American Cloth in Foreign Markets
WE have seen that the American cotton grower supplies more than half of the world’s demand for raw cotton. The cotton manufacturer in the United States is in no such position. This is not to say that American cotton goods are not exported in very considerable amounts. From the inception of the industry in this country varying percentages of the total product have been sent abroad. The following table, taken from the United States Statistical Abstract (1910) shows the average annual exports of cotton goods for the five year periods named, expressed in millions of dollars:
| Total |
Uncolored Cloth |
Colored Cloth | Other | |
| 1856-60 | $7.5 | $2.4 | $2.3 | $2.8 |
| 1861-65 | 3.7 | .4 | .9 | 2.4 |
| 1866-70 | 4.1 | .9 | .3 | 2.8 |
| 1871-75 | 3.1 | 1.7 | .6 | .7 |
| 1876-80 | 10.0 | 6.1 | 2.6 | 1.2 |
| 1881-85 | 13.0 | 8.0 | 2.9 | 2.1 |
| 1886-90 | 12.4 | 7.4 | 3.2 | 1.6 |
| 1891-95 | 13.3 | 7.7 | 3.0 | 2.5 |
| 1896-1900 | 20.4 | 11.6 | 4.4 | 4.3 |
| 1901-05 | 31.3 | 17.2 | 7.0 | 7.0 |
| 1906-10 | 35.1 | 16.8 | 7.2 | 11.0 |
The irregularity of the export trade, as shown by these figures, has been explained on several grounds, the chief factors being, apparently, the fluctuations in the prosperity and consequently in the buying power of the home market, and the pressure upon the home market exerted by the rapid growth of cotton manufacturing in the South.
The normal position of the United States as an exporter of cotton goods is shown by the following table, which gives the exports of the chief manufacturing countries in the year before the war (the figures for 1915 are also given because they show the changes which had already begun):
| 1913 | 1915 | |
| United Kingdom | $618,000,000 | $418,000,000 |
| Germany | 117,000,000 | 30,100,000 |
| France | 78,000,000 | 60,000,000 |
| Japan | 58,000,000 | 95,800,000 |
| United States | 55,500,000 | 60,200,000 |
| Switzerland | 50,300,000 | 65,800,000 |
| Italy | 47,800,000 | 30,500,000 |
| India | 38,900,000 | 27,300,000 |
| Holland | 30,900,000 | |
| Austria Hungary | 27,800,000 | |
| Belgium | 23,700,000 | |
| Russia | 22,500,000 | [B]19,700,000 |
| Spain | 8,300,000 | 17,400,000 |
| China | 1,400,000 | 2,100,000 |
Eleven months.
Thus, despite the very remarkable growth which had taken place between 1910 and 1913, the United States ranked fifth among the nations exporting cotton goods. The reasons for this might be summed up in almost a word. The attractiveness and rapid growth of the home market provided an outlet for practically the whole output of American mills. With high prices prevailing in the home market, the manufacturer was not called upon to exert himself to stimulate sales in regions where competition would inevitably be keen and profits small.
Minor Handicaps to
Trade Development
Supporting this main objection there have been others. Until recently the banking facilities abroad were insufficient to the needs of a greater commerce; and shipping facilities, in pre-war days, were not such as to make regular shipments 39 possible to many foreign markets. Over these conditions manufacturers had not direct control, but there were other matters in which their own short-comings were all too evident. There is little need to list again the familiar complaints, known to every reader of Commerce Reports and the export magazines. Faulty packing and insufficient attention to orders were the most frequent. The former was undoubtedly due to inexperience, and the latter to the tendency of the manufacturer or merchant to consider the foreign market as a place for disposing of a surplus unsalable at home. To this attitude may also be attributed the frequency with which shipments for which orders had been accepted have been delayed or overlooked altogether.
Compress bales awaiting export on a Savannah wharf
The foreign market remained for the American manufacturer a prize so distant and of such questionable value that he was simply not willing to make the effort and spend the money that would be necessary to compete with British, German, French, and other sellers. He would have had to know local customs and tastes, and all the details that he had so arduously acquired a knowledge of for the home market. The time was not ripe.
U. S. Export Trade
As Affected By War
The war served to disarrange the system of cotton cloth distribution of the whole world. It is now a commonplace to say that the United States, by the cutting off of the usual sources of supply, succeeded for the first time in entering in force markets which hitherto had been closed. It would probably be truer to say that foreign buyers, finding it impossible to secure their customary supply from their regular sources, came to the United States and asked American manufacturers to supply their imperative wants.
Just what this meant is found in the statement that while in 1913 our total exports of cotton goods amounted to about 445,000,000 yards, in 1917 the figure was about 690,000,000 yards, an increase of fifty-five per cent. The increase, 40 moreover, has been in the colored cottons, the uncolored cloths showing an actual decrease.
The United Kingdom, during 1917, exported nearly 5,000,000,000 yards of cloth, so there is no immediate prospect that the United States will be a dangerous competitor for that country, except in a few limited lines and in a few markets. The chief gain to the American cotton industry brought by the war was the opportunity it gave merchants to introduce their goods abroad at a time when loss was next to impossible. Operating at an assured profit they were able to learn the markets without the long and discouraging fight which would have been necessary had the competitive power of the other nations been at full force. If, as seems likely, the economic forces which projected the United States so suddenly and dramatically into the world’s markets shall continue to operate, then the future will see a further development of our sales.
Future of Foreign Sales
And Probable Markets
Our best and most permanent markets are probably to be found in such countries as Cuba, Mexico, the Philippines, Central and South America, and, to a certain extent, Canada and Australia, and parts of Asia and Africa. To be sure, competition will have to be met both from European countries and from Japan, whose development in the cotton industry in recent years has been nothing short of phenomenal. She has practically doubled the number of her spindles in the last ten years, and her competition has already been felt, for instance, in China, where American gray goods have been practically eliminated from the market. Other growing markets for Japanese cotton goods are South Africa, Australia, India, and the west coast of South America.
In Cuba and the Philippine Islands, the United States has the advantage of a preferential tariff agreement and excellent shipping facilities. In Canada and Australia our cotton goods are popular but the tariff duties are in favor of Great Britain. In the Dutch East Indies there is at present a good opportunity for getting a foothold in the white goods trade. Argentina has lately been our best market for cotton goods, and as the imports of cotton products into that country amounted to $65,000,000 in 1916, this trade is worth the intensive efforts which are now being made to clinch it.
Future Development
Up to Merchants
On the west coast of South America, as in the Manila market, there are established American trading firms that are doing extensive development work and their efforts have produced favorable results. In the other Latin-American markets there are practically no local American firms and in none of them have the possibilities of the trade been more than touched.
The general opinion seems to be that if the United States is to keep what she has gained by the war in the cotton goods trade the same care and aggressiveness will have to be shown in the foreign as in the domestic trade. England’s position today as the foremost exporter of cotton manufactures is the result of careful study of foreign markets and their requirements, of catering to the tastes of the people, of aggressive advertising, of competent foreign salesmen, of reliability in filling orders, of good packing, and of more or less liberal credit terms. Manufacturers in the United States will have to follow the same procedure if this country is to keep her present position in international trade.