ment to the importer, indicating the amount of pounds sterling which must be remitted to London, to provide for their payment at maturity, or rather a bill stated in dollars for the amount of pounds sterling drawn under the credit. In this purchase of exchange, the importer makes payment for his goods. This method, while workable, is obviously cumbersome, yet it is practically the only one which the American importer can follow in connection with such imports. It is expensive for the importer, for not only must he pay his bank a commission, for arranging the credit, but there is included in this commission a charge made by the London bank for its acceptance. Further than that, the importer must take a material risk in exchange. At the time a credit is opened the cost of remitting, say £10,000, to take up the bills in London, might be only $48,600, or at the rate of $4.86, whereas, by the time the bills actually mature exchange may have risen and cost him $4.87, or $48,700."

Apart, however, from our banking methods, inadequate as these are, is the absence of American banks in South America. So far as the writer knows, there is no American-owned or American-controlled bank south of Panama. Consequently, if

an American exporter is fortunate enough to sell a cargo of goods to a South American firm, his draft and all the papers concerning the shipment would go through the hands of bankers who are interested in the success of his competitors. There is reason for believing that information so obtained is, in some cases, put at the disposal of his competitors; for, of course, many of the people who are interested in the foreign banks or banking agencies now existing at the principal points in South America, are also interested in the manufactures and trade of the countries of their owners. Indeed, some of the owners are probably personally interested in the enterprises that produce the goods. It is not surprising then, that with complete information as to the cost, freight, insurance, and price, not only of the articles produced in their own countries, but of similar articles. produced in this country and sent there to compete, our foreign competitors for South American trade have us at a tremendous disadvantage.

Still another obstacle in the growth of our trade with the countries of South America is the fact that importers in these countries usually need longer periods of credit than we are willing to grant. The reason for this will appear when we remember that the industry of these countries is mainly agricultural. An advance for seed or machinery can be repaid only when the crop is put upon the market. The experience of our own people in

this matter has been very similar until within a comparatively recent time. And our exporters ordinarily did not have sufficient capital to tie up any amount in the extension of credit to customers in this condition. Consequently we have been accustomed to demand payment, either at the time the order was received, or when the goods were delivered. This has been resented as a reflection on the credit of the South American consignee, and has always been impossible for him to accede to because of the economic condition just described. That is, our unwillingness and inability to grant credit for so long a period has been met by their unwillingness and inability to purchase from us on our terms. Moreover, it is very questionable whether in the past it Would have been profitable for our exporters to sell on such terms. They found too many ready markets at which they could get immediate payment for their shipments. Our unwillingness to extend credit even if we had been able to do so, is due largely to our ignorance of South American people and South American trade conditions. In some quarters there seems to be a prejudice against the honesty of the South American merchants. prejudice is mainly due to ignorance. It is at least doubtful whether there are any more failures to meet obligations among the merchants of Argentina, Chile, Brazil, and elsewhere, in proportion to busineses done, than in our own country or in Europe. To a considerable extent the prejudice has arisen from ill-considered extensions of credit under conditions where the risk was large and full inquiry had not been made.

This

The character of our business agents and their methods of selling goods have not always been happy from the point of view of the South American business man. Frequently the representatives of American business firms have not been able to converse with their prospective customers in the language of the latter. A knowledge of the vernacular is essential for one who is trying to introduce business. Of course it is possible to talk through an interpreter, but one can hardly push business very extensively through an interpreter. Moreover, our representatives have been grossly ignorant, when compared with their German and even their English fellows, not only of the language but of the customs and needs of the countries. As a rule they have been unable to quote prices or measures or weights in the standards known to the prospective purchaser. Our people have been too generally satisfied with sending bulky catalogs and price lists printed in English, de

scribing their goods in yards, pounds and dollars, when the native was looking for meters, kilograms and pesos. Our business representatives have not studied the markets of the South American countries. They have not known what kind of goods the people want, nor in what sizes, shapes or patterns. A similar criticism has frequently been made of the English exporter, and is given as one of the principal reasons why his German competitor has driven him so largely from the retail trade of some of the cities of South America. Whether or not it is true of the English manufacturer and exporter, it certainly has been true in large measure of our own, that they have assumed the attitude of "take it or leave it”, when dealing with their South American customers.

