the manufacture of fine shoe uppers. By the terms of the agreement they
were to be three feet in width. The money for them amounting to $30,000
was deposited in a New York bank before shipment.
When the skins reached Paris they were found to be heavy, coarse leather
and measuring five feet in width. They were absolutely useless for the
desired purpose. The average French buyer, however, is not a welcher. He
accepted the undesirable stuff, but with a comment in French that,
translated into the frankest American, means, "Never again!"
All this oversight is aided and abetted by a twin evil, a lack of
knowledge of the French language. Here you touch one of the chief
obstacles in the way of our foreign business expansion everywhere. It
has put the American salesman at the mercy of the interpreter, and since
most interpreters are crooks, you can readily see the handicap under
which the helpless commercial scout labours. A concrete episode will
show what it costs:
A certain American firm, desirous of establishing a more or less
permanent connection in France, sent over one of its principal officers.
This man could not speak a word of French, so he secured the services of
a so-called "interpreter guide." It was proposed to select a
representative for the company from among a number of firms in a certain
large French seaport. The firm chosen was to receive and pay for
consignments through a local bank and act generally for the American
company.
Friend "interpreter guide" said he knew all the big business houses in
the city, so he selected a firm which the American accepted without
making the slightest investigation. A bank agreed to take care of the
shipments and the whole transaction was quickly concluded. The American
grabbed the papers in the case (and I might add without the formality of
having them examined by a third party) and left France immensely
impressed with the ease and swiftness with which business could be
transacted with that country.
But there was an unexpected and unfortunate sequel to this performance.
A few months later another officer of this American company came
post-haste to France to straighten out an ugly tangle. It developed that
the French firm chosen by the "interpreter guide" was not of the highest
standing: that the interpreter, for reasons and profits best known to
himself, had entirely misrepresented the conversation, that instead of
paying four per cent for services, the American firm was really paying
about ten. The whole transaction had to be called off and a new one
instituted at considerable expense of time and money.
Another American came to Paris without knowing the language, used an
interpreter every day for nine weeks, and was unable to place a single
order. Yet in this time he spent enough money on his language
intermediary to pay the rent of a suitable office in Paris for a whole
year.
The dependence of Americans with important interests or commissions upon
interpreters is well nigh incredible. On the steamer that took me to
France last summer was the new Continental Manager of a large American
manufacturing company. I assumed, of course, that he could speak French.
A few days after I arrived in Paris I met him in the Boulevard des
Italiens in the grip of a five franc a day interpreter. He told me with
great enthusiasm that an interpreter was "the greatest institution in
the world." In six months he will probably reverse his opinion.
The lesson of this lack of knowledge of French as applied to
salesmanship is this: That while the average Frenchman is greatly
flattered when you tell him that his English is good, he prefers to talk
business in his own vernacular. He thinks and calculates better in
French. Frequently when you engage him in conversation in English and
the question of business comes up, you find that he instinctively lapses
into his mother tongue.
I was talking one day with Monsieur Ribot, the French Minister of
Finance, whose English is almost above reproach, and who maintained the
integrity of his English through a long conversation. But the moment I
asked him a question about the proposed bond issue, he shifted into
French and kept that key until every financial rock had been passed.
In short, you find that if you want to do business in France, you must
know the French language. It is one of the keys to an understanding of
the French temperament.
Even when Americans do become energetic in France, they sometimes fail
to fortify themselves with important facts before entering into hard and
fast transactions. As usual, they pay dearly for such omissions. This
brings us to what might be called The Great American Deluge which
overwhelmed not a few Yankee pocketbooks and left their owners sadder
and saner.
Fully to understand this series of events, you must know that since the
beginning of the war the question of an adequate French coal supply has
been acute. Indeed, for a while the country faced a real crisis. Many of
her mines are in the hands of the Germans and she was forced to turn to
England for help. Not only has the English price risen, but to it must
be added the high cost of transportation, the heavy war risk, and all
those other details that enter into such negotiations.
France had to have coal and various enterprising Americans got on the
job. At least, they thought they were enterprising. Before they got
through, they wished that they had not been so headlong as the following
tale, now to be unfolded, will indicate.
A group of New York men made a contract to deliver three shiploads of
coal at Bordeaux at a certain price. _After_ they had signed the
contract, freight rates from Baltimore to the French port almost
doubled. This was the first of their troubles. When their vessel finally
reached Bordeaux, the dock was so crowded with ships unloading war
munitions that they could not get pier space. In France demurrage begins
the moment a ship stops outside of port. The net result was that these
vessels were held up for nearly two weeks and the high price of
transportation coupled with the very large demurrage practically wiped
out all the profits.
