itials of Trading With Latin America Guaranty Trust Company of New York a CE A DATE DUE | | \@ UIBRARY OF | Je QOUTRUENT YREAS SUMUE TEACHES COLEEE es . SAN MARCOS, TEXAS | Essentials of Trading With Latin America ees Lona | SOUTHEST TEXAS STATE TEaCHERS COLLEGE ; ! SAN MARCOS, TEXAS tere Guaranty Trust Company of New York 140 Broadway MADISON AVENUE OFFICE FIFTH AVENUE OFFICE Madison Avenue and 60th Street Fifth Avenue and 44th Street GRAND STREET OFFICE 268 Grand Street COPYRIGHT, 1920 BY GUARANTY TRUST COMPANY OF NEW YORK Essentials of Trading With Latin America XPORT transactions with the Latin-American Republics bring. the American merchant or man- ufacturer who is not experienced in foreign trade into contact with unfamiliar factors and elements of com- merce at every turn. He finds it necessary to deal with problems of language, finance and exchange, credits, transportation, consular requirements, ma- rine, war-risk, riot, and other insurance, special methods of packing and marking exports, and he also soon discovers that each of the twenty different countries which constitute this great and growing market has its own special regulations and practices as to imports. No one, of course, can hope to keep all such mat- ters in mind, and if an exporter intends to conduct his operations under his individual control and to direct them with intelligence, he will usually wish to have readily at hand all the necessary books of reference that record and explain the many and complex for- malities and the special practices which are involved in this trade. This brief pamphlet is issued, not with the inten- tion of covering these subjects in full, but merely to call attention briefly to the essential elements that are involved in the business of exporting to the south- ern countries, and to aid those interested by directing [3] them to sources where these elements are fully set forth. An effort is made also to describe some of the special conditions that pertain to certain branches of our trade with Latin-America. Many of the rules and practices referred to in the following pages may be regarded as fixed or as of continuing and universal application in all export transactions to any country. There are in addition, however, trade customs that ‘differ in the several countries and among different traders, and it may prove worth while to record some of them in these pages. Special Effort Necessary Our trade relations with foreign countries can never be regarded as static or permanently stable. There are too many changing and powerful influ- ences political, financial and commercial that con- stantly affect them, both at home and abroad, for this to be possible. For the last three or four years our exporters have had an exceptionally favorable oppor- tunity and position in South and Central American markets. This special advantage no longer exists, however, so far as most of them are concerned. Fu- ture trade must be won and held in open and keen competition with highly trained rival nations. Superior service, exact knowledge of trade require- ments, and strict compliance with them, wise policies in regard to credit terms, careful fulfillment of cus- tomer’s instructions, and proper and skilful handling of orders will all be increasingly important. There can never be permanent success in this field for firms whose methods are slovenly or who are inconsiderate [4] of their foreign clients. We have nothing whatever on which to base any belief that these markets will ever give us any special preference in their buying. While all of us hope that a mutually sympathetic understanding 1s growing between the peoples of the northern and southern continents of the Western Hemisphere, this sympathy has by no means yet reached a point that would imply any position of trade advantage for our exporters. In fact, by racial origin, customs and historical development, these countries are much more closely bound to the Euro- pean nations, and we can overcome this handicap only by showing special skill and understanding in every detail of the handling of our trade relations with them. A Great Market During the year ended June 30, 1920, our trade with South America, imports and exports included, totalled $1,351,888,479. ‘The balance against us in South America was $370,000,121. The adverse bal- ance in Cuba was $248,976,779. We had a small favorable balance, however, in Central America. It is thus plain that a special effort is required to strengthen our export position and protect our gold reserves. ‘This can be accomplished today only by the expert handling of this commerce. Fortun- ately, the number of trained men available is con- stantly on the increase, through the educational efforts of schools and colleges, the growing interest in the Latin languages, and the willingness of young Americans to serve as representatives of, business houses abroad. [5] A tremendous development is possible in these thinly settled and rich countries during the coming years. There are great areas almost untouched. Transportation waits on investment. There is a keen interest in the modernization of sanitation in the cities, and American companies already have done much in this field in Uruguay, Chile, Peru and else- where. Industries are increasing in variety and num- ber. There is urgent demand for capital which in- vestors in the United States should be willing to sup- ply in considerable part,as there is opportunity for direct profit and our investments there will also give a strong impetus to exports from the United States. General Information Valuable While it is not at all necessary to have an encyclo- paedic knowledge of the market one may be trading with, there are always certain essential facts that every merchant should know about the cities or countries with which he seeks to trade. Otherwise, for instance, he may fail to recall that it is winter in Buenos Aires when it is summer in New York, may seek a tropical market for goods that are out of place there, or indulge other mistakes and costly miscon- ceptions. Latin American countries, in general, are distinc- tively sources of raw materials, minerals, and food products, not of manufactures. The list of these commodities is not very long. It is useful to have a file of pamphlets at hand describing each country, its area, population, currency, language, principal imports and exports, and its more important cities. Some idea of the historical development of each [6] country also is desirable, as this gives a knowledge of the character and psychology of the people, and such knowledge has a definite value in connection with trading correspondence and advertising. Getting Trade in Latin America The American initiative that is shown in the de- velopment of domestic markets has equal scope in markets abroad, but must be guided by knowledge of special new conditions and differing trade prefer- ences. Thus, correspondence and advertising are characterized by qualities not necessarily quite the same as those current and advisable for use at home. The Spanish and Portuguese languages become im- portant in this connection, and accurate translation of names of products 1s essential. Courtesy in address, personal or in correspondence, is essential, of course, and certain of our own charac- teristic brusque and direct ways are not received with favor and may well be discreetly modified in dealing with the more formal and far less hurried Latin peoples. The names of possible buyers in Latin-American countries can be obtained from many sources. The Guaranty Trust Company maintains in its Interna- tional Trade Service and Publicity Department indices containing the names of business firms in every country, classified under the commodities han- dled, and by locality. Markets for Specific Commodities There are opportunities in the Latin-American countries for the sale of the following various classes of commodities exported from the United States: [7] Agricultural implements and machinery; boots and shoes; construction materials; dried fruits; drug prod- ucts, patent and proprietary medicines; fresh fruits; American furniture; electrical goods; jewelry and sil- verware; hardware; motor vehicles; paper, paper products and printing machinery; lumber; machin- ery and machine tools; surgical instruments and dental supplies; wearing apparel and textiles. The International Trade Service and Publicity Department of the Guaranty Trust Company has compiled brief special reports on many phases of Latin-American trade, including studies of markets for specified products. They are available to those interested. They are being added to currently and brought up-to-date, as more material is received from the many authoritative sources at the com- mand of the Department. Possible Exports The subjects covered by these reports on com- modity markets now include: Agricultural machinery; automobiles; airplanes; asbestos; books; bottles; boilers; buttons (shoe); carpets and rugs; cement; caustic soda; chemicals; children’s vehicles; clothing (ready made); ladies’ clothing, waists, house dresses (ready made); boys’ and youths’ knee pants; coal; confectionery; dyestuffs; dental gold; drugs and medicines; engines (gasoline); envelopes; furniture (office); furs; haberdashery; hosiery; incubators; iron (pig); leather; locks; lumber; matches; machinery (power saving); machine tools; milk (evaporated); motor vehicles; mowers (lawn); musical instruments; oilwell supplies; paints; portable houses; razors [8] (safety); refrigerators; textile machinery; towels; tractors; trolley systems (overhead); saws (jewelers’); saws (hack); saw blades; sawmill machinery; um- brellas and canes; valves; vulcanized fibre; wire; yarns (woolen). Reports of the International Trade Service and Publicity Department of the Guaranty Trust Com- pany on other aspects of the trade, include the fol- lowing: Taxes on Commercial Travelers Terms of Sale in South America The Lumber Industry in South America Itinerary for Short Trips Around South America | Bibliography (Latin America) Advertising Media in Latin America Credit Terms Insurance Regulations for United States Holders of Trade- marks Economic Conditions and Labor Market in Rio de Janeiro Trade Demands of Brazil Living Conditions in Cuba Sugar and Tobacco Industries in Cuba Cattle Raising in San Domingo General Report on Mexico Recent Financing Methods in Mexico Colombian Railroads Proposed Railways in Venezuela Quoting to Customers In export trade no detail of a transaction should be left vague or undefined. Customers are far distant, mails are slow, cables are costly, and misunderstand- ings are exasperating and difficult tostraighten out. A clear-cut agreement should be reached between buyer and seller as to the way the goods are to be packed and [9] marked, who is to insure them and pay various charges, such as consular fees and other incidentals. The parties to the transaction also should assure themselves that they fully understand each other when using such trade terms as F.O.B., F.A.5.,and so on, and attach precisely the same meaning to these commercial formulas. The Guaranty Trust Com- pany has distributed abroad information regarding the trade terms in general use in an effort to assist in bringing about a general agreement as to the meaning that is attached to them. Method of Payment Important Where it is practical to quote all costs on an export shipment up to the doors of a foreign custom house it is an advantage to do so, as it is often difficult for the buyer to estimate for himself the costs of handling, transportation, and insurance. Especially clear should be the understanding about the method of payment, the manner in which drafts shall be drawn, and adjustments of interest charges, exchange, and other items that enter into international financial transactions. If a customer suggests waterproof lining for cases, or special kinds of wrapping on his purchases, these should be supplied, and the extra cost included in the price quoted. If he requests that the cases be lined with tin, that should be done. If the weight must be within a certain limit there is usually a def- nite reason for the request. The buyer’s greater knowledge of customs requirements will often cause him to make suggestions, the significance of which [10] may not be fully understood by the seller, but it is wise to comply with them. Preparation of Papers The formalities required m an export shipment occasion a great amount of “paper work,”’ and much of this paper work must be accomplished very speed- ily and under difficulties, as the time that is available for preparing some of them is often very brief. These papers may include many separate documents and many copies of some. It is important that those documents that are supposed to be in entire agree- ment with other accompanying documents should actually be identical. Further, all papers should be, as far as possible, clean copies, free from erasures or interlineations. Some must be written in Spanish, or, at times, in the Portuguese language. Export Documents A typical shipment to Latin-America will invari- ably demand the preparation of a shipper’s export declaration for the use of the United States customs authorities. This declaration receives a number, which is then used as a reference number on other papers in connection with an individual shipment. The facts given in this dovument, which is prepared in duplicate, are used for the statistical record of American exports, compiled monthly and annually and published by the Department of Commerce. In general, the shipping steamship company will not execute a bill of lading until this customs declara- tion has been prepared and is at hand. The descrip- tion of the goods to be exported should be specific [11] and, as far as possible, in accordance with the pub- lished classifications of the United States Govern- ment. The ocean bill of lading, or the formal receipt and contract of the steamship company which transports the goods, must be carefully drawn and it may be necessary to make as many as a dozen or more copies for the use of the various interests involved. The signed copies are, of course, valuable, as they usu- ally are drawn in such form as to give title to the goods to the actual holder of the documents. Thus, for most Latin-American countries bills of lading are drawn “to order,” so that the holder may freely in- dorse them and that others may make use of them, but it 1s to be noted that certain countries (Vene- zuela, Colombia, and Panama, for example) do not sanction the use of the “to order” form of bill of lading. Consular Invoices Another important “‘paper’’ task, essential in fact for all Latin-American countries, is the execution of consular invoices which, with the bills of lading (and certificates of origin when required) must, in most cases, be certified by the consular officers in the United States of the country of destination. This certification is usually accomplished at the port of shipment, although it may take place at an interior point if a foreign consular officer happens to be sta- tioned there. Fees are charged, usually moderate in rate, but with certain Latin-American countries these fees are such as to constitute, in fact, an import duty of a [12] considerable amount on valuable shipments. For this reason, it is clear that the shipper must include this charge in his estimate of costs, and arrange that it shall be passed on in due form to the buyer. Description Must Be Specific The consular invoice contains all the essential facts about the shipment marks, numbers, kind of package, the articles, values, name of shipper and consignee, and even, in some cases (for Venezuela, for example) the name of the captain and the nation- ality of the ship on which the order goes forward. These invoices are for the use of foreign customs authorities in levying tariffs,and as these tariffs are often drawn with a high degree of complexity as to details, the description of commodities shipped must be very specific and often must contain information the need for which the exporter should carefully dis- cover before making up his records. Thus, the kinds of fibres in textiles, the weights per unit of measure, and the metals composing an arti- cle, become important matters in the preparation of a consular invoice. Every detail must be written or typed fully, and conventional marks or abbreviations that might obscure the record must be avoided. The number of copies of consular invoices required varies with each country and may be from two to four, or even six. Sets of invoices are sold at the con- sulates, or can be obtained from certain stationers who specialize in this service. The commercial invoice covering the shipment also must usually be a part of the collection of documents involved, and it is often necessary that [13 ] this commercial invoice shall be available for inspec- tion by the foreign consular officers who certify to the shipment. Special Requirements For Argentina a certificate of origin is required, viséed by the consul. He also certifies a set of three copies of a bill of lading for a fee of $2.10. For Bo- livian shipments the consular invoice must name a Bolivian custom house at destination or the custom house nearest the final destination. As shipments to that country must pass through other countries, it is necessary to note on packages that they are “in transit’’ to the imterior republic, via (Chile, for ex- ample) and the requirements of the ports of entry in Chile or Peru, or other countries, must be ob- served. In Cuba, where the United States enjoys special tariff rates, it is necessary to include evidence in the form of a declaration, satisfactory to the Cuban au- thorities, that the products exported are the products of the soil or the industry of the United States. Details in regard to the preparation of consular invoices, the number of copies required and the scale of fees imposed may be obtained from the Latin- American consular offices in the United States. The branch office of the Bureau of Foreign and Domestic Commerce in New York maintains an up-to-date list of the foreign consuls in New York. Exchange At times the question of the exchange value of dollars as measured in foreign currencies will be [14] brought up in connection with transactions with cus- tomers. This subject is apparently difficult to com- prehend, but its essential principles are readily un- derstandable and every exporter should be familiar with them. In general, exporters in dealing with Latin-American countries will make their quotations and draw on their customers in United States dollars and the buyer will make his own arrangements for covering his exchange. Buyers of Exchange Buyers in foreign countries are quite accustomed to the practice of purchasing dollar exchange or Ster- ling at times when the rate appears favorable to them. American buyers of Latin-American products, who purchase on a large scale, also are accustomed to watching exchange closely and may, at times, pur- chase South American currencies heavily through their agents there when such action seems to promise profit. When individual problems of exchange con- front a seller, he should consult his own bank or one of the international banks handling exchange transactions daily. Packing Familiarity with the customs requirements, the shipping and port conditions and practices and the limitations of transportation in interior districts over difficult roads or trails, soon makes plain the imper- ative need for intelligent handling of the problem of packing goods to meet these conditions satisfactorily. Limits of weight must be considered and the pro- tection of the contents of boxes with wire or steel [15] straps to guard against pilfering en route. There are excellent devices on the market for such protection. Certain classes of valuable goods, like watches or boots and shoes, will not be accepted by the steam- ship lines unless so guarded against theft. Old boxes already covered by shipping marks of previous use are not suitable for export, and easily shattered boards merely invite breakage and loss. Boards one inch thick are preferable. Right Weight Units Essential Tariff rules often make inadvisable the mixing of goods of different kinds or value in the same package and, when a tariff is imposed on the weight of the outer container, it should be as light as is consistent with strength. Where packages may reach a trans- portation route served by horses, mules or llamas, it is essential that weight units shall not exceed the car- rying power of such beasts of burden. The Bureau of Foreign and Domestic Commerce has issued pamphlets on Packing for Export, and further information can be obtained from export for- warding agents. During the war, the Government devised methods of packing designed to economize space in the holds of steamers, an important factor for what is termed “measurement” freight. Inter- esting tables on this subject were prepared by the War Trade Board and no doubt can be obtained from the Department of Commerce. Reference might be made to the work on scientific packing accomplished by Capt. R. H. Moody, Chief of the Packing Service of the United States Army. [ 16 ] There have been many reports from Latin-Amer- ica of dissatisfaction with the faulty packing methods of American exporters, no doubt justified by the con- dition of packages upon arrival. Some of the trouble is due to inadequate and ill-planned packing, but there is also evidence that the handling of cargo at times is so needlessly severe that no packing, unless absurdly excessive in strength, could withstand it. The responsibility for careful loading, it is said, is turned over to cargo handlers, who are at times in- different to the safety of boxes. Marks on Packages -There are many regulations in the customs laws of the various Latin-American countries as to the markings that are permissible or obligatory on pack- ages for imports. These requirements vary with the several countries. In some cases it is essential to record the weights gross, net or “‘legal’’ in kilos or pounds, as the regulations may indicate. In other countries the statement of the weight is not required on packages. Boxes always should be numbered, either serially or, if the shipment consists of a number of packages of the same size and content, a single number with a serial identification number may be given to them all. Special identification marks should be on every case and, in general, marks, numbers, weights and ad- dresses should be stenciled. Stenciled marks are obligatory in Chile, for example. All marks should be clear and of sufficient size to be readily deciphered. Not less than two and a half to three inches is a desir- able size for such markings. [17] Argentina requires stenciled marks on two adjacent sides of the container. As stated above, weights in kilos are usually required. Argentina, for example, requires that both the gross and net weights be marked on packages, while Brazil requires no mark- ings of weights whatever. Restricted or Prohibited Imports There are certain classes of import articles and products which, in nearly all the countries of the world, are subject to special import restrictions or may be forbidden entry altogether. Among these are live animals, birds, insects, trees and shrubs, seeds, bulbs, certain foods, alcoholic fluids, poisons, disin- fectants, drugs and proprietary medicines, explosives, fire-arms and cartridges. There are many regulations in Latin-American countries affecting such imports and these should be known before attempt is made to forward shipments of products in the classes which have been mentioned. Ordinarily some form of certificate of inspection and certification of health is required for living crea- tures and a certificate of adequate inspection and assurance of quality for meats and other food prod- ucts. There are also requirements as to the registra- tion of the formulae of proprietary and other medi- cines and for the inclusion on labels of statements as to ingredients. Arrangements for Ocean F. reight In making shipments overseas it is usually neces- sary to obtain from a steamship line in advance a definite agreement that the goods will be accepted [18] for transportation on a certain ship. As delivery of goods to the receiving sheds is often in broken lots, a system of dock receipts is in effect, these receipts being finally exchanged for the formal signed bills of lading which constitute the evidence of title and as- sure the responsibility of the transportation company. Railroad bills of lading are familiar enough to all merchants, but ocean bills of lading have certain spe- cial clauses and it is well that a shipper should famil- iarize himself with the strict limitations of the liabil- ity of the transportation company. The number of signed copies of the bill of lading is stated in the docu- ment, although many additional copies may be made for convenience in maintaining the necessary record in the files of the shipper, the shipping company, and the consignee. The preparation of bills of lading, as with all the papers related to an export shipment, should be scru- tinized carefully by competent assistants, as errors cause cumulative troubles all along the line. Weights and Measures The metric system of weights and measures is in general use in Latin-American countries. Conver- sion tables may be found in the Exporters’ Encyclo- paedia and in Factors in Foreign Trade, issued by the Department of Commerce. Translations Consultation with banks or export associations will afford suggestions as to reliable agencies where correspondence and advertising are translated accur- ately and idiomatically into Spanish and Portuguese. [19] Trade-Marks Register your trade-marks! This precaution may save the exporting manufacturer exasperating and costly experience. In most Latin-American coun- tries any applicant may register a trade-mark, and it is not necessary for him to be the owner or the man- ufacturer. Once thus registered, the actual American owner of the trade-mark is debarred from its use mn the countries referred to. The subject of trade-marks is treated in many books and pamphlets and there are law firms which specialize in the registration of marks and of patents. When it is a question of selling a specialty abroad, prompt consideration should be given to the protec- tion of patent and trade-mark rights. Buying the use of one’s own trade-mark from some interloper who has recognized its value and registered it in his own name is a troublesome experience which a number of American manufacturers have suffered. Registration of Trade-Marks in Latin America (Tariff Series No. 31), issued by the Department of Com- merce, may be consulted. Protecting Trade-Marks The registration of trade-marks with the Interna- tional Trade-Mark Registration Bureau at Havana, Cuba, under the regulations prescribed, will protect the registrant in the United States, Cuba, Guate- mala, Nicaragua, Panama, the Dominican Republic and Haiti. Upon ratification by one more country in South America, a similar bureau will be estab- lished at Rio de Janeiro, when registration at either [ 20] bureau will protect the registrant in all the signatory countries in the Western Hemisphere. Such action will place the holder of a trade-mark on an equal footing with the citizens of each country in respect to the trade-mark laws of that country. Parcel Post Recent changes in parcel post regulations promise to extend the use of the mails for export shipments. The limit of weight has in many cases been raised to twenty-two pounds. Rules for the use of this service and for the preparation of the necessary papers are supplied at post offices, and can be found in the Pos-’ tal Guide. Such shipments are liable to the usual tariff and other restrictions. Commercial Travelers and Samples The fees that must be paid by commercial travelers and the rules as to the admission of samples without the payment of import duties, are found in Commer- cial Travelers in South America (Department of Commerce). Insurance on Exports Protection by insurance should accompany every step of the movement of valuable goods from the fac- tory to the consignee. The usual marine insurance policy defines the limits of liability to the period stated therein and, where there is danger of loss on wharves, in warehouses or lighters or from pilferage, care should be taken to have this risk properly cov- ered by insurance. The marine insurance policy is of a special and complicated form and contains phrases [21] and clauses, the meaning of which should be clearly understood by the one who Is paying for protection. Credit The thought of selling on credit, either short or long, to customers five or six thousand miles away, makes many American manufacturers hesitate. Yet credit is being given currently by many exporters who find that such action is safe and profitable, al- though those who grant credit successfully are usually safeguarded by long familiarity with the markets and exact knowledge of the moral and financial standing of their customers. For many years Latin-American buyers have been accustomed to receiving long-term credits and busi- ness has been adjusted upon the basis of such ac- commodation. That the interest charges have been heavy has not seemed to disturb them and, as Eu- ropean sellers have usually been protected by local representatives and by intimate knowledge of con- ditions, they have seemed quite willing to develop commerce along such lines. This gives them a defi- nite competitive advantage and American exporters must recognize this fact and be willing to show some courage in making decisions as to how far they will meet the terms of their rivals. Credit Files The service of credit reports on Latin-American firms now carried on by American banks or by the commercial agencies is growing more extensive and specific, and sellers can usually obtain excellent mate- [ 22 ] al on which to exercise sound credit judgment. The Guaranty Trust Company has very complete files on most of the important firms in the Latin- American countries. Meeting Competition Exporters in the United States have often been accused by Latin-American merchants of unwilling- ness to conform to the customary practices of financ- ing in that part of the world. There is no doubt that many American firms have refused to consider orders unless the buyers were willing to agree upon payment before the goods should leave the United States. While this policy can be called an eminently safe one, so far as preventing losses is concerned, it is em- phatically not the way to build up a permanent for- eign trade. There is a great volume of such trade that can, safely and profitably, be transacted on terms much more tempting and satisfactory and, in- deed, much fairer to the trustworthy foreign buyer, than on the basis of cash pre-payment or “cash against documents” at New York or some other port. The exporter may with wisdom carefully study these other methods and, while guarding himself against loss by a careful selection of the firms with which he deals, he should act upon the suggestions of worthy foreign customers as far as possible when they propose payment perhaps three or four months after the acceptance of a draft upon them. Methods of Payment Payment may be arranged in a number of ways, either, as stated before, on terms of cash with the [ 23 ] order or payment by aconfirmed or unconfirmed bank credit available to the seller upon the presentation of shipping and other documents. The drafts that usu- ally accompany an export transaction may thus be drawn either against this established bank credit, or by special agreement with the customer for payment at a definite period after date. Tt is much more likely, however, that the customer will request that drafts be drawn upon him “at sight,”’ or, in other words, when they are presented to him by the shipper’s representative abroad, usually a foreign banking correspondent of the American bank which handles the documents in connection with the ship- ment. Sight drafts are paid upon presentation, although it is customary for banks to grant a brief period of grace, usually a few days, for the convenience of the drawee. Title to the goods represented by the bill of lading is then surrendered upon the payment of the draft. Such drafts are referred to as D/P drafts (documents against payment). A great volume of export business, however, 1s transacted on terms implying the “acceptance”’ of the draft upon its presentation to the buyer, actual pay- ment then being made perhaps one to three, or even four months (but rarely longer) after the date of this acceptance. The reference D/A (documents against acceptance) is applied to such transactions. Forms of Drafts The Guaranty Trust Company has issued a bul- letin on How Business with Foreign Countries 1s Financed, which contains descriptions and examples [ 24 ] of the forms of drafts and other export documents in general use. Some business Is transacted upon open account but this implies close and long-continued relations and confidence. Argentina During the war our export trade with the Argen- tine was handled largely on the basis of “cash against documents’’ at port of export, but this was a temporary situation and such methods cannot con- tinue under renewed competition from Europe and elsewhere. An estimate has been made by one familiar with the situation in that country that about two-thirds of the transactions now are on a time basis, docu- ments being surrendered against acceptances of drafts for thirty, sixty, or ninety days, or, at times, even longer. Perhaps about one-third of the business now transacted is on terms of delivery of documents against payment. The granting of credit should be made only on satis- factory banking or other report. Drafts are almost always drawn, not in Argentine currency, but in terms of foreign money, preferably in dollars. Asa result of this fact, transactions in exchange connected with Argentine foreign trade are centered mainly in Buenos Aires financial institutions, rather than in New York or London exchange markets. Brazil Competent authorities advise that American ex- porters cannot hope to hold trade in Brazil unless the credit accommodation similar to that granted by [25] European exporters is afforded. There are excellent firms worthy of credit to large amounts, and as in domestic trade, it is essentially the task of the credit man of an export firm to assure himself that he is dealing with reliable houses. Chile Chile is a country fortunate in possessing a single great natural source of wealth in its nitrates, which gives a stability to its Governmental revenues. Our exports to Chile were valued at $70,289,000 in the fiscal year ending June 30, 1919, and imports from Chile at $135,603,000. Our exports were $44,290,285 in the fiscal year ending June 30, 1920; imports, $112,637,825. Our drafts on Chile are usually in dollars or ster- ling, as the paper currency is subject to extreme fluc- tuations. Since the war, drafts have usually been in dollars, and “90 days’ sight”’ is the customary form. Some firms maintain book accounts with American exporters and buy dollars at favorable times to reim- burse their correspondents in the United States. Countries on the Caribbean Countries bordering on the Caribbean Sea, with their seasonal exports of coffee, sugar, fruits, and other products to the United States, maintain espe- cially close relations with this country and it is said that a large volume of business is conducted on open account between firms which have long been trading with each other. Such firms may even maintain mu- tual balances over long periods, permitting the bal- [ 26 ] ancing of exports and imports against one another at convenience. Sources of Imports The Central American States and Venezuela and Colombia should develop stronger commercial ties with us every year. Our investments there are grow- ing, and the two latter countries will be sources of supplies of beef, oil, hides and skins, coffee, platinum and other metals, on which we shall draw more and more. We have in Cuba a very rich and growing market and in that republic our special political relations since the Spanish War have placed us in a very ad- vantageous trade position, which is greatly aided also by the favorable tariff rates which we enjoy. We are bound to remain the greatest market for Cuba’s sugar and tobacco, and our future in that trade area seems secure. Personal Interest and Knowledge Essential A number of American firms engaged in the export business have been accustomed to assigning the con- trol of foreign trade matters to an employee, who has been chosen because of his experience in export trade, and the business conducted by this employee has been somewhat apart from the main efforts of the firm. Asa rule, the principals of the firm have lacked a full understanding of this particular branch of their business and have been unacquainted with conditions and requirements of their export depart- ment. The result has been that the directors of the com- pany in making decisions in this field have found it [27] necessary to depend entirely upon the judgment of the employee in charge of their export business. Our European competitors have acquired their expert knowledge of foreign trade through the pre- cise information gained by the managing directors or other principals of their export houses, an experience that can be gained only through actual travel in for- eign markets and personal contact with customers overseas. The directors of American firms should appreciate the fact that in order to maintain a strong footing in countries where competition is bound to become keener every day, it is highly desirable that they visit foreign markets and gain the personal knowl- edge and closer contact with their customers which at present is often lacking. Export trade in the future will merit all the attention which the principals of a firm can personally give to it. | 28 | Detailed Trade Information The International Trade Service and Publicity Department of the Guaranty Trust Company will be pleased to reply to inquiries in regard to foreign tariffs, trade and banking methods, or other subjects to which only brief reference is made in this pamphlet. It will also be pleased to recommend, when requested, specific tech- nical books or bulletins containing the detailed information which should be at hand for ready reference in the office of the well-equipped American exporter. eng de So