government. Each one saved the labour of eight persons and considerable
office space. This made a distinct impression and the company got
permission to import two hundred tons of their product. But not even an
application for more can be filed until the first of next year. Only the
dire necessity for this article, coupled with the fact that it is
without British competition, got it over.
I cite this incident to show what many Americans in England believe to
be one of the real reasons behind the prohibition, which, summed up, is
simply this: England is trying to keep out everything that competes with
anything that is made in England or that can be made in England!
For some time after the war began our motor cars went in free. Then
followed an ad-valorem duty of thirty-three and a third per cent.
Despite this handicap, agents were able to sell American machines, which
were both popular and serviceable. The tariff was imposed ostensibly to
cut down imports, but mainly to please the British motor manufacturers,
who claimed that the surrender of their factories to the government for
making munitions left the automobile market at the mercy of the American
product, which meant loss of goodwill.
Subsequently a complete embargo was placed on the entry of American
pleasure cars and the business practically came to a standstill. What is
the result? Let the agent of a well-known popular-priced American car
tell his story.
"Before the war and up to the time of the embargo," he said, "I was
selling a good many American automobiles. With the embargo on cars also
came a prohibition of spare parts. It was absolutely impossible to get
any into the country. Many of my customers wanted replacements, and,
when I could not furnish them, they abandoned the cars I sold them and
bought English-made machines whose parts could be replaced."
All through the motor business in England I found a strong disposition
on the part of the British manufacturer and dealer to create a market
for his own car as soon as the war is over. Some even talked of a large
output of low-priced machines to meet the competition of the familiar
car that put the automobile joke on the map. The only American comeback
to this growing prejudice is to build factories or assembling plants
within the British Isles. This will save excessive freight rates, keep
down the costly-tariff "overhead," and get the benefit of all the
goodwill accruing from the employment of British labour.
A by-product of British exclusion is the inauguration of a
Made-in-England campaign. Buy a hat in Regent Street or Oxford Street
and you see stamped on the inside band the words, "British Manufacture."
This English crusade is more likely to succeed than our Made-in-U.S.A.
attempt, for the simple reason that the government is squarely behind
it.
This same spirit dominates newspaper publicity. You find a British
fountain pen glowingly proclaimed in a big display advertisement,
illustrated with the picture of men trundling boxes of gold down to a
waiting steamer. Alongside are these words:
"The man who buys a foreign-made fountain pen is paying away gold, even
if the money he hands across the counter is a Treasury note. The British
shop may get the paper; the foreign manufacturer gets gold for all the
pens he sends over here. What is the sense of carrying an empty
sovereign-purse in one pocket if you put a foreign-made fountain pen in
another?"
Behind all this British exclusion is an old prejudice against our wares.
There has never been any secret about it. I found a large body of
opinion headed by brilliant men who have bidden farewell to the
Hands-Across-the-Sea sentiment; who have little faith in the theory that
blood is thicker than water when it comes to a keen commercial clash.
What of the human element behind the whole British awakening? Will
organised labour, an ancient sore on the British body, rise up and
complicate these well-laid schemes for economic expansion? As with the
question of practicability of the Paris Pact, there is a wide difference
of opinion.
On one hand, you find the air full of the menace of post-war
unemployment and the problem of replacing the woman worker by the man
who went away to fight. To offset this, however, there will be the
undoubted scarcity of male help due to battle or disease, and the
inevitable emigration of the soldier, desirous of a free and open life,
to the Colonies.
On the other hand, there is the conviction that unrestricted output,
having registered its golden returns, will be the rule, not the
exception, among the English artisans. England's frenzied desire for
economic authority proclaims a job for everybody.
I asked a member of the British Cabinet, a man perhaps better qualified
than any other in England to speak on this subject, to sum up the whole
after-war labour situation, as he saw it, and his epigrammatic reply
was:
"After the war capital will be ungrudging in its remuneration to labour;
and labour, in turn, must be ungrudging in its output."
No one doubts that after the war the British worker will have his full
share of profits. As one large manufacturer told me: "We have so gotten
into the habit of turning our profits over to the government that it
will be easy to divide with our employees." Here may be the panacea for
the whole English labour ill.
But, whatever may be the readjustment of this labour problem, one thing
is certain: Peace will find a disciplined England. The five million men,
trained to military service, will dominate the new English life; and
this means that it will be orderly and productive.
With this discipline will come a democracy--social and industrial--such
as England has never known. The comradeship between peer and valet,
master and man, born of common danger under fire, will find renewal, in
part at least, when they go back to their respective tasks. This wiping
out of caste in shop, mill and counting room will likewise remove one of
the old barriers to the larger prosperity.
England wants the closest trade relations with her Dominions. But will
the Colonies accept the idea of a fiscal union of empire, which
practically means intercolonial free trade? Or will they want to
protect their own industries, even against the Mother Country? Like the
French, they are willing to risk life and limb for a cause, but they
likewise want to guard jealously their purse and products. They have not
forgotten the click when Churchill locked the home door against them.
This leads to the question that is agitating all England: Will peace
bring tariff reform? Both English and American economic destiny will be
affected by the decision, whatever it may be.
Canvass England and you encounter a widespread movement that means, as
the advocates see it, a broadening of the home market; security for the
infant "key" industries; a safeguard for British labour--in short, the
end of the old inequality of a Free England against a Protected Germany.
Protection in England, hitched to a world-wide freeze-out business
campaign against Germany, would doubtless divert a whole new
international discount business to New York. German exporters under
these circumstances might refuse payments from their other customers on
London, demanding bills on New York instead. To hold this business,
however, we should need direct banking and cable connections with all
the grand divisions of trade, adequate sea-carrying power, dollar
credits, and a government friendly to business.
Then, there is the middle English ground which demands a "tariff for
revenue only," and subsidy--not protection--for the new industries.
Combating all this is the dyed-in-the-bone free trader, who points to
the fact that free trade made England the richest of the Allies and gave
her control of the sea. "How can a nation that is one huge seaport, and
which lives by foreign trade, ever be a protectionist?" he asks.
If he has his way we shall have to struggle harder for our share of
universal business. More than this, it will block what is likely to be
one of Germany's schemes for rehabilitation. Here is the possible
procedure:
Germany's financial position after the war will be badly strained. She
can be saved only by an effective export policy. To do this she must
seek all possible neutral markets; and to get them quickly she will
offer broad--even extravagant--reciprocity programmes. They may conflict
with the proposed Franco-British programmes of protection and embargo
against neutral trade interests.
But if the Franco-British programme leaves the allied markets for goods
and money open, as before the war, the German reciprocity scheme will
fail of its effect by the sheer force of natural competition. Hence
England can throttle the re-establishment of German credit by a free and
liberal trade policy, open to all the world. Though poor, after the war
she can actually be stronger, in view of her great army and navy, her
new individual efficiency, and renewed commercial vitality.
Will all this keep Germany out? There are many people, even in England,
who think not. Already Germans by the thousands are becoming naturalised
citizens of Holland, Spain, Switzerland and Denmark; building factories
there and shipping the product into the enemy strongholds, stamped with
neutral names. Much of the "Swiss" chocolate you buy in Paris was made
by Teutonic hands.
A French manufacturer who bought a grinding machine in Zurich the other
day thought it looked familiar; and when he compared it with a picture
in a German catalogue he found it was the identical article, made in
Germany, which had been offered to him by a Frankfort firm six months
before the war began. Only certificates of origin will bar out the
German product.
Amid the hatred that the war has engendered, England wonders at the
price she will pay for German exclusion. Men like Sir John Simon
solemnly assert in Parliament: "In proportion as we divert German trade
after the war we throw the trade of the Central European Powers more and
more into the hands of America, with the result that, unhappily, if we
became involved in another European war we should not be able to count
on the friendly neutrality which America has shown in this war." Others
inquire: "What of the future trade of India, the great part of whose
cotton crop before the war went to Central Europe?"
Sober-minded and farseeing men, in England and elsewhere, believe that,
despite the ravage of her men and trade, Germany will come back
commercially.
"You must not forget," said one of them, "that, no matter how badly she
is beaten, Germany will still be a going business concern. She will have
an immense plant; her genius of efficiency and organisation cannot be
killed. Through her magnificent industrial education system she has
trained millions of boys to take the vacant stools and stands in shop
and mill. England and France have no such reserves. Besides, if we
pauperise Germany, no one--not even Belgium--will get a pound of
indemnity."
You have now seen the moving picture of half a world in process of
significant change, wrought by clash of arms, and facing a complete
economic readjustment with peace. Whether the Paris Pact is practical or
visionary, no matter if England is free trade or protectionist,
regardless of Germany's ability to find herself industrially at once,
one thing we do know--the end of the war will find the Empire of World
Trade molten and in the remaking.
Fresh paths must be shaped; the race will be to the best-prepared.
Whatever our position, be it neutral or belligerent--and no man can
tell which now--we shall face a supreme test of our resource and our
readiness. What can we do to meet this crisis, which will mean continued
prosperity or costly reaction?
Many things; but they must be done now, when immunity from actual
conflict gives us a merciful leeway. More than ever before, we shall
face united business fronts. Therefore, co-operation among competitors
is necessary to a successful foreign trade.
Since the coming trade war will rage round tariffs, it will be well to
heed the resolution recently adopted by the National Foreign-Trade
Council: "That the American tariff system, whatever be its underlying
principle, shall possess adequate resources for the encouragement of the
foreign trade of the United States by commercial treaties or agreements,
or executive concessions within defined limits, and for its protection
from undue discrimination in the markets of the world." In short, we
must have a flexible and bargaining tariff.
We must train our men for foreign-trade fields; they must know alien
languages as well as needs; we must perfect processes of packing that
will deliver goods intact. With these goods, we must sell goodwill
through service and contact. Secondhand-business getting will have no
place in the new rivalry.
Our money, too, must go adventuring, and courage must combine with
capital. Our dawning international banking system, which first saw the
light in South America, needs world-wide expansion. Dollar credit will
be a world necessity if we capitalise the opportunity that peace may
bring us. No financial aid should be so welcome as ours, because it is
nonpolitical.
This trade machinery will be inadequate if we have no merchant marine.
Chronic failure to heed the warning for a national shipping will make
our dependence upon foreign holds both acute and costly.
Our trade needs more than a government professedly friendly to business.
It requires a definite co-operation with business. An advisory board of
practical men of commercial affairs would be of more constructive
benefit to the country than all the lawmakers combined.
Here, then, is the protection against organised European economic
aggression, the armour for the inevitable trade conflict. Unless we gird
it on, we shall be onlookers instead of participants.
III--_American Business in France_
Two Americans met by chance one day last summer at a little table in
front of the Café de la Paix in Paris. One had arrived only a month
before; the other was an old resident in France. After the fashion of
their kind they became acquainted and began to talk. Before them passed
a picturesque parade, brilliant with the uniforms of half a dozen
nations, and streaked with the symbols of mourning that attested to the
ravage of war.
"There is something wrong with these Frenchmen," said the first
American.
"How is that?" asked his companion.
"It's like this," was the reply. "I have sold goods from the Atlantic to
the Pacific, and yet I can get nowhere over here. I give these fellows
the swiftest line of selling talk in the world and it makes no
impression."
"How well do you speak French?" queried his new-found acquaintance.
"Not at all."
"Have you studied the ways and needs of the Frenchman?"
"Of course not. I've got something they want and they ought to take it."
The man who had long lived in France was silent for a moment. Then he
said:
"The fault is not with the Frenchman, my friend. Think it over." He did,
and with reflection he changed his method. He put a curb on strenuosity;
started to study the French temperament; he began to see why he had not
succeeded.
This incident illumines one of the strangest and most inconsistent
situations in our foreign trade. By a curious irony we have failed to
realise our commercial destiny in the one Allied Nation where real
respect and affection for us remain. France--a sister Republic--is bound
to us by sentimental ties and the kinship of a common struggle for
liberty. Her people are warm-hearted and generous and _want_ to do
business with us.
Yet, as long and costly experience shows, we have almost gone out of our
way to clash with their customs and misunderstand their motives. In
short, we have neglected a great opportunity to develop a permanent and
worth-while export business with them. It was bad enough before the war.
Events since the outbreak of the monster conflict have emphasised it
more keenly.
* * * * *
Why have Americans failed so signally in France? There are many reasons.
First of all, their whole system of selling has been wrong.
For years many of our manufacturers were represented in Paris and
elsewhere in France by German agents, who also represented producers in
their own country. The energetic Teuton did not hesitate to install an
American machine or a line of American goods. But what happened? When
the machine part wore out or the stock of goods was exhausted, there was
seldom any American product on hand to meet the swift and sometime
impatient demand for replacement or renewal. By a strange "coincidence"
there was always an abundant supply of German material available. The
German salesman always saw to that. Necessity knows no nationality. The
result invariably was that German output supplanted the American. The
Frenchman did not want to be caught the second time.
This prompt renewal created an immense goodwill for German goods. Right
here is one of the first big lessons for the American exporter to learn,
no matter what country he expects to sell in. It lies in keeping goods
"on the shelf," and being able to meet emergency demand.
The Frenchman in trade is a sort of Missourian. He must be "shown." He
shies at samples; distrusts drawings. He likes to go into a warehouse
and look over stocks; it gives him satisfaction to pick and choose. He
is the most fastidious buyer in the world and he likes to do things his
own way. Any attempt to ram foreign methods--either in buying or
selling--down his sensitive throat is bound to react.
Here is a case in point: The General Representative in France of a large
American manufacturing concern decided to engage some French salesmen.
He was a shark on business system; he fairly oozed with "scientific
salesmanship"; he decided to gird his Gallic emissaries with the most
improved American selling methods. So he prepared an elaborate "What I
did" schedule for them. Into it was to be written every evening the
complete record of the business day.
When he handed one of these blanks to his leading French salesman, that
gentleman shrugged his shoulders and said:
"It eez imposseeble."