Another group of Americans made a contract to deliver coal to a French
railway "subject to call." Without taking the trouble to inquire just
what "subject to call" meant in France, they signed and sealed the
bargain. Then they discovered that the railroad wanted the coal
delivered in irregular instalments. Meanwhile the consignors had to
store the coal in French yards where space to-day is almost as valuable
as a corner lot on Broadway. They were glad to pay a cash bonus and
escape with their skin.
Still another group made a contract with the Paris Gas Company for a
large quantity of coal. They discovered later that the company expected
the coal to be delivered to their bins in Paris.
"But the American plan is to sell coal f.o.b. Norfolk," said the
spokesman.
"We are sorry," replied the Frenchmen, "but the coal must be delivered
to us in Paris. The English have been doing it for forty years, and if
you expect to do business with us you must do likewise."
When the Americans demurred the company held them to their contract.
This last episode shows one of the great defects in the American system
of doing business abroad. We insist upon the f.o.b. arrangement, that
is, the price at the American point of shipment. The foreigner, and
especially the Frenchman, wants a c.i.f. price which includes cost,
insurance and freight and which puts the article down at his door. The
German and English shippers, and particularly the former, have made this
kind of shipment part of their export creed, and it is one reason why
they have succeeded so wonderfully in the foreign field.
The Great American Coal Deluge also precipitated a flood of miserable
titled ladies all selling coal for "well known American companies." Most
of them were clever American women, married, or thinking they were
married, to Italian or French noblemen. Their chief effort was to get a
cash advance payment to bind the contract. Such details as price,
transportation, credit, and other essentials were unimportant.
Here is a little story which shows how these women did business and
undid American good will.
One day last August, the telephone rang in the office of the General
Manager of a long established American concern in Paris. A woman was at
the other end.
"Is this Mr. Blank?"
"Yes."
"I am Countess A. and I have a letter of introduction for you."
"Yes."
"I represent several large American coal companies and have secured a
large order for Italy."
"Yes."
"Can you tell me how I can get the coal to Italy?"
"Yes."
"Splendid! But how?"
"By boats."
"Oh, yes, I know, but have you got the boats and can I get them? I have
the order, you see, and that is the main thing."
"But, madam," asked the man, "have you cabled your company in America
about the contract?"
"No," answered the woman. "What's the use of doing that. I have no money
to spend on cables. Besides, I have full power to act. The price is all
right and the buyers are ready to sign but they want to put into the
agreement some silly business about delivery and I am asking you to help
me get the boats."
"Come and see me," said the Manager.
The woman promised to call the next morning, but she never came. Just
what she had in mind the Manager could never quite tell. But one thing
was proved in this and similar activities: The "Countess" and most of
her sisters who have been trying to put over coal and other contracts in
Paris, have little or no real authorisation for their performances, and
the principal result has been to prejudice French and Italian buyers
against us.
In seeking to make French contracts, some of these adventurers (and they
include both sexes) make the most extravagant claims. One group
circulated a really startling prospectus. At the top was the imposing
name of the corporation with a long list of branches in every part of
the world. Then followed a list of names of individuals and firms with
their assets supposed to be part and parcel of the corporation. One man
whose name I had never heard before and who was set down as a
Pittsburgher, was accredited with assets of $250,000,000. Under other
individual and firm resources ranged from one to twenty-five million.
The list included the name of a great American retail merchant, without
his consent I might add, but the promoters had cunningly misspelled his
name, which kept them within the pale of the law. The total assets of
these "concerns personally responsible for all orders entrusted" was
precisely $340,000,000. In spite of this dazzling array of
misinformation, let it be said to the credit of the French buyer that he
failed to fall for the glittering bait.
The more you go into the reasons why so many of our business men have
failed in France, the more you find out that plain everyday business
organisation seems to be conspicuously absent. Take, for example, the
question of credit. The average American doing business in France
proceeds in the assumption that every Frenchman is dishonest. This being
his theory, he either exacts cash in advance or sells "cash against
documents." Such a procedure galls the Frenchman who is accustomed to
long credit from English, German, Swiss and Spanish manufacturers and
merchants.
Of course, behind all these American errors in judgment and tact is a
lack of organised credit information. To illustrate:
When I was in London, the English Managing Director of one of the
greatest of Wall Street Banks received an inquiry from his home office
for information about the Compagnie Generale Transatlantique (the French
Line). The amazing thing was that this bank, that prides itself on its
world-wide information, had no data regarding the leading steamship line
between England and France. You may be sure that the Credit Lyonnais or
any other French banking institution has a complete record of the
American Line.
Not long ago, one of the largest banks in Chicago refused to extend
credit to a French concern, although the French Government backed up the
purchase. This concern had occasionally done business with a New York
Trust Company in the Rue de la Paix, whose French Manager was a live,
virile, far-seeing young American. The President of the French Company
laid his case before him. Quick as a flash he said:
"All right! If they won't guarantee it, I will, and on my own
responsibility."
Whereupon he put the deal through. It was the kind of swift, dramatic
performance that appeals to the Frenchman. The net result was that the
service has come back a hundredfold to the Trust Company.
The idea prevailing in America that French firms are not worthy of
credit is a matter of great surprise all over Europe. Here is the way an
Englishman whose firm has done business in France for fifty years, sized
up the situation:
"There are no better contracts in the world than those entered into in
France. Americans who have had little experience in such matters may
find the negotiations leading up to the signing of a French contract
somewhat tedious, but we do not mind this and one is so completely
protected by the laws of the country, that losses are almost unknown.
"Not long ago we had a case in point. A purchaser of lathes who had
already made an advance payment, received his machines and then by
various excuses put off the final payments for the remainder from week
to week. We waited four weeks and then made our complaint to the judge
at the tribunal. Two days later the judge ordered the delinquent firm
to pay up in full and we received our money the very same day. How long
do you think a New York court would have taken to decide a simple
question of business of this kind? The fact is that in spite of the war,
French credit remains to-day as good as any you can find."
On top of their resentment over our lack of confidence in their credit
is the added feeling which has cropped up since the beginning of the war
over the way American manufacturers have ignored many of their French
contracts. A French manufacturer summed it up in this way:
"There is no doubt that some American manufacturers who had signed
contracts for the delivery of machinery in France, deliberately sold
these machines at home at higher prices. It has created a very bad
impression and I am afraid that henceforth your salesmen will find it
much harder to operate in my country.
"The trouble is that Americans have been spoiled by too many orders.
Before the war they were all crying out for business. Now that they have
everything their own way, they have become independent and arrogant.
With the ending of the war, all this will change, for the French are not
likely to forget some of the bitter lessons they have learned.
Henceforth they will profit by them."
One reason for our laxity all up and down the French business line is
that the American has never taken the French export business any too
seriously. On the other hand, stern necessity has been the driving force
behind the English and German manufacturer. The American, too, has made
the great mistake of assuming that the foreigner, and especially the
Frenchman, is not always serious-minded and to be depended upon. If he
wants his mind disabused in this matter, let me suggest that he see him
at war. He will realise that the superb spirit of aggression and
organisation that mark him now is bound to last when peace comes.
You must not get the impression from this long list of American business
calamity that all our endeavour has failed in France. Those few great
American corporations who have planted the flag of our commercial
enterprise wherever the trade winds blow, have long and successfully
held up their end throughout the Republic. So, too, with some
individuals. The story of what one New Yorker did is an inspiring and
perhaps helpful lesson in the right way to do business in France.
This man is resolute and resourceful: he speaks French fluently and he
was familiar with the foreign trade field. With the outbreak of war he
did not lose his head and try to get business indiscriminately. Instead,
he made a careful survey of the field; he did not listen to the optimist
who said it would be a short war: his instinct told him, on the
contrary, that it would be a long one. "What will France need more than
anything else?" he asked himself.
He realised that most of all France would need machine tools. He got the
cables busy assembling goods, and by every known route he brought them
to France. When he had a warehouse full of material, he began to sell.
He not only had what the French were hungering for, but he had them to
deliver overnight. While his colleagues were frantically trying to get
their stuff in, he was getting all the business. The French like the
man who makes good.
This man met their expectations and to-day he stands at the top of the
selling heap.
More than this, he is building a factory on the outskirts of Paris where
he will make and assemble his product. Ask him the reason why he is
doing this, and he will tell you:
"First, it means good will; second, we will get the benefit of native
and cheap labour; third, we will be able to replace parts at once; and,
fourth, we will get inside the wall of the Economic Alliance."
IV--_The New France_
No matter how we heed the example of the few progressive Americans who
have successfully planted their business interests in France, we will
face a new handicap when the war ends. As in England, we will be bang up
against an industrial awakening that will mark an epoch. Coupled with
this revival will be an efficiency born of the war needs that will act
as a tremendous speeder-up.
In France this galvanised industrial life will be stimulated by a
brilliant imagination wholly lacking in the English temperament. It will
go a long way toward opening up fresh fields of labour and distribution.
Self-sufficiency will be the keynote. The automobile is a striking
instance. We had established a very promising motor market (and
especially with moderate-and low-priced cars) among the French. When the
Government assumed control of the French automobile factories and
changed their output to war munitions, the two great automobile
syndicates protested that the cutting off of the French motor supply
would mean an immense loss of good will. First came a 70 per cent duty
on practically all American cars and this was followed up by an almost
complete restriction of all American cars.
