TRADE CONDITIONS IN SOUTH AMERICA
Walking along the extensive docks at Buenos Aires, and going through the
immense warehouses which extended one after another along those docks,
I was impressed with the small proportion of the immense traffic coming
into this port that belonged to the United States. It was an object
lesson far more impressive than the perusal of statistics. Section after
section would be visited without a single package bearing the name of one
of our manufacturers, while great boxes and bales with “Hamburg” stamped
upon them, French boxes of both wet and dry goods, labelled “fragile,”
and English shipments were piled clear up to the ceiling. The question
“why is this condition?” arose in my mind, and set me upon inquiry.
Are North American manufactures not adapted to the needs of our fellow
Americans? Can it be that our goods are not fully known or appreciated
beneath the Southern Cross?
It was just at this time that the naval commission of Argentina awarded
the contract for the two battleships to United States builders, after
a fierce competition from the ship-building firms of five nations, and
one in which even the diplomatic representatives of more than one nation
became involved. This act brought out a great deal of favourable comment
upon the United States from the leading journals of Buenos Aires. A
reporter of _La Prensa_, perhaps the most influential daily in that
republic, came to interview me, and I took the occasion to say that
the United States had entered upon an era of commercial conquest, and
hereafter must be reckoned with. A number of Argentinians whom I met
afterwards commented on the subject, and everywhere the encouraging words
were heard: “We will welcome you; indeed we have wondered why it was not
done long ago.” This convinces me that no prejudice exists among the
Latin-Americans against their fellow Americans of North America.
It may be that the manufacturers of the United States have been a
little ignorant of conditions in South America. A little ignorance is
excusable. As the United States has not been a colonizing nation, having
undeveloped lands and resources at home for its surplus population,
there has not been the intercourse between North and South America
that there has been between South America and Europe. But there is one
characteristic which I noticed everywhere and greatly admired, and
that is that South Americans of every country are satisfied only with
the “best.” The “just as good” argument does not satisfy. When once
convinced that the manufacturer of the United States is putting out a
better article, it will be bought. The manufacturer of that country has
oftentimes been at a disadvantage because the importing houses are mostly
of European nationality, and for that reason prejudicially inclined
towards their fellow-countrymen. North American-made goods have forged
ahead simply and solely upon their own intrinsic merit.
“All of our printing machinery is of North American make, as is almost
everything in the establishment, except the type,” said the manager
of _La Prensa_, as he courteously and with justifiable pride showed
me through their fine office building with its humanitarian and
sociological features. “We have found those goods to be the best.
Furthermore, our presses, as you will see, are the North American
make; and not from the branch factory in England.” And so I found as
we went through these offices, being taken from one floor to another
on an American elevator, that the “copy” was being written up on
typewriters, set up on linotype machines, and printed upon presses, all
of United States manufacture; the checks to the reporters were signed by
fountain-pens and the cash received over the counters was rung up on cash
registers from the same land.
“Where do you purchase your paper?”
He answered: “We buy some of it in the United States but most of it in
Germany. We prefer that made in North America, but it is so carelessly
packed that we always figure on a ten per cent. loss. The German
manufacturers carefully surround the rolls with boards to prevent the
paper from damage, while the North American paper is simply wrapped with
a little heavier paper, which tears or becomes water soaked, and damage
results. A short time ago we returned nearly nine hundred bales to the
manufacturers because of the damaged condition in which it was received.”
[Illustration: ROLLS OF PAPER FROM GERMANY]
“How does American machinery sell?” I asked of an importing merchant in
Buenos Aires, who represented a few American manufacturers.
“Very well indeed, for the people generally like them. But there is one
thing your North American manufacturers must learn, and that is to be
very careful in putting every necessary part in the shipment. Several
times we have received engines, or other complicated machinery, and when
it was put together some part would be missing. As it was impossible to
get that part in less than three or four months, the customer lost a
season’s business, and his friends bought English machinery because there
was no danger of that same trouble.”
It would be possible to relate numerous other instances of personal
experiences, all of which would be of similar tenor to those herewith
given. It is humiliating to an American to travel throughout the length
and breadth of South America and see the trade which legitimately
belongs to us slipping away to Europe, when some of our own factories in
that line are idle because of lack of orders. It leads one to ask the
questions: “What is the matter with the American business man? What is
the matter with the American manufacturer?”
The South American field is an extensive one, and it is a discriminating
one. The idea that anything is good enough for that continent has been
exploded. Buenos Aires, for instance, is a live, hustling up-to-date
metropolis. The people have money and they spend it freely. What they buy
they want of the very best, and nothing is too good for them. It might
also be added that nothing is too expensive for them, as they are used to
paying high prices, and money seems to be of little moment when once the
desire for the article exists. So it is not a cheap or a low-price market
that awaits the American merchant.
Argentina is essentially British in her sympathies. That is but natural,
for England owns her railroads, public improvements and government
bonds. Almost two billion dollars of British gold is invested in that
republic, and perhaps fifty thousand of her subjects dwell there. There
is not a boat that sails for Buenos Aires from an English port which
does not carry some young English boys to that city, who expect to enter
commercial life there. It is only natural that this should create a
preference for English-made goods, for the Englishman always carries his
atmosphere with him as well as his ideas of taste and style. And yet
German houses have aggressively entered this field in the past decade and
have made terrific inroads on English trade. The Germans have studied the
markets; they aim to cater to its demands; they grant the terms asked by
the merchants, and do anything to secure the trade—and they generally get
it.
One noticeable feature of the German commercial invasion is its
imitation, and a desire to furnish “similar” articles at a cheaper price.
As a prominent man told me: “Their goods are worth no more than you pay
for them, and they are bound to lose out in the long run.” It is this
commercial rivalry that has caused the intense feeling between Germany
and England, for the German manufacturer has been somewhat unscrupulous
in his methods. If a manufacturer in the United States or England has
succeeded in evolving some new and valuable contrivance, it will not
be long until a German imitation will be on the market, and bearing an
English name. It is well known that the North American manufacturers
have evolved the best and practically only successful typewriters, cash
registers and computing machines. Within the last year or two, however,
German imitations have appeared in all markets. The machines in some
instances have such a wholly misleading name as “Columbia,” showing
the plain intention of deception. In these lines their methods have
had little effect. One can hardly go into an office anywhere in South
America without seeing one or more typewriters with familiar labels, for
a half dozen or more manufacturers are working in that field, and nearly
every store has from one to a half dozen cash registers of one or two
North American makes. “We are bringing them in by the shipload,” said an
agent in Buenos Aires, who handled both lines, and there was not much
exaggeration in the statement.
It is in the practical and useful things that the genius of the United
States has been most manifest. A great undeveloped country rich in
natural resources stirred the inventive genius of the people, and the
result has been a continual increase in time-saving and labour-saving
appliances of all kinds. These same articles are equally adapted to
conditions all over South America. In some places these articles are
known and appreciated; in others they are still unknown. No manufacturers
have evolved farming machinery of all kinds so well adapted to conditions
in South America as those of the United States.
American manufacturers look with longing eyes towards the Orient as a
promising field for expansion. It will be many years before China, for
instance, will be a great importer of manufactured goods, because of the
extreme poverty of the people and the consequent low purchasing power
of the masses. The imports of that country, with its teeming population
of four hundred millions, for the past year were about $333,000,000,
an average of less than one dollar per capita. It will be many years
before that percentage will greatly increase, because the rise in the
standard of wages will be very slow owing to the abundance of labourers.
Furthermore, as soon as trade has once been established, the low wages
will induce manufacturers to establish factories on Chinese soil so that
the cost of production will be decreased. Japan is, and will always be,
a formidable competitor in the Orient, because of her ingenuity and
similarly low wage scale.
South America, on the other hand, is not and will not be for a long time,
if ever, a manufacturing country. Brazil has encouraged some lines of
manufactures, because of her extensive water power, but still is and will
ever remain an importing nation. Argentina, Uruguay and Paraguay have
little available water power and scarcely any coal. Chile, Peru and all
the other republics of South America remain importing nations. In none of
these countries, except Chile, has coal been found in large quantities,
and millions upon millions of tons are imported each year from Europe and
Australia. The matter of fuel alone will always deter manufacturing in
South America.
Let us glance for a moment at the purchasing power of these republics.
Argentina, although not so populous as the immense republic of Brazil,
easily stands at the head of the list. During the year 1909 the total
foreign trade of the Argentine Republic was valued at $700,106,623, of
which $302,756,095 was imports. This was an average of almost $108.00
for each man, woman and child in the nation, and an importation of more
than $46.00 per capita. Thus this one republic, with a population of
less than seven million, imports almost as much as China with more than
fifty times the population. In the last decade the imports of Argentina
have increased one hundred and fifty-four per cent., an increase exceeded
only by Canada. She now ranks thirteenth in total imports and sixth in
per capita imports. Those nations, such as England and Holland, which
exceed in per capita imports, are large importers of raw materials and
not manufactured goods, as is the case with Argentina. Furthermore, the
population of Argentina is increasing rapidly, both by natural increase
and immigration. There are no idle men in the country, as every able
bodied man seems to be able to secure employment. Wages are about as high
as in the United States, and the cost of living higher. The people spend
their money freely, and the importing houses do an immense business which
is increasing each year.
Brazil will one day be one of the great powers of the world, for she
contains within her borders the greatest amount of undeveloped, fertile
land in the world. The United States, exclusive of Alaska and the island
possessions, could be set inside the territorial limits of Brazil, and
leave a state as large as Texas on the outside. The Brazilian government
estimates the population at a little more than twenty million, but
it would probably be better to place the number at eighteen million.
Brazil has fostered some lines of industry, especially the manufacture
of cotton goods, where water power is an invaluable asset, but most of
the goods are imported. The purchasing power of the people is not as
great as in Argentina, because there are several millions of negroes and
Indians included in the population. The total imports for the year 1909
were $179,690,125. This would be at the rate of ten dollars per capita,
or ten times that of China. In other words, the imports of Brazil, with
her eighteen million population, is equal to that of half the Chinese
Empire. If the coffee situation improves there will be a great increase
in Brazilian imports, for many improvements are withheld in the coffee
regions at the present time on that account.
Chile, that long, narrow strip of land, whose two hundred and ninety-one
thousand and five hundred square miles stretch over thirty-eight degrees
of latitude, is well worthy of consideration. In 1909 the imports of
this republic were $94,349,795. With a population of less than four
million, this makes a per capita importation of twenty-five dollars.
Peru, with a slightly greater population, but a larger number of Indians
who are not purchasers, imported in the same year about $25,000,000.
Uruguay ranks next to Argentina in imports in proportion to population.
Larger than New York and West Virginia combined, this republic, whose
physical characteristics and agricultural resources are very similar
to its neighbour across the La Plata, has a population of one million
one hundred thousand. It is a great stock country, and ninety-four
per cent. of its $37,000,000 exports for last year were hides, frozen
meat, jerked beef, meat-extracts and tallow. Its imports amounted to
$35,000,000 in round numbers, making the comparatively small republic
well worth consideration by the exporter. Venezuela imports will
average $10,000,000, Bolivia $16,000,000, Ecuador $7,000,000, Columbia
$12,000,000 and Paraguay about $4,000,000.
These figures are eloquent in themselves. They bespeak great
possibilities of trade among our South American neighbours. Of the total
imports of Argentina, during the year 1909, the United States sent
$43,068,829. For the last two years the percentage has shown a gradual
increase, as a few lines of American goods have been systematically
pushed. In percentage of increase over the preceding year the United
States is ahead of the other commercial nations. Specialties such as
typewriters, photographic cameras, firearms, elevators, phonographs,
toilet and medical articles, and petroleum products, have made their
market, but it is the larger competitive field that needs attention. In
this class are included motors of all kinds, electrical appliances, steel
in every form, railway and tramway equipment, and a thousand and one
things made by manufacturers of the United States, which are always equal
to and oftentimes superior to anything of their kind made elsewhere.
We purchase more than twice as much from Brazil as any other nation, more
than half the total, and sell that country less than half as much as
Great Britain and less than Germany. We sell more to Argentina than we
purchase from her, but Great Britain sells almost three times as much,
and our percentage is only fourteen per cent. of the whole, with Germany
still in the lead and France not far behind. We purchase nearly twice
as much from Chile as Germany, and more than twice as much as Great
Britain, and yet the latter country sells Chile more than twice as much
as we do and Germany almost half as much again. And so the figures might
be given for the other countries, which would show about the same ratios,
and which make the American travelling through those countries lose some
of his egotism.
Here are a few of the obstacles encountered: the leading banks are either
British, German or Italian; the importing merchants are of the same
nationality, and there is quicker transportation because of the numerous
steamship lines running to European ports, although there are good
steamers running direct from New York to the ports on the east coast. And
the following are a few of the remedies suggested: an American bank would
greatly facilitate business, as it would aid in exchange and the handling
of credits; American manufacturers should study the markets and send
salesmen who understand the languages, people and customs; great care
in packing goods for South America should be exercised; fourthly, and
lastly, establish independent houses with hustling Americans in charge,
and not trust to foreign representatives who have a natural predilection
for things made in their own land. The shipping question will solve
itself, for boats will be run whenever business demands them. A little
attention to these principles and suggestions will help in solving the
question of American trade in South America. They are Americans, also,
and pride themselves on that fact. They rather resent our assumption
of the name “Americans,” and insist that we should use the term “North
Americans.” They are the “South Americans.” Then, as they say, as we are
all “Americans,” let the cry be “America for the Americans.”