When the American became insistent all the French salesmen resigned in a
body. This objection was purely temperamental. If there is one thing
above all others that puts a Frenchman into panic it is publicity of his
personal affairs. He believes that the greatest crime in the world is to
be found out, whether in business or in love. There was nothing perhaps
to hide in a biography of his daily work, but it was the wrong tack to
take.
In the same way militant and masterful salesmanship also fails. A man
may be a crack seller in Kansas City, Denver, and all points West, but
he finds to his sorrow that his dynamic process goes straight over the
head of a Frenchman. He refuses to be driven; he wants time for mature
reflection and an opportunity to talk the thing over with his wife.
This irritating attempt to force uncongenial methods on French buyers is
duplicated in a corresponding lack of plain everyday intelligence in
meeting the simplest French requirements.
Indeed, the omissions of Americans are wellnigh incredible. Take the
matter of postage to France. The head of a great French concern made
this statement to me in sober earnestness: "Won't you be good enough to
beg American manufacturers to put their office boys through a course of
instruction in postal rates between Europe and the United States?"
When I asked him the reason he said: "We sometimes get twenty letters
from America in one mail and each comes under a two cent stamp. This has
been going on for years despite our repeated protest about it. Some
months my firm was required to pay from ten to fifteen dollars in excess
postage."
Now the amount of money involved in this transaction is the slightest
feature: it is the chronic laxity and carelessness of the American
business man that gets on the Frenchman's nerve.
Here is another case in point: A well known French firm has been writing
weekly letters for the past eighteen months to a New England factory
trying to persuade the Manager to mark his export cases with a stencil
plate and in ink rather than with a heavy lead pencil, as the latter
marking is almost obliterated by the time the shipment arrives at Havre.
In fact, this French firm went to the extent of sending a stencil and
brush to New England to be used in marking the firm's cases. But the old
pencil habit is too strong and a weekly hunt has to be instituted on the
French docks for odd cases containing valuable consignments of machine
tools. Vexatious delays result. It is just one more nail that the
heedless American manufacturer drives into the coffin of his French
business.
These incidents and many more that I could cite, are merely the
approach, however, to a succession of mistakes that make you wonder if
so-called Yankee enterprise gets stage fright or "cold feet" as soon as
it comes in contact with French commercial possibilities. Let me now
tell the prize story of neglected trade opportunity.
Last spring the American Commercial Attache in Paris made a speech at a
dinner in Philadelphia. He painted such a glowing picture of trade
prospects in France that the head of one of the greatest hardware
concerns in America, who happened to be present, came to him afterwards
with enthusiasm and said: "We want to get some of that foreign business
you talked about and we will do everything in our power to land it. Help
us if you can."
The Attache promised that he would and returned to his post in Paris. He
studied the hardware situation and found a tremendous need for our
goods. He was about to make a report to the hardware manufacturer when
an alert upstanding young American breezed into his office and said:
"I have been looking into the hardware situation here and I find that
there is a big chance for us. In fact, I have already booked some fat
orders. Will you put me in touch with the right people in America to
handle the business?"
"Certainly," replied the Attache. "I know just the firm you are looking
for." He recalled the enthusiastic remarks of the man who came to him
after the Philadelphia speech, so he said: "Write to the Blank Hardware
Company in ----, and I am sure you will get quick action."
"No," said the enterprising young American, "I will cable." He
immediately got off a long wire telling what orders he had and giving
gilt edge banking references.
Quite naturally he expected a cable reply, but he was too optimistic.
Day after day passed amid a great silence from America. At the end of
two weeks he received a _letter_ from the Export Manager of the firm who
said, among other things: "We are not prepared to quote any prices for
the French trade now. We have decided to wait with any extension of our
foreign business until after the war. Meanwhile you might call on our
agent in Paris who may be able to do something for you."
The young American dashed up to the agent's warehouse. The agent was an
old man becalmed in a sea of empty space. All his young men were off at
the front; a few grey beards aided by some women comprised his working
staff.
"I have no American hardware in stock," he said, "but I may be able to
get you some English or Swiss goods." This did not appeal to the young
American. He is now making a study of Russian finance.
Full brother to this episode is the experience of another American in
Paris who found out that there was great need among French women for
curling irons. Despite war, sacrifice and sudden death, the French woman
is determined to look her best. Besides, she is earning more money than
ever before and buying more luxuries. Knowing these facts, the Yankee
sent the following cable to a well known concern in the Middle West:
"Rush fifty thousand dollars' worth of curling irons. Cable acceptance."
He also cabled his financial references which would have started a bank.
He, too, was doomed to disappointment. After a fortnight came the usual
letter from America containing the now familiar phrase: "See Blank
Blank, our Paris representative. He may be able to take care of you."
Manfully he went to see Monsieur Blank Blank, who not only had no
curling irons but refused to display the slightest interest in them.