Chapter VII: Appendix: 377 (6)

Another illustration may serve to impress the importance of maintaining your trade mark in its entire originality. The Chinese are great consumers of canned salmon, and our Western fisheries supply much of the article. One firm in San Francisco had a brand well liked and very famous among the Celestials. The label on the tin showed a highly colored salmon having the wrong number of fins, with tail elevated in the act of leaping over a waterfall down stream, while the background was filled with tropical palms and cocoanut trees. The trade mark was simplicity itself, and was recognized with favor all over the Flowery Kingdom. Higher education however completely removed the brand from the map. The head of the house had a son just from college, who had been recently admitted to the firm. He started to clean up things—to be 100 per cent. efficient. His æsthetic and educated eye at once saw that the label on the brand which had made the firm’s fortune was a living lie. Salmon were not colored like the rainbow; leaped up stream only; had less fins and depressed their tails when doing acrobatic feats. And horror of horrors—no tropical palms or cocoanut trees grew in the vicinity of the salmon’s habitat. So the label was reconstructed and made a work of art, scientifically and piscatorially correct, and not a mere illegitimate combination of wrong details. Then goods with the new and authentic label were shipped. When they got to China no Chinaman could be induced to buy them. They became dubious at once of the changed label. Living in a land of suspicion they knew intuitively that some designing schemer was falsifying their favorite trade mark. “No samee chop” was the laconic reply when told that these were the old and well known goods in a new dress. Argument was useless. The brand was completely lost to the market. I know one merchant in Hong-Kong who was forced to throw two car-loads of this salmon into the sea, because space in his “go-down” or warehouse was worth more than that occupied by unsaleable stock.

Should you for some reason contemplate altering your trade mark or the color or shape or size of your container, always take the wise precaution of consulting the merchant handling your goods abroad and if possible adopt or be guided by his suggestions. He is on the firing line and has his finger on the pulse of the buyers, therefore his opinion is worthy of the most serious attention.

As typical of the high-handed hold ups of the local Dick Turpins, who have registered trade marks under their own names in Latin America let me state that I know of two American patent medicine men whose products have been extensively advertised and are almost household words in the United States, paying $28,000 and $25,000 respectively for the privilege of using their own names in one country of South America. Both of these concerns had been doing business in the United States for forty years and they afterwards ascertained that the gentlemen (?) who had registered their names had been waiting patiently for their coming all the time. A well known mineral water, within the past two years, paid according to my positive knowledge $2500 for their trade-mark and considered that they got off remarkably cheap. The price originally asked was $20,000 and their representative spent three months on the ground using every possible means to reduce the figures of the original demand. In the meantime nearly 500 cases of the water in question were held up by the authorities, who refused to allow them to be landed until they had the written consent of the native holding the registration papers. A prominent typewriter company flatly refused to pay the excessively high sum demanded by the party holding the right to use their trade mark, reversed its name, and now sells its machine by this unpronounceable designation. Pages could be filled with similar illustrations, showing the great importance of properly protecting your trade mark at the start.

XXV
FINANCE AND CREDITS

The science of foreign banking is the most difficult to understand of all the departments of modern finance. It requires the experience of experts whose knowledge must be the most profound and complete and includes such details as the conditions of the world’s markets, the existing crops, factory productions, local and extraneous political affairs, as well as external and internal commerce.

European financiers and merchants soon recognized the importance of reciprocal banking arrangements between the home countries and foreign fields and as early as 1862, anticipating the growth of Latin America and sensing the financial necessities of its future merchants, opened the London and River Plate Bank, which with its ramifications of branches and agencies in Argentine, Brazil, Chile, New York, and various European countries has been a potent factor in developing and controlling business along British channels. Following the pioneer move of this corporation, other institutions were organized in England, until to-day the amount of British capital invested in banks in all of Latin America is close to $500,000,000.

Calle Rivàdavia, Buenos Aires
]

Realizing the benefits to be derived from such monetary connections in these countries and knowing that a bank’s co-operation meant much to both the buyer and seller and formed perhaps the strongest link in the chain of foreign commerce with which they hoped to girdle the world, Germany followed in the footsteps of England and opened a similar series of institutions in the same territories, even going so far as to have branches in England, knowing the decided preference for “bills on London.” Through their offices in the English capital, they succeeded in keeping as much as possible of the business they acquired abroad in their own hands, reaping all possible profit from every transaction. In their turn, and as their foreign trade demanded it, France, Italy, Spain and Switzerland entered the field but on a much smaller financial basis, at the same time restricting their activities so as to confine them more to the home countries and to persons of their own nationalities engaged in this field of commerce.

Only recently have statutory and business conditions warranted the advance of the American banker into this sphere of finance. To-day in Latin America our banking institutions may be found in the Argentine, Brazil, Panama, Cuba, Santo Domingo, Porto Rico, Mexico and to a small extent in Haiti. As it becomes apparent that our merchants and those of other countries require financial organizations to further and facilitate trade with the United States, additional establishments will be opened in these lands until ultimately the dollar will be so enthroned in the estimation of the business world that it need pay no homage to the Pound Sterling, which up to the present has been Emperor Supreme in the Realm of Finance.

That this movement is judicious no one familiar with this trade will for a moment dispute. The ability of the British banks, through their strong financial arteries, gave them exceptional opportunities to force business into the hands of English merchants, by obliging the seller of exchange, for example, in Buenos Aires on New York to pay from 1 per cent. to 1.5 per cent. more than if he sold on London, or if he desired to buy, to pay a correspondingly higher price for a draft on New York than on London. In addition to exerting thus their powers through a high rate of exchange to drive merchants into British markets, the profits in the transfer of money incident to the transaction were enormous. The truth of this statement is vividly apparent when we are told that in 1912, “bills on London” valued at $9,025,000,000 were sold, on every penny of which a fraction of a per cent. of profit was made by English bankers.

It is not deemed necessary for the purpose of this work to go into the intricacies of the banking problem in Latin America. Such incidents as local loans, credits and financing, need not concern us, and are best left for solution to those in this line of business. It is to be hoped however that the presence of American banking institutions throughout Latin America will result in the financing with American money of municipal and national improvements such as water-works, sanitation, electric and gas companies, subways, harbor improvements, fortifications, building of warships, telephones, electric and steam railways. It was the custom of the European financier in making such loans to stipulate that the work should be done under the supervision of citizens of, and with articles and machinery purchased in, the country placing the loan. This was as it should be. It gave their engineers and contractors an opportunity to force upon these countries their products and methods, provided permanent employment for many of their countrymen, who in return created a demand for articles of home production.

We may therefore consider the banking situation only in so far as it applies to the traveller, the house he represents and the customer he sells in the accommodation it can afford them and the service it may render all parties. One of its chief uses will be to give reliable information as to the credit rating of customers.

From a financial point of view all of Latin America may be divided into seven groups: (1) the east coast countries of Brazil, Argentine, Uruguay and Paraguay; (2) the west coast countries of Chile, Peru, Bolivia and Ecuador; (3) the northern countries of Venezuela and Colombia; (4) the Central American Republics of Guatemala, San Salvador, Nicaragua, Costa Rica, Honduras, with which Haiti may be considered; (5) Mexico; (6) the countries wherein American banking systems exist, such as Panama, Cuba, Santo Domingo and Puerto Rico, and (7) the extensive group of foreign possessions and islands such as British, French and Dutch Guiana, British Honduras, Trinidad, Barbados, Jamaica, Martinique, Guadeloupe, Curaçao and St. Thomas.

The first and second groups of these South American countries are almost entirely under the domination and control of the European financier, the English being paramount, followed by Germans, French, Italians and Spanish, in the order named. Throughout Brazil, Argentine, Uruguay, Paraguay, Chile, Bolivia, Peru and Ecuador, in all the larger cities and ports, as well as in the interior and isolated towns, where business is to be had, may be found branches, agencies, or representatives of banking houses of these nationalities. They keep their fingers on the pulse of trade, know mine outputs, crop prospects, cattle productions, stability of governments, possibilities of revolutions or political unrest, the condition of business—in a word everything that has any bearing on banking or that could by any possibility reflect on the money market. Taking all these elements into consideration together with the important factor of the question of supply and demand, they decide the price of exchange each day or how much a merchant having a foreign obligation to meet, must pay for the necessary sum to liquidate his indebtedness. Very naturally a better price is quoted for the money required if payment is to be made in coin of the bank’s nationality for the reason that it necessitates less actual movement in the medium of exchange, the entire transaction as a rule being done on paper. This preliminary saving of a fraction of a per cent. in a big business means much in the course of a year and it has a strong tendency to make the buyer seek markets so situated that he might profit thereby. On the other hand the Latin American trader desiring to remit to the United States for goods bought in this country is forced because of lack of direct financial connection in South America to buy his exchange on London, Hamburg, Paris or some other European money center, thereby giving the European banker a profit of a fraction of a per cent. on every dollar of our foreign business. Furthermore, invoices and bills of lading are frequently attached to banking documents for custom house clearance and other purposes, thereby giving the European banker and through him, his clients and friends, an opportunity of learning our prices and terms. And so, not content with giving the foreign financier a chance to make money on our export trade, we also aid our greatest competitors by supplying prices and information to defeat our commercial purpose.

Some mercantile houses in the larger of these countries maintain for their own use accounts in New York against which they draw when liquidating bills in the States and do a general banking business as well, including the cashing of drafts and selling of exchange. Obviously only a large business concern could afford to do this and their natural tendency is to sell direct exchange on New York as high as the European banks. The dealer with small capital or the foreign merchant is invariably for one reason or another forced as a general rule to do business through the European banker when in need of American exchange.

In both Venezuela and Colombia, their nearness to the United States, a direct steamship service to our leading ports and the fact that we as a nation take the bulk of their products, combine to overcome all attempts on the part of Europeans to establish banks in these countries. As the local exporters ship their goods to our shores where they are disposed of they instruct their agents to deposit the moneys so received in local American banks, against which they issue checks in liquidation of indebtedness, thereby eliminating the necessity for the services of the international banker. Local banks in these countries, never very strong, and always subject to forced loans from financially embarrassed governments, do not enter materially into the business life of the community although they also maintain credits in New York and sell drafts against them. The consequence is that every leading merchant throughout these lands develops into a foreign banker, on a small scale, and buys and sells exchange. As long as this condition prevails, and it works most satisfactorily, the foreign bank will not be required to open its doors.

Practically the same state of affairs occurs in Central America, the general tendency to political unrest and the existence of an inconvertible paper currency in some of these countries, (similar conditions being current in Colombia) serve to emphasize distrust in local banks and concentrate banking operations in the hands of the larger mercantile houses.

Prior to the revolutionary troubles which are now convulsing Mexico, American, English, German, French and Spanish banks were to be found throughout that country. The presence of the American banker in this territory and the great bulk of trade movements between Mexico and the United States, kept the price of exchange within reasonable bounds.

In Panama, Cuba, Santo Domingo and Porto Rico, American banks exist and American currency is in use almost exclusively. All financial calculations are made in dollars and cents and a complete and perfect system of exchange on leading cities of this country is current so that the subject need not be further discussed.

As is to be supposed, the European countries having possessions in the West Indies and South or Central America, very naturally have banking facilities between these colonies and each mother country. In addition, prominent Canadian banks have successfully established branches in the largest of the British colonies for the purpose of building up direct trade with the Dominion of Canada, thereby eliminating the tribute London usually demands on exchange. Although we take much of the exports and sell these possessions most of their necessities, still the individual business done in each island or colony is relatively small and the field of operation too restricted to warrant other banking connections. Besides exchange on New York is cheaper here than elsewhere, owing to the fact that both Canadian and English banks maintain branches in that city. In the other colonies merchants, as a rule, have personal accounts in American banks in the States and are thereby enabled to handle their own transactions advantageously.

There are four monetary systems in use in Latin America: (1) the gold standard, wherein gold is the only legal tender, other forms of money being maintained at a parity with or without a government guarantee; (2) the gold exchange standard, wherein gold and other forms of money are legal tender, the conversion of the legal tender into gold being guaranteed by the government; (3) the silver standard, wherein silver is the legal tender, and (4) inconvertible paper, the value of which continually fluctuates and is dependent entirely upon the stability of the government’s credit.

The gold standard is used by Bolivia, Cuba, Costa Rica, Ecuador, Peru, Porto Rico, Santo Domingo, Uruguay, the British, French, Danish and Dutch West Indies and possessions.

The gold exchange standard is in use in Argentine, Brazil, Mexico, Nicaragua and Panama.

The silver standard is current in Salvador and Honduras.

Inconvertible paper is found in Chile, Colombia, Guatemala, Haiti and Paraguay.

The basis of exchange between countries depends primarily on the relation existing between the gold value of their respective moneys, the price paid being materially influenced by the condition of the balance of trade and the social or political state of the country. For example, with the balance of trade in favor of England, the price of exchange on that country would go up a fraction of a point or so, while if a country is in a state of political or economic unrest, or at war, the price of exchange on it goes much higher than if conditions were normal. For these reasons exchange in all countries varies daily, the price for the day being decided upon the receipt of European cables from the home institution. It will therefore be apparent that it is impossible to determine a fixed rate of exchange for any definite period. By buying when exchange is low and selling when it is high, much money can be made, especially if the sum involved is large. The United States did a gross business with Latin America in 1912 of $526,468,815, practically all of which was paid for by European exchange. Assuming that the commission charged was one-half of one per cent., the cost to the American merchant would be $2,632,344, which in itself is a strong argument for American banks in these lands.

Furthermore the home offices of all of these European banks having branches throughout Latin America, have had in mind the rendering of financial assistance to the home merchant or manufacturer. This was especially true of the German organizations, which were designed to foster and facilitate commercial relations of all kinds abroad. In the headquarters of these institutions, complete records and data are kept regarding all overseas merchants, their credits and the financial turnover of their business each year being known. As a consequence when the exporter presented his shipping documents at say Hamburg, the bank, should he so desire, knowing the rating of the importer, discounted the bill, and for the service rendered charged a commission, while the Latin American customer had the benefit of the time agreed upon for payment, according to the terms of the sale. Compare this perfect system of the banks extending courtesy to the exporters and the importers with the American policy of “cash against documents” and we see another vital reason why the Europeans succeeded in their conquest of these markets. The American manufacturer with small capital was handicapped. His business demanded a quick turnover; he had no way of ascertaining Latin American credits and no American banking connections to accept his export shipping documents at a discount. As a consequence, the door of this trade was closed to him and his productions.

Owing to the fact that gold coin is bulky and heavy to transport and paper money of a foreign nation always worth as a rule much less than its face value, a traveler is accustomed to carry what is known as a Letter of Credit. This is a document issued by a bank to a person or concern authorizing him or it to draw on the bank or its correspondents drafts for the whole or any desired part of the sum named in the Letter of Credit, by means of sight or time drafts. Customary means to prevent forgery of the holder’s signature are provided. On presenting this document to the bank’s foreign correspondent, the sum desired is advanced in the money of the country or in the monetary terms expressed in the Letter of Credit. These Letters of Credit are always time limited and are made against cash or some suitable guarantee to the bank issuing them.

In traveling in South America it is advisable to have two different Letters of Credit, one in Pounds Sterling and the other in Dollars. In Central America, Venezuela, Colombia, the British, Dutch and Danish West Indies it is often more advantageous to use dollars when buying exchange or getting cash on the Letter of Credit, while in Chile, Argentine, Brazil and Uruguay, pounds sterling are better. Before selling exchange on your Letter of Credit or realizing money on it, always visit the banks and see which one offers the best rate and whether English or American gold is in demand. By taking advantage of these conditions much money can be saved in the course of a long trip. The opening of American banks in Latin America will do much toward making the dollar popular and travelers are advised to take out letters of credit through United States banks with local branches in these lands.

It has been the understood custom for the correspondent banking house on whom a letter of credit was drawn to give the holder all information desired as to the rating and financial standing of local merchants and to aid him in every way possible. This was done in theory more than in practice. Assuming that your letter of credit was on an English bank in Buenos Aires, and that you were selling cotton goods, it would be most natural for the bank manager in Argentine to evade all direct information as to a possible customer’s standing, especially if his home institution had been discounting bills for a good client in England drawn against the local merchant. This is generally the attitude of bank managers in competitive lines and particularly when there is a tendency to cut into the trade of their customers. In this regard they can hardly be blamed for they are really protecting their patrons. If however, one is selling flour, or something which England cannot produce, the desired information is given fully and freely and every assistance rendered. Native or private bankers are not so reliable or as trustworthy sources of information.

In only two or three South American countries are there responsible commercial agencies; therefore, after getting what data you can from the bank it is always well to verify it by any other means at hand. Customers will often give references either in Europe or America as to their standing, which should be corroborated. Inasmuch as you desire information as to your clients’ credit and standing, you should be equally willing to establish the reputation of your house and to that end should assist as much as possible in supplying whatever facts in this connection may be wanted.

To illustrate the insufficiency of our knowledge regarding Latin American credits, let me cite a personal experience. At the beginning of the war in Europe, one of the largest daily papers in Buenos Aires was refused credit for less than $100.00 a week of cable news, because there was no really reliable means in New York of satisfying the manager of the foreign press agency that the paper was of the highest financial standing. A moratorium had been declared in the Argentine and Europe and at that time no direct banking connections existed with the United States. This condition of affairs only served to make the New York manager insist that the service be paid for weekly. He was absolutely unwilling to extend credit for even ninety days, provided the paper paid the cable tolls in Buenos Aires, which it had offered to do. The publication, its plant, equipment and the building it owns and occupies are easily worth $5,000,000. Furthermore it is eminently responsible and reputable. With all the manifold resources of a great, wealthy newspaper, it was absolutely impossible for it to remit money to the United States to get the war news so essential for its readers. Cables to Europe were cut, as the world knows, thereby preventing it from getting reports from this source. Its position was desperate. After finding that efforts to obtain the desired service from the press agency were useless and that no credit would be extended, the South American editor, in despair, cabled me, and I financed the paper for five months, paying weekly the bills incurred. With the opening of the National City Bank in Buenos Aires, remittance in full with interest was made for the money I had advanced, the draft sent me being one of the very first issued by that institution. This American news association had a great opportunity to establish a profitable connection in a country where a service of this kind is badly needed, for the favorable attitude of the press is of the greatest benefit in developing both business and friendly relations between nations. Instead of taking advantage of the situation, the position it assumed has positively hurt us as a nation.

One of the things to be met and overcome is the question of long credits. European merchants originally extended much time to reliable customers. Instances are on record of from twenty-four to thirty-six months being given. Goods were often shipped on consignment. The tendency of late, however, as business became established in these lands has been to curtail credits. This condition is one which demands delicate and diplomatic handling and very naturally will be materially controlled by circumstances. European banks were organized, as hereinbefore explained, to discount long time paper, provided the drawer and the drawee were considered good risks. The Federal Reserve Act, however, falls short of helping us in this regard for the life of a foreign negotiable draft is limited by it to ninety days.

Long credits are not to be encouraged. They were excusable in the age of the sailing ships and poor banking facilities, but with the quick transportation service of to-day are unwise and unnecessary. Under no conditions should more than six months time be allowed and that only for some special line dependent upon some future contingency, such for instance as crops—agricultural machinery being a good illustration. Staples and necessities require less time to dispose of and ninety days should be ample. If possible it might be wise to get the customer to agree to pay one-third of the invoice on receipt of shipping documents and the balance in sixty or ninety days. On overdue accounts, the Latin American merchant has always been accustomed to pay a good rate of interest.

XXVI
PACKING AND SHIPPING

The method of packing goods intended for the export markets of Latin America is worthy of the greatest study and the most serious consideration. Poor and improper packing, so characteristic of American made goods, has caused us the loss of much business, and wherever I have been in these countries it has formed the subject of much unfavorable comment and highly warranted criticism. Of late there has been a slight tendency toward improvement in this really important branch of the foreign trade, but there is still much opportunity for bettering conditions in this regard.

In the United States with every forwarding facility, the largest, best and most complete transportation systems on earth, we are prone to think of the rest of the world as being similarly provided with modern methods for handling goods. The fact is that the burro, the llama, the camel, the elephant, the coolie and the Indian are yet the greatest common carriers, and it will be many, many years before the shrill whistle of the locomotive will supplant the jingling bells of the pack train, or the slow moving caravan, in the outer edges of terra firma. In Latin America to-day, in proportion to its size, there are comparatively few railways, and fully another century will elapse before it possesses half the amount of mileage that we have at present in the United States. This is primarily due to the scarcity of population and secondarily to the inaccessibility of many of its interior towns, built in early days in remote and secluded spots so as to be free from the frequent invasions of buccaneers, as were the coast cities, or for the purpose of being near some rich mine or fertile agricultural district. The narrow mountain trails that wend their circuitous and tiresome way along the gigantic buttresses which Nature has so profusely placed throughout this part of the world are the only routes to these inland cities. As a rule they are hardly wide enough for two mules or pack animals to pass, except at certain localities. On one side they are bounded by the walls of snow-tipped mountains, which raise their majestic heads into the clouds, while on the other yawning abysses, hundreds, sometimes thousands of feet deep, open their gaping mouths, along the bottom of which winding watercourses wend their way to the sea.

_Photograph by Underwood & Underwood_

A Pack-train on the Andes Trail in Colombia

“In the United States with every forwarding facility, the largest,
best and most complete transportation systems on earth, we are prone
to think of the rest of the world as being similarly provided with
modern methods for handling goods. The fact is that the burro, the
llama, the camel, the elephant, the coolie and the Indian are yet
the greatest common carriers”
]

Many of the ports of Latin America are open roadsteads, such for instance as Mollendo, Peru, one of the gateways to the interior of that country and Bolivia as well. At certain seasons of the year it is almost impossible for one to land and I have known of vessels to wait as long as six weeks before getting their cargoes discharged into the rolling, tossing lighters which continually thump and smash against the side of the ship. After the lighters are loaded, they in turn have to wait days, weeks and often months before a favorable opportunity arrives for getting their contents ashore. Without being conversant with these conditions one can hardly realize the strain and pressure exerted upon packing cases at such times.

After the goods have been brought to land by the none too gentle longshoremen, they are opened by the customs authorities and examined, and are then placed upon trains for forwarding into the interior points, for practically all these ports are the terminus of some railway leading into the remote inland districts. When they have gone as far as the train can take them, they are then consigned to the tender mercies of the muleteer, aided and abetted by the llama, burro or mule, and may be weeks on the road to their final destination.

The varying climatic changes to which they are subjected should also be given due consideration. Leaving the ice-bound northern ports of the States in winter, they come through the storm tossed waters of either or both oceans to the port of disembarkation, where for days they may rest under the broiling tropical sun. As they follow their path to the interior, on train and by beast of burden, they pass through torrid heat and tropical rains, across wind swept plateaus, through sand and snow storms, sleet and hail, above the clouds in high altitudes, and down into green valleys, across swollen streams, and on again up the sides of steep canyons, and through gloomy woods. Each night they are unstrapped from the animals’ backs, and roughly thrown on the ground along the trail or in the filthy barnyard of some mountain hospice. Before the stars have stopped their twinkling in the early dawn they are again piled upon the backs of the unwilling, resisting beasts and the dreary, wearying, monotonous march resumed.

Custom has decreed the exact weight each burro, llama or mule will carry and let me add that these animals know to a nicety their load, and are life members of a union that prohibits its initiates from carrying more than is expected of them. Attempts to overload bring forth growls, groans and moans, and if these signals of protestation are overlooked by the attendants, the animal flatly refuses to budge, until the burden is made the standard union size, a condition of affairs that must be extremely satisfactory to the cause of labor.

The merchant living in the interior is always specific to state the exact dimensions of each box and how he wishes it strapped and packed, in accordance with the transportation which he will have available at the time the goods arrive. Obviously a llama or burro cannot carry as heavy a load as a mule, and the buyer, who generally owns his own pack animals, gives his instructions in accordance with the nature and size of the animals which will form his caravan. Extraordinarily heavy cases may be carried suspended from poles between two mules.

_Copyright by Underwood & Underwood_

Llamas in Cerro de Pasco, Peru, bringing in their burdens of copper
ore from nearby Indian mines

“Custom has decreed the exact weight each burro, llama or mule will
carry, and let me add that these animals know to a nicety their
load, and are life members of a union that prohibits its initiates
from carrying more than is expected of them.”

_See page 315_
]

Follow these shipping instructions to the letter. The man who makes them out knows all about the difficulties that are to be overcome and is familiar with every inch of the road that must be traveled. Do not let the superior judgment of your shipping clerk alter one word of these requirements. Near Durango, in Mexico, there lie practically all the parts of a large plant, not made according to the instructions given the man who took the order. In the draughting room of the shops which constructed the machinery, they could not understand why the fly wheel of the engine should be made in so many sections adapted to be bolted together, and so they constructed it as if intended for shipment to Buffalo, and not so that a mule might carry each component part on his back. The entire order was executed in the same manner. As a result the equipment they turned out is gradually resolving itself into iron oxide, at the railway station nearest to the mine it was designed for, while the people who purchased it are filled with contempt for American methods and the American machinery company that received the business has long since vowed never to accept another Latin American commission.

If the packing instructions read:—“Each case to be made of half-inch pine boards, strapped with iron bands, half an inch wide around each end, and wrapped first in waterproof paper, then sewn in burlap, and NOT TO WEIGH more than 40 kilos (about 100 pounds)”—do exactly this and NOTHING more.

The iron bands and the heavy wood of the packing case insure protection against breakage during its ocean and railway voyage. The waterproof paper will serve to keep the contents of the case from rain and snow storms, to say nothing of preventing the spray of the ocean while it is in the lighter, from damaging its contents. The burlap sewed over all is a visible defense against theft en route, either by the customs authorities or by the pack train men. The weight of 40 kilos means that it may be strapped to the side of a burro, and form one of two such packages to be carried by him. Furthermore the wood of the case being half an inch wide, means that when the box reaches its destination, it can be sold to the coffin maker for conversion into a baby’s casket, because wood of this nature is scarce in many of these lands. The metal strips will find another use and the waterproof paper and burlap covering will serve some particular purpose, perhaps be sold to the upholsterer.

Your shipping instructions will also tell you exactly what signs or marks to put upon the outside of the case or its covering. Observe this with precision. The net and gross weights must also be marked thereon in a legible manner. Be sure that in weighing and marking the case you use the metric system for this is the only one used through all of Latin America. They know nothing of pounds and ounces. It is a wise plan to have your shipping clerk familiarize himself with this method, so as to avoid mistakes in marking, which may cause the importer much trouble at the custom house when the goods arrive.

Never place anything of a foreign nature in a packing case unless expressly instructed to do so by the shipper. Many exporters often take advantage of a small space available in a box to enclose a package of cards or some other advertising material. In most Latin American countries it is against the law for a case to contain anything more than what the bill of lading or the consular invoice expressly states, and the trouble that ensues from this desire to really help the purchaser can never be understood by those so far away from the native customs official who seizes every opportunity to extort money from the local dealer in the shape of fines and fees.

The merchant in ordering will generally definitely state just how he wants the goods which you are shipping him declared, so as to properly conform to the classification in vogue in the local custom house and its tariff regulations. Here it again behooves you to follow his instructions word for word, otherwise the officious custom house employe sees another chance to levy a fine and the unfortunate importer becomes correspondingly disgusted with your methods of doing business with him.

Finally, the packages should agree in number, weights, markings, declarations and contents with the consular invoice and the bill of lading. This will help materially all along the line from the receiving clerk of the steamship company to the merchant who accepts the consignment at its destination.

It would be well if shipping clerks engaged in the export trade would make a careful study of the geography of the Latin American countries, and the various ways of routing goods, as well as the topography of each state. This would do much toward eliminating complications. As an illustration of the ignorance so frequently displayed in this connection, let me recite what happened to a joint shipment of beer and mineral water, intended for Leon, Nicaragua. In ordering goods from this country the Latin American merchant will often have a shipment made up of goods from different cities. He will instruct or request the exporter living at the port from which the shipment is to be made, to assemble the several cases which make up his various orders, and send them under one consular invoice, his idea being to save money, in the many incidental charges made by consuls and those handling his freight. The beer came from Milwaukee and the mineral water from the warehouse in New York City. The shipping instructions read as follows:

“Ship via Isthmus of Tehuantepec, to Salina Cruz then via first
opportunity to Leon, Nicaragua.”

The intellectual shipping clerk could see no valid reason for sending goods intended for Nicaragua through Mexico, so he took upon himself their routing, and as a result the goods were sent direct from New York to Bluefields, Nicaragua, on the east coast of that country, with instructions to a forwarding agent there to dispatch them to their destination on the west coast. That was three years ago and the last I heard of them was that they had been sold by the customs authorities to pay storage and other accumulated charges. Of course the forwarding agent in Bluefields realized that it would be easier to send goods to the North Pole than across the country, as he had been instructed, owing to the fact that there was hardly a mountain trail over which they might be transported. In addition to this it would take several weeks to make the journey, and the expense would be enormous. These facts were communicated to the shippers who promptly decided to abandon the goods, replying that they did not care to do business in such an inaccessible country. As a result of this colossal error goods to the value of more than $2500 were lost to the exporter and the importer, and bad feeling engendered on both sides. The speculator who bought them at the custom house sale, told me that the contents of the bottles had deteriorated so that the goods were unsaleable after their long stay in the tropical warehouse, and as a result he was the possessor of a large quantity of bottles for which he had no sale.

Shipments from the United States to a foreign country require what is known as a consular invoice to accompany them. This document states briefly the contents of the invoice, its weight, and value, from whom and for whom intended. This paper must be made out before the consul or vice-consul of the country to which the goods are to be exported, the idea being to keep track of the business between the nations. This document should always be in the language of the country for which the shipment is intended, although all the consuls do not require this condition to be rigidly complied with. They must be taken to the office of the consul or vice-consul empowered to issue and sign them and as a rule he requires one or more copies for his files and for forwarding to his government, or to the customs authorities at the port to which the goods are going. For this service he charges a fee, generally specified by law. Great care should be exercised in the preparation of these papers, as before intimated. The importer generally states just how he wishes his goods declared in these documents and it is best to follow his commands instead of those which may be issued or suggested by some of the employes of the consular office, or even the consul himself. Besides if you follow your shipping instructions there can be no cause of complaint, on the part of the buyer, should unfavorable conditions arise.

It might be well in order to impress upon the reader’s mind some of the great difficulties to be overcome and the many handlings that are received by goods in transit to follow in detail a shipment actually made from New York City to La Paz, Bolivia, the route being the usual one taken by merchandise intended for that place. The order was placed in February, 1913, early in the month and the goods arrived December 22nd, 1913, being more than ten months on the way. When the American salesman received the order at La Paz, it was immediately forwarded by the next mail to New York City, where it arrived in about five weeks. The shipment of 854 cases was made from the factory in the middle West about the 15th of April, 1913, and the vessel containing them sailed from New York harbor, May 1st, 1913. Exceptionally bad weather in the Atlantic, delays in the Straits, storms in the southern Pacific, and time lost in discharging cargo intended for intermediate ports made it September 1st, before the goods reached Mollendo, in Peru, the port of discharge for the interior. Here, owing to bad weather, Mollendo being one of the worst ports on the Pacific, and the further fact that the roads and custom house were both congested with freight, a common occurrence in this part of the world, another month was consumed before the cases were finally got ashore and passed by the Peruvian authorities. A few more days were lost in loading them on the narrow gauge railroad that runs from Mollendo to Arequipa, an inland city of Peru, and the end of the first railway. Here the goods were trans-shipped to the road running to Puno, Peru, on the shores of Lake Titicaca, where they were again discharged and allowed to wait for many days before their turn came to be stowed on the small steamer plying across this perpetually storm-tossed lake in the clouds, to Guaqui, where after being put ashore they were again examined by the Bolivian customs officials. They were next placed on the train which took them across the wind swept plateaus of Bolivia, to the edge of the tea-cup rim, at the bottom of which La Paz is situated. Here again they were transferred, this time to an electric train which took them down the face of the canyon wall, 1500 feet, to the station at the outskirts of La Paz. At this point Indian cargadores took the cases, one at a time, on their backs and carried them to the merchant’s warehouse, where they were again opened, and checked up, after which they were repacked and sent on into the interior towns, mining camps and his branch stores, via llama, burro and mule.

In this shipment there was nothing unusual. It went over the route commonly selected and took about the average length of time. If you have followed its many handlings by rough men, in all kinds of weather, you will admit at once the necessity for strong packing cases and you will, I am sure, cease to wonder why it takes goods intended for interior cities so long to reach their goal.

A wise precaution, and one to be recommended for all shipments to Latin America, is to insure them against theft en route. This may add a little to the cost of the article, but it is the only protection against petty pilfering. The fact is that the minor employes of the custom houses, as well as the porters, trainmen and pack train attendants are so poorly paid, and so completely lacking in honesty that there is every tendency in the world to appropriate whatever appeals to their fancy. I have known what should have been cases of toilet soap to arrive at their destination, filled with scrap-iron, so as not to attract suspicion by their weight, and this after duty had been collected at the custom house and freight paid by the shipper. Unless there is an insurance against these depredations one has absolutely no protection, for it is practically impossible to prove where and by whom the theft was committed. Furthermore if a conviction were obtained it would mean that in future all goods bearing your particular shipping mark would be forever doomed to trouble.

I am always forced to laugh when I think of the experience of a traveller for a well-known baking company in the United States who was making his initial trip to South America. The port at which he landed was, as it generally is, the scene of a yellow fever epidemic. Fearful of contracting this disease he decided to take the first train for the capital, located in the mountains and as a rule free from the scourge which infests the port. Inasmuch as the train left early, he deposited his twelve sample cases at the custom house with the keys and the request that after they had been inspected one of the men whom he had tipped should send them by the evening train to his hotel. After waiting for three days without receiving the trunks, during which time he frequently sent telephonic messages to the customs authorities and telegraphed and wrote the United States consul on the subject, he decided to go in person, despite his fear of contracting fever, and secure his samples. You may imagine his surprise on reaching his cases to find every one empty—the cakes and biscuits and dainties had been eaten by the customs employes. Of course it was impossible to place the blame on any one, and his loud demands for redress resulted in the police escorting him to the railway station and threatening to arrest him if he persisted in continuing his demonstrations. His cable to the house,

“Samples eaten by the customs authorities. Send duplicates,”

confirmed the belief of his employers that he had gone suddenly insane and brought this brief reply:—

“Return immediately.”

As far as I know, this big company have made no further efforts to enter these really profitable fields, which are still dominated by English cracker and biscuit concerns. I trust that the moral will be patent to my readers that it pays to keep close to your sample cases and never trust them with unreliable or unknown natives.

XXVII
ADVERTISING

Advertising is in its infancy in all parts of Latin America. It has been given neither thought, study or attention, by the native, and where some particular article has made a “hit” or developed into a profitable seller through publicity, the chances are that the campaign was conducted by some foreigner more or less familiar with modern methods. Thousands of dollars are yearly wasted by inexperienced persons in trying to market goods along erroneous lines.

The great thing which militates against successful work in this field is the enormous percentage of illiteracy—some authorities placing it as high as 85 per cent. Chile admits that 49 per cent. of her citizens cannot read or write; Argentine 54 per cent.; Cuba 56 per cent.; Mexico 75 per cent.; Brazil 85 per cent. and Guatemala 92 per cent. This condition is easily conceivable when we stop to consider the scarcity of either public or private schools, and the large percentage of aborigines, Indians, negroes and mixed breed population, especially in the northern countries of South America, as well as in Central America, Mexico and the Spanish-speaking West Indies.

How to reach this class, each member of which is a potential possibility from a purchasing point of view, is a problem requiring much consideration. Bright colors attract them and posters and cards illustrating your article, and showing its application and practicability have their value. Such souvenirs are never thrown away but are preserved for years. If any member of the village can read he is asked to transcribe the printing on the medium, and this will in all probability form the subject for much discussion so that ultimately everybody becomes acquainted with whatever may be thereon related or depicted, thereby fulfilling the mission for which it was intended.

To advertise a luxury to the uneducated classes is a waste of money, for they have neither the means nor the desire to indulge in such extravagances. Very naturally the great demand among these people, as it is among persons of this class elsewhere, is for the necessities of life—cotton goods, textiles, patent medicines, shoes, farming implements, hardware, machinery, tools and the like. These are the things required by the farmer and the laborer who make up the greater proportion of the world’s population, and perhaps the very best way to reach them is through the influence of the middle man, the jobber and the local storekeeper. Of these three, the village merchant is by far the most important with the masses. He is always a man of standing in his community. He is invariably respected and looked up to. His word among many amounts to law—his judgment final. He is the moneyed man of the neighborhood. He carries the peons on his books—helps them along in hard times, and when crops are short—extends credit when he thinks it wise to do so and curtails it when proper. He is therefore in a position to force on this great class of the people whatever he wishes. I recall one of these typical country merchants telling me that practically every man in the neighborhood owed him money and that therefore he had them all in his power, so that he could tell them just what he wished them to do or buy or be closed out. The control held by such a man in these remote communities is far-reaching and conclusive. It is quite obvious that the proletariat may be reached through direct appeal to him. He usually takes the local papers, and those published in his immediate vicinity, and is certain to subscribe to one or more of the leading metropolitan dailies, so as to keep in touch with the markets and shipping conditions. He knows almost to a ton what this year’s crop will amount to; what the output of the neighboring mines will be; how much rubber will come from up country; if wool will bring a high price, or if cattle will be lower than last year, and is generally an all around encyclopaedia of useful information on every local subject. The course to pursue is obvious—advertise in the papers he takes, and at the same time cultivate his friendship. Get to know him personally and intimately, and seek to do him favors when the opportunity offers.