This prohibition will have the same effect as the English exclusion in
that it will stimulate the demand for the native French cars. Here we
get to one of the striking phases of the new industrial development of
immense concern to us. France has her eye on quantity output. Many signs
point to it.
When the war broke out, a certain young French engineer saw great
opportunity in shell making. He was immuned from military service, he
had a little capital of his own, and with Government aid he set to work.
Within four months he had built an enormous plant on the banks of the
Seine almost within the shadow of the Eiffel Tower. In six months he had
enlarged his capacity so that he was producing 15,000 shells a day. Last
summer he sent for the agent of a large American machinery company: "I
am going to make automobiles in series after the war." "In series" is
the French way of expressing quantity output.
"All right," said the American. "What can I do for you?"
"Simply this," said the Frenchman. "I wish to order sufficient
automatics to meet the demand when peace comes."
This is the spirit of the awakened French industry. I know of half a
dozen automobile and other producing establishments who are making plans
to manufacture popular-priced cars when the war is over. This output
will not only affect the sale of American cars in France, but will also
interfere with the market for our cheap machines in South America.
Already France is making every effort to increase her Latin-American
trade. She has immense sums of money invested in Brazil and she will
follow up this advantage keenly.
It is important for us to remember that France like England will have a
well oiled productive machine after the war. It will not only be better
but bigger than ever before. The German ill wind that devastated the
northern section will blow good in the end. Hundreds of factories
operated by hand labour before the war will now be equipped with
American labour-saving machinery. The products of these machines
operated by cheap labour will be in competition with our own commodities
manufactured by more expensive labour in many of the markets of the
world.
Formerly the French artisan could produce an article almost from raw
material to finished product: now he has learned to stand at an
automatic and labour at a single part. In short, he is becoming a
specialist which makes him a cog in the machine of quantity output.
What is true of machines and men is also true of money. The old wariness
of the French banker in underwriting industry is passing away. He is
thinking in terms of large figures and vast projects.
I could cite many examples of the new Gospel of French Self-Supply.
Before the war France manufactured lathes that were beautiful examples
of art and precision. The firms that made them were old and solid and
took infinite pride in their product. Now they realise that output must
dominate. A simple type of machine has been chosen as model and will
henceforth be made in large quantities.
Then there is the sewing machine. Before the war two
groups--Anglo-American and German--controlled the French market. By the
ingenious use of export premiums, the Germans had the best of it.
"Why always pay tribute to strangers?" now asks the French housewife. So
far as Germany is concerned, this question is already settled. But the
American sewing machine will have to struggle for its existence
hereafter in France, for plans have been made for at least three huge
factories for its production.
Striking evidence of the growing French industrial independence of
Germany is her advance in crucible making. For years Sèvres vied with
Limoges for ceramic honours. To-day the vast plant which once produced
the most exquisite and delicate ware in the world is now producing the
less lovely but more serviceable crucibles, condensers and retorts
necessary for the distillation of the powerful acid used in modern high
explosives. Previous to the war, the Central Empire had a monopoly on
this market. Indeed, much of the pottery and glassware used in
laboratories and chemical factories was made in Bohemia and marketed by
Germany. Now the Sèvres plant is shipping these goods to England and
Russia.
So, too, with dye stuffs. A whole new French colouring industry is being
created. A Société d'Etude has been formed to make a scientific survey
and this will be replaced by a National Company to undertake the
manufacture of all coal tar products.
The use of a certain number of new war factories has been guaranteed to
the company by the Minister of War. Typical of the purpose which will
animate the enterprise is one of the articles of the National Company
which provides that the Director of the Dye Stuff Industry must be of
French birth. An agreement has also been made with England and Italy to
protect the colour output of the three countries with a high tariff
after the war. Here you find one tangible evidence of the working out of
the Paris Economic Pact.
Even while the invader's hand still lies heavy upon the land, France
looks ahead to reconstruction. Last summer Paris flocked to a graphic
exhibition of how to rebuild a destroyed city. It was called La Cité
Réconstitué, and was held in the Tuileries Garden. Here you could see
the modern way of making a Phoenix rise quickly out of the ashes. There
were model schoolhouses, churches, factories, and cottages, all with
standardised parts which could be thrown together in an almost
incredibly short time.
With Self-Sufficiency has come a desire for new business knowledge. Not
long ago an American business man who has lived in Paris for many years,
received a letter from a young French friend in the trenches at Verdun.
The soldier wrote: