*4 BINP South New Light on its People, Customs, Business andTrade Opportunities for U. S.Manufacturers James hLCollins Trade Analyst and Explorer 1} ft /do \ -■■ . a ■ MM, , ; rf r ff / / /ira Iff Ate* \*//;/J _«j| p5&JH< u- '■■■j^rsjfe ^ u^^^^^LJ^ / / V W \lw SrZlMrM ^•tr Published by BUSINESS NEWS SECTION PUBLIC ittib LEDGER PHILADELPHIA •RESERVATION X)PY ADDED To ders ion for a definite the Business News es H. Collins to the ige of how to find ler the most direct >e in experience of the ideal agent to United States the and profit in the re faculty of being ted. Indeed, as the s of the American AS A ME / ** Americ Section of tht southern rep the way to tf method of pr OF WIDE successfi make clear U essential req South Amerit able to impar Public Ledge merchant. T EAVING the United States on June 21, 1919, Mr. Collins spent months ■*-! at his task, thoroughly covering the trade centers of Argentina, Brazil, Chile, Uruguay, Paraguay and Peru. In touring these countries he came in intimate touch with statesmen, bankers, brokers and importers, manufacturers, shippers, warehousemen and steamship and railroad managers. He asked searching questions and elicited frank answers. He made particular study of the methods by which Great Britain and Germany built up their exports. Of vital concern to him was a critical review of the errors, handicaps, blunders and experiences that have been pitfalls for the American exporter. He also obtained an intimate light on the social life and customs of the South Americans. COMMENCING with the issue of September 15, 1919, letters giving an illuminating and exhaustive review of Latin-American condi- tions were printed in the Business News Section of the Public Ledger thrice tveekly. The demand from all sections, including South America, for copies of the Public Ledger containing the Collins articles became so great that it ivas decided to reprint them in convenient form. The arti- cles, therefore, are here reprinted and descriptively illustrated with numerous new, interesting and instructive photographs obtained by Mr. Collins on the spot. BUSINESS NEWS SECTION PUBLIC ggy&b LEDGER PHILADELPHIA Copyright 19?0 by Public Ledger Co. CONTENTS Hd It,? ARGENTINA Article Subject / Shipping Delays Hamper Trade II Manufacturers Send New Type of Representative III U. S. Business Agents Soon Feel at Home IV Buenos Aires Big Field for U. S. Men's Clothing V Leading Newspaper Uses Yankee Methods - VI High Cost of Living Hits Buenos Aires VII U. S. Packers Urge Modern Methods VIII American Automobiles Supplanting British - IX Consult Wife, Then Send Man to Latin America X South America Gets U. S. Capital via Europe XI American Trade Menaced by German Competition XII Propaganda Against U. S. Goods Is Mere Gossip XIII Philadelphia Firm Gets Early Start XIV Argentina Has Many National Heroes XV What Can Americans Do to Aid Argentina? XVI Customs Regulations Replete With Delays XVII Old Customs Rule in Buenos Aires Stores LII Latin America Shivers With Fuel Undeveloped LI 1 1 Buenos Aires Has Need for U. S. Type of Buildings LIV Lack of Vision Retards U. S.-Latin American Trade LV Advertising of Yankees Appeals to the Argentino LVI Antiquated Retail Style Invites Yankee Invasion LVII Argentine Methods Differ From Ours in Many Respects LVI II Self -Advertisement Here Would Benefit Argentina LIX Commerce Chamber Big Aid to Trade in Argentina LX Big U. S. Bank Will Get You a Haircut in Argentina Page / 3 5 7 9 11 12 14 16 17 20 21 23 25 27 28 33 34 9« oo 38 39 41 43 45 BRAZIL XV III Check Plan Not in Vogue Except in Movies • XIX Attorneys Eager for U. S. Law Books ... XX Language of Brazil is Portuguese ... XXI U. S. Credentials Needed in Trading ... XXII No Anti-U. S. Feeling Among Best Citizens XXIII U. S. Needs Good Shipping Agents at Foreign Ports XXIV Conformity to Brazil's Tariff a Trade Necessity XXV Bad Packing May Cost U. S. Big Trade Gain XXVI Law and Family Large Factors in Business • XXVII Modern Railroads Needed to Develop Brazil's Resources XXVIII Bond Investments Will Aid Trade With Latin America XXIX Brazil One End of Blind Alley for U. S. Ship Lines XXX U. S. Salesmen, Shy on Detail, Fail in South America XXXI "Coal" Is Keyword to Latin-American Trade XXXII American Bank Methods Win Firm Hold in Brazil XXXIII Sao Paulo Is Brazil's Bee Hive of Industry XXXIV Tennessee Woman Showed How to Win Out in Brazil XXXV Some Straight Business Tips Bearing on Brazil - XXXVI American Methods Make "Ads" Pull in Brazil XXXVII Europe Loses Aircraft Field to U. S. Machines - (Continued on Next Page) 47 49 50 52 54 55 57 59 61 62 64 65 67 68 70 71 73 74 76 78 r Article Subject Page XXXVIII Brazil's 30-Year Steel Need Is $3 £00, 000, 000 - 79 XXXIX Four Free Trading Ports Contemplated by Brazil 81 XL Brazil's Great Forest Wealth a Handicap 83 XLI Tax Greed Strangled Brazil Manganese Trade 84 XLII Pensions and Payrolls Use 80 P. C. of Revenue 85 XL1II Thefts From Shipments to Brazil Are Common - 88 XLIV Hampering World Trade Through the Income Tax 89 XLV Groping for Business Is Error of Exporters 91 XLVI Brazil an Aladdin's Lamp Giving Wealth for a Rub 92 XLV 11 Sao Paulo Is Becoming a Chicago Counterpart - 94 XLV III Speculative Kick Being Taken From Coffee Crop 96 XL1X Brazil Keen for Honest News from U. S. - 98 L Brazilians Have Horror of Physical Violence 99 LI New Cable Will Help U. S. -Latin- American Trade URUGUAY and PARAGUAY 101 LXI Uruguay Is the Biggest Little Republic in South ■ 103 LXII Individualism Features Trading by Uruguayans 105 LXIII Make Refrigerator Cars Swim to Latin America • 106 LXIV Uruguay Is Financially Strongest of Group 109 LXV Uruguayans Were Quick to Grasp Rotary Spirit - 110 LXVI Canned Corned Beef a Neglected War Baby 112 LXVII Uruguay's Big Men Rank Among Biggest CHILE - 113 LXVIII Fourth Capital City Has No U. S. Consul - 115 LXIX Chile Needs Yankees ----- 117 LXX Panama Canal Opens Way to Chile Trade - 119 LXXI Continental System of Rails Is Planned - 120 LXXII Banks Are on Wrong Foreign Trade Track - - 121 LXXI1I American Shippers Aid Clever Freight Thieves - 123 LXXIV Chile Has Her Dentistry Markets Cornered - - 125 LXXV Motorbus Is Popular in Capital of Chile - 126 LXX VI Inquietude of the Peso a Handicap to Chile - - 128 LXXVII Some Peculiarities and Needs of Chile 129 LXXVIII Valparaiso, Important City, Three Streets Wide - 131 LXXIX Nitrate Trade Awaits Yankees or British 132 LXXX Mail Service of the U. S. an Obstacle to Trade - 134 LXXXI Liberators of Chile From Far-Off Nations 135 LXXXII Chile Is Bombarding Walls of Ignorance PERU - 137 LXXXIII Amusement Park Will Make Good in Peru - 139 LXXXIV Peru Jail Has Special Space for Ex-Presidents - 140 LXXXV Direct Buying Saved Five Profits for Mill - 742 LXXXVI Exchange Gambling Arm of Business in Peru 144 LXXXVII Peru Has an Exhibit of Export Crookedness - 145 LXXXVIII Tractor Destined to Increase Peru's Wealth 147 LXXXIX Teaching With Selling Latin America's Need ■ 150 Lt .,1 «L_ __-*4rfl • '' Argentina ARTICLE I SHIPPING DELAYS HAMPER TRADE JN THE Roadstead, Rio Plata, off Buenos Aires, Aug. 15, 1919. — They say the present earning capacity of the British steamship Vauban is about $7000 a day. Her crew of 300 cost at least $1000 daily, and with 350 passengers, for whom a food allowance of six shil- lings is made, that item amounts to at least half the wages of the crew. Hold the Vauban up for an hour and it means a loss of perhaps $100 costs, or $300 earning capacity, at a reasonable esti- mate. It must have cost the Vauban from $500 to $1500 to load passengers' trunks when the writer sailed on her for Buenos Aires June 21, and the process was worth watching in connection with the new trade which he hopes to hold and increase in Latin America. The ship docked in Brooklyn. The dock belongs to New York city. It is nothing more than a sheetiron shelter without a single mechanical appliance of any kind for handling baggage or cargo. The passen- gers' trunks were picked up in half doz- ens and swung into the air by the ship's own cranes and scrambled into her hold. It took several days of sorting at sea before baggage was found by owners. "They always do it that way, sir," ex- plained the steward. "They 'urry the luggage into the 'old and we must find it." Climbing over trunks- in the hold of a ship looking for one's own baggage was the chief sport for several days and better exercise than shuffleboard or deck quoits. An automatic conveyor on the pier at Brooklyn, with proper sorting of baggage, should have loaded everything in an hour. This was only the beginning of the log of the Vauban — a log rich with possibili- ties for making money through elimina- tion of waste and delay. Coming from Liverpool early in June with a load of passengers, she had been scheduled to sail for Buenos Aires June 14. Slow methods of cargo loading delayed her until June 21, a little item of $50,000 lost in earning capacity. We started for Barbados, the first scheduled stop, and six days later docked instead at Castries, St. Lucia, one of the small British West Indian islands, where coal and water were to be taken. And here two more interesting factors in the world trade were disclosed. THE "CAMBIO" Ij^IRST, the "cambio," which is Spanish for money exchange. Five different kinds of money are necessary on a voy- age from New York to Buenos Aires — United States, British, Brazilian, Uru- guayan