Foreign Firms in Chile
Commercial conditions upon the West Coast of South America are sharply distinguished from those of the Atlantic and the Caribbean by the establishment of a number of powerful firms doing both import and export businesses, owning and operating factories, and possessing widely extended branches.
Several of these houses are British, their foundation dating back to the early days of Chilean independence more than a hundred years ago; much of the mercantile enterprise, as well as the milling and nitrate refining industry, is indebted to these companies for capital and inspiration. With European alliances also is a strong North American firm, interested in general business, factory development and nitrate, and running a line of steamers between North and South America, while still more recent newcomers are the important Jugo-Slav firms operating all the way from Punta Arenas to Antofagasta, and rapidly increasing their interests in nitrate and other extractive industries.
The largest of the British firms operates sixty branches or agencies throughout Chile, and while importing machinery, tools and agricultural implements, hardware, sacks, rice, coffee, etc., also buys and ships country produce. Another house deals largely in textiles, and a third is chiefly although not exclusively interested in the nitrate country, where in addition to refining and exporting the salitre, the firm is a big supplier of machinery, foodstuffs, and all supplies for the town-camps in the nitrate fields.
These large houses do not secure a monopoly of business; side by side are numbers of smaller local firms of various nationalities: but their existence and system of operation is a salient fact in the foreign trade of Chile. The repute of the majority of these strongly entrenched houses stands high; their representatives are men of character and ability, and the organizations have not only created and built up Chilean commerce in the past, but are of great value today. Their services are never more strikingly proved than in such times of stress as those of 1921, when small and inexperienced firms broke under the storm that the big organizations were able to meet with all the strength of long usage and wide credit.
It is sometimes complained against this array of impregnable commercial castles that their influence tends to render the West Coast a territory offering but a cold welcome to the newcomer in trade. I have heard the establishment of the heavy tax upon commercial travellers in Chile charged against the suggestion of the big houses. But even if there is foundation for these complaints, there is something to be said on the other side—for instance, that the old-established firms, having sown for several generations, are not likely to be enthusiastic when a brand-new reaping hook makes an appearance. Thinking of their long cultivation of the soil, big investment, and big overhead charges, they are apt to regard the débutant travelling salesman as a raider, and are not extraordinary in looking askance at comprehensive plans launched during the last few years for direct selling to consumers by groups of home manufacturers.
As a matter of fact Chile is not singular in levying a heavy tax upon the commercial traveller, and its assessment may be regarded as partly due to the pressing need of Latin America during recent years to discover new sources of revenue. Few American countries have even attempted to face the difficulties of the direct tax, and with their chief source of revenue derived from import and export dues, are affected immediately by every change in the commercial barometer. In times of stress all possible founts are examined and in the course of this search the foreign commercial traveller himself has come to be regarded as amongst the imports. It is true that he is still rather a necessity than an article of luxury, and it is recognition of this fact that may help to account for the frequent evasion of payments of the tax.
Chilean law requires travellers representing foreign firms to buy in each province visited a patente (licence) costing 1000 pesos; with the paper peso at an exchange value of one shilling, this is equal to £50, so that in order to traverse Chilean commercial towns from Valdivia to Coquimbo the traveller would have to spend £400 or £500 on licences. The consequence is that visits are either confined to a strictly limited number of cities—perhaps, to Santiago and Valparaiso only—or an arrangement is made by which the trade representative carries the business card of a local house, and is thus not subject to taxation, or rents an office in Valparaiso, pays the normal trading tax imposed on all businesses, and operates freely from that central point. Chile does not trouble the temporary visitor with the host of small charges and restrictions that exhibit local ingenuity in many parts of South America during the last few years, and which include prohibitions against the entry of a typewriter except under a heavy tax; permits to depart from the police or port captains; demands for new vaccination and other medical certificates; inspection and re-stamping of passports; charges upon samples and catalogues, and, worst trial of all, removal of baggage to customs houses for leisurely future inspection. In Chile one is as free of this bureaucracy as in England before the war.
From commercial rivalry, whether between different groups of foreigners or between foreigners and the Chileans who have for the last twenty-five years taken so vivacious an interest in trade, Chile in general is bound to benefit. The effect of time tends to take retail business more conspicuously than wholesale or big import and export trade from foreign hands and into Chilean, not only on account of ability but because a house beginning life as an exotic has often become Chilean through the domestic ties of its founders. The children of an enterprising foreigner who marries, as so many foreigners have done, a Chilean wife, are generally Chilean-born and educated, and cling in later life to the pleasant land of their birth; a rapid naturalization of blood and of capital is one of the outstanding features of Chile’s economic history.