A European merchant, many years established in a South American city, and knowing the community, has been selling pianos in this way: The manufacturer would quote him a price and deliver the piano, giving him long credit at an ordinary rate of interest. The merchant would finally sell the piano on the installment plan, receiving interest at a higher rate on the deferred payments, the merchant trusting the buyer, the manufacturer trusting the merchant, both thus making good profits, and the purchaser being accommodated. This man found the American manufacturer entirely unwilling to deal in this way.
European houses on the spot, whether independent or financed by large home houses, give credits for as long, sometimes, as a year. They would not continue to do so if they lost by doing it. Often this fits the customs of the local domestic trade. In one country the local retailer is expected to be paid within eighteen months. Naturally, our exporters' demand for "cash down on receipt of documents," even when the customer is well vouched for, does not appeal to him.
He prefers to get long credit from a European house, and pay interest for it, rather than to borrow from his bank at high interest or sink his own capital to pay for American goods, long before he gets them, their price plus the profit of a commission house. Indeed, he is generally dissatisfied with the methods of American export trade as now conducted, which is almost exclusively through commission houses. These, it seems, might become more efficient through organization and more aggressive and scientific methods.
On the other hand, the export trade of certain of the big combinations is beginning to be pushed with commendable zeal and efficiency. Trade at large, to reach its greatest volume, must include the pushing of smaller lines of goods. These smaller lines, in the aggregate, would reach considerable sums, and it does not appear that there have hitherto existed efficient agencies for their marketing. To hold Latin-American trade we must equal our competitors in liberality of credits, in representation on the spot, and in other facilities.
There is no doubt that more American merchants resident in the trade centres would give valuable impetus to our commerce. Even our commission houses operating on the spot are so few that in handling many lines there is the greatest danger of their sacrificing the building up of a steady trade to the opportunities of unduly heavy profits now and then, and so damaging our general commercial interests. Then we must send many commercial travelers.
Just here, however, it cannot be too strongly emphasized that Americans sent to these countries to do business must above all be men of agreeable manners. In these countries many quite unworthy people have these: so a good man who lacks them is likely to be badly misjudged. They should have sympathetic personality and sufficient education, besides being men of sobriety and good character, and should be able to speak the language of the country.
All this will be expensive, but non-competing firms might join in sending men, or competing firms might, it is hoped, be guaranteed against the terrors of the Sherman law in order to join in sending a corps of representatives upon some basis of division of the field or the profits. Combination is even more necessary abroad to put forth the nation's strength in world competition than it is for efficiency at home. These men would be students and salesmen, and perhaps future merchants who would settle in these countries and emulate the patriotic groups of resident foreigners who in so many places help to form an atmosphere favorable to their countries' interests.
They would work to replace with our goods those now shut off by the war, but also to introduce dozens of lines of American products which are now comparatively hard to find in these markets. A number of strong firms might join to establish commercial houses or selling agencies in trade centres of certain groups of countries. Commission houses might do the same if they carried samples and instructed their clients in packing, credits, &c., but in each case there should be American houses on the spot which would carry general lines and supply to the eye that visible evidence of the goods themselves which is such a valuable form of advertisement.
In the establishment of American houses in these countries, as in many other respects, much may be learned from the Germans. They bring out carefully selected young men. These, if efficient, have sure promotion. The partners retire before old age to make room for those who work up. The inefficient are dropped. It is a little like the principle of a good foreign service.
I think the most minute study should be given, first, to the nearer countries, say those north of the Equator, including the republics of the Caribbean. Each country must be separately studied. Primarily, there will be found a cry, sometimes desperate, for capital. Public works, concessionary and otherwise, have stopped for lack of funds from Europe. New developments in railroad building, mining, harbor works, plantations, are arrested. Where European credits have been customarily used to handle crops, there is distress, and no less so in cases in which such credit has previously been given by ostensibly American houses operating really with European capital.