American Cloth in Foreign Markets
We have seen that the American cotton grower supplies more than half of
the world's demand for raw cotton. The cotton manufacturer in the United
States is in no such position. This is not to say that American cotton
goods are not exported in very considerable amounts. From the inception
of the industry in this country varying percentages of the total product
have been sent abroad. The following table, taken from the United States
Statistical Abstract (1910) shows the average annual exports of cotton
goods for the five year periods named, expressed in millions of dollars:
_Uncolored _Colored
_Total_ Cloth_ Cloth_ _Other_
1856-60 $7.5 $2.4 $2.3 $2.8
1861-65 3.7 .4 .9 2.4
1866-70 4.1 .9 .3 2.8
1871-75 3.1 1.7 .6 .7
1876-80 10.0 6.1 2.6 1.2
1881-85 13.0 8.0 2.9 2.1
1886-90 12.4 7.4 3.2 1.6
1891-95 13.3 7.7 3.0 2.5
1896-1900 20.4 11.6 4.4 4.3
1901-05 31.3 17.2 7.0 7.0
1906-10 35.1 16.8 7.2 11.0
The irregularity of the export trade, as shown by these figures, has been
explained on several grounds, the chief factors being, apparently, the
fluctuations in the prosperity and consequently in the buying power of
the home market, and the pressure upon the home market exerted by the
rapid growth of cotton manufacturing in the South.
The normal position of the United States as an exporter of cotton goods
is shown by the following table, which gives the exports of the chief
manufacturing countries in the year before the war (the figures for 1915
are also given because they show the changes which had already begun):
1913 1915
United Kingdom $618,000,000 $418,000,000
Germany 117,000,000 30,100,000
France 78,000,000 60,000,000
Japan 58,000,000 95,800,000
United States 55,500,000 60,200,000
Switzerland 50,300,000 65,800,000
Italy 47,800,000 30,500,000
India 38,900,000 27,300,000
Holland 30,900,000
Austria Hungary 27,800,000
Belgium 23,700,000
Russia 22,500,000 19,700,000[B]
Spain 8,300,000 17,400,000
China 1,400,000 2,100,000
-----
[B] Eleven months.
Thus, despite the very remarkable growth which had taken place between
1910 and 1913, the United States ranked fifth among the nations exporting
cotton goods. The reasons for this might be summed up in almost a word.
The attractiveness and rapid growth of the home market provided an outlet
for practically the whole output of American mills. With high prices
prevailing in the home market, the manufacturer was not called upon to
exert himself to stimulate sales in regions where competition would
inevitably be keen and profits small.
Minor Handicaps to
Trade Development
Supporting this main objection there have been others. Until recently the
banking facilities abroad were insufficient to the needs of a greater
commerce; and shipping facilities, in pre-war days, were not such as to
make regular shipments possible to many foreign markets. Over these
conditions manufacturers had not direct control, but there were other
matters in which their own short-comings were all too evident. There is
little need to list again the familiar complaints, known to every reader
of Commerce Reports and the export magazines. Faulty packing and
insufficient attention to orders were the most frequent. The former was
undoubtedly due to inexperience, and the latter to the tendency of the
manufacturer or merchant to consider the foreign market as a place for
disposing of a surplus unsalable at home. To this attitude may also be
attributed the frequency with which shipments for which orders had been
accepted have been delayed or overlooked altogether.
[Illustration: _Compress bales awaiting export on a Savannah wharf_]
The foreign market remained for the American manufacturer a prize so
distant and of such questionable value that he was simply not willing to
make the effort and spend the money that would be necessary to compete
with British, German, French, and other sellers. He would have had to
know local customs and tastes, and all the details that he had so
arduously acquired a knowledge of for the home market. The time was not
ripe.
U. S. Export Trade
As Affected By War
The war served to disarrange the system of cotton cloth distribution of
the whole world. It is now a commonplace to say that the United States,
by the cutting off of the usual sources of supply, succeeded for the
first time in entering in force markets which hitherto had been closed.
It would probably be truer to say that foreign buyers, finding it
impossible to secure their customary supply from their regular sources,
came to the United States and asked American manufacturers to supply
their imperative wants.
Just what this meant is found in the statement that while in 1913 our
total exports of cotton goods amounted to about 445,000,000 yards, in
1917 the figure was about 690,000,000 yards, an increase of fifty-five
per cent. The increase, moreover, has been in the colored cottons, the
uncolored cloths showing an actual decrease.
The United Kingdom, during 1917, exported nearly 5,000,000,000 yards of
cloth, so there is no immediate prospect that the United States will be a
dangerous competitor for that country, except in a few limited lines and
in a few markets. The chief gain to the American cotton industry brought
by the war was the opportunity it gave merchants to introduce their goods
abroad at a time when loss was next to impossible. Operating at an
assured profit they were able to learn the markets without the long and
discouraging fight which would have been necessary had the competitive
power of the other nations been at full force. If, as seems likely, the
economic forces which projected the United States so suddenly and
dramatically into the world's markets shall continue to operate, then the
future will see a further development of our sales.
Future of Foreign Sales
And Probable Markets
Our best and most permanent markets are probably to be found in such
countries as Cuba, Mexico, the Philippines, Central and South America,
and, to a certain extent, Canada and Australia, and parts of Asia and
Africa. To be sure, competition will have to be met both from European
countries and from Japan, whose development in the cotton industry in
recent years has been nothing short of phenomenal. She has practically
doubled the number of her spindles in the last ten years, and her
competition has already been felt, for instance, in China, where American
gray goods have been practically eliminated from the market. Other
growing markets for Japanese cotton goods are South Africa, Australia,
India, and the west coast of South America.
In Cuba and the Philippine Islands, the United States has the advantage
of a preferential tariff agreement and excellent shipping facilities. In
Canada and Australia our cotton goods are popular but the tariff duties
are in favor of Great Britain. In the Dutch East Indies there is at
present a good opportunity for getting a foothold in the white goods
trade. Argentina has lately been our best market for cotton goods, and as
the imports of cotton products into that country amounted to $65,000,000
in 1916, this trade is worth the intensive efforts which are now being
made to clinch it.
Future Development
Up to Merchants
On the west coast of South America, as in the Manila market, there are
established American trading firms that are doing extensive development
work and their efforts have produced favorable results. In the other
Latin-American markets there are practically no local American firms and
in none of them have the possibilities of the trade been more than
touched.
The general opinion seems to be that if the United States is to keep what
she has gained by the war in the cotton goods trade the same care and
aggressiveness will have to be shown in the foreign as in the domestic
trade. England's position today as the foremost exporter of cotton
manufactures is the result of careful study of foreign markets and their
requirements, of catering to the tastes of the people, of aggressive
advertising, of competent foreign salesmen, of reliability in filling
orders, of good packing, and of more or less liberal credit terms.
Manufacturers in the United States will have to follow the same procedure
if this country is to keep her present position in international trade.