters have been granting long terms of credit 
 in Salvador but the best houses of the country have business 
 agencies in the United States and Europe which discount their 
 notes or give security for payment. Many of Salvador's 
 importers, however, have lately shown a distinct preference 
 for making cash payments with a discount for such payment 
 of 2 or 3 per cent. 
 
 San Domingo 
 
 The general term of credit in San Domingo is 90 days, 
 and the rate of discount is from 2 to 5 per cent for cash pay- 
 ments or for payments made within 30 days. 
 
 Siam 
 
 A credit of from 3 to 6 months is granted by European 
 traders in close touch with the most important traders in Siam. 
 
 Spain 
 
 The customary term of credit varies from 90 days to 6 
 months, but the banks of the country will not discount any 
 commercial paper or make allowance for a period longer than 
 90 days. 
 
 Sweden and Norway 
 
 The credit demanded is 3 to 6 months. 
 
 Switzerland 
 
 Long credits prevail at 30 to 90 days, with 2 per cent dis- 
 count for cash payments. 
 
 Turkey 
 
 The custom as to credit varies. The most common term 
 seems to be 6 months, but Turkish merchants do quite an
 
 414 TRADE REGULATIONS 
 
 extensive cash business with foreign firms and are usually pre- 
 pared to give security. The rate of discount for cash pay- 
 ments seldom exceeds 2 per cent. A great deal of foreign 
 business is conducted through the banks. 
 
 United Kingdom of Great Britain and Ireland 
 
 The usual credit allowance is 30 to 60 days. A discount 
 of 2^ per cent or more is allowed for cash, varying according 
 to the class of trade. 
 
 United States 
 
 Credit terms and the conditions of sale are as varied as 
 the goods sold. The prevailing time which is allowed for 
 settlement of accounts between local traders seems to be 30 
 to 60 days. In some lines of trade time extensions are allowed, 
 
 Uruguay 
 
 Strong houses prefer to make cash payments. In the in- 
 terior credit is usually extended for from 3 to 6 months. 
 
 Venezuela 
 
 The usual credit allowance varies between 30, 60, 90 days, 
 and 6 months. Discounts of from 4 to 6 per cent are given 
 for cash, but cash business is rare in Venezuela. It is, how- 
 ever, a very easy matter to arrange with a bank to cash the 
 drafts of Venezuelan merchants, as their credit as a rule is 
 excellent.
 
 APPENDIX
 
 APPENDIX A 
 
 GOVERNMENTAL ENACTMENTS AND AGENCIES 
 
 Text of Webb-Pomerene Law 
 
 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 solely trade or com- 
 merce 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 
 for resale, within the United States or any Territory thereof, of such 
 goods, wares, or merchandise, or any act in the course of such pro- 
 duction, manufacture, or selling for consumption or resale. 
 
 That the words "trade 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 District of Columbia, 
 or between any such Territory and another, or between any such 
 Territory or Territories and any State 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 otherwise, of two or 
 more persons, partnerships, or corporations. 
 
 Sec. 2. That nothing contained in the Act entitled "An Act to 
 protect trade and commerce against unlawful restraints and mo- 
 nopolies," approved July second, eighteen hundred and ninety, 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 agreement 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 
 
 417
 
 4i8 
 
 APPENDIX 
 
 of such association : And provided further, That such association does 
 not, either in the United States or elsewhere, enter into any agree- 
 ment, 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 
 restrains trade therein. 
 
 Sec. 3. That nothing contained in section seven of the Act en- 
 titled "An Act to supplement existing laws against unlawful restraints 
 and monopolies, and for other purposes," approved October fifteenth, 
 nineteen hundred and fourteen, shall be construed to forbid the 
 acquisition or ownership by any corporation of the whole or any part 
 of the stock or other capital of any corporation organized solely for 
 the purpose of engaging in export trade, and actually engaged solely 
 in such export trade, unless the effect of such acquisition or owner- 
 ship may be to restrain trade or substantially lessen competition within 
 the United States. 
 
 Sec. 4. That the prohibition against "unfair methods of competi- 
 tion" and the remedies provided for enforcing said prohibition con- 
 tained in the Act entitled "An Act to create a Federal Trade 
 Commission, to define its powers and duties, and for other purposes," 
 approved September twenty-sixth, nineteen hundred and fourteen, 
 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. 
 
 Sec. 5. That every association now engaged solely in export trade, 
 within sixty days after the passage of this Act, and every association 
 entered into hereafter which engages solely in export trade, within 
 thirty days after its creation, shall file with the Federal Trade Com- 
 mission 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 stockholders or members, and if a corporation, 
 a copy of its certificate or articles of incorporation 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 business 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.
 
 APPENDIX 
 
 419 
 
 It shall also furnish to the commission such information as the com- 
 mission may require as to its organization, business, conduct, practices, 
 management, and relation to other associations, corporations, partner- 
 ships, 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 the continuance of such 
 failure, which forfeiture shall be payable into the Treasury of the 
 United States, and shall be recoverable 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 
 direction of the Attorney-General of the United States, to prosecute 
 for the recovery of the forfeiture. The costs and expenses of such 
 prosecution shall be paid out of the appropriation for the expenses of 
 the courts of the United States. 
 
 Whenever the Federal Trade Commission shall have reason 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 association either in the United States or else- 
 where 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 
 a'ssociation 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 alleged violations of law. 
 Upon investigation, if it shall conclude that the law has been violated, 
 it may make to such association recommendations for the readjustment 
 of its business, in order that it may thereafter maintain its organiza- 
 tion and management and conduct its business in accordance with 
 law. If such association fails tO' comply with the recommendations 
 of the Federal Trade Commission, said commission shall refer its 
 findings 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 applicable, given it 
 in "An Act to create a Federal Trade Commission, to define its 
 powers and duties and for other purposes." [Approved April 10, 1918.]
 
 420 APPENDIX 
 
 Law of Drawback 
 
 Exported merchandise is entitled to a refund of 99 per cent 
 of the import duty paid on materials used in the manufacture 
 of such merchandise. This refund is known as "drawback." 
 The privilege is an important one and has the effect of necessi- 
 tating the payment of only i per cent duty on goods imported 
 for use in the manufacture of other articles to be exported. 
 
 Exporters thus far have not taken full advantage of this 
 liberal provision of our tariff law, although those firms which 
 realize its advantages usually employ a drawback agent to look 
 after the details of drawback. 
 
 In order to obtain drawback, a manufacturer must make ap- 
 plication to the United States Treasury Department. Agents 
 of the Treasury Department then investigate the manufac- 
 turer's claim and if it is found to be justifiable, permission to 
 claim drawback is granted. The exporting manufacturer need 
 not be himself the manufacturer of the materials upon which 
 drawback is claimed. 
 
 At some time before the shipment is ready for export, the 
 manufacturer should mail to his drawback agent a "Notifica- 
 tion Blank." The latter then advises the collector of customs. 
 A "Notice of Intent" is also filled out by the manufacturer and 
 is delivered to the United States district inspector at the pier. 
 
 Following is the official wording of Section 25 of the Tariff 
 Act of 1909 relating to drawbacks: 
 
 That where imported materials on which duties have been paid 
 are used in the manufacture of articles manufactured or produced in 
 the United States, there shall be allowed on the exportation of such 
 articles a drawback equal in amount to the duties paid on the ma- 
 terials used, less one percentum of such duties ; Provided, that when 
 the articles exported are made in part from domestic materials the 
 imported materials, or the parts of the articles made from such ma- 
 terials, shall so appear in the completed articles that the quantity 
 or measure thereof may be ascertained; And provided further, that
 
 APPENDIX 421 
 
 the drawback on any article allowed under existing law shall be 
 continued at the rate herein provided. That the imported materials 
 used in the manufacture or production of articles entitled to draw- 
 back of customs duties when exported shall, in all cases where draw- 
 back of duties paid on such materials is claimed, be identified, the 
 quantity of such materials used and the amount of duties paid thereon 
 shall be ascertained, the facts of the manufacture or production of 
 such articles in the United States and their exportation therefrom 
 shall be determined, and the drawback due thereon shall be paid to 
 the manufacturer, producer or exporter, to the agent of either or to 
 the person to whom such manufacturer, producer, exporter, or agent 
 shall in writing order such drawback paid, under such regulations as 
 the Secretary of the Treasury shall prescribe. 
 
 That on the exportation of medicinal or toilet preparations (in- 
 cluding perfumery) hereafter manufactured or produced in the United 
 States in part from domestic alcohol on which an internal revenue 
 tax has been paid, there shall be allowed a drawback equal in amount 
 to the tax found to have been paid on the alcohol so used ; Provided, 
 That no other than domestic tax-paid alcohol shall have been used 
 in the manufacture or production of such preparations. Such draw- 
 back shall be determined and paid under such rules and regulations, 
 and upon the filing of such notices, bonds, bills of lading and other 
 evidence of payment of tax and exportation, as the Secretary of the 
 Treasury shall prescribe. 
 
 That the provisions of this section shall apply to materials used in 
 the construction and equipment of vessels built for foreign account 
 and ownership, or for the government of any foreign country, not- 
 withstanding that such vessels may not within the strict meaning 
 of the term be articles exported. 
 
 Federal Reserve Act 
 
 Those sections of the Federal Reserve Act which have an 
 important bearing on foreign trade are quoted below:
 
 422 APPENDIX 
 
 Section 14 
 
 Any Federal reserve bank may, under rules and regulations pre- 
 scribed by the Federal Reserve Board, purchase and sell in the open 
 market, at home or abroad, either from or to domestic or foreign 
 banks, firms, corporations, or individuals, cable transfers and bankers' 
 acceptances and bills of exchange of the kinds and maturities by this 
 act made eligible for rediscount, with or without the indorsement of 
 a member bank. 
 
 Every Federal reserve bank shall have power: 
 
 (a) To deal in gold coin and bullion, at home or abroad, to make 
 loans thereon, exchange Federal reserve notes for gold coin or gold 
 certificates, and to contract for loans of gold coin or bullion, giving 
 therefore, when necessary, acceptable security, including hypothe- 
 cation of United States bonds or other securities which Federal re- 
 serve banks are authorized to hold; 
 
 (b) To buy and sell, at home or abroad, bonds and notes of the 
 United States, and bills, notes, revenue bonds, and warrants with 
 a maturity from date of purchase not exceeding six months, issued 
 in the anticipation of the collection of taxes or in anticipation of the 
 receipt of assured revenues by any State, county, district, political 
 subdivision, or municipality in the continental United States, includ- 
 ing irrigation, drainage, and reclamation districts, such purchases 
 to be made in accordance with rules and regulations prescribed by the 
 Federal Reserve Board. 
 
 (e) To establish accounts with other Federal reserve banks for 
 exchange purposes and, with the consent or upon the order and direc- 
 tion of the Federal Reserve Board and under regulations to be pre- 
 scribed by said board, to open and maintain accounts in foreign 
 countries, appoint correspondents, and establish agencies in such coun- 
 tries wheresoever it may be deemed best for the purpose of pur- 
 chasing, selling, and collecting bills of exchange, and to buy and 
 sell, with or without its endorsement, through such correspondents or 
 agencies, bills of exchange (or acceptances) arising out of actual com- 
 mercial transactions which have not more than ninety days to run, 
 exclusive of days of grace, and which bear the signature of two 
 or more responsible parties, and with the consent of the Federal 
 Reserve Board to open and maintain banking accounts for such foreign 
 correspondents or agencies
 
 APPENDIX 423 
 
 Section 25 
 
 Any national banking association possessing a capital and sur- 
 plus of $1,000,000 or more may file application with the Federal Re- 
 serve Board for permission to exercise, upon such conditions and 
 under such regulations as may be prescribed by the said board, 
 either or both of the following powers : 
 
 First. To establish branches in foreign countries or dependen- 
 cies or insular possessions of the United States for the furtherance 
 of the foreign commerce of the United States, and to act if required 
 to do so as fiscal agents of the United States. 
 
 Second. To invest an amount not exceeding in the aggregate ten 
 per centum of its paid-in capital stock and surplus in the stock of 
 one or more banks or corporations chartered or incorporated under 
 the laws of the United States or any State thereof, and principally 
 engaged in international or foreign banking, or banking in a depen- 
 dency or insular possession of the United States either directly, or 
 through the agency, ownership, or contract of local institutions in for- 
 eign countries, or in such dependencies or insular possessions 
 
 Work of the Bureau of Foreign and Domestic 
 
 Commerce 
 
 Among the most important agencies in this country for the 
 development of foreign trade is the governmental Bureau of 
 Foreign and Domestic Commerce. Its purposes and aims are 
 set forth in the following statement issued by the Bureau: 
 
 The Bureau of Foreign and Domestic Commerce has three prin- 
 cipal sources from which it obtains trade information from foreign 
 countries. 
 
 Consular Service. The United States Government maintains 
 abroad nearly 300 consular officers and in addition many agencies. 
 These consular officers furnish the Bureau a great fund of informa- 
 tion relating to the trade of their districts, including annual reviews 
 of commerce, special reports called for by the Department of Com-
 
 424 APPENDIX 
 
 merce, lists of importers, notices of bids for contract work, requests 
 of merchants to be placed in communication with American exporters, 
 etc. 
 
 Commercial Agents. Most of these men are taken from active 
 work in some particular industry or some special branch of com- 
 merce and are experts in their respective lines. They travel widely 
 and make reports as to methods of manufacture and special require- 
 ments in the lines that they are investigating. 
 
 Commercial Attaches. While stationed at one post like the 
 consular ofificer, the commercial attache is free to: travel within the 
 field to which he is assigned. He has but one function — the facili- 
 tation of commerce between the United States and the country to 
 which he is assigned. Each attache speaks the language of the 
 country in which he is located and is thoroughly conversant with its 
 commercial usages. 
 
 In addition the Bureau receives numerous official and other pub- 
 lications from foreign countries, which are utilized in answering re- 
 quests for information. It also avails itself of trade journals pub- 
 lished in this country and of the assistance of commercial organi- 
 zations. 
 
 Publications 
 
 Information collated by the Bureau of Foreign and Domestic 
 Commerce is distributed chiefly through its publications, which in- 
 clude a daily trade journal and monthly, quarterly, annual, and special 
 bulletins. 
 
 Announcements of specific opportunities for the sale of American 
 goods abroad and other matters of a confidential character are fur- 
 nished only to American firms, through the "Trade Opportunity" 
 service and the confidential bulletins and circulars of the Bureau. 
 
 Commerce Reports, a daily journal, contains articles submitted 
 by consular officers and commercial agents of the Department of 
 Commerce and trade information from other sources. It is the organ 
 through which current information on foreign trade matters is dis- 
 tributed to American business men. It is sold by the Superintendent 
 of Documents, Government Printing Office, Washington, D. C, for 
 $2.50 per year, and subscriptions are also received at the district 
 offices. The annual reports of consular officers, formerly published 
 in this daily journal, are now issued as supplements to it and are 
 mailed to all subscribers to Commerce Reports.
 
 APPENDIX 425 
 
 Monthly Summary of Foreign Commerce gives the imports and 
 exports of the United States by articles, quantities, and values for the 
 month of issue and for the accumulated period of the year ending 
 with the month of issue, with comparative figures for corresponding 
 periods in the two preceding years. It is sold by the Superintendent 
 of Documents for 15 cents per copy, or $1.50 a year. 
 
 Imports Entered for Consumption, which is issued quarterly, 
 gives a detailed statement of the quantity and value of imports into 
 the United States, the rates of duty, and the amount of duty col- 
 lected. It is sold by the Superintendent of Documents for 75 cents 
 a year; single copies, 15 to 25 cents. 
 
 Commerce and Navigation, an annual volume of about 900 quarto 
 pages, gives detailed statistics of the foreign trade of the United 
 States, stating the countries to which each article or class of articles 
 was exported and from which each article or class of articles was 
 imported during a five-year period. It is sold by the Superintendent 
 of Documents. 
 
 Statistical Abstract of the United States, an annual volume of 
 about 800 pages, contains a condensed statement of the commerce, 
 production, industries, population, finance, currency, and wealth of 
 the country, with summary statements of the commerce of the prin- 
 cipal foreign countries. It is sold by the Superintendent of Docu- 
 ments for 50 cents. 
 
 Bulletins on Special Subjects 
 
 Special bulletins published by the Bureau embrace a wide range 
 of subjects. Some present a survey of the entire world's markets 
 for certain lines of goods ; others contain an intensive study of par- 
 ticular fields and particular lines ; still others furnish a general study 
 of some country or group of countries. 
 
 Bulletins have been issued on the cotton goods trade of almost 
 every country in the world; other bulletins deal with cottonseed oil, 
 lumber, shoes and leather, machine tools, paints and varnishes, motor 
 vehicles, musical instruments, canned goods, etc. 
 
 Special handbooks have been issued on Australia, New Zealand, 
 Russia, South America, Dominican Republic, Canada, Alaska, Hawaii, 
 and the Philippines, British India, etc. Still other special publica- 
 tions deal with such subjects as foi'eign credits, packing, and trans- 
 portation rates.
 
 426 APPENDIX 
 
 Trade Directories 
 
 Trade directory work is an important branch of the Bureau's 
 service to American exporters. In 191 1 was issued a "World Trade 
 Directory," giving the names of importers in all countries of the 
 world. This volume is now out of print, but may be consulted at 
 the district offices, which also have the revised lists that are con- 
 stantly being received from consular officers. 
 
 In 1914 the Bureau issued a revision of the South American 
 section of the directory (428 pages), with a uniform classification 
 of dealers and importers. This can be bought from the Superinten- 
 dent of Documents. 
 
 A revision of the directory of Central America and the West 
 Indies is published and others will be taken up later. 
 
 The district offices of the Bureau have on hand American trade 
 directories and directories of foreign countries that will prove of 
 material assistance to exporters. 
 
 Trade Opportunity Service 
 
 Announcements of specific opportunities for the sale of American 
 goods abroad are published in Commerce Reports. The names and 
 addresses of the foreign importers desiring the goods are not given in 
 these announcements, but are furnished to bona fide American firms 
 upon application to the Bureau at Washington or to any of the dis- 
 trict offices. 
 
 In applying for such names and addresses the inquirer need refer 
 only to the number of the announcement as published in the daily. 
 A separate application on the firm's letterhead should be made for 
 each "opportunity" desired. 
 
 When the confidential information furnished regarding an oppor- 
 tunity for sales in foreign countries is too detailed to be given in a 
 "Trade Opportunity" announcement, it is embodied in a confidential 
 bulletin or circular, which is sent to firms that are listed in the Trade 
 Index files maintained by the Bureau and its district offices. 
 
 Samples, specifications, etc., that accompany reports by consular 
 officers and commercial agents are sent to the district offices for 
 lirtiited periods and can be inspected by those interested. 
 
 Foreign Trade Information 
 
 The Division of Foreign Tariffs has on file the customs tariff's 
 of all foreign countries, usually in official editions, and the customs
 
 APPENDIX 427 
 
 laws, regulations, and decisions of the principal countries of the 
 world. It also receives the official gazettes of most foreign countries, 
 so that the tariff information distributed by the Bureau, either in 
 the form of special tariff publications or by correspondence, is derived 
 largely from official sources. 
 
 The Bureau is equipped to answer inquiries in regard to rates 
 of duly, customs regulations, mternal revenue taxes, license fees for 
 commercial travelers and customs treatment of their samples, con- 
 sular regulations, and commercial agreements of foreign countries. 
 
 In addition to publishing translations of foreign customs tariffs 
 and special compilations of rates of duty on groups of products in 
 all foreign countries, the Bureau gives notice of current tariff changes, 
 as well as proposed changes, through the foreign tariff notes in 
 Commerce Reports. These notes are assembled quarterly and pub- 
 lished under the title of Foreign Tariff Notes. The other tariff pub- 
 lications of the Bureau are known as "Tariff' Series." 
 
 In writing for information in regard to foreign rates of duty, it is 
 necessary to give a detailed description of the article involved and to 
 specify the particular country or countries for which tariff information 
 is desired. It is advisable to confine inquiries to information needed 
 immediately rather than to ask for comprehensive statements for fu- 
 ture reference, which may be out of date by the time they are used. 
 
 While the district offices of the Bureau of Foreign and Domestic 
 Commerce are supplied with the tariff publications issued by the 
 Bureau, they are not in a position to give authoritative information 
 in regard to foreign tariffs. Tariff inquiries should therefore, when- 
 ever possible, be addressed to the main office in Washington. 
 
 A collection of foreign trade-mark and patent laws is now being 
 made up by the Bureau of Foreign and Domestic Commerce for the 
 purpose of answering inquiries in regard to those subjects. 
 
 The District Office Can Help 
 
 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 business men of the coun- 
 try, and to establish closer co-operation between Government and 
 private agencies interested in the extension of foreign trade. 
 
 Each district office has on file confidential information regarding 
 trade opportunities, lists of importers in foreign countries, trade 
 directories, etc.
 
 428 APPENDIX 
 
 Each district office receives specifications, samples, exhibits, 
 etc., for a Hmited time, and these may be inspected by interested 
 persons. 
 
 Each district office arranges conferences between exporters and 
 consular officers and commercial agents when the latter visit district 
 offices during leave of absence in this country. 
 
 Each district office makes a special study of the needs of the 
 district in which it is located, and the Bureau endeavors to equip 
 each of its districts 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. Each office acts as sales 
 agent for the Superintendent of Documents, Washington, D. C, for 
 the sale of the Bureau's publications. 
 
 The Bureau of Foreign and Domestic Commerce is the American 
 business man's bureau and is able and ready to serve your interests. 
 
 Suggestions to Exporters 
 
 Visit or write the district office in your district and learn what 
 it has and what it can do for you. 
 
 Get your name on the Trade Index, so you will receive the 
 Bureau's confidential information on foreign trade. 
 
 Build up a library of publications on your line of business. The 
 Government will furnish you its publications at cost, and in them 
 you may find the solution to some of your business problems. 
 
 Subscribe for Commerce Reports, so you may able to get 
 promptly the announcements of opportunities for the sale of goods 
 in foreign lands and to keep inform.ed concerning commercial and 
 industrial conditions the world over. Subscriptions (at $2.50 per 
 year) will be received at the district offices, or may be sent direct 
 to the Superintendent of Documents, Washington, D. C. 
 
 Write the district office about your export problems. The Bureau 
 through its districts aims to meet your needs, to serve your interests. 
 The more it knows about your problems, the more effectively it can 
 assist you. 
 
 Consult the district office in your district before addressing re- 
 quests for information to American consular officers. Frequently 
 the Bureau and its district offices have on file just the information 
 you desire. Thus you will save time and expense. 
 
 Make arrangements with the Bureau or its district offices for
 
 APPENDIX 429 
 
 conferences with consular officers and commercial agents. These 
 officials can furnish you information of great value. You, in turn, 
 can aid them in making their work more effective. 
 
 Participate with the commercial organizations to which you 
 belong in the work of the Bureau of Foreign and Domestic Commerce 
 and its district offices. Every commercial association can, by co- 
 operation with the Bureau, prove an effective agency in the develop- 
 ment of American trade in foreign countries. 
 
 Consult the district office in your district concerning your plans 
 for entering the foreign trade field. From it you can ascertain what 
 countries are the largest importers of the articles you produce, and 
 what countries are now supplying the demand, where American ex- 
 porters in your line have met with success, the usual conditions as 
 to credits, packing, etc. 
 
 Work of the Office of Foreign Trade Advisers 
 
 > 
 
 The chief duties of the Office of the Foreign Trade 
 
 Advisers of the Department of State are: 
 
 1. To control and direct, under the supervision of the appropriate 
 executive officers of the Department, the commercial work of the 
 diplomatic and consular services ; 
 
 2. To attend to correspondence and other miscellaneous business 
 of the Department relating primarily to trade; 
 
 3. To gather information and formulate advice on commercial 
 subjects for the use of the Secretary and other officers of the Depart- 
 ment. 
 
 The control and direction of the commercial work of the diplo- 
 matic and consular services involve the drafting of instructions 
 relating to the activities of diplomatic and consular officers in behalf 
 of American trade, the acknowledgment, filing and indexing of their 
 reports, the consideration of these reports and their transmission 
 after editing to private inquirers and to the governmental depart- 
 ments interested, including the Department of Commerce for possible
 
 430 APPENDIX 
 
 publication in Commerce Reports. These reports constitute the great 
 bulk of the material published in this daily. 
 
 The commercial work of the diplomatic service has largely to do 
 with representations to the central authorities of foreign countries 
 in an endeavor to obtain for American commercial interests equitable 
 or more favorable treatment. For example, since the outbreak of 
 the war European countries have forbidden the exportation of many 
 important articles of commerce with a resultant interference to 
 American industry and trade which in particular instances has been 
 of a most serious nature. Other belligerent measures aimed to stop 
 enemy trade overseas have had a similarly adverse effect on the 
 economy of the United States. It has fallen to the Office of the 
 Foreign Trade Advisers to advise the Department in reference to 
 the many instructions to American diplomatic missions abroad and 
 notes to the diplomatic representatives of foreign powers in the 
 United States involved in negotiations to secure an amelioration of 
 these conditions. 
 
 The situations which have arisen have been manifold. A British 
 Order in Council interfered with the shipment of American tobacco 
 to Germany and Austria-Hungary. It was possible to secure a 
 removal of the restrictions imposed with the immediate result of an 
 increase in the prices realized by American tobacco growers for their 
 crops. Owing to embargoes ordered by Germany and Austria- 
 Hungary the importation of sugar beet seed became impossible. 
 Arrangements were carried through for the importation of 15,000 
 bags under an exception to the German embargo and by special 
 arrangement with the British Government. The British Government 
 recently placed an embargo on the exportation of logwood from 
 Jamaica, thereby intensifying the shortage of dyestuffs in the United 
 States. On January 10, 1916, the embargo was raised as a result 
 of representations by this Government. Other recent questions of 
 importance requiring diplomatic action have related to the importa- 
 tion of hemp from Italy, of tungsten ore from Portugal, argols from 
 France, and hides, glycerine, sodium cyanide and a large number 
 of other important commodities from various foreign countries. 
 
 The commercial work of the consular service includes, among 
 other activities, the preparation of reports on a wide range of 
 economic subjects and the answering of many and diverse inquiries 
 relating to commercial matters originating with business houses in 
 the United States. Both the reports and letters pass through the
 
 APPENDIX 431 
 
 Office of the Foreign Trade Advisers where they are read, indexed, 
 edited, and sent on to the Departments interested and inquirers. In 
 191 5, 28,641 reports and letters were transmitted to the Department 
 of Commerce alone for possible publication in the daily issues of 
 Commerce Reports. 
 
 Another important activity of the consular service is the report- 
 ing of opportunities for the sale of American goods abroad. Large 
 numbers of reports of this character are received daily from consuls 
 in all parts of the world. A considerable portion come by cable. 
 These are given immediate consideration and communicated at once 
 to the Department of Commerce for possible publication in Commerce 
 Reports or in the form of special confidential circulars addressed to 
 business houses known to be interested. 
 
 Reports received from not more than one-half of the 300 con- 
 sulates in the American service show that during a period of about 
 six months just passed American exporters obtained foreign business 
 as a direct result of the activities of those offices amounting to 
 $23,000,000 in cases where it was possible to state the value of the 
 orders obtained. In addition there were other orders the amounts 
 involved in which could not be definitely known, representing a value 
 probably approximately one-half of the above figure. 
 
 The miscellaneous correspondence of the Department of State 
 relating to trade originates for the most part with individuals and 
 firms who desire to extend their foreign connections, to have informa- 
 tion on particular points concerning foreign tariffs, food regulations, 
 invoice requirements, embargoes, etc., or to enlist the aid and pro- 
 tection of the Government in respect to their difficulties with foreign 
 governmental authorities. In order to comply with the requests con- 
 tained in these letters it is necessary in many cases to send written or 
 telegraphic instructions to American diplomatic and consular officers. 
 In other cases the information desired must be sought from the 
 library of trade publications or the files of diplomatic and consular 
 reports and despatches already in the Office. The services of the 
 foreign representatives of the United States are made available to the 
 public in this way by the Office of the Foreign Trade Advisers and 
 private inquirers obtain the benefit of a well-developed commercial 
 intelligence service. 
 
 The work of the Office of the Foreign Trade Advisers has 
 undergone an enormous increase since the outbreak of the present 
 war. By an Order in Council of March 11, 191 5, the British Govern-
 
 432 APPENDIX 
 
 ment decreed a suspension of the sea-borne foreign trade of Germany 
 and its allies. The validity of this measure has not been recognized 
 by the United States and is still the subject of diplomatic discussion. 
 Pending the settlement of the questions involved, it was arranged that 
 the British Government should issue permits to individual American 
 importers for the uninterrupted shipment to the United States from 
 neutral ports of particular consignments of goods of German, Austrian, 
 or Turkish origin purchased or ordered prior to March i, 1915. The 
 permits are issued on the basis of applications filed with the British 
 Embassy at Washington through the Office of the Foreign Trade 
 Advisers acting unofficially as the representative of the importers. 
 Between the latter part of September and November i, 1915, nearly 
 1,400 of these applications were received. The total value of the 
 merchandise involved is estimated at about $40,000,000. At the end 
 of 191 5 nearly one-half of this had been released for shipment to the 
 United States as a result of the activity of the Foreign Trade 
 Advisers' Office. 
 
 The Office of the Foreign Trade Advisers is frequently requested 
 by the Secretary of State and other officers of the Department to 
 prepare memoranda on commercial questions arising in the course 
 of the Department's business. From time to time it has undertaken 
 extensive investigations, as when tariff reciprocity with Canada was 
 mooted in 191 1. At present the Office is studying business conditions 
 and international tariff relations with a view to safeguarding and pro- 
 moting the interests of the United States in the profound economic 
 readjustments which it is expected will attend the conclusion of the 
 present war. 
 
 The library of the Office of the Foreign Trade Advisers contains 
 more than 15,000 books and pamphlets relating to foreign treaties, 
 customs and tariff laws, regulations and decisions, commerce, naviga- 
 tion, and industry throughout the world. It is probably the most 
 complete library of its kind in existence, as American diplomatic and 
 consular officers in all parts of the globe are instructed to supply 
 it with the latest statistical and other publications of the governments 
 to which they are accredited. Duplicate copies of the publications 
 received are transmitted from time to time to other Departments of 
 the Government which it is thought may be interested in the subject 
 matter. 
 
 The present staff of the Office of the Foreign Trade Advisers 
 embraces the Foreign Trade Adviser, four consular officers detailed
 
 APPENDIX 
 
 433 
 
 for special duty in the Office, one attorney and one special agent 
 handling applications for British permits, thirteen departmental clerks, 
 twelve stenographers and two messengers. The offices are in the 
 State Department Annex, Washington, D. C. 
 
 Federal Trade Commission — Rules of Practice 
 
 The following rules of practice were adopted June 17, 
 191 5, by the Federal Trade Commission. 
 
 Sessions 
 
 The principal office of the Commission at Washington, D. C, is 
 open each business day from 9 a.m. to 4:30 p.m. The Commission 
 may meet and exercise all its powers at any other place, and may, 
 by one or more of its members, or by such examiners as it may 
 designate, prosecute any inquiry necessary to its duties in any part 
 of the United States. 
 
 Sessions of the Commission for hearing contested proceedings 
 will be held as ordered by the Commission. 
 
 Sessions of the Commission for the purpose of making orders and 
 for the transaction of other business, unless otherwise ordered, will 
 be held at the office of the Commission at Washington, D. C, on each 
 business day at 10:30 a.m. Three members of the Commission shall 
 constitute a quorum for the transaction of business. 
 
 All orders of the Commission shall be signed by the Secretary. 
 
 Complaints 
 
 Any person, partnership, corporation, or association may apply 
 to the Commission to institute a proceeding in respect to any violation 
 of law over which the Commission has jurisdiction. 
 
 Such application shall be in writing, signed by or in behalf of 
 the applicant, and shall contain a short and simple statement of the 
 facts constituting the alleged violation of law and the name and 
 address of the applicant and of the party complained of.
 
 434 APPENDIX 
 
 The Commission shall investigate the matters complained of in 
 such application, and if upon investigation it shall appear to the 
 Commission that there is a violation of law over which the Commis- 
 sion has jurisdiction, the Commission shall issue and serve upon the 
 party complained of a complaint stating its charges and containing 
 a notice of a hearing upon a day and at a place therein fixed at least 
 40 days after the service of said complaint. 
 
 Answers 
 
 Within 30 days from the service of the complaint, unless such 
 time be extended by order of the Commission, the defendant shall 
 file with the Commission an answer to the complaint. Such answer 
 shall contain a short and simple statement of the facts which con- 
 stitute the ground of defense. It shall specifically admit or deny 
 or explain each of the facts alleged in the complaint, unless the 
 defendant is without knowledge, in which case he shall so state, such 
 statement operating as a denial. Answers in typewriting must be 
 on one side of the paper only, on paper not more than Sy2 inches wide 
 and not more than 11 inches long, and weighing not less than 16 
 pounds to the ream, folio base, 17 by 22 inches, with left-hand margin 
 not less than ly^ inches wide, or they may be printed in 10 or 12 
 point type on good unglazed paper 8 inches wide by lo^/^ inches long, 
 with inside margins not less than i inch wide. 
 
 Service 
 
 Complaints, orders, and other processes of the Commission may 
 be served by anyone duly authorized by the Commission, either (a) by 
 delivering a copy thereof to the person to be served, or to a member 
 of the partnership to be served, or to the president, secretary, or 
 other executive officer, or a director, of the corporation or association 
 to be served; or (b) by leaving a copy thereof at the principal office 
 or place of business of such person, partnership, corporation, or 
 association ; or (c) by registering and mailing a copy thereof addressed 
 to such person, partnership, corporation, or association at his or its 
 principal office or place of business. The verified return by the 
 person so serving said complaint, order, or other process, setting forth 
 the manner of said service, shall be proof of the same, and the return 
 post-office receipt for said complaint, order, or other process, regis- 
 tered and mailed as aforesaid, shall be proof of the service of the 
 same.
 
 APPENDIX 435 
 
 Intervention 
 
 Any person, partnership, corporation, or association desiring to 
 intervene in a contested proceeding shall make application in writing, 
 setting out the grounds on which he or it claims to be interested. The 
 Commission may, by order, permit intervention by counsel or in 
 person to such extent and upon such terms as it shall deem just. 
 
 Applications to intervene must be on one side of the paper only, 
 on paper not more than 85^ inches wide and not more than 11 inches 
 long, and weighing not less than 16 pounds to the ream, folio base, 
 17 by 22 inches, with left-hand margin not less than 13^2 inches wide, 
 or they may be printed in 10 or 12 point type on good unglazed paper 
 8 inches wide by lo^^ inches long, with inside margins not less than 
 I inch wide. 
 
 Continuances and Extensions of Time 
 
 Continuances and extensions of time will be granted at the 
 discretion of the Commission. 
 
 Witnesses and Subpoenas 
 
 Witnesses shall be examined orally, except that for good and 
 exceptional cause for departing from the general rule the Commission 
 may permit their testimony to be taken by deposition. 
 
 Subpoenas requiring the attendance of witnesses from any place 
 in the United States at any designated place of hearing may be issued 
 by any member of the Commission. 
 
 Subpoenas for the production of documentary evidence (unless 
 directed to issue by a Commissioner upon his own motion) will issue 
 only upon application in writing, which must be verified and must 
 specify, as near as may be, the documents desired and the facts to 
 be proved by them. 
 
 Witnesses summoned before the Conunission shall be paid the 
 same fees and mileage that are paid witnesses in the courts of the 
 United States, and witnesses whose depositions are taken, and the 
 persons taking the same, shall severally be entitled to the same fees 
 as are paid for like services in the courts of the United States. 
 
 Depositions in Contested Proceedings 
 
 The Commission may order testimony to be taken by deposition in 
 a contested proceeding.
 
 436 APPENDIX 
 
 Depositions may be taken before any person designated by the 
 Commission and having power to administer oaths. 
 
 Any party desiring to take the deposition of a witness shall make 
 application in writing, setting out the reasons why such deposition 
 should be taken, and stating the time, when, the place where, and the 
 name and post-office address of the person before whom it is desired 
 the deposition be taken, the name and post-office address of the 
 witness, and the subject matter or matters concerning which the wit- 
 ness is expected to testify. If good cause be shown, the Commission 
 will make and serve upon the parties, or their attorneys, an order 
 wherein the Commission shall name the witness whose deposition is to 
 be taken and specify the time when, the place where, and the person 
 before whom the witness is to testify, but such time and place, and 
 the person before whom the deposition is to be taken, so specified in 
 the Commission's order, may or may not be the same as those named 
 in said application to the Commission. 
 
 The testimony of the witness shall be reduced to writing by the 
 officer before whom the deposition is taken, or under his direction, 
 after which the deposition shall be subscribed by the witness and 
 certified in usual form by the officer. After the deposition has been 
 so certified it shall, together with a copy thereof made by such officer 
 or under his direction, be forwarded by such officer under seal in an 
 envelope addressed to the Commission at its office in Washington, 
 D. C. Upon receipt of the deposition and copy the Commission shall 
 file in the record in said proceeding such deposition and forward the 
 copy to the defendant or the defendant's attorney. 
 
 Such depositions shall be typewritten on one side only of the 
 paper, which shall be not more than 8j^ inches wide and not more 
 than II inches long and weighing not less than i6 pounds to the ream, 
 folio base, 17 by 22 inches, with left-hand margin not less than 
 ij^ inches wide. 
 
 No deposition shall be taken except after at least 6 days' notice to 
 the parties, and where the deposition is taken in a foreign country 
 such notice shall be at least 15 days. 
 
 No deposition shall be taken either before the proceeding is at 
 issue, or, unless under special circumstances and for good cause 
 shown, within 10 days prior to the date of the hearing thereof assigned 
 by the Commission, and where the deposition is taken in a foreign 
 country it shall not be taken after 30 days prior tO' such date of 
 hearing.
 
 APPENDIX 437 
 
 Documentary Evidence 
 
 Where relevant and material matter offered in evidence is 
 embraced in a document containing other matter not material or 
 relevant and not intended to be put in evidence, such document v^^ill 
 not be filed, but a copy only of such relevant and material matter 
 shall be filed. 
 
 Briefs 
 
 Unless otherwise ordered, briefs may be filed at the close of the 
 testimony in each contested proceeding. The presiding Commissioner 
 or examiner shall fix the time within which briefs shall be filed and 
 service thereof shall be made upon the adverse parties. 
 
 All briefs must be filed with the Secretary and be accompanied 
 by proof of service upon the adverse parties. Fifteen copies of each 
 brief shall be furnished for the use of the Commission, unless other- 
 wise ordered. 
 
 Application for extension of time in which to file any brief shall 
 be by petition in writing, stating the facts upon which the application 
 rests, which must be filed with the Commission at least 5 days before 
 the time for filing the brief. 
 
 Every brief shall contain, in the order here stated : 
 
 1. A concise abstract, or statement of the case. 
 
 2. A brief of the argument, exhibiting a clear statement of the 
 
 points of fact or law to be discussed, with the reference to 
 the pages of the record and the authorities relied upon in 
 support of each point. 
 
 Every brief of more than 10 pages shall contain on its top fly 
 leaves a subject index with page references, the subject index to be 
 supplemented by a list of all cases referred to, alphabetically arranged, 
 together with references to pages where the cases are cited. 
 
 Briefs must be printed in 10 or 12 point type on good unglazed 
 paper 8 inches by 10^/2 inches, with inside margins not less than 
 I inch wide, and with double-leaded text and single-leaded citations. 
 
 Oral arguments will be had only as ordered by the Commission. 
 
 Address of the Commission 
 
 All communications to the Commission must be addressed to 
 Federal Trade Commission, Washington, D. C, unless otherwise 
 specifically directed.
 
 APPENDIX B 
 
 DIPLOMATIC REPRESENTATION, PARCEL POST 
 COUNTRIES, AND SHIPPING DISTANCES 
 
 Foreign Cities in Which There are American 
 
 Consulates 
 
 Consular officers endeavor to maintain and promote every 
 rightful interest of American citizens in foreign lands and 
 strive to procure for them all the privileges belonging to them 
 by reason of treaty or traditional custom. Thus the consul 
 may be a valuable source of aid and advice for the exporter 
 and, though forbidden by law to act as agent for the sale of 
 merchandise, may assist the American merchant in many im- 
 portant ways. Following is as complete and accurate a list of 
 American consulates abroad as it is possible to publish at this 
 time. 
 
 The consulates formerly maintained in the countries lately 
 at war with the United States have been omitted. Authentic 
 and up-to-date information concerning consular relationships 
 with our late adversaries can be obtained only through the 
 State Department at Washington, D. C. 
 
 Argentine Republic 
 
 Brazil 
 
 Buenos Aires 
 
 Bahia 
 
 Rosario 
 
 Para 
 
 Austria-Hungary 
 
 Pernambuco 
 
 (No consulate) 
 
 Rio de Janeiro 
 
 Belgium 
 
 Santos 
 
 (No consulate) 
 
 Sao Paulo 
 
 Bolivia 
 
 Bulgaria 
 
 La Paz 
 
 Sofia 
 
 
 438
 
 APPENDIX 
 
 439 
 
 Chile 
 
 Antofagasta 
 
 Punta Arenas 
 
 Valparaiso 
 China 
 
 Amoy 
 
 Antung 
 
 Canton 
 
 Changsha 
 
 Chefoo 
 
 Chungking 
 
 Foochow 
 
 Hankow 
 
 Harbin 
 
 Mukden 
 
 Nanking 
 
 Peking 
 
 Shanghai 
 
 Swatow 
 
 Tientsin 
 
 Tsinantu 
 Colombia 
 
 Barranquilla 
 
 Cartagena 
 Costa Rica 
 
 Port Linion 
 
 San Jose 
 Cuba 
 
 Cienfuegos 
 
 Habana 
 
 Nuevitas 
 
 Santiago de Cuba 
 Denmark and Dominions 
 
 Aalborg 
 
 Copenhagen 
 
 Esbjerg 
 
 Odense 
 Dominican Republic 
 
 Puerto Plata 
 
 Santo Domingo 
 
 Ecuador 
 
 Guayaquil 
 France and Dominions 
 
 Algiers, Algeria 
 
 Bordeaux 
 
 Brest 
 
 Calais 
 
 Cette 
 
 Dakar, Senegal 
 
 Grenoble 
 
 Guadeloupe, West Indies 
 
 Havre 
 
 La Rochelle 
 
 Limoges 
 
 Lyon 
 
 Marseilles 
 
 Martinique, West Indies 
 
 Nantes 
 
 Nice 
 
 Paris 
 
 Rouen 
 
 Saigon, Fr. Indo-China 
 
 St. Etienne 
 
 St. Nazaire 
 
 St. Pierre-Miquelon 
 
 Tahiti, Society Islands 
 
 Tananarivo, Madagascar 
 
 Tunis 
 Germany 
 
 (No consulates) 
 Great Britain and Dominions 
 
 Adelaide, Australia 
 
 Aden, Arabia 
 
 Auckland, New Zealand 
 
 Barbados, West Indies 
 
 Belfast, Ireland 
 
 Belize, British Honduras 
 
 Birmingham, England 
 
 Bombay, India 
 
 Bradford, England
 
 440 
 
 APPENDIX 
 
 Great Britain and Dominions 
 
 (Continued) 
 Bristol, England 
 Cairo, Egypt 
 Calcutta, India 
 Calgary, Alberta, Canada 
 Campbellton, New Brunswick 
 Cape Town, Cape of Good 
 
 Hope 
 Cardiff, Wales 
 Charlottetown, Prince Edward 
 
 Is. 
 Colombo, Ceylon 
 Cork (Queenstown), Ireland 
 Cornwall, Ontario 
 Dublin, Ireland 
 Dundee, Scotland 
 Dunfermline, Scotland 
 Durban, Natal 
 Edinburgh, Scotland 
 Fernie, British Columbia 
 Fort William, Ontario 
 Georgetown, Guiana 
 Gibraltar, Spain 
 Glasgow, Scotland 
 Halifax, Nova Scotia 
 Hamilton, Bermuda 
 Hamilton, Ontario 
 Hong Kong, China 
 Huddersfield, England 
 Hull, England 
 Johannesburg, Transvaal 
 Karachi, India 
 Kingston, Jamaica 
 Kingston, Ontario 
 Leeds, England 
 Liverpool, England 
 London, England 
 Madras, India 
 Malta, Maltese Islands 
 
 Manchester, England 
 Melbourne, Australia 
 Mombasa, Br. East Africa 
 Moncton, New Brunswick 
 Montreal, Quebec 
 Nairoli, Br. East Africa 
 Nassau, N. P., Bahamas 
 Newcastle, Australia 
 Newcastle-on-Tyne, England 
 Niagara Falls, Ontario 
 Nottingham, England 
 Ottawa, Ontario 
 Penang, Straits Settlement 
 Plymouth, England 
 Port Antonio. Jamaica 
 Port Arthur, Ontario 
 Port Elizabeth, Cape of Good 
 
 Hope 
 Prescott, Ontario 
 Prince Rupert, Br. Columbia 
 Quebec, Quebec 
 Rangoon, India 
 Regina, Canada 
 Riviere du Loup, Quebec 
 St. John, New Brunswick 
 St. John's, Newfoundland 
 St. Stephens, New Brunswick 
 Sarnia, Ontario 
 Sault Ste. Marie, Ontario 
 Sheffield, England 
 Sherbrooke, Quebec 
 Singapore, Straits Settlements 
 Southampton, England 
 Stoke-on-Trent, England 
 Swansea, Wales 
 Sydney, Australia 
 Sydney, Nova Scotia 
 Toronto, Ontario 
 Trinidad, West Indies 
 Vancouver, British Columbia
 
 APPENDIX 
 
 441 
 
 Great Britain and Dominions 
 (Continued) 
 
 Victoria, British Columbia 
 
 Windsor, Ontario 
 
 Winnipeg, Manitoba 
 
 Yarmouth, Nova Scotia 
 Greece 
 
 Athens 
 
 Patrac 
 
 Saloniki 
 Guatemala 
 
 Guatemala 
 Haiti 
 
 Cape Haitien 
 
 Port au Prince 
 Honduras 
 
 Ceiba 
 
 Puerto Cortes 
 
 Tegucigalpa 
 Italy 
 
 Catania 
 
 Florence 
 
 Genoa 
 
 Leghorn 
 
 Milan 
 
 Naples 
 
 Palermo 
 
 Rome 
 
 Turin 
 
 Venice 
 Japan 
 
 Dalny, Manchuria 
 
 Kobe 
 
 Nagasaki 
 
 Seoul, Chosen 
 
 Shimonoseki 
 
 Taihoku, Taiwan 
 
 Yokohama 
 Kongo 
 
 Boma 
 
 Liberia 
 
 Monrovia 
 Mexico 
 
 Acapulco, Guerrero 
 
 Aguascalientes, Aguascalientes 
 
 Chihuahua, Chihuahua 
 
 Ciudad Juarez, Chihuahua 
 
 Durango, Durango 
 
 Ensanada, Lower Cal. 
 
 Frontera, Tabasco 
 
 Guadalajara, Jalisco 
 
 Guaymas, Sonora 
 
 Manzanillo, Colima 
 
 Matamoros, Tamaulipas 
 
 Mazatlan, Sinaloa 
 
 Mexico, Mexico 
 
 Monterey, Nuevo Leon 
 
 Nogales, Sonora 
 
 Nuevo Laredo, Tamaulipas 
 
 Progreso, Yucatan 
 
 Salina Cruz, Oaxaca 
 
 Saltillo, Coahuila 
 
 San Luis Potosi, San Luis Po- 
 tosi 
 
 Tampico, Tamaulipas 
 
 Torreon, Coahuila 
 
 Vera Cruz, Vera Cruz 
 Morocco 
 
 Tangier 
 Netherlands and Dominions 
 
 Amsterdam 
 
 Batavia, Java 
 
 Curacao, West Indies 
 
 Padang, Sumatra 
 
 Rotterdam 
 Nicaragua 
 
 Bluefields 
 
 Corinto 
 Norway 
 
 Bergen
 
 442 
 
 APPENDIX 
 
 Norway (Continued) 
 Christiania 
 Christiansand 
 Stavanger 
 Trondhjem 
 Vardo 
 Panama 
 Colon 
 Panama 
 Paraguay 
 
 Asuncion 
 Persia 
 Bushire 
 Tabriz 
 Teheran 
 Peru 
 
 Callao, Lima 
 Portugal and Dominions 
 Fayal, Azores 
 Funchal, Madeira 
 Lisbon 
 Lourenco Marques, East Africa 
 
 St. Michael's, Azores 
 Russia 
 Archangel 
 
 Helsingfors, Finland 
 
 Irkutsk 
 
 Kief 
 
 Moscow 
 
 Odessa 
 
 Petrograd (St. Petersburg) 
 
 Riga 
 
 Tiflis, Caucasus 
 
 Vladivostok, Siberia 
 
 Warsaw 
 
 Salvador 
 
 San Salvador 
 Serbia 
 
 Belgrade 
 
 SlAM 
 
 Bangkok 
 Spain and Dominions 
 Almeria 
 Barcelona 
 Bilbao 
 Gijon 
 Madrid 
 Malaga 
 Santander 
 Seville 
 
 Teneriffe, Canary Islands 
 Valencia 
 Vigo 
 Sweden 
 
 Gothenburg 
 
 Helsingborg 
 
 Malmo 
 
 Stockholm 
 Switzerland 
 
 Basel 
 
 Berne 
 
 Geneva 
 
 St. Gall 
 
 Zurich 
 Uruguay 
 
 Montevideo 
 Venezuela 
 
 La Guaira 
 
 Maracaibo 
 
 Puerto Cabello
 
 APPENDIX 
 
 443 
 
 Embassies and Legations Maintained Abroad by the 
 
 United States 
 
 The following list is of countries in which the United States 
 maintains embassies and legations. Those countries in which 
 the representative is an ambassador extraordinary and pleni- 
 potentiary are indicated by italics. The remaining represen- 
 tatives are envoys extraordinary and ministers plenipotentiary. 
 Business correspondence to representatives in the first class 
 should be addressed to "American Ambassador" ; to those in 
 the latter class to "American Minister." 
 
 Argentina (Buenos Aires) 
 
 Bolivia (La Paz) 
 Brazil (Rio de Janeiro) 
 
 Chile (Santiago) 
 China (Peking) 
 Colombia (Bogota) 
 Costa Rica (San Jose) 
 Cuba (Habana) 
 
 Denmark (Copenhagen) 
 Dominican Republic (San Do- 
 mingo City) 
 
 Ecuador (Quito) 
 
 France (Paris) 
 
 Great Britain (London) 
 
 Greece (Athens — also represents 
 
 Montenegro) 
 Guatemala (Guatemala City) 
 
 Haiti (Port au Prince) 
 Honduras (Tegucigalpa) 
 
 Italy (Rome) 
 
 Japan (Tokio) 
 
 Luxemburg (See "Netherlands") 
 
 Mexico (Mexico City) 
 Montenegro (See "Greece") 
 
 Netherlands (The Hague — also 
 
 represents Luxemburg) 
 Nicaragua (Managua) 
 Norway (Christiania) 
 
 Panama (Panama City) 
 Paraguay (Asuncion) 
 Persia (Teheran) 
 Peru (Lima) 
 Portugal (Lisbon) 
 
 Roumania (Bucharest) 
 Russia (Petrograd) 
 
 Salvador (San Salvador) 
 Serbia (See "Roumania") 
 Siam (Bankok) 
 Spain (Madrid) 
 Sweden (Stockholm) 
 Switzerland (Berne) 
 
 Uruguay (Montevideo) 
 
 Venezuela (Caracas) 
 
 In the first two of the following countries the United States
 
 444 APPENDIX 
 
 is represented by an agent and consul-general, and in the third 
 by a minister-resident and consul-general: 
 
 Egypt (Cairo) 
 Morocco (Tangiers) 
 Liberia (Moravia) 
 
 Parcel Post Countries 
 
 The United States has not yet concluded parcel post con- 
 nections with all countries, yet most of the important places 
 in the world may be reached by this means. Though regula- 
 tions concerning the shipment of goods by parcel post vary in 
 different countries, it may be said in general that any article 
 admissible to the domestic mails of the United States may be 
 sent abroad in unsealed packages by parcel post. The parcel 
 post connections with the countries listed below include most 
 of the colonial possessions of the countries. Specific data 
 concerning any particular country may be easily obtained by 
 application to the Post-Office Department. The lists of parcel 
 post countries is as follows: 
 
 Argentina Dominican Republic 
 
 Australia Dutch Guiana 
 
 Bahamas East Indies 
 
 Barbados Ecuador 
 
 Bermuda France 
 
 BoHvia French Guiana 
 
 Brazil Gibraltar 
 
 British Guiana Great Britain (including Ireland) 
 
 China Greece 
 
 Colombia Guatemala 
 
 Costa Rica Guadaloupe
 
 APPENDIX 445 
 
 Haiti Newfoundland 
 
 Honduras (British) New Zealand 
 
 Honduras (Republic of) Nicaragua 
 
 Hong Kong Panama 
 
 Italy Peru 
 
 Jamaica Salvador 
 
 Japan Siam 
 
 Leeward Islands Society Islands 
 
 Liberia Trinidad 
 
 Martinique Uruguay 
 
 Manchuria Venezuela 
 
 Mexico Windward Islands 
 
 Parcel post service with the following countries has been 
 temporarily suspended on account of conditions arising from 
 the war: 
 
 Austria Hungary 
 
 Belgium Netherlands 
 
 Chile Norway 
 
 Denmark Portugal 
 
 Germany Sweden 
 
 Distances From New York to Principal Ports of the 
 
 World 
 
 These distances comprise the shortest practicable routes, 
 and are given in nautical miles. To convert nautical into 
 statute miles, multiply by 1.1516. 
 
 Bahia 4,089 Boston 3^5 
 
 Baltimore 404 Buenos Aires 5-868 
 
 Barbados i ,829 Callao 3-363 
 
 Bermuda 681 Cape Town 6,720 
 
 Bombay 8,120 Charlestown 627
 
 446 
 
 APPENDIX 
 
 Charlottetown, P. E. 1 1,321 
 
 Colon 1 ,974 
 
 Georgetown 2,217 
 
 Gibraltar 3-195 
 
 Habana 1,186 
 
 Halifax 596 
 
 Hamburg 3,510 
 
 Havre 3.219 
 
 Hong Kong 11,190 
 
 Honolulu (via Panama) . . 6,702 
 
 Key West 1,128 
 
 Las Palmas 2,965 
 
 Liverpool 3,053 
 
 London 3,222 
 
 Manila (via Panama) ....11,548 
 
 Mobile 1,658 
 
 Montevideo 5,768 
 
 Melbourne (via Panama) . 10,392 
 
 Naples 4,155 
 
 New Orleans 1.730 
 
 Newport News 281 
 
 Pernambuco 3,696 
 
 Philadelphia 235 
 
 Port Castries i,747 
 
 Portland 349 
 
 Puerto Mexico i,944 
 
 Punta Arenas 6,947 
 
 Quebec 1,321 
 
 Queenstown 2,904 
 
 Rio de Janeiro 4,77° 
 
 Saint Thomas i,434 
 
 Saint Vincent 2,914 
 
 San Francisco (via Pana- 
 ma) 5,262 
 
 San Juan 1,407 
 
 Savannah 700 
 
 Shanghai (via Panama) ..10,649 
 
 Sydney (via Panama) 9,8ii 
 
 Singapore 10,170 
 
 Valparaiso (via Panama). 4,633 
 
 Yokohama 9,798
 
 APPENDIX C 
 
 CURRENCY AND WEIGHT EQUIVALENTS 
 
 Foreign Currency Equivalents 
 
 
 
 Value of For- 
 
 Value of U. S. 
 
 
 
 eign Gold Cur- 
 
 Dollar at Par 
 
 Denomination 
 
 
 rency at Par 
 
 in Terms of 
 
 
 
 in 
 
 Terms of 
 
 Foreign Gold 
 
 
 
 U. 
 
 S. Dollar 
 
 Currency 
 
 Balboa (Panama) 
 
 
 
 $1,000 
 
 1. 000 balboas 
 
 Bolivar (Venezuela) 
 
 
 
 •193 
 
 5.18 bolivares 
 
 Boliviano (Bolivia) 
 
 
 
 •389 
 
 2.57 bolivianos 
 
 Colon (Costa Rica) 
 
 
 
 •465 
 
 2.15 colones 
 
 Crown (Austria) 
 
 
 
 .203 
 
 4.926 crowns 
 
 Crown (Denmark) 
 
 
 
 .268 
 
 3.731 crowns 
 
 Dinar (Serbia) 
 
 
 
 •193 
 
 5.18 dinars 
 
 Dollar (Mexico) 
 
 
 
 .464 
 
 2.15 dollars 
 
 Dollar (Newfoundland) 
 
 
 
 1. 000 
 
 1. 000 dollar 
 
 Dollar (Salvador) 
 
 
 
 .972 
 
 1.02 dollars 
 
 Dollar (Sts. Settlements) 
 
 
 
 -567 
 
 1.764 dollars 
 
 Dollar (Elsewhere) 
 
 
 
 1. 000 
 
 1. 000 dollar 
 
 Drachma (Greece) 
 
 
 
 •193 
 
 5.18 drachmas 
 
 Florin or Guilder (Netherlands) 
 
 
 .402 
 
 2.487 florins 
 
 Franc (Belgium, France, 
 
 Swit- 
 
 
 
 
 zerland) 
 
 
 
 •193 
 
 5.18 francs 
 
 Gourde (Haiti) 
 
 
 
 •25 
 
 4.000 gourdes 
 
 K'ran (Keran) (Persia) 
 
 
 
 .079 
 
 12.646 k'ran 
 
 Krone (Denmark) 
 
 
 
 .268 
 
 3.731 kroner 
 
 Leo (Roumania) 
 
 
 
 •193 
 
 5.18 lei 
 
 Lev (Bulgaria) 
 
 
 
 •193 
 
 5.18 leva 
 
 Lira ^taly) 
 
 
 
 •193 
 
 5.18 lire 
 
 Lira Turca or Medjidie (Turkey) 
 
 
 44 
 
 .227 pounds 
 
 Mark (Finland) 
 
 
 
 •193 
 
 5.18 marks 
 
 Mark (Germany) 
 
 
 
 .238 
 
 4.20 marks 
 
 447
 
 448 
 
 APPENDIX 
 
 
 
 Val 
 
 lue of For- 
 
 Value of U. S. 
 
 
 eign Gold Cur- 
 
 Dollar at Par 
 
 Denomination 
 
 rency at Par 
 
 in Terms of 
 
 
 in 
 
 Terms of 
 
 Foreign Gold 
 
 
 U. 
 
 S. Dollar • 
 
 Currency 
 
 Milreis (Brazil) 
 
 
 •546 
 
 1. 831 milreis 
 
 Milreis (Portugal) 
 
 
 1.08 
 
 .926 milreis 
 
 Peseta (Spain) 
 
 
 •193 
 
 5.18 pesetas 
 
 Peso (Argentina) 
 
 
 ■965 
 
 1.037 pesos 
 
 Peso (Chile) 
 
 
 •365 
 
 2.74 pesos 
 
 Peso (Guatemala) 
 
 
 .972 
 
 1.02 pesos 
 
 Peso (Uruguay) 
 
 
 1.034 . 
 
 •977 pesos 
 
 Pound (Egypt) 
 
 
 4-943 
 
 .202 pounds 
 
 Pound (England) 
 
 
 4.8665 
 
 £0, 4s., ij4d. 
 
 Ruble (Russia) 
 
 
 •515 
 
 1. 941 rubles 
 
 Rupee (India) 
 
 
 •3244 
 
 3.086 rupees 
 
 Sol (Peru) 
 
 
 •487 
 
 2.053 sol 
 
 Sucre (Ecuador) 
 
 
 .487 
 
 2.053 Sucre 
 
 Tael (China) 
 
 
 •703 
 
 142 taels 
 
 Tical (Siam) 
 
 
 .278 
 
 3.597 ticals 
 
 Yen (Japan) 
 
 
 498 
 
 2.008 yen
 
 APPENDIX 
 
 449 
 
 
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 CO
 
 APPENDIX D 
 
 SUGGESTIVE INVESTIGATION CHARTS 
 
 Investigator's Instruction Sheets 
 
 The investigator of a foreign market will minimize the 
 danger of overlooking essential sources of information if he is 
 provided at the outset with standardized instructions which 
 will designate all the different kinds of sources from which he 
 will ordinarily be expected to gather his facts. 
 
 His task will be further simplified if he is also provided 
 with the name and location of each of the bureaus, consular 
 offices, banks, and other sources which he is expected to visit. 
 To these he will be able to add other sources which he will have 
 visited on his own initiative and his sheet may be expanded 
 indefinitely. No investigator can consider his work completed 
 until he has exhausted the possibilities of more than one source 
 under each head. 
 
 For convenience five distinct forms, each representing the 
 sources of the different classes of information are presented 
 on the following pages. In practice a single combined chart 
 will be found equally effective. 
 
 Investigator's Analysis Sheet 
 
 The next step is to supply the investigator with a list of the 
 topics on which specific information is required and to tell him 
 
 453
 
 454 
 
 APPENDIX 
 
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 456 
 
 APPENDIX 
 
 which of the sources on his instruction sheet may be expected 
 to supply such data. This Hst of topics will be found on the 
 "Investigator's Analysis Sheet" which follows, with the prob- 
 able sources of information indicated in the first column at 
 the right of the topic. The information itself is recorded 
 in the second column. 
 
 To illustrate: The first specific information called for on 
 the analysis sheet is the "Nature of Demand." The United 
 States Department of Commerce at Washington may be ex- 
 pected to tell whether the demand is local or general by ref- 
 erence to its consular reports. Mention of this department will 
 be found on the investigator's instruction sheet — Classification 
 B, Column I. It may be designated on the analysis sheet as 
 " B I." 
 
 Since the American consul at the chief seaport of the 
 foreign market may have some personal information which 
 will throw light on this same incjuiry, we may also include 
 him as a source, designating him as "C II." 
 
 Investigator's Analysis Sheet 
 
 I. Demand 
 
 (a) Nature 
 
 Source 
 
 Information 
 
 
 
 (b) Quality 
 
 
 
 (c) Extent (Quantity) 
 
 
 
 (d) Potential (Latent) 
 
 
 
 (e) How Best Fostered 
 
 
 
 (f) How Best Created 
 
 
 
 (g) 
 
 
 
 (h) 
 
 
 
 2. Supply 
 
 
 
 (a) Nature 
 
 
 
 (b) Quality 
 
 
 
 (c) Extent 
 
 
 
 Investigator's Analysis Sheet
 
 APPENDIX 
 
 457 
 
 2. Supply (Continued) 
 
 (d) Principal Sources 
 
 Source 
 
 Information 
 
 
 
 (e) Is There Overproduction? 
 
 
 
 (f) 
 
 
 
 (g) 
 
 
 
 3. Structure of Market 
 
 
 
 (a) Machinery of Distribution 
 
 
 
 (b) Import Policies 
 
 
 
 (c) Terms of Sale 
 
 
 
 (d) Credit Conditions 
 
 
 
 (e) 
 
 
 
 (f) 
 
 
 
 4. Psychology of Market 
 
 
 
 (a) Stable or Changeable 
 
 
 
 (b) Reliable or Unreliable 
 
 
 
 (c) Attitude of Government 
 
 
 
 (d) Attitude of People 
 
 
 
 (e) 
 
 
 
 (f) 
 
 
 
 5. Status of Market 
 
 
 
 (a) Political 
 
 
 
 (b) Governmental 
 
 
 
 (c) Legal 
 
 
 
 (d) Economic 
 
 
 
 (e) Financial 
 
 
 
 (f) Social 
 
 
 
 (g) Commercial 
 
 
 
 (h) 
 
 
 
 (i) 
 
 
 
 6. Methods of Distribution 
 
 
 
 (a) Competitor's Methods 
 
 
 
 (b) Criticisms 
 
 
 
 (c) Best Method for This Product 
 
 
 
 (d) 
 
 
 
 (e) 
 
 
 
 Investigator's Analysis Sheet (Continued)
 
 458 
 
 APPENDIX 
 
 7, Terms of Sale 
 
 (a) Prices 
 
 (b) Margin of Profit 
 
 (c) Discount 
 
 (d) Commissions 
 
 (e) Credit Customs 
 
 (f) 
 (g) 
 
 8. 
 
 Advertising 
 (a) Kinds 
 
 (b) 
 (c) 
 (d) 
 (e) 
 
 (f) 
 (g) 
 (h) 
 (i) 
 
 Papers 
 
 Cost 
 
 Nature 
 
 Extent 
 
 Catalogues 
 
 Circulars 
 
 Capital Required for 
 
 (a) Advertising 
 
 (b) Agencies 
 
 (c) Sales 
 
 (d) Credits 
 
 (e) Organization 
 
 (f) Banks (Am. Foreign Branches) 
 
 (g) 
 (h) 
 
 Source 
 
 Information 
 
 10. Tariff, Transportation, and Miscel- 
 laneous Commercial Laws 
 
 (a) Tariff Rates 
 
 (b) Best Transportation Routes 
 
 (c) Transportation Rates 
 
 (d) Local Requirements 
 
 (e) Consular and Shipping Require- 
 
 ments 
 
 Investigator's Analysis Sheet (Continued)
 
 APPENDIX 
 
 459 
 
 10. Tariff, Transportation, and Miscel- 
 laneous Commercial Laws (Cont.) 
 
 Source 
 
 Information 
 
 
 
 (0 
 
 
 
 (g) 
 
 
 
 II. Miscellaneous Information 
 
 
 
 (a) Packing Rules 
 
 
 
 (b) Special Production Demands 
 
 
 
 (c) Principal Competitors 
 
 
 
 (d) 
 
 
 
 (e) 
 
 
 
 (f) 
 
 
 
 Investigator's Analysis Sheet (Continued) 
 
 Investigator's Summary of Analysis Sheet (for the 
 
 Executive) 
 
 At the end of the investigation a summary of the analysis 
 sheet with its concise comments may serve as a handy refer- 
 ence device for the executive. 
 
 The comment on this sheet, however, must be supported by 
 detailed and comprehensive reports covering the entire topic, 
 indicating all sources of information and presenting the com- 
 plete evidence on which the conclusion arrived at by the in- 
 vestigator has been based. These detailed reports may be con- 
 sidered of a confidential nature and should be kept in a sep- 
 arate file where they are available for the use of the executive 
 only.
 
 460 
 
 APPENDIX 
 
 
 
 
 
 
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 APPENDIX 461 
 
 Supplementary Topics for Investigation 
 
 The following subjects may profitably be treated in a full 
 supplementary report by the investigator. They cannot readily 
 be put into the chart form, but may constitute an important 
 portion of the investigation. The material presented here is 
 suggestive in character rather than conclusive in any sense. 
 
 1. In Connection With the Problem of Production 
 
 (a) Number of other companies in the field. 
 
 (b) Location of their plants. 
 
 (c) Present volume of production in this particular line. 
 
 (d) Availability and condition of raw materials. 
 
 (e) Export potentiality. 
 
 2. Legislation, Regulations, or Industrial Conditions In- 
 
 fluencing OR Bearing on the Commodity 
 
 (a) Climatic conditions. 
 
 (b) Traffic conditions. 
 
 (c) After- and pre-war situations as affecting this particular 
 
 commodity. 
 
 (d) Present market status — governmental, geographic, and 
 
 legislative. 
 
 (e) Restrictions on or aids to commerce. 
 
 (f) Pre-war or recent lights on labor in all industrial fields. 
 
 3. Selling Methods 
 
 (a) General sales conditions in this particular industry. 
 
 (b) Ways and means used by competitive manufacturers. 
 
 (c) Enterprise and service suggestions. 
 
 4. Prices 
 
 (a) Quotations of competing lines. 
 
 (b) Comparison of prices — as to better or lesser rated goods. 
 
 5. Distribution Difficulties and Advantages 
 
 (a) Channels of distribution. 
 
 (b) Other methods of distribution. 
 
 (c) Methods of overcoming obstacles to distribution. 
 
 (d) Cheapening the processes of distribution.
 
 462 APPENDIX 
 
 6. Methods of Meeting "Kicks" or "Unsatisfactory Goods" 
 
 Problem 
 
 (a) Plans to eliminate poor merchandise. 
 
 (b) Experience others have had in perfecting products. 
 
 (c) Packaging and retail education. 
 
 7. Competition 
 
 (a) Briefs of leading firms in the industry. 
 
 (b) Status of their goods in open markets. 
 
 (c) Value of competitor's goods to consumer. 
 
 (d) Strength and weakness of competitor's methods. 
 
 (e) How long competitors have been in the market. 
 
 (f) Similar products manufactured, if any. 
 
 (g) Retail and wholesale price of similar products. 
 
 8. Consumption 
 
 (a) Survey of per capita use. 
 
 (b) Zone consumption as applied naturally. 
 
 (c) Diagnosis of best sellers and desirable items. 
 
 (d) Statistical table of consumption by years. 
 
 (e) Potential purchasing power of consuming classes. 
 
 (f) Percentage of literate and illiterate consumers. 
 
 (g) Characteristics and customs peculiar to consuming classes, 
 (h) Appeal of the product — as a luxury or a necessity. 
 
 9. Advertising 
 
 (a) How, where, when, and what to advertise. 
 
 (b) Possible costs and relative return of tentative advertising. 
 
 (c) Competitor's use of advertising. 
 
 (d) Comparison of window, bill-board, car, newspaper, maga- 
 
 zine, special device, and sampling methods of publicity. 
 
 (e) Co-operation of press— general or only through advertising 
 
 pages. 
 
 (f) Value of local color. 
 
 ID. Trade-Mark Value and Good-Will Building 
 
 11. Future Outlook for Industry as a Whole 
 
 12. Trade-mark and Patent Laws
 
 APPENDIX E 
 
 BIBLIOGRAPHY 
 
 Practical Exporting, B. Olney Hough. Johnson Export Publishing 
 Co., New York. 1918. 
 
 American Methods in Foreign Trade, George C. Vedder. McGraw- 
 Hill Book Co., New York. 1919. 
 
 Shipping Office Organization, Management and Accounts, Alfred 
 Calvert. Isaac Pitman & Sons, London. 1910. 
 
 Marine Insurance, William Gow. The Macmillan Co., London. 1909. 
 
 Exporters' Handbook and Glossary, Frank M. Dudley. Isaac Pit- 
 man & Sons, New York. 1916. 
 
 Exporters' Encyclopedia. Exporters' Encyclopedia Co., New York. 
 (Published yearly.) 
 
 Industrial and Commercial Geography, J. Russell Smith. Henry Holt 
 & Co., New York. 1913. 
 
 A Text-Book of Commercial Geography, C. C. Adams. D. Appleton 
 & Co., New York. 1918. 
 
 Theory of International Trade, C. F. Bastable. The Macmillan Co., 
 London. 1903. 
 
 The Principles and Practice of Commerce, James Stephanson. G. P. 
 Putnam's Sons, London. 191 5. 
 
 International Finance, H. Withers. E. P. Button & Co., New York. 
 1916. 
 
 Foreign Exchange and Foreign Bills, W. F. Spalding. Isaac Pitman 
 & Sons, London. 1918. 
 
 Elements of Foreign Exchange (Revised edition), Franklin Escher. 
 Bankers' Publishing Co., New York. 1917. 
 
 Modern Foreign Exchange, V. Gonzales. C. S. Hammond & Co., 
 New York. 1914. 
 
 The Law of Commercial Paper, W. U. Moore. D. Appleton & Co., 
 New York. 1918. 
 