and Argentinian. Every time an exchange is made one must pay from 2 to 10 per cent, and running a cambio ARGENTINA MODERN* GRAIN ELEVATORS AND PIERS AT BUENOS AIRES in Latin-American cities is a popular and lucrative business. St. Lucia introduced the cambio in novel form. It came out swimming when the steamship entered the harbor — several dozen negro divers who coaxed for coins and shot after them the moment they touched the water. Two hours later these same negroes held out a handful of American nickels and dimes to passengers sightseeing in Cas- tries, asking for American paper money. Castries uses British currency. Ameri- can paper passes at par, but not coins. As the local money lenders will pay only ten to fifteen cents for an American quarter, the alert negro divers, after gathering anywhere from $2 to $25 small change in the water, hurry ashore and ask passengers to turn into American bills the coins they have idly tossed over the side. Life is rather hard for a negro on a small West Indian island, but it develops his wits. He thoroughly works the occasional passenger ship touching there and dreams of the day when he can stow himself in the bunkers for New York, to become an elevator boy. The other interesting thing at Castries was coaling the ship with baskets of fuel weighing upward of 100 pounds, carried on the heads of negro women. This is considered a quick, cheap method of coal- ing if you happen to have West Indian negroes or Oriental coolies willing to do the work at a cent a basket. But it is not a pleasant sight to Americans accus- tomed to seeing such things done by power, and it turned the writer's thought to our new fabricated ships with their crude-oil fuel, which is not adapted to the human head. One poor little negro "Lizzie" fell into the coal bunkers in some way during the night. There was a rumor about her when the ship pulled out next morn- ing, discredited at first, but only too plainly confirmed a day later in the hot tropical swelter. Her body was not found until nearly three weeks later, when she was buried at sea, near the end of the voyage. THE MONEY COST OF DELAYS HPEN hours of steaming, a quick trans- fer of mails at Barbados and eleven more days on top of that brought the ship to Rio de Janeiro. By contrast this was a modern port, with electric cranes along the docks which picked up cargoes and loaded directly into railroad cars. But the Vauban spent a couple of thou- sand dollars in earning capacity waiting at quarantine and carrying out other docking formalities, which, unquestion- ably, could be accelerated. At Monte- video, four days later, there was the same delay, and still a longer one at Buenos Aires two days later. Although the ship lay at quarantine before daylight, it was twelve hours later before she finally touched the docks. Two hours of this was necessary for steaming up the river, but the rest was sheer loafing at $300 an hour while simple port facilities were gone through with. First came the doc- tors, to line up passengers and super- ficially feel pulses ; then immigration offi- cials, to scrawl initials on passports, and so on. Living in Buenos Aires is very expen- sive, and no article of imported mer- chandise costs less than twice the New York retail price. To ascertain how much of the cost of a Bond street hat or Schenectady electric iron is, due to the leisurely handling of ships by port offi- cials, should be a very interesting study for the Buenos Aires consumer — the pos- sibilities of making money through economies might dwarf the profits from the greater Argentine expectancies. The whole voyage consumed exactly twenty-six days, and as the Vauban is one of the fastest mail-carrying ships between New York and Buenos Aires, that is the time of the United States mail between the two cities. The Vau- ban is scheduled to sail again for New York twelve days later, and with the Trans-Andean Railroad closed by snow, cutting off mail routes up the west coast of South America, a passen- ger of this ship, writing home when he arrived in Buenos Aires, probably would not be heard from in the United States until the beginning of September. In contrast with this, mails between Argen- tina and Europe go every few days by British, French, Italian and Dutch steamships. All United States mail to the east coast of South America is car- ried by comparatively slow foreign ships, excepting only two American liners on the west coast that take mail shipped over the Andes to Chile. These are wartime conditions, to be sure, but dur- ing years of peace the American business man attempting trade with Argentina and Brazil was handicapped by delays almost as grievous in transportation and communication. NEW BOATS FOR SOUTH AMERICA VTEW British steamships are being built for this trade — faster boats between New York, Brazil and Argen- tina to accommodate the passenger travel that has developed almost magically with the war. These vessels may not be ready for months, but eventually they ARGENTINA will carry people and mails faster — and it is to be hoped with certain refinements of service. Perhaps a few plain sugges- tions to the British managers may be helpful in making their plans. First. Cooking. The British were never cooks before the war, and five years of contact with the French did nS * Ho H? Sr%; e M?** ri &b;v!* TYPE OF BRIDGE IX RIO HARBOR. PEOPLE ARE FERRIED OVER INSTEAD OF WALKING In ordinary times return cargoes from Brazil to the United States are the chief factor in keeping ships busy. There is active competition in soliciting Brazilian freight. We really need well-paid traf- fic men who can create freight through service, as is done by our railroads. For lack of such men abroad in the past, quite as much as for lack of ships, other countries have controlled our ocean traf- fic and built their own trade at our ex- pense. Ships have to be turned around quickly. In his capacity as train dis- patcher the competent shipping agent is waiting to board a vessel the moment the port authorities have finished with her, has her papers, berth and stevedores ready, takes her captain to the consignee in his car and saves hours of time in turning her around at several hundred dollars an hour. If the agent is an in- competent long-distance appointee, or, worse yet, an alien with alien business interests, he may waste days where the competent agent saves hours — and the distant owners in the United States have no way of checking him up. What happens when Washington shifts this complex business on to the United States consul by cable is shown in a case that aroused a good deal of criti- cism in Rio de Janeiro last summer, when a whole fleet of Norwegian sailing ships chartered by our government sort of got lost in Rio harbor and lay idle at $7000 a day demurrage. Nobody at Washing- ton seemed to have anything for them to do, and expense to the government was stopped only by urgent pleas from the consulate that this fleet be put to work. As dining car superinten- dent, the shipping agent must buy provisions and stores, and as di- vision superinten- dent see that re- pairs are made when vessels are damaged. In all the ports of the world, including our own, there are crooked ship chan- dlers and drydock concerns. It takes all the business ability of a first-rate agent to deal with these matters to advantage, and distant owners suffer loss of money and time where badly or dishonestly represented. There have been several instances in Rio de Janeiro the last year where American merchant ships have been tied up or aban- doned through legal complications arising from claims for exorbitant repair bills. Instead of having a competent Ameri- can agent in foreign ports, some of our ship owners leave all these matters to their captains. The captain may lack business ability, be of foreign nationality or dishonest. Whether innocent or dis- honest, a scheming ship chandler or dry- dock man knows how to involve him in some shady transaction to rob the owner through overcharges for provisions and repairs. In the absence of an agent any- thing the captain does along this line makes the ship legally responsible. TROUBLE WITH CAPTAIN A BOUT a year ago an American ship under a foreign- captain salvaged an- other ship into Rio de Janeiro. This captain immediately became interested in his salvage money and took steps to keep his own ship in port while the case was being settled. Ordered to sea by his owner, who could only direct matters by cable through the United States con- sulate, in the absence of an agent, the captain first asserted that the ship was out of order. An expert had to be sent from the United States to make a sur- vey, and pronounced the ship seaworthy. This was a small auxiliary -motor ship., and the captain then complained that he could not run on the oil obtainable in Rio de Janeiro. Experts examined the oil and pronounced it good. Then the captain claimed that his chief engineer had slandered him and brought criminal BRAZIL 57 suit in the Brazilian courts, wnere the case dragged on until dismissed. Then the consulate directed the owner to dis- charge the captain, leading to further complications. Finally it was necessary to put a United States naval officer aboard the vessel until another captain could be found. This ship lay in Rio de Janeiro harbor more than six months, yet representation by a capable agent, to whom the captain would have been di- rected to report on arrival, was the obvious way of preventing all that trou- ble and loss. One line of American ships, at least, running between the United States and Brazil is managed efficiently, with its own American representative in Rio de Janeiro. This is the United States and Brazil Steamship Line, the cargo service of the United States Steel Corporation, started in 1913. It is not only handled by broad-gauge American steel men, but James A. Farrell, president of the United States Steel, happens to be the son of an American ship owner of other days, and takes the keenest personal interest in the ocean delivery service through which United States Steel markets its products abroad. The Philadelphia house of E. J. Lavino & Co., importing manganese ore from Brazil and making ferro-manga- nese, also operates its own and chartered ships through its branch in Rio de Ja- neiro, with efficient American super- vision. Our flag is really coming back on the ocean. In every Latin-American port one now sees the Stars and Stripes on the fabricated steel cargo carriers and the squatty wooden Ferris steamers built for the war emergency. But unless the American energy and business ability which built these ships and finds them cargo at home are applied to their operation in ports abroad, our flag may disappear again. If Uncle Sam intends to own and operate the ships he must stop dab- bling by long dis- tance through his consuls, establish United States ship- ping board officers in every port, un- der first-rate rep- resentatives, and do the job right. If the ships are to be sold to pri- vate owners, then the latter must wake up to the fact that ships call for just as much business manage- ment abroad as they do at home, and that experience and business ability in the handling of ships of other nation- alities, through their own representa- tives, in ports abroad have put us at far greater disadvantages in ocean ship- ping than any disparity in sea wages. Where American shipping companies operate on a large scale, like the United States Steel Company, it will pay hand- somely to put their best men on this job. Where smaller concerns operate a few ships on fluctuating routes the same high- class business representation is possible through the formation of a corporation under the Webb law by a group of such shipping concerns and the opening of offices under capable business men to han- dle ships for owners wherever they may turn up in world ports. ARTICLE XXIV CONFORMITY TO BRAZIL'S TARIFF A TRADE NECESSITY jDIO DE JANEIRO, Oct. 7.— A shipment of American goods sent to a Brazilian merchant was carefully wrapped in paper by the manufacturer. Having heard about bad American pack- ing, he took pains to wrap the stuff twice as well as domestic packages. It arrived in excellent condition, but because it was merchandise of high value per pound and the weight of wrapping paper on such merchandise pays duty under the Bra- zilian tariff, his customer lost money on the shipment. Instead of repeating such stories, let us see if we cannot get the viewpoint of S. AUTO USED IN THE SALES DEMONSTRATION the Brazilian business man — follow his transactions as he does business from day to day, carrying upon his shoulders a veritable "Old Man of the Sea." The Brazilian business man is hard- working, putting in long hours every day. He has to! He is also competent. He must be, for he does business in one lan- guage at home and perhaps several oth- ers abroad — probably learned French thoroughly at school ; is able to get along with Spanish, and knows English as well. In his seaport he must turn pounds, francs and dollars into milreis, watch- ing the rise and fall of exchange from hour to hour. And up-country, where little real money circulates, transactions often take the form of barter. His "Old Man of the Sea" is the Bra- zilian customs house. Among all the red tape of Latin-American business that of the Brazilian tariff system seems to be admittedly most complex. It would be easy to write about it either humor- ously or in terms of denunciation. But we are simply going to try to see it through Brazilian eyes, and perhaps add a viewpoint of our own. Brazil's customs duties are very high. In many cases they have been purposely made prohibitive to build up home in- dustries. During the war a Brazilian proposed to manufacture seamless hosiery. Before getting his machinery he secured a pro- hibitive tariff on such goods. In a little while his factory failed, so no seamless hosiery is made in Brazil today. But the prohibitive tariff continues and makes imported seamless hosiery very expensive. Many Brazilians feel that their home in- dustries, such as cotton weaving, shoe- making and the like, not only make mer- chandise very expensive, but, with labor shortage, draw country people into the towns, to the neglect of the great agri- cultural resources of the country. The Brazilian tariff has more than 1000 para- graphs, covering nearly 300 items. Daily changes are published in an of- ficial gazette. These changes have never been collected, but are scattered through back issues of the gazette. Duties are large- ly computed by weight, not the value of merchan- d i s e. Packages and wrapping often pay duty, too. Nickel watches from the United States pay a lower rate than from Eu- rope, because we. 58 BRAZIL as good customers for Brazil's cof- fee, have made a diplomatic horse trade on various products. Part of the duty is payable in gold and the rest in paper money, with daily fluctuations in ex- change. Then the customs house, be- sides collecting several different duties of its own, adds internal revenue duties and stamps. OFFICIALS SUSPECTED OF FRAUDS TT takes six to eight weeks to get goods through the Brazilian customs house with the aid of a shrewd customs broker, or "despachante." Every transaction is wrapped around and around with official Shortly after investigation began there was a brisk fire in that customs house and all the evidence was destroyed. Brazil- ians themselves admit that if all revenue on imports were honestly turned over to the government their country would soon be out of debt. But officials have ways of expediting a given shipment through the customs house if discreetly encouraged with tips, and also ways of delaying business and imposing fines where busi- ness men do not follow the general cus- tom of the country. The American business man in Brazil may try to reform this system single-handed at first, but presently realizes that it is not a one-man sees that the Brazilians must eventually go to school and profit by the educational value of local taxation. The Brazilians begin to see this, too, but have hardly started in the kindergarten. "Come and visit our beautiful modern cities," urges the Brazilian, ''and learn that we are not Indians." But once the visitor steps beyond the cities into the real Brazil, life becomes decidedly primitive, with few educational advantages, much illiteracy, great dis- tricts undeveloped for lack of transporta- tion and irrigation, and a happy-go-lucky scheme of existence generally. "God has been almost too good to Bra- CLOSE VIEW OF SUGAR LOAF MOUNTAIN. WHICH STANDS GUARD OVER RIO DE JANEIRO HARBOR papers. No step is taken without the review and signature of one official after another. These officials work very short hours, and one may bluntly state that they are not very competent, nor even thoroughly honest, because the Brazilians themselves frankly say so, and are anxious to effect reforms. They are revising their tariff now under President Pessoa's new ad- ministration. A couple of years ago there was a brisk little scandal in the customs house at one of the North Brazilian ports, with sus- picion that officials had connived with importers to cheat the government. job. Moreover, he sees that the Brazil- ian system, followed by everybody as a matter of course, can only be improved by the Brazilians themselves. The Brazilian republic is only thirty years old. Its chief revenues come from import duties. The revenues of its twenty separate states come from export duties, like that of Sao Paulo on coffee and Amazonas and Para on rubber. The idea of local taxation on land and reve- nue from income taxes is still new. The Yankee, accustomed to such taxes at home, with their concrete community benefits, such as schools, highways, waterworks and other improvements, zil," declared the thoughtful Brazilian. With his little plantation of bananas and manioc for bread, his pigs and hens for meat, the country Brazilian can exist without great effort. To get money he can gather wild products — rubber, Bra- zil nuts, yerba mate, carnauba wax or what not. If he plants crops, they yield luxuriantly, and he uses the product in barter. He is a genial, hospitable, char- itable fellow. If relatives or friends hap- pen to be down on their luck he takes them into his large family and his large heart. The family is still his unit of life, and he has not yet acquired the sense of community, that larger family, which is BRAZIL 59 I the unit of our own life and with which so many Improvements can be worked out. AMERICANS CAN AID NATIVE MERCHANTS N business the Yankee can help the Brazilian carry his "Old Man of the Sea" by carefully conforming to the re- quirements of his official system, meeting his suggestions for wrapping, packing, weighing, marking and shipping goods. As most of the red tape exists in his own country, the Brazilian will do the rest. The Yankee can even help the Brazil- ian get rid of his "Old Man of the Sea" to some extent. As an example, take the duplicate in- voice! An American salesman was offered a fine order in Rio de Janeiro on condi- tion that his house at home send one in- voice, with goods billed at the real prices, and another at half the real price. The first invoice would be paid and kept se- cret, and the other entered at the cus- toms house to se- cure a dishonest tariff duty. "I'm sorry, but my house will not do that," said the salesman. "Your house doesn't know how to do business then," replied the Brazilian, ''for your competitor right in your own town bills this to me in this way. Here is my last in- voice to prove it." "Will you let me have it?" asked the salesman. "Certainly!" agreed the Brazilian, thinking that the invoice was to be used to convert the salesman's house. And the latter sent the fraududent document home, but for another purpose — so that his house could report the practice of its competitor to their trade association. That was done and the competitor made to bill export goods honestly. More than that, the salesman's chief told him to report the case to the Brazil- ian Government. But here it was wise to stop, as the salesman pointed out. Had he endeavored to extend education in straightforward business methods that way in Rio de Janeiro, naturally he would never have sold any more goods. That Brazil is by no means alone in such practices is shown in the fact that many American firms descend to tne double invoice in world markets. So do the British and the French and the Ital- ians — as for the Germans, they are cred- ited with inventing the practice. But other American firms refuse to falsify shipping documents, and very often, after the Brazilian customer has gone away and thought it over, he decides that such concerns are highly trustworthy in other business dealings, and returns with an order. As with other underhand methods, the abuse itself makes for re- form. Throughout Latin America it has grown so greatly that steps are now being taken through our own trade asso- ciations and the United States Govern- ment to stop it, after a general warning. If American business as a whole today happens to be somewhat more straight- forward than business on the southern continent, it is because we are older in experience. The Brazilian knows, figuratively, that 80 per cent honesty pays, 'and is working up through experience to, say, 85 or 90 per cent. We have been going to school long enough to know that 90 per cent is safe business, and believe we can eventually attain par. If we can help the Brazilian stiffen his are simply wrapped as we see them at home and arrive so tattered that hun- dreds of feet of the outer layers must be thrown away. Bad packing is the first thing in world trade that every young consul encounters, says United States Consul Haeberle, sta- tioned at Rio de Janeiro. During his own apprenticeship he wrote eloquent re- ports on this subject, like every other young consular assistant, and sent them home. There they were printed, and business concerns shipping goods badly packed were also notified by mail. To his astonishment, young Haeberle dis- covered that some of the worst offenders would not believe that there was any room for improvement in their shipping methods, and declared that he was mis- taken. Whereupon he adopted a quieter and more effective method. Visiting the docks with his camera, he photographed badly packed American goods with their marks for identification, and these were sent with his report, to be forwarded to business houses at fault. That led to improvement with- out casting dis- credit upon Amer- ican concerns whose shipments were received in good order. BIG BUSINESS GOING SOUTH O 1 NATIONAL MILITARY SCHOOL CADKTS backbone he will throw off his "Old Man of the Sea," and so, in the same way, will all Latin America. ARTICLE XXV BAD PACKING MAY COST U. S. BIG TRADE GAIN T> IO JANEIRO, Oct. 9.— Somebody in the United States is going to lose good business in newsprint paper very shortly. The newspaper publishers in Rio de Janeiro formerly bought their paper in Europe, but turned to the United States during the war. At least one of them, the publisher of the Jornal do Brazil, which uses probably as much print paper as any newspaper in the country, declares that he prefers Euro- pean paper and is willing to pay 50 per cent more for it. This is not a matter of quality, but simply of packing. Euro- pean paper comes crated and in fine con- dition, whereas rolls of American paper LD- TIMERS in Rio de Ja- neiro, which i s taken to mean Americans who have been there several years, say that a notably good class of American business men have been coming to Brazil since the armistice. Our business houses formerly sent out representatives. Now the principals themselves are going abroad to have a look into world mar- kets. A good example of the new Ameri- can business traveler was the vice presi- dent of a big New England hardware house who recently visited Rio de Ja- neiro. His concern has been selling famous trademark products all over the world for years, but in many places indi- rectly. He was sent out to shake hands with everybody, the first time an official of the company had ever visited the Latin-American trade. A month's stay in Brazil was a revelation to him. "Through our lack of real knowledge we have come close to missing one of the finest opportunities our company has ever had," he said, and steps are now being taken to build more direct connections, broaden distribution and advertise prod- ucts to the Latin-American consumer as they are advertised at home. The American salesman visiting the 60 BRAZIL southern continent and trying to do business in English still figures promi- nently in world- trade literature. Actually he is not very common. Everybody in Rio de Janeiro or Bue- nos Aires can re- call one such chap, but the story often dates back several years. Portuguese should be a good test in this matter, because, unlike Spanish, it is not widely taught in the United States. The faculty of a big Middle West- ern university was really astonished lately when told that Portuguese is the lan- guage of Brazil, and immediately ar- ranged for Portuguese classes. In any gathering of American business men in Rio de Janeiro nine out of ten will be found speaking Portuguese easily, and the tenth man, probably a new arrival, is studying the language. To practice a profession such as medicine or dentistry in Brazil, an American must pass a stiff examination, and have a knowledge far beyond the few dozen words and phrases that enable him to get along with wait- ers and chauffeurs. The American pro- fessional colony is constantly growing. Many Americans doing business in Bra- zil are of Latin-American birth or have had years of experience in the Spanish- speaking countries and have learned Portuguese as well. On the whole the North American in South America, in- cluding the Canadian as well as our- selves, is at home with the people in language and also temperamentally. WE ARE FROM U. S. OF NORTH AMERICA HpHE Brazilian calls the Yankee an "American," but when the latter speaks of himself prefers that he say "I am a North American." We do not have to go very far from home to dis- cover that we lack a handy international term for ourselves, like "Canadian" or "Brazilian." If we call ourselves "Americans" the people in twenty Latin- American republics protest that they are Americans, too, and so do the Cana- dians, and suggest that we are trying to monopolize two continents. If we use "United States" the Brazilian asks "United States of what ?" For his coun- try is the United States of Brazil and so designated on his money. Even the fa- miliar "U. S. A." has its duplicate inter- nationally because it also stands for the Union of South Africa. Really the only THE HOME OF THE U AMBASSADOR AT RIl way to thoroughly identify ourselves is as citizens of the United States of North America, which once led an English statesman to suggest that we be known by the initials as "Usonians." In the end, we are coming to be known as "Yankees," and this term, which is pecu- liar to New Englanders at home, means all of us abroad, and is an indispensable synonym. If you saw a ship with "Victoria, E. S." on its stern enter one of our. harbors with an unfamiliar green flag you would wonder where she was from. Victoria is one of the less known Brazilian ports, and "E. S." stands for the state of Es- pirito Santo. Many of our new ships built in New Jersey have been sent out lettered "Newark, N. J." It was sug- gested that they be lettered "Newark, U. S. A.," but the United States Steam- boat Inspection Service, with a certain official obliqueness of world vision, ruled that the American flag on our ships was sufficient identification of nationality. It has now been found advisable to substi- tute "Newark, U. S. A.," and that city is rapidly becoming known over the world as one of our leading seaports. Brazilians dress largely in black. The women appear as though in mourning, the men wear somber straw hats, and even the little boys wear a hard, shiny, mournful black hat which is made out of wood and painted to stand rain. So it strikes the automobile accessory man as odd that the Brazilians detest our black enameled automobile lamps, saying that they are "funeral lamps." They dislike them so much that they often remove those that come on an American car, sub- stituting others of brass, even if they have to have them especially made. Automobiles are almost invariably driven by chauf- feurs in Brazilian cities, and brass- work gives the chauffeur s o m e- thing to do in odd moments. On ac- cessories such as fenders, even nickel plating is not bright enough — it must be brass that responds brilliantly to an application of elbow grease. An American auto- mobile accessory man who recently visited Brazil says that local climatic conditions enter into it as much as local taste, because many fittings on our cars which stand up well at home soon rust in Brazil. These factors will repay technical study on the spot, with adaptations to conditions, as we have adapted motorcars, tires and accessories to local requirements and climates at home. Very often a slight change in manufacturing methods, such as giving brass parts an extra copper plating instead of nickel, will meet the Brazilian idea and make him happy. GUNPLAY MOVIE IS POPULAR MOVING-PICTURE titles on films shown in Brazil are not only turned into Portuguese, but even the names of the characters are translated — "Charles Harding," the hero, becomes "Carlos Jardineira," and so forth. A Brazilian journalist, who is very fond of our movies, insists that this is wrong, because the characters are American, and the Brazilian names tacked on to them, presumably by well-meaning title writ- ers in the United States, do not fit, and there is a loss of American character which Brazilians like in our pictures. Keep the original names he advises. Also, he criticizes our frequent use of foreign settings for movie stories, maintaining that Brazilians are most keenly interested in American stories and characters. An- other odd effect of American movies on the Brazilians is that when he sees a film full of western gunplay or New York crime it makes him a better Brazil- ian. Not understanding that movie sto- ries must have action even though they distort facts, he takes the gunplay and vamping as present-day life in New York and Wyoming and says, "Thank heaven, I live in Brazil!" Americans quickly take to the Brazil- ian maxixe, and the real thing both in the dance and the music might be intro- BRAZIL 61 duced in the United States to create a bond of every-day interest between the two countries. The maxixe is a quicker dance than the tango, being essentially a two-step, easier to learn than the slower and more complex tango, while also sus- ceptible of many graceful variations. The Brazilian maxixe music as played by Bra- zilian orchestras is full of its own par- ticular "jazz," being largely rhythmic variations of simple tunes, lacking the gentle melancholy of the tango. A pecu- liar Brazilian rhythm instrument is always played for the maxixe — a brass affair containing lead shot, which is rat- tled somewhat like the jingling of a tam- bourine. As with the tango, hundreds of maxixe records by native orchestras are made in Brazil, but demand for them in the United States has still to be cre- ated. ARTICLE XXVI LAW AND FAMILY LARGE FACTORS IN BUSINESS L>IO DE JANEIRO, Oct. 12.— To do business in Brazil you will have to learn a new word — "fiscalization." The "fiscal" is everywhere. Originally a sort of watchdog of the royal treas- ury in the Middle Ages, the Brazilians have made him an auditor and account- ant and checker-up generally, supervis- ing private as well as public business. If you build a railroad bridge for the government everything must be fiscal- ized, from the contract to the width of the abutments. And if you are a con- ductor on a Rio de Janeiro street car, you must be fiscalized every night when you finish your run. Brazilian business is full of legal for- malities. At home questions of law may not touch your business once a month, but in Bra- zil the law is with you every day, sometimes merely hampering things by our standards, and again facili- tating business. You are ham- pered in such matters as the re- quirements that the name of your company be trans- lated into Portu- guese. Sometimes it means about the same thing trans- lated, but in other cases you lose the cumulative value of a well-known name. Perhaps you can get around that by bluntly disregarding the law, as some foreign con- cerns in Brazil have learned to do. Then the government will fine you a couple hundred dollars, and by one of the sub- tle little adjustments of Brazilian for- malities the fine lasts a year! There are other odd requirements about business names, such as changing "Robinson Brothers" to something like "The Rob- inson Company," if there happened to be only two brothers Robinson in the con- cern and one of them withdraws or dies. OFFICIALS CHECK BOOKS RUT other formalities are commend- able, such as keeping copies of all business correspondence and important documents in a "fiscalized" diary. First you go to an official with an old-fash- ioned tissue-paper copybook, such as we used before the days of typewriters. Every page in this book is numbered and the official signs each page, though there may be a thousand, and also certifies that he has signed them. Then you make a letter-press copy of all your letters and documents, day by day and page by page, and your copybook is legal evidence in the Brazilian courts. You can have your business signature fiscalized, too, by reg- istering it with an official for twenty-five cents, and if a dispute arises over the genuineness of your signature, this regis- tered signature is the legal standing for comparison — sometimes a very handy thing, if you are away from home or have the misfortune to die. LANDING PIER AT RIO Brazilian business is involved in many courtesies as well as formalities. At first these may seem to the! Yankee sheer waste of time. But once accustomed to them, he may begin to suspect that our business ways often waste life and the humanities. Sales cannot be made with one visit to your Brazilian customer, for a sale involves much more than goods. Your customer wants to know something about you as a friend, and be friendly with you, and inquire about your family and your health. Even though he likes your goods and prices and yourself, perhaps he prefers to buy from an older friend. There is a certain business sense in this, too, if you remember that goods come from distant countries, and dealing with concerns that treat you well is often preferable to picking up bargains from unknown salesmen. It is perhaps just such a point in your Brazilian customer's mind that makes him put off the closing of a sale that to you seems finished. That is what people mean when they say, "It takes three years to know a Brazilian in trade." The Brazilian is cordial, courteous, affectionate and sensitive. Men embrace and often kiss their men friends, shake hands a half dozen times during a three- minute chat on the street, take their hats off to each other and are indignant over abuses of children or animals. They have a very strong sense of nationality, ar- dently desire that you think and speak well of Brazil, and like to say nice things about your own country. If your sale makes it necessary to demonstrate that your stuff is better than something the Brazilian possesses, you must let him see the superiority himself, because too strong emphasis will hurt his feelings. Brazilian alertness of intellect makes it unnecessary to be too obvious. HOME AND TRADE IN- SEPARABLE pAMILY mat- ters continually creep into business, as in other Latin- American coun- tries, The Amer- ican, British and German family are loosely held to- gether, so that members scatter all over the world, but the Latin family holds loyally to- gether and is the unit of society and the state. A n American engineer was erect- ing some machin- ery in Rio de Ja- 62 BRAZIL neiro. One Brazilian on the payroll, with the same name as his customer, never came to work, appearing only on pay day to draw his money. "How about this man Souza?" he asked. "He draws a hundred milreis a week, but never does anything." "Oh, that's all right," was the cus- tomer's reply. "You see, he's a cousin of mine." The American undertook to chaff Cousin Souza the following pay day. "If it's too much trouble to come in for your money, I could send it around to you," he suggested. But Cousin Souza was not at all abashed. "Oh, no! It is no trouble at all," he said. "I like to come around for it." High cost of cousins is a constant fac- tor in Latin-American business, and family often gets interwoven into busi- ness thinking. A Brazilian was placing a large paint order with an American salesman. He drew up a contract for the latter to sign. This document not only covered quanti- ties, kinds and terms minutely, but there was a special clause providing an income for the Brazilian's wife in case he died before the paint was sold. The sales- man had a good deal of difficulty in get- ting that customer to see that paint and life insurance were two separate lines of business. Business appointments are not at all sacred in Latin America. The Brazil- ian says, "I'll come in to see you tomor- row at 11." Probably he will arrive about 12, or perhaps not come at all. Re- minded of the matter later, he says, "Oh, yes; but I forgot! Can you make it 11 o'clock tomorrow?" After you get used to the Latin-American's indifference to time you will suggest calling him up about 10.30 to remind him of his ap- pointment- — which he thinks a splendid idea. In big business centers like New York or London, where the day's work is con- centrated between 10 and 4, and affairs mount up into large aggregates, and things are close at hand, scrupulous at- tention to appointments facilitates busi- ness. But down under the Tropic of Capricorn, 5000 miles from market, with mail steamers a week apart — and from the United States just now a month — a multitude of small transactions are spread out through the long working day, and a mere matter of an hour seems less important. YANKEE OFFICE BUILDING NEEDED DRAZIL has 25,000,000 population, with more than 250 cities with more than 20,000 population. It is the largest Portuguese-speaking country in the world, for Portugal at home has only 6,000,000 population and her colonies fewer than 10,000,000. Of the 40,000,- 000 Portuguese-speaking people in the "world, only 20 per cent, or 8,000,000, can read or write. To get a general or technical education, therefore, the Bra- zilian is obliged to learn another lan- guage, usually French, because it does not pay to publish scientific or technical books in Portuguese. The difficulties of language are probably responsible as much as anything else for the lack of a university in Brazil. While fervent ad- mirers of the French, and following their leadership in literature, art, architecture and the learned professions, the Brazil- ians are turning more and more to the United States for education in business and technical matters. They realize that a town with a municipal theatre but poor sanitation, and a country with a magnificent capital city but few schools, is somewhat out of balance. While re- taining the culture secured from Europe, they now want to apply the Yankee's energy and big-scale business methods to the development of their country. As much of the business in Argentina is done by Spaniards and Italians, so the Portuguese dominate in Brazil. Landing as poor immigrants from the home country, they work persistently, stick together and control pretty much everything, from the little fruit stand and coffee shop up to the big retail stores. The Brazilian, like the Argentino, com- plains that these immigrants do little for the real development of the country. They are chiefly traders, not leaders or promoters of new enterprises, and, after a certain number of years of hard work and frugality, are likely to return to Portugal, taking their savings with them. Rio de Janeiro needs an American office building. Suspension of construc- tion during the war made office space scarce, and now that every steamer from the United States brings men who are coming to live in Brazil, representing American business concerns, the demand is acute. A modern skyscraper would give economy of space on some promi- nent Avenida site and bring the Ameri- cans together out of a hundred old build- ings and side streets. • The real American business center now is the new hotel on the Avenida, the success of which demonstrates that an American skyscraper hotel is also needed. To please American patrons the man- agement provides dancing music every evening after dinner, and for each couple dancing there are a dozen spectators. The dancers are usually Americans and the spectators Brazilians. The idea of informal dancing is new, but they like it, and the idea of using the hotel as an informal gathering place is also new, and they like that even more. As life in many of our own towns has been en- tirely reshaped around its new Giltmore Hotel, so the Brazilian capital, with its first real gathering place, is being "city broke." ARTICLE XXVII MODERN RAILROADS NEEDED TO DEVELOP BRAZIL RESOURCES |^IO DE JANEIRO, Oct. 14.— The Railroader to the Automobile Man — When they told me at home that Bra- zil had 20,000 miles of railroad, nearly one-third the mileage in South America, they forgot to explain that it was chiefly a trimming of toy railroad on the fringe of the country. The Automobile Man to the Railroad Man — That's nothing; at home they told me Brazil was a great market for cars because it had 25,000,000 persons. But they didn't say anything about ab- sence of roads in the interior. When I get home myself I'm going to tell some- body something about Brazil. Seventy-five per cent of all the rail- roads in Brazil are in five central coast states. The coast of central Brazil is fringed with mountains, so that trunk lines are difficult to build and are rare. Behind the mountains everywhere lie Brazil's riches — gold, diamonds, man- ganese, cotton, coffee, cattle. Here and there puny man has been able to climb the mountain wall, bringing virgin wealth down to the sea. Now one har- bor taps a region and grows rich in trade, and then another, with a railroad that has no reference to any other railroad in Brazil — the gauge, cars, locomotives, ownership and management will all be individual. For instance, up in far Para, near the border of French Guiana, gold and other products have been leaking out through a French port because that was the near- est road to market. But the alert Bra- zilians now propose to have a 300-mile railroad from the border of Guiana to the Amazon, to reverse the traffic, and this line, with each of its feet in a river, will be almost the first railroad in a state three times the size of California. R. R.'S KEY TO "TREASURE BOX" TN THE state of Sao Paulo railroad progress has created a real transpor- tation center in the capital city, and some of the lines have reached a point where BRAZIL 63 electrification is possible. Farther south in the state of Rio Grande do Sul there are trunk lines connecting Brazil with Uruguay and Argentina. But, after seventy years of railroad building by gov- ernment concessions, chiefly to European promoters who have built narrow-gauge lines of limited capacity, with little co- ordination, Brazil — the real Brazil of amazing magnitudes — is still an unlocked treasure house. Railroad transportation is the key to unlock it. But it must be real railroad transportation on continen- tal lines like our own. So today Brazil is looking to the United States for the Yankee railroader. She needs the capi- talist and builder for new roads, and the promoter and operator to merge existing lines into real transportation systems. ernment guaranteed the French 6 per cent interest on their investments, re- gardless of earnings, and at the same time insisted that the construction cost not more than $7500 per kilometer — about $12,000 per mile. This did not permit building broad-gauge track along river beds, cutting away obstructions to give easy grades, reasonable operating ex- penses and volume of traffic at moderate freight rates. Instead, the builders stretched narrow-gauge tracks over the hills, winding around those too big to climb. The more kilometers, the more return on investment out of the federal treasury, regardless of traffic. When finished, this line reached from existing railroads, connecting Rio de Janeiro with Montevideo and Buenos Aires, about Presently there was trouble with the Brazilians and the French. When plans for wide bridges and tunnels were laid before the Brazilian "fiscal" he trimmed them down to the government limit, obeying the law of the original conces- sion. And because French investors still held the bonds, and feared loss, they op- posed the Yankees with rather malicious propaganda. Matters were further com- plicated by simultaneous operations in Latin-American railroads elsewhere, land development, cattle raising, lumber- ing and other enterprises, so that the Brazilians wondered if the Yankees had at last come down to annex their coun- try. Ultimately this big enterprise of the Brazilian Co. went into receiver- ship, and then came the war upheaval. AVBN1DA BOTAFOGO. THE FASHIONABLE BAY SHORE DRIVE OF RIO DE JANEIRO The American railroad promoter went into Brazil for the first time some years ago and tackled this job in a way that promised to give results. But when the Yankee idea of railroading met the Bra- zilian and European ideas there was a clash, and a receivership, and the Yankee promoter retired, with some undeserved discredit. The story is interesting because it illus- trates the past, present and future of Bra- zilian railroads: About twenty years ago French capi- talists secured a Brazilian federal con- cession for a railroad in southern Brazil. It was granted on conditions typical in Latin America, but which American promoters declare unsound for real rail- road development. The Brazilian Gov- equal to the distance from New York to St. Louis. But it takes ten days to make the trip! Then came the Americans, buying control through purchase of shares to turn it into a real railroad system. Re- construction was begun to provide a standard gauge line, hauling big cars over easy grades with big American loco- motives, laying down freight at moderate rates at the ocean. This could not be done for $12,000 a mile. But the Yan- kees said : "Damn the $12,000 limit. Go ahead and build the Brazilians a real railroad, with bridges and tunnels for double tracking later. If we do the job right it will develop the country, and we'll get our money later." Had it succeeded, however, that rail- road system would have been one of the best in Latin America, and after a period when American promotion methods were distrusted the Brazilians now begin to realize this. BALDWIN MAN ON THE SPOT A/TOST of the railroad built in Brazil up to the present time has been constructed, not for Brazil or the Bra- zilians, but for the profit of foreign con- cessionaries. As with port and other developments, the European promoters' ideal has been to secure a monopoly and work it for all it was worth today, keep- ing up freight rates and port charges in- stead of building volume of traffic for tomorrow. Narrow-gauge railway is a 64 BRAZIL tempting fallacy. With minimum capi- tal it permits the construction of mile- age over which to operate tiny cars and locomotives, winding around sharp curves in rough country. But operating costs are high and capacity small. Dis- regarding the Yankee railroader's axiom that "You build a railroad only once, but you have to operate it all the time," they have, through the concession system and guaranteed return on capital, tied down the Leviathan Brazil like Gulliver with pack threads of European "meter gauge" — and now it looks very much as though the Yankee railroader would have to get Gulliver out. At least one Yankee is on the job. He dropped into Rio de Janeiro quietly the other day, looked around for an office and then for a home. He is Colo- nel Chauncey H. Crawford, of the Bald- win Locomotive Works, Philadelphia, and is in Brazil with his family to stay. Colonel Crawford is an engineer and a railroader of long experience. When he finished war service with the general staff in Washington his boss told him to go to Brazil, not to sell locomotives, but to live and grow up with the railroad development of the country during the next ten or fifteen years. Brazil seemed far away. He knew little about it, and had to begin studying Portuguese. But there are certain advantages for the first- rate American business man who goes to a country like Brazil with a fresh mind. One of the first things that impressed him, Colonel Crawford says, is that Bra- zil has a wonderful system of rivers. These have been regarded as natural ad- vantages. But American railroad ex- perience has demonstrated that a river system cannot compete with a railroad system. The United States also has a wonderful system of rivers, and in the Mississippi steamboating days, made famous by Mark Twain, before the Civil War depended upon them for transportation and development. But railroads later not only carried freight more cheaply than rivers when run par- allel, like the Illinois Central and the Mississippi, but made growth possible in more favorable directions, along east and west lines to the Atlantic and Pacific in- stead of south to the gulf. The Brazilians are also on the job themselves. Two of President Pessoa's first appointments, on taking office last summer, and it is believed two of the best, were Brazilian engineers who have studied railroading in the United States — Dr. Pieres do Rio, the new minister of public works, who has appointed a com- mission to study standardization of rail- road gauge and equipment, and Dr. Assis Ribeiro, the new director of the govern- ment's Central Railway, an advocate of our master car builders' system of stand- ardized equipment, who has recently investigated the use of pulverized coal in the United States, and is experimenting with pulverized Brazilian coal as a promising solution of the fuel problem. Brazil's railroads, like those of Argen- tina, are operated with coal from the United States and England. This makes railroad transportation expensive. Cheap fuel is necessary for cheap transportation, and American investigators maintain that cheap fuel is not likely to be obtained from another continent. Brazil has low- grade coal which may prove suitable for railroad use when pulverized. She has great areas of petroleum in the Andes, which only require railroad transporta- tion to make them available. In great unprospected regions nearer at hand, just beyond the fringe of coast states, there is probably better coal and handier oil. On top of that Brazil is rich in water power, so that electricity is a possible future transportation resource. The bigness of the lailroading job in Brazil is made cleaver by still other difficulties — such as the possession of perhaps the greatest deposit of iron ore in the world, but without coal for turn- ing it into steel, so that practically all railway equipment except ties and wood work has to be brought in from other countries at high cost. But the very big- ness of the job makes it attractive, and the American railroader, after developing a continental country of his own, can help Brazil out of its toy railroad era into the continental railroad game. ARTICLE XXVIII BOND INVESTMENTS WILL AID TRADE WITH LATIN AMERICA jDIO DE JANEIRO, Oct. 19.— Through an odd confusion of for- eign words trolley cars are called "bonds" in Brazil. Various versions of the story are given, but in substance there was an issue of bonds in Rio de Janeiro to turn mule cars into trolleys, and people hearing the word "trolley" and "bonds" applied the latter to the new street cars. It is now a real Brazilian word made Portuguese by spelling it "bonds." The Brazilian term for a bond is "debenture." Thanks to our war loans, we know a little more about bonds — but not much more about Latin-American bonds or world investments generally. At the present writing the United States has taken only two bond issues of South American municipalities, both in Brazil, the cities of Rio de Janeiro and Sao Paulo. Some time ago the authorities in a north Brazilian city conferred with American investment men about a bond issue. This is one of the largest ports in the country, with 200,000 population, well governed and with good security for a loan. Our financiers admitted that the security was good, yet did not take the issue. "The difficulty is not in your city," they said, "but in the United States. Our investing public knows nothing about Pernambuco, and the sale of your bonds involves an educational campaign which we are not able to undertake." When some bonds of the city of Rio de Janeiro were sent to the middle west- ern branch of a big New York invest- ment house last summer to be sold to in- vestors a wail of protest came from the sales force. "Our customers won't take these se- curities," the salesmen insisted. "They don't know where Rio de Janeiro is, or even Brazil, and prefer securities of our own cities." The sales manager took a train, went to that branch, called the salesmen to- gether and held a class in geography. He showed them that Brazil was bigger than the United States, had just about as many people to the square mile as we had before our West was settled, and that a similar development of her inte- rior was about to begin. He told them that the British and Canadians had in- vested $1,000,000,000 there, where we had invested only $20,000,000, that her foreign commerce amounted to $27.50 per capita against only $10.34 for our- selves when we also lived along the At- lantic fringe, and that American money was needed to back the 50 per cent of imports that Brazil is now buying from us. Then passing to Rio de Janeiro it- self, he showed that it would be out- ranked in the United States in size only by New York, Chicago and Philadel- phia, that on a basis of per capita debt its bonds were twice as good as those of Boston or London and four times as good as those of New York or Paris, that she had 1000 factories, $150,000,000 export and import trade, $1,000,000,000 bank deposits, a stable government and in three centuries had never failed to pay her debts. Primed with some plain busi- ness knowledge about this new line, the sales force went out and quickly placed their quota of that issue. A similar campaign of education lies ahead of our investment bankers. Their representatives are now found every- where in Latin America, investigating the different countries, states, provinces and municipalities, and when they are able to go to investors in the United States and talk about the bonds of the state of Rio Grande do Sul or the city of Montevideo as they talk about the road bonds of Massachusetts or the school bonds of Grand Rapids, Michi- BRAZIL gan, Latin-American issues should be- come as familiar in the United States as they are to British and French inves- tors. Not all the countries and cities on the southern continent are attractive from the investment standpoint. Where one is found upon investigation to have good government, sound credit and a reputa- tion for faithfully meeting obligations, another close by may have extravagant government and unpaid debts. But on the whole the general average is excel- lent. If the French investor, for in- stance, held well-chosen, widely distrib- uted Latin-American bonds today instead of his enormous accumulations of Rus- sian, Turkish and other securities, now almost worthless, the reconstruction problems of France would be greatly simplified. U. S. PUBLIC OPINION NEEDED T ATIN-AMERICAN bonds fall into several groups. The most impor- tant and best known are those of the national governments themselves. Be- fore the war practically all such issues were marketed in Europe. When capi- tal was