It is sometimes said that the lack of American lines of ships to South American ports is due to our small trade. It is hard to see the force of this argument. For we have large volumes of trade with other countries without carrying the goods in our own ships, and our trade with South America has been rapidly expanding in the past few years under existing conditions. We must not confuse the absence of American lines of ships with the lack of shipping facilities. There are no ships flying the American flag in the trade with South America, but there are plenty of shipping facilities. An American mercantile marine, a proper part of which shall be engaged in South American trade, is of course a desideratum, but it is not absolutely necessary in order to enlarge the volume of business between the countries. Appeal is sometimes made to our patriotism in behalf of shipping, the real motive of which is frequently an effort to favor some "interests". It is hard to see wherein it is a "disgrace" that we allow our goods to be carried for us by other people if they do it more cheaply than we can do it ourselves. It is no more disgraceful to let others carry our goods than it is to let them raise coffee for us. Appeals to sentiment on behalf of trade expansion must be looked upon with suspicion. It is all very sad to be obliged to deplore the infrequent appearance of the flag in the ports of the world, and it is nonsense to say that "trade follows the flag". The important question for us is whether it is, all things considered, worth while to provide the ships. There are always people ready to stir up public sentiment on patriotic grounds by descanting on the feeling of shame the American who is rich enough to travel abroad feels when he notes the deplorable absence of our flag, and to stand ready to supply the need and so gratify our patriotism-for a

proper profit. We need waste no time on such arguments. Can we not find all necessary shipping facilities as things are? Would we do more foreign trade if we had our own ships than we do now? Would it be profitable for us to provide and sail our own ships? The answers to these questions have an important bearing on our trade relations with South America.

At present there are thirteen lines running out of New York to South American ports. Of these six run to ports as far south as the River Plate, while three go down the east coast and up the West. The rest are divided between traffic to Brazilian ports and the north coast of South America. From New Orleans three lines sail to Panama or Central America, or points on the north coast of South America. Others could be mentioned, and of course, there are steamers to be chartered at almost any time. Many of the vessels out of New York to South American ports also touch Central America, the West Indies, Cuba and Porto Rico. In short, there is little ground for complaint concerning the adequacy of the shipping facilities. If our trade expands, making more ships necessary, they would undoubtedly be supplied.. However, although the shipping facilities are adequate, it is important to inquire whether their owners furnish the merchants of the United States rates and facilities that are fair when compared with those furnished European exporters. It has sometimes been charged that the owners of these vessels constitute a trust, and that they discriminate against American goods, in rates, as compared with

those that are

these lines ply.

exported from their own country to points to which

In an article of this kind it is impossible to discuss this question, but if the statement is true, of course it affords a justification for whatever action on the part of our government is necessary, either to procure fair treatment from existing lines, or to favor in such ways as may seem best the provision of ships flying the American

flag. If investigation proves that competition is being suppressed in the carrying trade from our ports to South America, we should, either by subsidies or in some other way, enable our producers and exporters to compete on fair terms in these foreign markets. There is little if any doubt that, as our capital increases and it becomes necessary for us to find new lines of investment for our surplus, the same initiative, energy, and skill which the American shows in other lines of economic activity will enable him to take his place among the carriers of the world on advantageous terms.

Assuming conditions of fair competition, we will build and sell our ships as soon as we are satisfied that we cannot make better use of the capital which is necessary to build them. Until that time comes, always assuming that competition is fair, there is no reason, on purely mercantile or economic grounds, for the artificial promotion of the merchant marine. This remark has no reference of course to any arguments that may be advanced on the ground of necessity for merchant ships as an auxiliary support to our navy in time of war.

The thing which would lead most directly and largely to a rapid extension of our trade with the countries to the south of us in the early future, is a larger investment of American capital in the development of these countries. A good many concessions for mining, railroads, rubber and other industries, have already been obtained by American capital, and there are some companies, notably the Grace Brothers of New York, which have been engaged in South American trade, particularly on the west coast, for a great many years. Several American companies have also obtained concessions for mines in Peru and Bolivia; some have obtained railroad concessions, both in those countries and in Ecuador, Uruguay, and elsewhere; and the American meat packers, particularly the Swifts and Armours, have recently invaded South American territory and established plants for the export of Argentine beef to Europe. Some concessions have been worked, however, rather in the way of exploiting the countries that granted them than for the purpose of building them up. The building of a railroad system or a group of docks, which forms a permanent productive investment in a country, is looked on properly as somewhat different from an investment in a mine, the product of which is taken largely or wholly out of the country. In the phraseology of the day, the former is in the direction of conserving and upbuilding the natural resources and economic strength of the country, while the latter is in the direction of exploiting and exhausting them. Moreover, an investment in a railway, for example, gives a greater hold upon the country and the people than an investment in a gold mine; for the upbuilding of the former intertwines itself with all the interests of the country, a fact which is not necessarily true of the latter. The people who secure concessions of the governments of the countries of South America and exploit these concessions to their own profit, while at the same time showing due regard for the interests of the country, find in their concessions a vantage ground from which to