To understand credits it is, of course, necessary to know something about the character, trustworthiness, and commercial standing of the purchaser, and the American producer or merchant who would sell goods in South America must have some means of knowledge upon this subject. This leads naturally to the next observation I have to make.
4. The establishment of banks should be brought about. The Americans already engaged in South American trade could well afford to subscribe the capital and establish an American bank in each of the principal cities of South America. This is a fact, first, because nothing but very bad management could prevent such a bank from making money; capital is much needed in those cities, and six, eight, and ten per cent can be obtained for money upon just as safe security as can be had in Kansas City, St. Louis, or New York. It is a fact also because the American bank would furnish a source of information as to the standing of the South American purchasers to whom credit may be extended, and because American banks would relieve American business in South America from the disadvantage which now exists of making all its financial transactions through Europe instead of directly with the United States. It is unfortunately true that among hundreds of thousands of possible customers the United States now stands in a position of assumed financial and business inferiority to the countries through whose banking houses all its business must be done.
5. The American merchant should himself acquire, if he has not already done so, and should impress upon all his agents that respect for the South American to which he is justly entitled and which is the essential requisite to respect from the South American. We are different in many ways as to character and methods. In dealing with all foreign people, it is important to avoid the narrow and uninstructed prejudice which assumes that difference from ourselves denotes inferiority. There is nothing that we resent so quickly as an assumption of superiority or evidence of condescension in foreigners; there is nothing that the South Americans resent so quickly. The South Americans are our superiors in some respects; we are their superiors in other respects. We should show to them what is best in us and see what is best in them. Every agent of an American producer or merchant should be instructed that courtesy, politeness, kindly consideration, are essential requisites for success in the South American trade.
6. The investment of American capital in South America under the direction of American experts should be promoted, not merely upon simple investment grounds, but as a means of creating and enlarging trade. For simple investment purposes the opportunities are innumerable. Good business judgment and good business management will be necessary there, of course, as they are necessary here; but, given these, I believe that there is a vast number of enterprises awaiting capital in the more advanced countries of South America, capable of yielding great profits, and in which the property and the profits will be as safe as in the United States or Canada. A good many such enterprises are already begun. I have found a graduate of the Massachusetts Institute of Technology, a graduate of the Columbia School of Mines, and a graduate of Colonel Roosevelt's Rough Riders smelting copper close under the snow line of the Andes; I have ridden in an American car upon an American electric road, built by a New York engineer, in the heart of the coffee region of Brazil; and I have seen the waters of that river along which Pizarro established his line of communication in the conquest of Peru, harnessed to American machinery to make light and power for the city of Lima. Every such point is the nucleus of American trade—the source of orders for American goods.
7. It is absolutely essential that the means of communication between the two countries should be improved and increased.
This underlies all other considerations and it applies to the mail, the passenger, and the freight services. Between all the principal South American ports and England, Germany, France, Spain, Italy, lines of swift and commodious steamers ply regularly. There are five subsidized first-class mail and passenger lines between Buenos Ayres and Europe; there is no such line between Buenos Ayres and the United States. Within the past two years the German, the English, and the Italian lines have been replacing their old steamers with new and swifter vessels of modern construction, accommodation, and capacity.
In the year ending June 30, 1905, there entered the port of Rio de Janeiro steamers and sailing vessels flying the flag of Austria-Hungary, 120; of Norway, 142; of Italy, 165; of Argentina, 264; of France, 349; of Germany, 657; of Great Britain, 1785; of the United States,—no steamers and seven sailing vessels, two of which were in distress!
An English firm runs a small steamer monthly between New York and Rio de Janeiro; the Panama Railroad Company runs steamers between New York and the Isthmus of Panama; the Brazilians are starting for themselves a line between Rio and New York; there are two or three foreign concerns running slow cargo boats, and there are some foreign tramp steamers. That is the sum total of American communication with South America beyond the Caribbean Sea. Not one American steamship runs to any South American port beyond the Caribbean. During the past summer, I entered the ports of Pará, Pernambuco, Bahia, Rio de Janeiro, Santos, Montevideo, Buenos Ayres, Bahia Blanca, Punta Arenas, Lota, Valparaiso, Coquimbo, Tocopilla, Callao, and Cartagena—all of the great ports and a large proportion of the secondary ports of the southern continent. I saw only one ship, besides the cruiser that carried me, flying the American flag.
The mails between South America and Europe are swift, regular, and certain; between South America and the United States they are slow, irregular, and uncertain. Six weeks is not an uncommon time for a letter to take between Buenos Ayres or Valparaiso and New York. The merchant who wishes to order American goods cannot know when his order will be received nor when it will be filled. The freight charges between the South American cities and American cities are generally and substantially higher than between the same cities and Europe; at many points the deliveries of freight are uncertain and its condition upon arrival doubtful. The passenger accommodations are such as to make a journey to the United States a trial to be endured and a journey to Europe a pleasure to be enjoyed. The best way to travel between the United States and both the southwest coast and the east coast of South America is to go by way of Europe, crossing the Atlantic twice. It is impossible that trade should prosper or intercourse increase or mutual knowledge grow to any great degree under such circumstances. The communication is worse now than it was twenty-five years ago. So long as it is left in the hands of our foreign competitors in business, we cannot reasonably look for any improvement. It is only reasonable to expect that European steamship lines shall be so managed as to promote European trade in South America, rather than to promote the trade of the United States in South America.
This woeful deficiency in the means to carry on and enlarge our South American trade is but a part of the general decline and feebleness of the American merchant marine, which has reduced us from carrying over ninety per cent of our export trade in our own ships to the carriage of nine per cent of that trade in our own ships and dependence upon foreign shipowners for the carriage of ninety-one per cent. The true remedy and the only remedy is the establishment of American lines of steamships between the United States and the great ports of South America, adequate to render fully as good service as is now afforded by the European lines between those ports and Europe. The substantial underlying fact was well stated in the resolution of this Trans-Mississippi Congress three years ago: