to introduce his goods successfully, decide to hold his market and fight for the trade later, irrespective of the possible temptation of a rising market in the United States, he will have to look at conditions for a period of years and set aside, if in his judgment he can do so profitably, a certain proportion of his output to go to customers he has secured in South America and be prepared to fight any competition that may develop later. This class of goods is being introduced today throughout all of South America through established commission houses, through whom the inquiries come from South America expressing the want that is there for goods that were previously supplied by other countries. Such orders can be marketed through a permanent connection of middlemen, such as the commission houses. If the manufacturer has sufficient business to warrant the dispatch of special salesmen and the establishment of his own organization abroad, the present is particularly a golden opportunity. The population of South America have a great many needs that imports only can supply. Exactly what their buying power will be with the general readjustment that must necessarily follow the war, is problematical. But the fact remains that the volume of this trade must necessarily continue to be large.

The war conditions affect different portions of South America differently. Those sections of the country that have produced articles, the consumption of which has been curtailed by the war, are suffering a financial stringency and are in the same condition as are the cotton growers in this country. Other sections of South America that have produced the foodstuffs and articles that are now in great demand are benefiting greatly by the enhanced prices, the same as our wheat, wool and provision suppliers of this country. Other sections of South America from which the exports have been comparatively small and the imports largely of a personal character are practically unchanged in their general condition by the present war conditions.

In the development of all business with South America the usual acumen, care and close study of conditions are essential to success. It must also be recognized that where merchants enter new fields they have to consider carefully the conditions of trade and commerce and the customs that exist in those fields and arrive at a happy compromise between their own ideas and the ideas of

the purchaser, if such ideas at the start are at variance. In other words, the success of any trade depends upon both the buyer and the seller being mutually protected and mutually satisfied to go ahead. If the personal intercourse between the people of the United States and the people of South America could be increased, it would be of great advantage to the mutual development of business. South American merchants should be induced to visit the United States, meet the manufacturers and sellers of our goods and exchange information and views. In turn about, American merchants, where possible, should get a personal touch with the South American markets and a personal grasp of their conditions and requirements and opportunities.

The vital question is the seriousness with which the merchants of the United States consider the present opportunities in South America and whether they consider them worth while as a permanent connection. If so, no merchant in the United States needs to be told in detail how to go about getting the business. I take it for granted that every successful merchant knows that the way to get business is to get it.

COÖPERATIVE PIONEERING AND GUARANTEEING IN

THE FOREIGN TRADE

BY EDWARD A. FILENE,1

Boston, Mass.

At last the great forces hitherto largely employed in developing and providing the greatest "home market" in the world are striving toward wider fields for conquest. American commerce also comes soliciting a "place in the sun." Oversea trade is no longer to be regarded with hasty complaisance-freely received in times of surplus production or periods of depression, to be forgotten when domestic demand again stretches out eager hands. Delayed, but none the less deep-seated, has come the firm conviction that foreign markets can be won if they are treated as primary markets, whose requirements should receive as much attention and study as our own, instead of regarding them as the outlet for our overflow or graveyard of our own manufacturing mistakes.

Thus, for the first time in the history of the United States, the fact that great expansion of trade with foreign countries is of fundamental importance is clearly apparent. United States as a nation not only actually desires and needs a larger foreign trade, but seems willing to pay the price for it in hard study, planning and fundamental work. But this desire and need come at a time of most extraordinary conditions all over the world, and, therefore, can be met only by new and radical methods. If we cannot find and use such methods, we shall fail eventually, and although we may make temporarily an apparent success, the result will be great losses for all but the exceptional few.

New machinery for making foreign trade must be found and tested, and this machinery must be superior to any employed by our competitors of other countries. Happily the business men of this country are renowned for their ability to scrap out-grown machinery and to invent new.

On previous occasions we have made spasmodic efforts to cap

1 The author wishes to acknowledge his indebtedness for considerable help in connection with this article to Mr. A. J. Axtell.

ture foreign trade. In each instance, however, the flutter has died away when the gale of boisterous publicity has subsided. Our prospective customers, especially in the Latin American countries, have been inclined to view these forays as a scramble after the agile dollar, and have cast their lot with the slow shilling and equally slow and perhaps surer mark. Old Europe, wise with the seasoning of centuries of commercial experience, has smiled at our boast over "favorable trade balances," taken our shipments of raw materials, and grown richer in returning these same raw materials in the form of manufactured goods.

Europe has always been painfully solicitous about encouraging American exports-of foodstuffs and raw materials. She can view with undisturbed complacency consecutive decades of "favorable trade balances" furnished at the expense of impoverished soil, depleted mines, and denuded forests.

On account of the great world war that is going on this buying power is seriously threatened not only in the warring nations but also in the neutral nations. Even before the war began, in every important country of the world, it had been reduced by the high cost of living, which had been mounting so fast as to become a serious burden. This high cost of living will inevitably be largely increased by the cost of the war; for even if that cost is capitalized, the interest on it will add very heavily to the burdens of every citizen in every country involved. And if the settlement of this war is such that Europe remains an armed camp and every nation must strain itself to the uttermost to keep its armaments effective as compared with those of rival countries or enemies, there will be added to that increased high cost of living the enormous additional cost of the increasing armaments.

This will curtail the buying power of all warring nations and may limit the purchases of the masses practically to the necessities of life for many years to come. Countries suffering from such conditions can offer but poor markets for trade expansion, however good our planning for such extension may be. More than this, their curtailment of buying power must react so strongly upon the other countries of the world, upon South America and Asia, for example, as to make these other countries also poorer fields for our trade expansion than they would otherwise be.

It becomes apparent at once, then, that great exertion and great expense for foreign trade expansion must be accompanied by at least equal exertion to make the terms of settlement of the present war such that Europe will not remain an armed camp.

I will say, right here, that I am not attempting in this article to pose as an organizer of peace compacts, for I have never in my life belonged to a peace organization. I am, rather, presenting my views as a business man, presenting what I believe to be the fundamentals necessary to permanent trade expansion.

As responsible men we should ask ourselves: What can we men do, what can the United States do, to help bring about the right terms of settlement of the war? The question is of course difficult to answer. The great nations of the world are locked in deadly struggle, and this struggle is so fierce that at the present time there seems to be no opportunity for any outside interference, however well intended; moreover, there is apparently no chance of peace being made on any terms in the near future. From my study on the spot I am convinced that any fighting government that attempted to make peace now, on any terms conceivably acceptable to their enemies, would perish under the wrath of their citizenship, who would fear that the great sacrifices they had made would not result in the indemnities and other advantages that they had hoped for.

The warring nations, then, will not propose terms of peace until either exhaustion or victory comes. The neutral countries, although they are seriously affected and suffer seriously from the effects of the war, can have little hope that any proposals they may make will be acceptable now.

Tentative attempts in this direction have failed. The danger is, therefore, that peace will eventually be made by the warring nations alone and through the same diplomats who were not able to prevent this devastating war. If that happens it is almost inevitable that the terms of peace will carry the seeds of the next war, leave Europe an armed camp, and will keep the whole world for years to come so impoverished that few if any countries will be profitable fields for trade expansion.

Fortunately, however, in the United States all the warring nations are represented by great numbers of men who were either born in one of those nations or are the immediate descendants of such