 Ocean Traffic and Trade, Olney B. Hough. LaSalle Extension Uni- 
 versity, Chicago. 1914. 
 
 Principles of Ocean Transportation, Emory R. Johnson and G. G. 
 Huebner. D. Appleton & Co., New York. 1918. 
 
 463
 
 464 
 
 APPENDIX 
 
 History and Economics of Transportation, A. W. Kirkaldy. Isaac 
 
 Pitman & Sons, New York. 191 5. 
 The Ocean Carrier, J. Russell Smith. G. P. Putnam's Sons, New 
 
 York. 1908. 
 Exporting to Latin America, E. B. Filsinger. D. Appleton & Co., 
 
 New York. 1916. 
 Dictionary of World's Commercial Products, J. A. Slater. Isaac 
 
 Pitman & Sons, New York. 1912. 
 
 There are many valuable pamphlets concerning the various aspects 
 of foreign trade published by certain organizations. Among the most 
 important of tris type which may be mentioned are the publications of: 
 
 The Bureau of Foreign and Domestic Commerce, Department of 
 
 Commerce, Washington, D. C. 
 The Department of State, Washington, D. C. 
 Foreign Departments of Banks.
 
 APPENDIX F 
 
 GLOSSARY 
 
 A. A. R. "Against all risks." Insurance term equivalent to "With 
 Average" and opposed to "F. P. A." 
 
 Acceptance. Admission of liability and engagement to pay by drawee 
 of after-sight or after-date draft; effected by drawee's signing 
 his name, the date, and the amount across the face of the 
 draft. 
 
 Bank. Draft by shipper on bank with which importer has 
 established credit. It is accepted by bank and is then negotiable. 
 The bank which acts thus may be in country of destination or in 
 country of export. 
 
 Trade. An unconditional order in writing addressed by one 
 person to another, signed by the person giving it, requiring the 
 person to whom it is addressed to pay at a fixed or determinable 
 future time a certain sum in money to the order of a specified 
 person. The bill must be drawn by the seller on the purchaser 
 of goods sold, and accepted by such purchaser. (Definition by 
 Federal Reserve Board.) 
 
 Act of God. See "Force Majeure." 
 
 Agio. Difference between the real and the nominal value of money. 
 When paper currency is depreciated, the agio represents the 
 premium at which gold stands as compared with paper. 
 
 American Exposition. A permanent exhibition of American goods 
 in a central city of the foreign country. Experiments in Caracas 
 and Shanghai are failures. The idea of such an exposition main- 
 tained by American exporters has been repeatedly advocated but 
 with little success. 
 
 Arbitrage. Buying securities or produce in one market and at the 
 same time instructing agents in another market by telegraph to 
 sell them. By this manipulation a profit is made due to the dif- 
 ference in price. 
 
 Average. See "General Average," "F. P. A.," and "W. A." 
 
 Average Bond. Agreement signed by shippers liable for contributions 
 to a general average adjustment. By it they receive cargo for 
 
 465
 
 466 APPENDIX 
 
 a promise to pay general average as soon as ascertained. See 
 "General Average." 
 
 Barratry of the Master and Mariners. Any wrongful act com- 
 mitted by the master or crew of a vessel to the prejudice of the 
 owner or charterer. If the owner connives, the act is not 
 barratry but fraud. 
 
 Bill of Exchange. See "Draft." 
 
 Bill of Lading. Steamship or railway company's receipt for goods 
 shipped over its route. Possession of a bill of lading properly 
 drawn to a shipper's own order or to a specifically named con- 
 signee conveys corresponding ownership of the goods represented 
 by it. It is not a negotiable instrument in the strict sense — 
 though negotiable bill of lading is a common term — because the 
 holder, even though he take it in good faith and for value, has no 
 better title than the transferrer had. Frequently the bill of 
 lading must be certified to by the consul of the country to which 
 the shipment is made. 
 
 Clean. One against which the shipping company has not 
 noted flaws in the packing of all or part of the shipment. 
 
 Direct. One which is made to consignee instead of to 
 shipper's order. The consignee takes title to the shipment as soon 
 as it is placed in the custody of the shipping company. 
 
 Foul. One against which the shipping company has noted 
 flaws in packing. 
 
 Negotiable. One which has been indorsed by the shipper, 
 if the bill is made to shipper's own order, or which lacks the 
 stamp "Copy, non-negotiable," if the bill is made directly to 
 consignee. 
 
 Order. One which is made out to shipper's own order, 
 instead of directly to consignee. The bill will be delivered to 
 consignee only upon fulfilment by him of conditions set forth 
 by shipper in his instructions to his banker. Shipper holds title 
 until the documents are delivered to the buyer. 
 
 Bonded Warehouse. Place sanctioned by customs authorities for 
 deposit of goods without payment of duties until they are removed. 
 
 Bottomry Bond. Document given by the captain of a ship in order 
 to get money for immediate repairs. Payment for the bond is 
 enforcible only if the ship reaches port safely and when the 
 consideration has been of benefit. 
 
 C. A. F. "Cost and freight." Same as "C. F." and "C. & F." Terms 
 
 '&■
 
 APPENDIX 467 
 
 quoted C. A. F. include cost and freight. The abbreviation ought 
 not to be used for fear of confusion with "Cost, assurance, 
 freight." 
 
 Cambist. One who exchanges foreign money or deals in foreign 
 notes or bills of exchange. 
 
 Cash on Delivery of Documents. A C. O. D. transaction. Cash 
 may be paid shipper on delivery of shipping documents to the 
 purchaser's bank in the country of export or when documents 
 are delivered to purchaser, in which case payment may be made 
 by a bank in the country of destination. 
 
 Certificate of Origin. Statement that goods in question are the 
 product or manufacture of the United States and of no other 
 country. It must be made before the consul of the country to 
 which goods are shipped and certified to by him. When consular 
 invoices are required at the point of entry, these serve the same 
 purpose — to control tariff treatment. 
 
 C. F. "Cost and freight," same as "C. A. F." 
 
 Charter Party. Lease or contract made with the owner of a vessel, 
 whether it be for a trip or for a period, for cargo or for passen- 
 gers. 
 
 Chicaneurs. Persons habitually inclined to take advantage of every 
 technicality. 
 
 C. I. F. "Cost, insurance, freight." 
 
 C. I. F. & E. "Cost, insurance, freight, and exchange." 
 
 Clearance. See "Shipper's Manifest." 
 
 Colonial Clause. This clause is attached to drafts on South 
 African and Australasian points. It requires that drawee pay 
 exchange (plus English and Colonial stamps) at the current 
 rate in London for negotiating bills on the Colonics. In New 
 York the exchange between New York and London only is 
 calculated. 
 
 Confirmed Credit. Letter from an American bank which has been 
 authorized by a foreign house (buyer) to pay an American 
 manufacturer (seller) a certain sum under definite conditions. 
 The bank confirms this credit by writing to the seller and stating 
 the sum and the conditions on which it is instructed to pay; the 
 seller is sure of his money if he complies with the terms men- 
 tioned. 
 
 Consignee. One to whom goods are shipped. This is the broadest 
 definition. More specifically, the term is used of one to whom
 
 468 
 
 APPENDIX 
 
 goods are sent at the shipper's risk — one who does not buy 
 outright. 
 
 Constructive Total Loss. A loss in which the property, though 
 damaged only slightly, is of no value to the owner. 
 
 Consular Documents. See "Bill of Lading," "Certificate of Origin," 
 "Consular Invoice," and "Non-Dumping Certificate." 
 
 Consular Invoice. Detailed statement regarding the character of 
 the goods shipped. Frequently it nmst be prepared in the lan- 
 guage of the country to which the shipment is made and always 
 it must be certified by the consul at the port of exit. The blanks 
 for consular invoices can usually be obtained at the consulate, 
 where they are sold by the set at a small price. 
 
 Countervailing Duty. Customs tax placed on imports so as to 
 place them on a parity with domestic goods which pay an excise 
 tax. 
 
 Credit. See "Confirmed Credit," "Irrevocable Credit," and "Letter 
 of Credit." 
 
 Custom House Clearance. See "Shipper's Manifest." 
 
 CwT. Hundredweight: 112 lbs. in the British system, which is com- 
 monly used. 
 
 D. A. Documents for acceptance; instructions of shipper to banker 
 to deliver bill of lading when buyer accepts the draft. The other 
 course is to instruct "D. P.," that is, "documents for payment of 
 draft" 
 
 Del Credere. If an agent securing an order guarantees payment, he 
 is a del credere agent and his additional commission for this 
 guaranty is a del credere commission. 
 
 Demurrage. Penalty, agreed to in charter, to be paid by charterers 
 of a ship to owners when the vessel is delayed beyond the 
 agreed-upon number of lay days, that is, days for loading and 
 unloading. 
 
 Discount. 
 
 Commercial. An allowance from the quoted price of goods, 
 made usually by taking off a certain percentage from the invoice 
 price. Commercial discount may be a trade discount, that is, 
 an allowance made to tradespeople, as for instance to whole- 
 salers buying in large lots, or it may be a cash discount given for 
 the payment of the account within a stated period. 
 
 Financial. Deductions from the face value of commercial 
 paper, such as bills of exchange, in consideration of receiving
 
 APPENDIX 469 
 
 cash before due date. For instance, when the holder of a bill 
 of exchange is desirous of obtaining money for it, instead of 
 waiting until the due date of payment arrives, he sells his bill at 
 a price less than its face value and for the consideration received 
 he parts with all the rights of ownership in the paper. The rates 
 of discount vary according to the state of the money market, 
 the financial standing of the persons on whom the bill is drawn 
 or who are parties to the bill, and other circumstances 
 surrounding the transaction. 
 
 Dishonor. Refusal on the part of the person on whom the draft is 
 drawn to accept the same or to pay after the draft has been ac- 
 cepted, or a refusal to pay a draft on the date when it falls due 
 and is presented for payment. See also "Protest." 
 
 Dollar Exchange. Opposed to sterling exchange. Exchange is 
 now regularly quoted in pounds sterling, and the quotation in 
 dollars is not likely ever to take the place of sterling exchange. 
 
 D. P. Documents for payment ; instructions of shipper to banker to 
 deliver bill of lading only when draft has been paid. Opposed to 
 "D. A.' 
 
 Draft. 
 
 Bill of Exchange. An unconditional order in writing signed 
 by the person giving it and requiring the person to whom it is 
 addressed (on whom it is drawn) to pay on demand or at a fixed 
 date a definite sum to the order of a specific person or bearer. 
 Foreign drafts are almost invariably accompanied by shipping 
 documents which insure that the order to pay will be honored 
 or that the sum can be recovered on the goods covered in the 
 shipping order. Hence they are readily negotiable. 
 
 Clean. Acceptance by importer of seller's draft, in the 
 same manner as domestic trade acceptances. 
 
 Documentary. One accompanied by shipping documents 
 to insure that these will not be surrendered until the buyer has 
 met the terms of the draft. 
 
 Drawback. Refund, paid to a manufacturer by the United States 
 government, of 99 per cent of duties on material entering into 
 the making of goods for export. The manufacturer receives the 
 drawback whether or not he was the importer. A claim must 
 be filed with the collector of customs at the port of exportation 
 before the goods are actually shipped. Rules and regulations 
 regarding this matter can be obtained from the United States
 
 470 
 
 APPENDIX 
 
 Department of the Treasury, Washington, D. C, or from an 
 attorney speciaHzing in this matter. The law of drawback 
 appears in Appendix A. 
 
 Dumping. Practice of throwing goods on a foreign market at cut 
 rates in order to diminish an oversupply in the domestic market 
 and thus maintain prices. See "Non-Dumping Certificate." 
 
 Endorsement. See "Indorsement." 
 
 E. & O. E, "Errors and omissions excepted," phrase prefacing 
 
 shipper's signature on invoice. 
 
 F. A. S. "Free alongside" (vessel). The seller delivers the goods 
 
 alongside on a lighter or on the receiving pier, but the quotation 
 excludes extra loading charges which may be due to the unusual 
 weight of the shipment. Such charges are then on buyer. 
 
 F. O. B. "Free on board." Shipper assumes all charges until 
 shipment is on vessel, but none thereafter. The following varia- 
 tions of this term are used, but are confusing and ought to be 
 avoided. 
 
 F. O. B. Destination. Seller pays all costs and assumes 
 all risks until the goods reach the place of delivery agreed 
 upon. 
 
 F. O. B. Factory. Goods will be placed free on railroad 
 cars at factory. 
 
 F. O. B. New York. Shipper assumes railroad charges to 
 New York, but not lighterage or cartage there. 
 
 Force Majeure. Act of God. A fortuitous event which comes 
 without design, foresight, or expectation. If a contract does 
 not provide exception due to force majeure, British and American 
 courts hold the seller liable, but continental courts do not. 
 
 F. P. A. "Free of particular average." To avoid petty claims, 
 insurance policies on goods slightly damaged in the course of a 
 voyage provide that no claim shall be paid unless it amounts to a 
 certain percentage of the value of such articles. This percentage 
 is known as the franchise. F. P. A. is opposed to "A. A. R." 
 and to "W. A." 
 
 General Average. All loss arising out of a voluntary sacrifice 
 (jettison) made of any part of the ship or cargo to prevent loss 
 of the whole or to rescue the whole adventure from unusual 
 peril. This loss is apportioned over all shippers on the vessel, 
 even the lost cargo bearing its share. Until this assessment is 
 paid, a lien lies against the goods.
 
 APPENDIX 471 
 
 Go-Downs. Bankers' warehouses in which they keep goods until 
 consignee discharges his obligation. 
 
 Gross Weight. Weight of the package as shipped. It is important 
 to differentiate gross, legal, and net weight because of the customs 
 requirements of the various countries. Moreover, each country 
 will have its own definition of these terms. It will therefore be 
 advisable to consult the tariff act of each country to which 
 shipments are made. 
 
 Hundredweight. See "Cwt." 
 
 Hypothecation. A draft drawn by shipper is offered to bankers 
 who hypothecate it, that is, advance cash to drawer (minus 
 interest and commissions) and, taking bills of lading as security, 
 wait to collect from drawee. In some cases, banks require a 
 letter of hypothecation setting forth their rights to sell goods in 
 case drawee does not pay, or to reinsure in case cargo is insuffi- 
 ciently insured, etc. Such letters, however, are not required in 
 law. 
 
 In Case of Need. Shippers doing a large business at a given foreign 
 port instruct their bankers to apply, in case of a protested draft 
 or acceptance, to some agent of the shippers who will not 
 necessarily take up the paper but will make arrangements for 
 it. The phrase is the regular form used in notification to the 
 bankers of the name and address of the agent. 
 
 Inconvertible Paper Currency. Paper money which cannot be 
 accepted at face value. 
 
 Indent. A list of goods sent by the overseas buyer to his agent 
 abroad for purchase to the best advantage. Usually it is an 
 order given to a commission house by its customer abroad. 
 
 Indent Merchant. Solicits orders on basis of sample or catalogue, 
 puts through consolidated order, and apportions goods when 
 received on basis of individual orders. Never buys on owti 
 account. 
 
 Indorsement. A signature on the back of an instrument, whether 
 it is a bill of exchange, a promissory note, or other negotiable 
 paper. An indorsement is made primarily for the purpose of 
 transferring the rights of the holder to some other person. It 
 is a contract between the holder and all the parties to the 
 instrument. Each indorser, by his indorsement, does two things : 
 he orders the antecedent parties to pay to his indorsee ; he also 
 agrees with the indorsee that if they do not pay, he will.
 
 472 APPENDIX 
 
 In Blank. One in which only the name of the indorser is 
 written. 
 
 In Full. One in which mention is made of the indorsee. 
 "Pay to the order of John Smith," followed by the signature of 
 the indorser, is the general form of the indorsement in full. 
 
 Irrevocable Credit. Term arising from war conditions and perhaps 
 not in permanent use. Meaning varies. Generally same as "Con- 
 firmed Credit," except that shipper has indefinite time in which to 
 present his shipping documents. 
 
 Jettison. Throwing overboard part of the cargo or equipment of a 
 ship in order to save the rest from marine disaster. For insurance 
 provisions in such a case see also "General Average." 
 
 Legal Weight. Weight of the goods themselves, plus their immedi- 
 ate containers, as cartons, etc. Each country will, however, 
 define gross, legal, and net weight in its own fashion in its tariff 
 laws. Reference should therefore be made to the law of each 
 country to which shipments are made. 
 
 Letter of Advice. Letter of financial and shipping advice. State- 
 ment sent by shipper to customer, informing him of ship used, in- 
 surance arrangements, and draft drawn. 
 
 Letter of Assurance. Permission from a government to ship a 
 given cargo to a given country. This requirement is a result 
 of war conditions. It was first applied to shipments from the 
 United States to the Scandinavian countries, for which British 
 permission was required. 
 
 Letter of Credit. In international trade this term has a different 
 meaning from the usual one. It is an order given by a person 
 in one place authorizing the banker in another place to pay a 
 specified person a certain sum on the delivery of certain docu- 
 ments or the performance of certain conditions. The authoriza- 
 tion may be addressed to the payee advising him that he may 
 draw on the bank under the conditions stated. In either case this 
 type of letter of credit is called "documentary," as distinguished 
 from the usual form called an "open letter of credit" used by 
 salesmen, travelers, etc. The documentary letter of credit is 
 used when an importer is buying goods in a country where he 
 is not known. Through the letter he opens an account in a 
 bank of the country where the seller resides and the bank is 
 instructed, under the terms of the letter, to honor all bills and 
 drafts upon the depositor by the seller, if certain documents of
 
 APPENDIX 473 
 
 title to the goods named are sent to the bank with the draft. In 
 this way the seller is secured from the time the order is given 
 and the buyer may be specially benefited as the goods can be 
 examined before they are paid for. 
 
 Letter of Indemnity. Certificate given steamship company by 
 shipper to avoid a foul bill of lading. It agrees that no claim 
 will be entered by shipper for damage to any article which the 
 company finds improperly packed. 
 
 Letter of Lien. Consignee's admission of bank's claim to title in 
 goods. In exchange for this letter the consignee receives the 
 shipping documents and is enabled to get the goods. 
 
 Lighterage. Cost of loading or unloading a vessel by means of 
 barges bringing goods alongside vessel. 
 
 Free. Term indicating that shipper assumes cost of lighters 
 if required in ihe foreign harbor. As applied to export ship- 
 ments from the interior of the United States to New York, the 
 term means that railroad rates quoted on carload lots of most 
 goods include cost of putting goods alongside vessel. In this use 
 lighterage includes cartage and ferriage. 
 
 Lloyds, Corporation of. An association of about 400 London 
 underwriters, who underwrite, that is, sign, insurance policies 
 for all kinds of marine and other unusual risks. Often this 
 underwriting is done jointly, from 5 to 10 underwriters signing 
 for a definite share of the risk. The pre-eminent position of 
 Lloyds is due to the remarkably complete system of information 
 maintained by the association, which has its agents in every 
 part of the globe and collects every kind of information of use 
 to marine insurance agents. 
 
 Manifest. See "Shipper's Manifest." 
 
 Marine Insurance Policy. A contract of indemnity by which the 
 insurance company engages for a certain sum payable in advance 
 to refund the amount of loss arising from such casualty as may 
 be insured against. Marine insurance is more extensive than 
 other kinds because it may provide not merely for losses arising 
 from fire, but from piracy, wreck, and generally all injuries 
 sustained at sea. There are a number of different policies or 
 contracts of marine insurance. The ordinary policy excludes 
 claims for damages on certain kinds or classes of goods, which 
 must be specially insured. See "F. P. A.," "General Average," 
 "W. A."
 
 474 APPENDIX 
 
 Net Weight. Weight of the articles unpacked, or in their immediate 
 containers. In connection with weights, reference should be 
 made to the tariff laws of each country to verify the definitions. 
 
 Non-Dumping Certificate. Statements, required by certain British 
 colonies, to the effect that the prices and discounts shown on 
 invoices are those obtaining in the country of the seller. If this 
 is not the case, then the open market price and the usual discount 
 for the quantity in question, if sold at home, must be stated 
 in columns parallel to those showing export prices and discounts. 
 
 Notify Clause in Order Bills of Lading. Requests delivering 
 steamship agent to notify consignee of arrival of goods, which 
 are of course not delivered to consignee until he can present 
 bill of lading properly indorsed. A similar request to notify is 
 sometimes made of a steamship agent at transshipping point 
 in order that consignee may learn approximate arrival date. 
 
 Open Policy of Insurance. Contract between the insurance com- 
 pany issuing the same and the shipper, by which the insurance 
 company binds itself to protect by insurance, in accordance with 
 the conditions of the policy, all shipments made by the insured. 
 This is done automatically from the moment the shipment leaves 
 the factory, store, or warehouse at initial shipping point. The 
 policy remains in force continuously until goods are delivered 
 to the factory, store, or warehouse, at destination. It is required 
 that the assured shall report all shipments to the insurance 
 company as soon as practicable, and at the end of each month 
 pay the premium on the shipments reported in accordance with 
 the schedule of rates attached to the policy. 
 
 Parcel Receipt. Receipt issued by a steamship company when small 
 packages are shipped, usually containing samples. The goods 
 shipped on "parcel receipt" are kept apart from the general 
 cargo and can be had by the consignee immediately on the 
 arrival of the ship. Some countries require consular invoices. 
 
 Parity. Prices of American securities as quoted on the London 
 Stock Exchange, expressed in dollars. 
 
 Particular Average. See "F. P. A." and "W. A." 
 
 Perils of the Sea. It is these that a simple marine policy insures 
 against. They include only such losses as are directly due to 
 being at sea, and not all of these ; wear and tear at sea and other 
 foreseeable losses are excluded, as are deterioration to perishable 
 goods, breakage, leakage, and robbery.
 
 APPENDIX 475 
 
 Per Procuration Signature. Signature of an authorized agent for 
 his principal. Legally, such signature is valid only to the extent 
 of the authorization, but generally it is regarded as indicating 
 that full authority covering all points has been given. 
 
 Primage. Originally a present to master and crew, now simply an 
 addition to the rates quoted by the steamship companies. This 
 addition stated in the quotation, is 5 or 10 per cent of the rate 
 mentioned. The practice is dying out. 
 
 Produce Exchange. Market for exchange of goods or produce, 
 corresponding to stock exchange. An exchange differs from 
 ordinary markets in that goods are not on viewi nor even 
 necessarily owned by seller at time of sale. Only goods which 
 are gradable and capable of being sold in large quantities are 
 suited for sale on a produce exchange. 
 
 Protest. A formal statement in writing by a notary that a bill of 
 exchange or a promissory note has been presented for payment, 
 that the same has been refused, and that all parties to the instru- 
 ment will be held responsible. The practice abroad is to send 
 a dishonored bill to a notary on the day when payment was 
 refused. The notary then again presents the bill to the drawee, 
 or to the acceptor for acceptance or payment, as the case may be, 
 and if it is again rejected the notary then notes the facts on the 
 bill or a slip of paper which he signs and attaches to the bill. 
 Subsequently the official certificate of protest is issued by the 
 notary and attached to the dishonored bill. The next step is to 
 notify all indorsers that the bill has been dishonored. 
 
 Salvage. Compensation allowed persons by whose voluntary exer- 
 tions a vessel, her cargo, or the lives of those belonging to her 
 are saved from danger or loss in case of wreck, capture, or other 
 marine disaster. Termed legally "civil salvage" as distinguished 
 from "military salvage" which is the rescue of property from the 
 enemy. 
 
 Seignorage. The profit made by a government on the coining of 
 bullion into money. 
 
 Shipper's Manifest — Custom House Clearance. An instrument 
 in writing containing a true account of the individual shipment 
 or of the cargo of the ship. It must contain a list of all packages 
 or separate items of freight with their distinguishing marks, 
 numbers, value, etc. It should be made out in accordance with 
 the official instructions at the custom house and sworn to by the
 
 476 APPENDIX 
 
 owner, shipper, or consignor in person, or by a duly authorized 
 agent. A copy of the "clearance," as the manifest is sometimes 
 called, should be given to the steamship company which files it 
 with the ship's manifest at the custom house. One copy at least 
 should be kept by the shipper himself. 
 Shipping Permit. Certificate issued by the steamship company 
 through which foreign shipment is to be made. It indicates the 
 place where and the dates when goods are to be delivered to the 
 steamer. 
 Shipping Receipt. Receipt given by shipper to steamship company 
 in exchange for bills of lading. Such companies as require them 
 will usually supply forms. 
 Ship's Protest. Declaration under oath of a captain of a vessel, 
 setting forth the circumstances under which damage to ship or 
 cargo was suffered. 
 Sight Draft with Documents. Irrevocable credit. 
 Special Permit. Receipt issued by steamship company on goods 
 exported which are of special value, as jewelry. It is a receipt 
 by virtue of which the shipping company assumes a special 
 responsibility. 
 Ton. 
 
 Cargo. 40 cu. ft. 
 Freight. 40 cu. ft. 
 Long. 2,000 lbs. 
 Measurement. 40 cu, ft. 
 Metric. 2,204.62 lbs. 
 Register. 100 cu. ft. 
 
 Shipping. 2,240 lbs. weight, or 40 cu. ft. measurement 
 (50 on sailing vessels). Since a common quotation of rates by 
 steamship companies is weight or measurement ton, whichever 
 costs more, and since measurement ton for most goods nets the 
 companies more, the measurement ton of 40 cubic feet, also 
 called the freight or cargo ton, is the common shipping ton. 
 Tonnage. Number of tons which the ship measures. 
 
 Displacement. Weight in tons of the volume of water 
 displaced by the ship when fully loaded. 
 
 Dead-Weight. Weight in tons of cargo that can be carried. 
 Gross Registered. Cubical capacity of ship in register tons. 
 Net Registered. Cubical capacity available for carrying 
 freight, stated in register tons.
 
 APPENDIX 
 
 477 
 
 Trust Receipt. Acknowledgment by consignee who has imported 
 under a letter of credit that the bank owns the goods, which he 
 receives without paying cash. The more usual procedure under 
 letters of credit is for the banker to retain possession of goods 
 in his go-down until the consignee arranges a sale. 
 
 Underwriter. One who underwrites, that is, signs, insurance con- 
 tracts. The term refers to individuals rather than companies 
 who engage in insurance. See also "Lloyds." 
 
 W. A. "With average," term used in insurance, same as "with 
 particular average," and A. A. R. Used chiefly for textiles and 
 delicate machinery. It requires a higher rate but damage need 
 not reach a particular percentage before claim is allowed. It is 
 therefore opposed to F. P. A. 
 
 Warranty. An undertaking by the insured that some particular 
 thing shall or shall not be done, or that some condition shall 
 be fulfilled. 
 
 Without Recourse. Responsibility disclaimed. The phrase means 
 that the drawer or an indorser of a bill of exchange will not be 
 liable to the subsequent holders of the bill in the event of its 
 non-payment. These words must be followed by the signature 
 of the drawer or the indorser of the bill, who will be held liable, 
 however, if any signature prior to his own prove to be a forgery. 
 
 ZoLLVEREiN. The union for customs purposes of the separate German 
 states. Not important after the formation of the German Empire 
 in 1871.
 
 INDEX 
 
 Abandonment, 296 
 Abyss'nia 
 
 regulations for travelers, 341 
 Advertising, 247-255 
 adapted to conditions, 248 
 as a follow-up, 188 
 channels for, 248-253 
 circularizing, 251 
 exhibits, 252 
 house organs, 249 
 local agencies, 252 
 local magazines and papers, 
 
 250 
 posters, 253 
 publications, 249 
 specialists, 250 
 distribution, as factor of, 54 
 information needed, 253 
 mail order, 243-245 
 methods of (See subhead above, 
 
 "channels for") 
 place of, in sales plan, 188 
 preparation for foreign, 254 
 purpose of, 247 
 Advertising expert 
 
 exporter's staff, 100 
 Afghanistan 
 
 regulations for travelers, 341 
 Africa 
 consular requirements, 390 
 shipping requirements, 390 
 Agency, law of, 324 
 Aids to foreign trade, 162 
 Ail-American Association, 131 
 American Asiatic Association, 131 
 American Board of Foreign Trade, 
 164-168 
 activities of, 165 
 
 functions of, 167 
 organization of, important, 166 
 American Chamber of Commerce 
 
 for the Levant, 131 
 American consulates, 438-442 
 American embassies, 443 
 American Exporters' and Import- 
 ers' Association, 128, 129 
 American manufacturing sj'Stem, 
 
 267 
 American Manufacturers' Export 
 
 Association, 128, 129 
 American-Polish Chamber of Com- 
 merce, 131 
 American-Roumanian Chamber of 
 
 Commerce, 131 
 American-Russian Chamber of 
 
 Commerce, 131 
 Analysis charts, 454-462 
 Antigua, regulations for travelers, 
 
 350-352 
 Appraiser, 264 
 Arabia 
 consular requirements, 391 
 regulations for travelers, 341 
 shipping requirements, 391 
 Argentina 
 
 consular requirements, 391 
 credit customs, 404 
 regulations for travelers, 341-343 
 shipping requirements, 391 
 Asiatic Association, 131 
 Australia 
 
 consular requirements, 391 
 
 credit customs, 404 
 
 market for American exporter, 
 
 68 
 regulations for travelers, 344 
 shipping requirements, 391 
 
 479
 
 48o 
 
 INDEX 
 
 Austria 
 
 consular requirements, 392 
 
 credit customs, 405 
 
 regulations for travelers, 344 
 
 shipping requirements, 392 
 Austria-Hungary 
 
 commercial policy, 78 
 Averages, 297 
 
 B 
 
 Bahamas, regulations for travelers, 
 
 350-352 
 Balance of trade, 40 
 Balkan States 
 
 consular requirements, 400 
 
 credit customs, 407 
 
 shipping requirements, 400 
 Baltimore Chamber of Commerce, 
 
 130 
 Bank acceptance, 303, 307 
 Banker's draft, 303 
 Banking and finance, study of in 
 
 foreign trade, 216 
 Bankruptcy laws, 320 
 Banks 
 
 abroad, established, 6^ 
 
 assistance of, 162 
 
 course in foreign trade, 217 
 
 credit, 300, 310 
 
 Federal Reserve Act, 313, 421- 
 
 .423 
 
 international banking, 312 
 machinery of foreign trade, 113 
 source of information, 27 
 Barbados, regulations for travel- 
 ers, 350-352 
 Bastable 
 
 "Theory of International Trade," 
 58 
 Bechuanaland, regulations for 
 
 travelers, 350-352 
 Beira, regulations for travelers, 
 
 346 
 Belgian Congo, regulations for 
 
 travelers, 347 
 Belgium 
 
 consular requirements, 392 
 credit customs, 405 
 
 governmental support of foreign 
 trade, 161 
 
 regulations for travelers, 346 
 
 shipping requirements, 392 
 Bermuda, regulations for travelers, 
 
 350-352 
 Bibliography, 463 
 Bill of health, 261 
 Bill of lading, 262, 278, 284 
 Bills of exchange, 302 
 Board of Foreign Trade, Ameri- 
 can (See "American Board of 
 Foreign Trade") 
 Boards of Trade, source of infor- 
 mation, 27 
 Bolivia 
 
 consular requirements, 392 
 
 credit customs, 405 
 
 regulations for travelers, 348 
 
 shipping requirements, 392 
 Bond, shipping in, 290 
 Bonding, 263 
 
 Boston Chamber of Commerce, 130 
 Brazil 
 
 consular requirements, 392 
 
 credit customs, 406 
 
 regulations for travelers, 349 
 
 shipping requirements, 392 
 British Guiana, regulations for 
 
 travelers, 350-352 
 British Honduras 
 
 credit customs, 406 
 
 regulations for travelers, 350-352 
 British possessions and protect- 
 orates 
 
 regulations for travelers, 350-352 
 British South Africa, credit cus- 
 toms, 406 
 British West Indies 
 
 credit customs, 406 
 Broker 
 
 custom house, staff of importer, 
 108-109 
 
 drawback, staff of importer, 109 
 
 foreign exchange, 114 
 
 marine insurance, 293 
 Bulgaria 
 
 credit customs, 407 
 
 regulations for travelers, 352
 
 INDEX 
 
 481 
 
 Bureau of Foreign and Domestic 
 
 Commerce, no, 338 
 work of, 423-429 
 Business technique, study of in 
 
 foreign trade, 214 
 Buyer, resident, staff of importer, 
 
 108 
 
 Canada 
 
 consular requirements, 393 
 
 credit customs, 407 
 
 regulations for travelers, 353 
 
 shipping requirements, 393 
 Capital, 8 
 Ceylon, regulations for travelers, 
 
 350-352 
 Chamber of Commerce 
 
 American-Polish, 131 
 
 American-Roumanian, 131 
 
 American-Russian, 131 
 
 Baltimore, 130 
 
 Boston, 130 
 
 Cleveland, 130 
 
 Detroit, 130 
 
 French, 131 
 
 Italian, 131 
 
 Japan, 131 
 
 Levant, for, 131 
 
 Norwegian, 131 
 
 Pacific Coast Associated, 130 
 
 Pan-American, 131 
 
 Pittsburgh, 130 
 
 St. Louis, 130 
 
 San Francisco, 130 
 
 Spanish, 131 
 
 Swedish, 131 
 
 United States, 129, 130 
 Chart 
 
 investigation, 20, 454-462 
 
 of demand, 34 
 Chicago Association of Commerce, 
 
 129, 130 
 Chile 
 
 consular requirements, 393 
 
 credit customs, 407 
 
 regulations for travelers, 354 
 
 shipping requirements, 393 
 
 China 
 
 consular requirements, 394 
 
 credit customs, 407 
 
 market for American exporter, 65 
 
 regulations for travelers, 355 
 
 shipping requirements, 394 
 C. I. F., 325 
 Civilizing influences, 45 
 Qearance, 288 
 Cleveland Chamber of Commerce, 
 
 130 
 Collections, (See also "Credit") 
 
 credits and, 310-315 
 
 machinery of foreign trade, 113 
 Colombia 
 
 consular requirements, 394 
 
 credit customs, 408 
 
 regulations for travelers, 355 
 
 shipping requirements, 394 
 Combinations 
 
 abroad, 134 
 
 industrial, 134 
 
 Webb-Pomerene law, 143 
 Commerce 
 
 comparative needs and supplies, 
 basis of, 41 
 Commerce laws, foreign, 316-325 
 
 agency, law of, 324 
 
 bankruptcy laws, 320 
 
 bookkeeping, compulsory, 320 
 
 commercial codes, 317 
 
 commercial paper, 322 
 
 commercial travelers, 324 
 
 elementary knowledge of, 316 
 
 government supervision, 321 
 
 information, source of, 325 
 
 miscellaneous provisions, 319 
 
 peculiar trade customs, 323 
 
 registration, 318 
 Commercial 
 
 codes, 317 
 
 geography, study of in foreign 
 trade, 216 
 
 law, study of in foreign trade, 215 
 
 paper, 322 
 
 policies 
 
 ancient world, 71 
 economic thought, develop- 
 ment of, 70
 
 482 
 
 INDEX 
 
 Commercial — contimied 
 policies — continued 
 
 France, 77 
 
 Germany, 77 
 
 Great Britain, 77 
 
 laisscc-faire, 71 
 
 mercantilism, 70 
 
 protectionism, 72 
 
 protective tariff, 73 
 
 types of, 72 
 
 United States, 76 
 
 world powers, 70-79 
 status, 
 
 foreign market, 52 
 travelers 
 
 documents required by, 339 
 
 enemy (former) countries, re- 
 lations with, 340 
 
 laws for, 324 
 
 license fees, 338 
 
 new republics, relations with, 
 
 340 
 railroad preferences, 340 
 season for campaigns, 340 
 regulations for, individual 
 
 countries, 341-389 
 samples, admission and sale of, 
 
 339 
 taxes, 338 
 
 treaties concerning, 338 
 Commission house, export (See 
 "Export commission house") 
 Commission house, local 
 staff of importer, 106 
 Comparative costs 
 application of, 41 
 conditions of, 41 
 definition of, 58 
 
 foreign trade result of differ- 
 ences in, 45 
 law of, 41 
 Compradore, 43 
 Consular invoice, 284 
 Consular service 
 function of, 119 
 
 government foreign trade ma- 
 chinery, 119 
 Consular trade requirements, 390- 
 
 403 
 
 Consuls 
 
 American, abroad, 438-442 
 source of information, 24-27 
 
 Co-operation 
 
 future, in foreign trade, 137 
 value of, in foreign trade, 133- 
 
 138 
 
 without combination, 136 
 Co-operative 
 
 export organization, 93 
 importer, staff of importer, 108 
 salesman, exporter's staff, 97 
 
 sales plan, 190 
 Co-ordinating Committee on For- 
 eign Trade 
 
 function of, 123 
 
 government foreign trade ma- 
 chinery, 123 
 Corea 
 
 regulations for travelers, 356 
 Correspondent 
 
 exporter's staff, 95 
 Costa Rica 
 
 regulations for travelers, 356 
 Course in foreign trade, 213-217 
 
 banking and finance, 216 
 
 business technique, 214 
 
 commercial geography, 216 
 
 commercial law, 215 
 
 economics, 214 
 
 foreign trade machinery, 216 
 
 foreign trade strategy, 215 
 
 history, 216 
 
 languages, 214 
 
 practice, 217 
 
 psychology, 216 
 
 salesmanship, 215 
 
 technology, 216 
 Court of Customs Appeals, 265 
 Credit 
 
 bank, 300, 310 
 
 banking, international, 312 
 
 collections and, 310-315 
 
 discounting drafts, 310, 312 
 
 distribution, and, 60 
 
 Federal Reserve Act, 313 
 
 finance bills, 314 
 
 foreign customs, 404-414 
 
 information, 311
 
 INDEX 
 
 483 
 
 Credit — continued 
 
 mail order, 245 
 
 terms of sale, 12 
 
 trust receipts, 314 
 Cuba 
 
 consular requirements, 395 
 
 credit customs, 408 
 
 regulations for travelers, 357 
 
 shipping requirements, 395 
 Curacao 
 
 regulations for travelers, 357 
 Currency equivalents, 447-450 
 Custom house broker 
 
 staff of importer, 108 
 Custom house procedure, 286-290 
 Customs 
 
 credit, foreign, 404-414 
 Cyprus 
 
 regulations for travelers, 350-352 
 
 Declaration, 262 
 Demand 
 
 and supply in foreign market, 
 29-38 
 
 chart of, 34 
 
 customer's, 267 
 
 how to study, 33 
 
 latent, 269 
 
 potential, 32 
 
 principles of, 29 
 
 qualitative test of, 31 
 
 quantitative test of, 31 
 
 reciprocal, 41 
 
 relation to selling campaign, 38 
 
 relation to supply, 34 
 
 tests of, 30 
 Denmark 
 
 consular requirements, 395 
 
 credit customs, 408 
 
 regulations for travelers, 357 
 
 shipping requirements, 395 
 Department of Commerce 
 
 function of, 120 
 
 government foreign trade ma- 
 chinery, 120 
 Deportment 
 
 importance of, 175 
 Detroit Chamber of Commerce, 130 
 
 Development of foreign market, 
 171-180 (See also "Foreign 
 market") 
 Diplomatic service 
 
 controlled by State Department, 
 118 
 
 government foreign trade ma- 
 chinery, 118 
 Director of foreign sales, 94 
 Distances to foreign ports, 445 
 Distribution 
 
 acquaintance an element of, 62 
 
 advertising, 54 
 
 hanks abroad, 63 
 
 channels of, domestic, 55 
 chart, 55 
 
 channels of, foreign, 56 
 chart, 56 
 
 credit and, 60 
 
 factors of, 54 
 
 maximum efforts, results of, 6i 
 
 minimum efforts, results of, 61 
 
 mistaken methods of, 61 
 
 prices and, 60 
 
 principles of international, 54-63 
 
 storage, 54 
 
 transportation, 54 
 Dock receipt, 284 
 Documentary drafts, 306 
 
 required by travelers, 339 
 Domestic billing, 278 
 Dominica, regulations for travel- 
 ers, 350-352 
 Dominican Republic 
 
 regulations for travelers, 358 
 Drafts, 303 
 
 banker's, 303 
 
 discounting, 310, 312 
 
 documentary, 306 
 Drawback, 288 
 
 text of law, 420 
 Dumping, 59 
 Dutch East Indies 
 
 regulations for travelers, 358 
 
 East Africa Protectorate, regula- 
 tions for travelers, 350-352 
 Economic status, foreign market, 49
 
 484 
 
 INDEX 
 
 Economics, study of, course in for- 
 eign trade, 214 
 Ecuador 
 consular requirements, 395 
 credit customs, 408 
 regulations for travelers, 359 
 shipping requirements, 395 
 Education for foreign trade, 200- 
 217 
 American methods, 203 
 
 status of, 204 
 course of study, 213-217 (See 
 also "Course in foreign 
 trade") 
 European methods, 200 
 haphazard methods, 207 
 natural qualifications, 206 
 opportunities for, 212 
 
 colleges and universities, 203 
 mail courses, 205 
 Y. M. C. A., 204-205, 212 
 practical, 202, 205 
 reason for many failures, 207 
 success, requisites for, 200 
 technical, 201 
 Efficiency of organization (See 
 
 "Organization") 
 Eg>'pt 
 
 consular requirements, 396 
 credit customs, 409 
 regulations for travelers, 359 
 shipping requirements, 396 
 Embassies 
 
 American, 443 
 England (See also "Great Britain") 
 government support of foreign 
 
 trade, 161 
 market for American exporter, 
 
 64 
 
 regulations for travelers, 387 
 
 Entry blanks, 262 
 Equatorial Africa 
 
 regulations for travelers, 359 
 
 Exchange 
 international, of commodities, 103 
 
 Export 
 
 declaration, 286 
 importer for, 
 
 staff of importer, 107 
 
 invoices, 284 
 
 manufacturing for, 267-272 
 
 marking for, 276 
 
 office, as training school, 210 
 
 packing for, 273-276 
 
 payments, 299-309 (See also 
 
 "Payment") 
 railroad transportation of, 277 
 shipper's declaration, 286 
 Export agent, 92 
 Export commission house, 90 
 buying agent, 91 
 differentiated from export mer- 
 chant, 90 
 Exporter 
 
 classes of, 89 
 co-operative export organiza- 
 tion, 93 
 export agent, 92 
 export commission house, 90 
 export merchant, 92 
 producer for export, 90 
 Exporter's staff, 89-100 
 advertising expert, 100 
 co-operative salesman, 97 
 correspondent. 95 
 director of foreign sales, 94 
 export manager, 93 
 foreign trade manager, 95 
 local selling agent, 98 
 manufacturer's representative, 95 
 shipping clerk, 98 
 traffic manager, 99 
 translators, 96 
 Exporting 
 
 technicalities of, 273 
 Export manager 
 
 exporter's staff, 93 
 Export merchant, 92 
 Export office 
 
 development of foreign market, 
 178 
 Export organization, 148-160 
 
 advantages of, for staple articles, 
 
 149, 150 
 co-operative sales, IS3-I57 
 disadvantages of, for specialized 
 articles, 148
 
 INDEX 
 
 485 
 
 Export organization — continued 
 district sales company, 159 
 jointly controlled, 151-155 
 selling combine, 156-158 
 types of selling organization, 
 
 150-158 
 Webb-Pomerene law, 139-147 
 advantages afforded by, 151, 160 
 possible types, 143 
 Exports 
 
 and imports 
 
 economic difference between, 
 
 104 
 legal difference, 104 
 relation to imports, loi 
 current fallacies, 101 
 Express, machinery of foreign 
 
 trade, 112 
 Extract, custom house manifest, 
 287 
 
 F 
 
 Falkland Islands, regulations for 
 
 travelers, 350-352 
 Federal Reserve Act, 313 
 
 text of law, 421-423 
 Federal reserve bank, 124 
 
 function of, 125 
 Federal Trade Commission 
 function of, 122 
 
 government foreign trade ma- 
 chinery, 121 
 rules of practice, 433-437 
 Webb-Pomerene Law, 142 
 Federated Malay States, regula- 
 tions for travelers, 350-352 
 Fiji, regulations for travelers, 350- 
 
 352 
 Finance bills, 314 
 Financial status, foreign market, 50 
 Financing foreign shipments, 299- 
 
 309 (See also "Payment") 
 Financing import shipments, 
 
 methods of, 308 
 F. o. b., 325 
 
 Follow-up methods, 186-189 
 Foreign commerce laws (See 
 
 "Commerce laws, foreign") 
 Foreign exchange 
 broker, 114 
 
 values of foreign coins, 447-450 
 Foreign market 
 attitude toward, 171 
 commercial status, 52 
 development of, 171-180 
 
 co-operative, 180 
 
 deportment, 175 
 
 expense, 177, 179 
 
 export office, 178 
 
 first steps, 171, 172 
 
 investigation procedure, 173 
 
 investigator, 173 
 
 letters of introduction, 174 
 
 obtaining data, 176 
 
 returns from, 179 
 
 time required, 177 
 economic status, 49 
 financial status, 50 
 governmental status, 48 
 
 political and legal functions, 48 
 international and domestic, 46 
 legal status, 48 
 political status, 46 
 social status, 51 
 status of, 46-53 
 Foreign sales plan, 181-191 (See 
 
 also "Sales plan") 
 Foreign service 
 
 adaptability for, 192 
 age. Importance of, 197 
 aptitude for, 192 
 elements of success in, 192 
 experience, importance of, 197 
 personality, importance of, 195 
 right man in right place, 196 
 right man, selection of, 196 
 selecting men for, 192-199 
 special knowledge for, 194 
 
 economic and social conditions, 
 194 
 
 languages, 194 
 
 psychology of races, 194 
 special training for, 194 
 test of candidates for, 198 
 Foreign trade (See also "Machin- 
 ery of foreign trade") 
 education for (See "Education 
 
 for foreign trade")
 
 486 
 
 INDEX 
 
 Foreign trade — continued 
 future of, 8o-8s 
 
 economic co-operation, 82 
 
 individualism, 81 
 
 socialism, 80 
 
 sociological aspects, 84 
 
 standard of living, 81 
 
 United States, 82 
 government machinery, 1 16-127 
 
 Department of Commerce, 120 
 intermediaries in, 55 
 
 chart, 56 
 manager, exporter's staff, 95 
 promotion of, 75 
 
 kartels, 76 
 publications. III 
 self-developing, 180 
 specialists, 114 
 State Department, 116 
 Foreign Trade Advisers, work of, 
 
 429-433 
 Foreign Trade Club of San Fran- 
 cisco, 130 
 Forwarding agents, machinery of 
 
 foreign trade, 113 
 Fostoock, 43 
 France 
 
 commercial policj^ 77 
 
 consular requirements, 396 
 
 credit customs, 409 
 
 governmental support of foreign 
 trade, 161 
 
 market for American exporter, 65 
 
 regulations for travelers, 360 
 
 shipping requirements, 396 
 Freight rates, 112, 281 
 French Chamber of Commerce, 131 
 Fundamental factors, 8-14 
 
 capital, 8 
 
 information, 8 
 
 methods of distribution, 9 
 
 organization, 10 
 
 poUcies, general, 13 
 
 terms of sale, 12 
 
 Gambia, regulations for travelers, 
 
 350-352 
 General average, 291, 297 
 
 Germany 
 
 commercial polIcj% yj 
 consular requirements, 396 
 credit customs, 409 
 government support of foreign 
 
 trade, 161 
 regulations for travelers, 360-362 
 shipping requirements, 396 
 Gibraltar, regulations for travelers, 
 
 350-352 
 Glossary, 465-477 
 Gold Coast 
 
 regulations for travelers, 350-352 
 Government 
 aids to foreign trade, 83, 162 
 Bureau of Foreign and Do- 
 mestic Commerce, 423-429 
 Federal Trade Commission, 
 
 433-437 
 Foreign Trade Advisers, 429- 
 
 433 
 local, source of information, 27 
 machinery of foreign trade, 116- 
 127 
 
 consular service, 119 
 Co-ordinating Committee on 
 
 Foreign Trade, 123 
 Department of Commerce, 120 
 diplomatic service, 118 
 federal reserve bank, 124 
 Federal Trade Commission, 121 
 Shipping Board, 121 
 State Department, 116 
 Tariff Commission, 121 
 support of foreign trade, 161-168 
 American organization, form 
 
 of, 164 
 American possibilities, 162 
 Belgium, 161 
 England, 161 
 France, 161 
 Germany, 161 
 Holland. 161 
 why needed, 163 
 trade investigation, 25 
 Governmental statistics, 23 
 Governmental status 
 foreign market. 48 
 political and legal functions, 48
 
 INDEX 
 
 487 
 
 Graduate School of Business Ad- 
 ministration, Harvard Univer- 
 sity, 203 
 Great Britain (see also "England") 
 
 commercial policy, "JJ 
 
 consular requirements, 396 
 
 credit customs, 414 
 
 regulations for travelers, 387 
 
 shipping requirements, 396 
 Greece 
 
 consular requirements, 397 
 
 credit customs, 410 
 
 regulations for travelers, 362 
 
 shipping requirements, 397 
 Greek Association, 131 
 Grenada, regulations for travelers, 
 
 350-352 
 Guaranty Trust Co., foreign trade 
 
 bureau, 132 
 Guatemala 
 
 consular regulations, 397 
 
 credit customs, 410 
 
 regulations for travelers, Z^2 
 
 shipping regulations, 397 
 
 H 
 
 Haiti 
 
 consular regulations, 397 
 
 credit customs, 410 
 
 regulations for travelers, 2)^2) 
 
 shipping regulations, 397 
 Harter Act, 295, 325 
 Hawaii, regulations for travelers, 
 
 364 
 Histery, study of in foreign trade, 
 
 216 
 Holland 
 
 commercial policy, 78 
 consular regulations, 397 
 credit customs, 411 
 governmental support of foreign 
 
 trade, 161 
 regulations for travelers, 373 
 shipping regulations, 397 
 Hong Kong, regulations for travel- 
 ers. 350-352 
 Honduras 
 consular requirements, 398 
 
 credit customs, 410 
 regulations for travelers, 364 
 shipping regulations, 398 
 Hungary, regulations for travelers, 
 364 
 
 Importer, loi-iio 
 co-operative, 108 
 for retail, 107 
 improperly so-called, 106 
 proper, 105 
 staff of, 105 
 
 broker, custom house, 108 
 
 broker, drawback, 109 
 
 commission house, local, 106 
 
 co-operative importer, 108 
 
 export-importer, 107 
 
 importer proper, 105 
 
 manufacturer, importing, 108 
 
 resident buyer, 108 
 
 wholesale distributer, local, 107 
 warehouse, importance of, to, 109 
 Importers, classes of, 260 
 Importing 
 bonding, 263 
 
 classes of importers, 260 
 domestic procedure, 262 
 entry blanks, 262 
 foreign preliminaries, 261 
 methods of, 109 
 storing, 263 
 technicalities, 259-266 
 undervaluation, 264 
 Imports 
 and exports 
 
 economic differences, 104 
 
 international exchange of com- 
 modities, 103 
 
 legal difference, 104 
 relation to exports, loi 
 
 current fallacies, loi 
 shipments, financing, 308 
 utility of, 102 
 Indebtedness, international, 40 
 India 
 credit customs, 410
 
 488 
 
 INDEX 
 
 India — continued 
 
 market for American exporter, 
 68 
 
 regulations for travelers, 366 
 Indo-China 
 
 regulations for travelers, 367 
 Influences 
 
 civilizing, of trade, 45 
 Information 
 
 advertising, 253 
 
 books, 26 
 
 collection of, 17 
 
 commerce laws, foreign, 325 
 
 consular, 24 
 
 credit, 311 
 
 governmental statistics, 23 
 
 governmental trade investigation, 
 25 
 
 importance of, 8 
 
 miscellaneous sources, 24 
 
 pamphlets, 26 
 
 personally secured, 27 
 
 sources of, 23-28 
 
 trade meetings, 25 
 
 trade representatives' investiga- 
 tion, 26 
 Insurance (See also "Marine in- 
 surance") 
 
 machinery of foreign trade, 112 
 Intermediaries, foreign trade, 55 
 
 chart, 56 
 International 
 
 convention 
 
 patent laws, 331 
 trade-mark, 328 
 
 distribution, principles of, 54-63 
 
 indebtedness, 40 
 
 organizations, 130 
 
 sales manager, 191 
 
 salesman (See "Salesman, inter- 
 national") 
 
 trade, civilizing influences, 45 
 
 values, elementary principles of, 
 58 
 Investigation 
 
 charting results, 20 
 
 governmental trade, 25 
 
 on the ground, 17 
 
 psychology of market, 19 
 
 structure of market, IQ 
 theoretical knowledge, 20 
 trade representatives, 26 
 Investigator 
 
 analysis charts, 453-462 
 development of foreign market, 
 
 173 
 
 expense of, 177 
 
 instruction sheet, 454 
 
 machinery of foreign trade, 114 
 Invoice, 262, 284 
 Ireland 
 
 credit customs, 414 
 
 regulations for travelers, 387 
 Italian Chamber of Commerce, 131 
 Italy 
 
 commercial policy, 78 
 
 consular requirements, 398 
 
 credit customs, 410 
 
 regulations for travelers, 367 
 
 shipping requirements, 398 
 
 Jamaica 
 
 regulations for travelers, 350-352 
 Japan 
 
 Association for North Am&rica, 
 
 131 
 
 Chamber of Commerce, 131 
 commercial policy, 78 
 consular requirements, 398 
 credit customs, 411 
 regulations for travelers, 367 
 shipping requirements, 398 
 Jobber, wholesale 
 
 staff of importer, 107 
 
 K 
 
 Kartels, 76, 135 
 Korea (See "Corea") 
 
 Laisscc-fairc, 71 
 Languages 
 
 course in foreign trade, 214 
 Latent demand, 269
 
 INDEX 
 
 489 
 
 Latin America 
 
 market for American exporter, 
 
 67 
 Legal status of foreign market, 48 
 
 Letters of introduction, 174 
 
 Levant, Chamber of Commerce for, 
 
 131 
 Liberia, regujations for travelers, 
 
 368 
 License fees, 338 
 Lloyds, 292 
 Local 
 
 organizations, 130 
 representative, mail order house, 
 
 246 
 selling agent, exporter's staff, 98 
 
 M 
 
 Machinery of foreign trade 
 
 banks, 112 
 
 chief factors of, I11-115 
 
 collections, 113 
 
 consular service, 119 
 
 Co-ordinating Committee, 123 
 
 course in, 216 
 
 Department of Commerce, 120 
 
 diplomatic service, 118 
 
 express, 112 
 
 federal reserve bank, 124 
 
 Federal Trade Commission, 121 
 
 foreign exchange broker, 114 
 
 foreign trade specialist, 1 14 
 
 forwarding agents, 113 
 
 freight rates, 112 
 
 government, 1 16-127 
 
 insurance rates, 1 12 
 
 investigator, 114 
 
 parcel post. 112 
 
 publications, III 
 
 Shipping Board, 122 
 
 State Department, I16 
 
 Tariff Commission, 123 
 Madagascar 
 
 regulations for travelers, 368 
 Alail order, 241-246 
 
 advertising, 243-245 
 
 credit, 245 
 
 dealer and the, 242 
 
 delivery by, 241 
 house 
 
 American, 241 
 dealer and the, 242 
 ordinary type of, 242 
 local representative, 246 
 service, 245 
 soliciting by, 241 
 Malay States, Federated, regula- 
 tions for travelers, 350-352 
 Malta, regulations for travelers, 
 
 350-352 
 Manifest, shipping, 282 
 Manufacturer, importing, 108 
 Manufacturer's representative, ex- 
 porter's staff, 95 
 Manufacturing 
 details of, 268 
 for export, 267-272 
 system in America, 267 
 Margraff, quoted on foreign ex- 
 change department of bank, 
 315 
 Marine insurance, 291-298 
 abandonment, 296 
 agents, 293 
 averages, 297 
 important features, 294 
 liability of steamship companies, 
 
 295 
 open policy, 297 
 origin of, 292 
 
 regulations, fundamental, 292 
 imderwriters, 292 
 valued policy, 297 
 Market 
 best for American exporter, 64-69 
 
 China, 65 
 
 Latin America, 67 
 
 London, 64 
 
 Paris, 65 
 
 Russia, 66 
 foreign 
 
 commercial status, 52 
 
 development of (See "Foreign 
 market, development of") 
 
 economic status, 49 
 
 financial status, 50 
 
 governmental status, 48
 
 490 
 
 INDEX 
 
 Market — continued 
 foreign — continued '^ 
 political status, 46 
 social status, 51 
 status of. 46-53 
 "new," defined, 65 
 psychology of, 43 
 structure of, 42 
 Marking, for export, 276 
 Mauritius, regulations for travel- 
 ers, 350-352 
 Men for foreign service, selection 
 of, 192-199 (See also "Foreign 
 service") 
 Mercantilism, 70 
 fallacy of, 71 
 Merchants' Association of New 
 
 York, 129, 130 
 Methods of distribution, 9 
 
 Mexico 
 
 consular requirements, 398 
 
 credit customs, 411 
 
 regulations for travelers, 369-372 
 
 shipping requirements, 398 
 Montenegro, regulations for travel- 
 ers. 372 
 Montserrat, regulations for travel- 
 ers, 350-352 
 Morocco, regulations for travelers, 
 
 373 
 
 N 
 
 National Association of Manufac- 
 turers, 129 
 National City Bank, foreign trade 
 
 bureau, 132 
 National Foreign Trade Council, 
 
 128 
 National organizations, 128 
 Navigation laws, 74 
 Netherlands (See "Holland") 
 New countries 
 
 consular requirements, 403 
 regulations for travelers, 340 
 shipping requirements, 403 
 Newfoundland, regulations for 
 travelers, 373 
 
 New Orleans Association of Com- 
 merce, 130 
 New York 
 
 distances from, to foreign ports, 
 
 445 
 New Zealand 
 
 credit customs, 404 
 
 regulations for travelers, 374 
 Nicaragua 
 
 consular requirements, 399 
 
 credit customs, 412 
 
 regulations for travelers. 374 
 
 shipping requirements, 399 
 Non-dumping certificates, 285 
 North Borneo, regulations for 
 
 travelers, 350-352 
 Northern Nigeria, regulations for 
 
 travelers, 350-352 
 Norway 
 
 consular requirements, 399 
 
 credit customs, 413 
 
 regulations for travelers, 375 
 
 shipping requirements, 399 
 Norwegian Chamber of Commerce, 
 
 131 
 Nyasaland Protectorate, regula- 
 tions for travelers, 350-352 
 
 Open policy, 298 
 Organization, 10 
 
 efficiency of, 218-224 
 
 form of, 219 
 
 manager, duty of, 222-224 
 
 policies of, general, 221 
 
 principles of, 218 
 
 salesmen, how to handle, 221, 
 223. 224 
 
 specialized effort, 220 
 Organizations 
 
 international, 130 
 
 local, 130 
 
 national, 128 
 
 private, 132 
 
 public, three types of, 128 
 Overproduction, 35
 
 INDEX 
 
 491 
 
 Packing, 273-276 
 
 general considerations, 274 
 
 instructions, general, 275 
 
 special considerations, 274 
 Panama 
 
 consular requirements, 399 
 
 regulations for travelers, 376 
 
 shipping requirements, 399 
 Panama Canal Zone, regulations 
 
 for travelers, 376 
 Pan-American Chamber of Com- 
 merce, 131 
 Pan-American Union, 130 
 Paraguay 
 
 consular requirements, 399 
 
 credit customs, 412 
 
 regulations for travelers, 376 
 
 shipping requirements, 399 
 Parcel post 
 
 countries, list of 444 
 
 machinery of foreign trade, 112 
 Particular average, 297 
 Patent laws, 326-333 
 
 importance of, 331 
 
 international convention, 331 
 Payment 
 
 bank acceptance, 307 
 
 bills of exchange, 302 
 
 cash with order, 299 
 
 draft, 303 
 bankers, 303 
 documentary, 306 
 
 methods of making, 299 
 
 negotiable instruments, 303 
 
 open accounts, 301 
 
 promissory note, 304 
 
 trade acceptance, 304 
 Permanent representative, 28 
 Persia 
 
 consular requirements, 400 
 
 regulations for travelers, Z17 
 
 shipping requirements, 400 
 Personality, importance of, 195 
 Personnel, men for foreign service, 
 192-199 (See also "Foreign 
 service") 
 Peru 
 
 consular requirements, 400 
 
 credit customs, 412 
 
 regulations for travelers, Z71 
 
 shipping requirements, 400 
 Philadelphia Association of Com- 
 merce, 130 
 Philadelphia Commercial Museum, 
 
 128, 129 
 Philippine Islands, regulations for 
 
 travelers, 378 
 Pittsburgh 
 
 Chamber of Commerce, 130 
 
 Foreign Trade Commission, 130 
 Plans, formulation of, 21 
 Poland, regulations for travelers, 
 
 378 
 Policies 
 
 open, 297, 298 
 
 valued, 297, 298 
 Political status 
 
 foreign market, 46 
 international and domestic, 46 
 Pomerene (See "Webb-Pomerene 
 
 Law") 
 Portugal 
 
 consular requirements, 400 
 
 credit customs, 412 
 
 regulations for travelers, 379 
 
 shipping requirements, 400 
 Practical course in foreign trade 
 (See "Course in foreign 
 trade") 
 Price 
 
 and quality, yi^ 271 
 
 distribution, and, 60 
 
 fixing the, 57 
 Private organizations, 132 
 Producer, for export, 90 
 Promissory note, 304 
 Promotion of foreign trade 
 
 organizations for, 128-132 
 Protectionism, ^2 
 
 zoUverein, ^2 
 Protective tariff 
 
 high, 7Z 
 
 low, -JZ 
 
 moderate, "jz 
 Psychology 
 
 basic principles of, 39 
 
 course in foreign trade, 216
 
 492 
 
 INDEX 
 
 Psychology — continued 
 
 economic forces, 42 
 
 of the market, 19, 43 
 foreign, 39-45 
 
 poHtical forces, 42 
 
 reciprocity, 44 
 
 social forces, 42 
 Publications 
 
 Asia, 131 
 
 channels of advertising, 248-253 
 
 foreign trade, ill 
 
 Tlie Americas, 132 
 Public organizations, three types, 
 128 
 
 Quality, and price, ;i7, 271 
 
 Races, temperament, classification 
 
 of, 51 
 Rapprochement, 237 
 Rates, shipping, 280 
 Reciprocal demands, 41 
 Reciprocity, psychology of, 44 
 Registration 
 commerce law, 318 
 trade-marks, 328 
 not subject to, 329 
 rules regarding, 329 
 Registry of deeds, 319 
 Rcichsbank, 161, 164 
 Resident buyer, staff of importer, 
 
 108 
 Retail, importer for, 107 
 Rhodesia, regulations for travelers, 
 
 350-352 
 Roumania 
 
 consular requirements, 400 
 credit customs, 412 
 regulations for travelers, 379 
 shipping requirements, 400 
 Russia 
 
 commercial policy, 78 
 consular requirements, 400 
 credit customs, 412 
 market for American exporter, 
 66 
 
 regulations for travelers, 380 
 shipping requirements, 400 
 
 St. Helena, regulations for .travel- 
 ers, 350-352 
 St. Louis Chamber of Commerce, 
 
 130 
 St. Lucia, regulations for travelers, 
 
 350-352 
 St. Vincent, regulations for travel- 
 ers, 350-352 _ 
 Sales manager, international, 191 
 Salesman, international 
 aggressiveness, 232 
 approaching a prospect, 236 
 art of being, 239 
 closing a sale, 238 
 excuses, overcoming customer's, 
 
 234 
 
 expenses of, 177 
 
 keeping a customer, 235 
 
 methods of training, 200-217 
 (See also "Education for for- 
 eign trade") 
 
 offering suggestions, 235 
 
 opportunities for study, 203-205, 
 212 
 
 study on the ground, 217 
 
 suggestions for, 232-240 
 
 type of man, 232 
 Sales plan 
 
 advertising, 188 
 
 closing sales by mail order, 189 
 
 concentration, v.ide range of, 185 
 
 co-operative, 190 
 
 correlation with sales organiza- 
 tion, 183 
 
 definition of, 181 
 
 elasticity of, 183 
 
 follow-up methods, 186-188 
 
 foreign, 181-191 
 
 information required, 182 
 
 international sales manager, 191 
 
 sources of information, local, 185 
 
 special features, 184 
 "Sales talk," not desirable in for- 
 eign fields, 207, 208
 
 INDEX 
 
 493 
 
 Salvador 
 
 consular requirements, 401 
 
 credit customs, 413 
 
 regulations for travelers, 380 
 
 shipping requirements, 401 
 Samples, admission and sale of, 
 
 339 
 San Domingo 
 consular requirements, 401 
 credit customs, 413 
 regulations for travelers, 381 
 shipping requirements, 401 
 San Francisco Chamber of Com- 
 merce, 130 
 Scandinavia, commercial policy, 78 
 School and shop method, education 
 
 for foreign trade, 211 
 Schools of Commerce, 203 
 Selection of men, 192-199 (See 
 
 also "Foreign service") 
 Selling combine, 156-158 
 Selling expense, means of reduc- 
 ing, 150 
 Selling methods, 225-231 
 adapting to country, 225 
 approach leisurely, 228 
 classes of, 229 
 competitor's methods, study of, 
 
 230 
 conforming to custom, 225 
 suited to conditions, 227 
 Selling organization, (See "Export 
 
 organization") 
 Serbia 
 consular requirements, 401 
 shipping requirements, 401 
 Seychelles, regulations for travel- 
 ers, 350-352 
 Sherman Act, 139 
 Shipping 
 arrangements at port, 280-285 
 clearance, 288 
 clerk, 98 
 
 consular requirements, 284 
 drawback, 288 
 
 financing shipments, 299-309 
 handling freight, regulations for, 
 282 
 
 in bond, 290 
 "in care of," 283 
 insurance (See "Marine insur- 
 ance") 
 interior, from, 287 
 liability of steamship companies, 
 
 295 
 
 permit, 283 
 rates, 281 
 regulations, foreign 
 
 individual countries (alpha- 
 betical list), 390-403 
 steamship company, choosing. 
 
 280 
 through agent, 287 
 "to order," 283 
 Shipping Board, 122 
 Ship's papers, 262 ' 
 
 Siam 
 credit customs, 413 
 regulations for travelers, 381 
 Sierra Leone, regulations for 
 
 travelers, 350-352 
 Social status, foreign market, 42, 51 
 South Africa, market for Ameri- 
 can exporter, 68 
 South America, commercial poli- 
 cies, 79 
 Southern Nigeria, regulations for 
 
 travelers, 350-352 
 Spain 
 commercial policy, 78 
 consular requirements, 401 
 credit customs, 413 
 regulations for travelers, 382 
 shipping requirements, 401 
 Spanish Chamber of Commerce. 131 
 Specialized articles, sale of, 148, 
 
 149 
 Standard Oil Companies, trust 
 
 agreement, 133 
 State Department 
 diplomatic service, control of, 118 
 machinery of, 116 
 Status of foreign market, 46-53 
 Storage, 263 
 
 distribution as factor of, 54 
 Straits Settlements, regulations for 
 travelers, 350-352
 
 494 
 
 INDEX 
 
 Strategy-, essentials of, 15-22 
 
 study of, 215 
 Structure of market, 19 
 Sudan, Anglo-Egyptian, regula- 
 tions for travelers, 350-352 
 Supply 
 
 and demand in foreign market, 
 29-38 
 
 domestic, 36 
 
 foreign, 36 
 
 overproduction, 35 
 
 relation to selling campaign, 38 
 
 tests of, 34 
 Surinam, regulations for travelers, 
 
 383 
 Sweden 
 
 consular requirements, 402 
 
 credit customs, 413 
 
 regulations for travelers, 383 
 
 shipping requirements, 402 
 Swedish Chamber of Commerce, 
 
 131 
 
 Switzerland 
 consular requirements, 402 
 credit customs, 413 
 regulations for travelers, 384 
 shipping requirements, 402 
 
 Tariff Commissions, 121, 123 
 Tariff laws, Zi^, ^2,3 
 purposes for which levied, 333 
 types of, 332 
 Taxes, 338 
 
 Technicalities of exporting, 273 
 Technicalities of importing (See 
 
 "Importing, technicalities") 
 Temperaments, of races, 51 
 Trade acceptance, 303, 304-306 
 Trade machinery 
 
 exporter and staff, 89 
 foreign trade auxiliaries, 89 
 importer and staff, 89 
 Trade-marks 
 laws, 326-331 
 classes of, 326 
 
 International Convention, reg- 
 ulations, 327 
 
 knowledge of, essential, 326 
 registration of, 328 
 rules regarding, 329 
 what may not be registered, 
 329 
 Trade meetings, 25 
 Trade representatives, investiga- 
 tions, 26 
 Traffic manager, exporter's staff, 99 
 Training for foreign trade (See 
 "Education for foreign trade") 
 Translators, exporter's staff, 96 
 Transportation 
 
 companies, assistance of, 162 
 distribution, factor of, 54 
 railroad, 277 
 Travelers, commercial (See "Com- 
 mercial travelers") 
 Treaties, commercial, 338 
 Trinidad, regulations for travelers, 
 
 350-352 
 Trusts, 134 
 American, 133 
 beneficial or harmful, 134 
 British Corporation, 135 
 combinations, abroad, 134 
 French, 135 
 
 Italian-British Corporation, 135 
 Japan, 135 
 kartcls, 135 
 Michigan Salt, 133 
 New Companies Act, 135 
 
 pipe, 133 
 receipts, 313 
 steel, 134 
 whiskey, 133 
 wire nail, 133 
 Tunis, regulations for travelers, 
 
 385 
 Turkey 
 
 consular requirements, 402 
 credit customs, 413 
 regulations for travelers, 385 
 shipping requirements, 402 
 
 U 
 
 Uganda, regulations for travelers, 
 350-352
 
 INDEX 
 
 495 
 
 Undervaluation of goods, 264 
 Underwriters, 292 
 Union of Soutli Africa 
 
 regulations for travelers, 386 
 United States 
 
 Chamber of Commerce, 129 
 
 commercial policy, 'J^i 
 
 credit customs, 414 
 
 foreign trade, future of, 82 
 
 importing, methods of, 109 
 
 regulations for travelers, 388 
 Uruguay 
 
 consular requirements, 402 
 
 credit customs, 414 
 
 regtilations for travelers, 3C8 
 
 shipping requirements, 402 
 
 Valued policy, 298 
 
 Values of foreign money, 447-450 
 
 Venezuela 
 
 consular requirements, 403 
 
 credit customs, 414 
 
 regulations for travelers, 389 
 
 shipping requirements, 403 
 
 w 
 
 Warehouse, importance in import- 
 ing, 109 
 Webb-Pomerene Law, 139-147 
 advantages, 146 
 
 aid to foreign trade, 145 
 combinations permitted, 143 
 co-operative selling organization, 
 
 153, 
 
 America, 154 
 
 England, 154 
 
 example of, 155 
 district sales company, 159 
 enactment of, 139 
 Federal Trade Commission, 
 
 powers under, 142 
 joint selling organization, 151 
 
 typical plan, 152 
 method of control, 142 
 permissions it grants, 141, 144 
 provision of, general, 140 
 purpose of, 139 
 selling combine, 156 
 
 example of, 157-159 
 text of, 417-419 
 Weight equivalents, 451 
 Wholesale jobber, staff of impor- 
 ter, 107 
 World powers, commercial policies 
 
 of, 70-79 
 
 Zanzibar, regulations for travelers, 
 
 350-352 
 Zemstvos, 47 
 Zollverein, 72
 
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