cut off there they turned to us. Our Liberty loans made it impossible to lend while we were at war, but now American bankers are investigating, and during the next few years should float large issues for the republics enjoying good credit. Another big group is that of securities to finance railways, ports, public utilities and improvements which will develop the resources of fertile coun- tries. Still another group includes bonds for city improvements and the building of schools, roads, water works and drain- age systems in smaller communities. To overcome lack of information by investors some of our bankers propose that sound Latin-American securities be purchased and funded, so that the Ameri- can investor will really be purchasing an American security, and be protected against possible loss. But Latin America needs more than our dollars. It needs intelligent public opinion in the United States. Just as we put more than dollars into the Lib- erty loans, the money being almost a by- product of a great educational movement, so Latin-American investment will be best for both borrower and lender if it is backed by understanding. We put our money into the Liberty loan because we had a clear picture of what we wanted to do with it. We will put our money into Latin America, too, when we get a clear pic- ture of the Latin Americans and of what they want to do with the money. Nationally, we might stop cartooning Latin-American countries as ragged lit- tle Indians and learn some elementary facts about them. There are ten republics in South America proper and ten more in Central America and the West Indies. All but three in South America are big coun- tries, Ecuador, Paraguay and Uruguay being the smaller ones, and all except Venezuela and perhaps Paraguay having fairly stable government. Apart from Mexico, most of the Central American republics, while small, are fairly stable politically, and should be absolutely so when their resources are developed, like those of Cuba, which has submerged poli- tics in work and prosperity. It has been pointed out that the only two Latin- American republics which are really backward, Santo Domingo and Haiti, are not Latin at all, but African in their civilization. Most of these countries are now in financial difficulties, nationally, but mak- ing determined efforts to solve their money problems, and pretty certain to do so and grow richer and more stable in the process. In the past they have bor- rowed unwisely, on pawnshop terms, given concessions and monopolies to get capital, spent money extravagantly and never had enough to develop their re- sources. Getting out of money difficul- ties involves better borrowing, better spending, better development and better politics. CEARA ENTERPRISE UNLIMITED [ OCALLY, Latin-American bond is- sues will be of a character so like our own that we should have little diffi- culty in getting the picture. As our town and county bonds and borrowing for schools and roads goes hand in hand with better communities and better com- munity spirit, so Latin America is enter- ing upon an era of community education through local taxation. As a sample picture take the Brazilian state of Ceara. This is one of the small- est states, but one of the most fertile, populous and enterprising. It suffers periodically from terrible droughts which have been a scourge for Ceara, yet in many ways a blessing for Brazil. When it rains crops are abundant and prosper- ity is everywhere in that state ; but when the droughts come the Cearenses, actually starving, scatter over half the republic. They have developed the rubber indus- try up the Amazon and are workers and promoters wherever they go. The Cea- renses are the Scotchmen of Brazil, and the Brazilians say that when Admiral Peary reached the North Pole he found a hut and a Cearense inside and said he had come up there to "see what was doing." The Cearenses will be borrow- ing money some of these days to develop irrigation facilities in their state. 65 Take anotner picture from Bolivia, which is a country of remarkable re- sources, but handicapped in development by being cut off from the ocean and by its mountainous character, lack of im- migration and other disadvantages. For years Bolivia's chief cities have been sub- ject to epidemics because they lacked sewer systems. After various failures, each of which taught its lesson, the Bo- livian government has now signed a con- tract with an American corporation to build sewer systems in two cities and prepare plans and a financial scheme for three others. This work will be paid for by Bolivian federal bonds. The facts in the case should make such se- curities no more difficult to market in the United States than bonds issued for similar purposes by one of our own com- munities, and when the Bolivians realize better health probably they will be will- ing to submit to higher property taxes to carry out further community improve- ments and be good customers for more of the American investor's money. To do more business in Latin America we must lend more. To lend more we must learn more about the different countries, and especially their local prob- lems and projects. Local development in the United States has been largely car- ried out through teamwork between communities and bond bankers. We have the money and the investment machinery — but we must "bone up" on the geogra- phy. ARTICLE XXIX BRAZIL ONE END OF BLIND ALLEY FOR U. S. SHIP LINES D IO DE JANEIRO, Oct. 19.— An American steel mill sold a fine order of rails to a Brazilian customer. When it came to shipment a difference of eighty cents a ton was discovered in the railroad rate to two different ports. The rails were sent by the cheapest route. When they were loaded into a foreign ship, however, the steel mill men were told that they really saved nothing at all — ocean freight was figured in such a way that the steamship company "absorbed" the saving offered by one of our own railroads. This happened several years before the war, when we hadn't a single merchant ship of our own traveling to Brazil. It gives an insight into the "conference sys- tem," whereby foreign steamship lines control ocean rates. Through agree- ments between different shipping lines and sometimes different nationalities, it has been possible to prevent fluctuations downward, take advantage of every up- ward rise and use deferred rebates to shippers as a reward for their patronage on one hand, or a punishment for send- ing freight by ships not in the combine. 66 BRAZIL VOTING PLACE FOR CITY ELECTION IN RIO DE JANEIRO In the case of these steel rails, more- over, the foreign ship was able to aid steel rail mills in its own country by artificially increasing the cost of Ameri- can rails laid down in Rio de Janeiro. Since that lot of rails was shipped to Brazil we have freight steamers of our own running to the east coast of South Amerl'-a, and plans for more. Every American familiar with East Coast pos- sibilities prays that there may be perma- nent service, both freight and passenger, by first-class American ships on those routes. But the ships must be backed up by understanding at home of the diffi- culties involved, and teamwork in over- coming them. RETURN CARGOES NEEDED HpHE freight route from the United States to Brazil, and also Argentina to some extent, is a blind alley for us. For twenty years shipping interests of other nations were able to keep us off those routes partly through the confer- ence system, but even more through the one-sided character of our East Coast trade. It was only by opening up the other end of the alley that the United States Steel Corporation succeeded in es- tablishing a new line of American steam- ers between the United States and Bra- zil in 1913. Our sea lane to Brazil is a blind alley because normally we ship twice as much tonnage as Brazil sends back. Our stuff runs to bulk, and the bulk promises to increase as we supply more coal, steel, cement, machinery, railway equipment and general merchandise to the Brazil- ians. Against this heavy stuff Brazil has only two or three things to ship back, with prospects that there will be a decrease in at least one of them the next five years. Brazil's chief tonnage to us is coffee, and recent frost in Sao Paulo will reduce the yield for several years, and consequently the tonnage. Cof- fee, cocoa, rubber, Brazil nuts, hides and skins make up the other important ton- nage. In 1917, roughly, we sent Bra- zil 1,000,000 tons of freight, and got back just about 500,000 tons of vege- table products. Therefore, every other ship that goes down loaded must come back empty unless we can find other cargo for it to carry — which is a heavy tax on our exports to Brazil. The United States Steel Corporation established its line of Brazilian ships by finding something to bring back. Man- ganese is used in steel making. The steel men turned their attention to Bra- zilian manganese ore, leased mines, put them under the supervision of experi- enced engineers, got the best ore down to the seaboard and sent it back to the United States on ships which had deliv- ered steel products and also carried gen- eral cargo for American manufacturers and exporters. In 1917 the manganese shipments from Brazil to us exceeded her tonnage of vegetable and animal prod- ucts, just about balancing the trade. SHIPPING TRAFFIC LOPSIDED DUT today the traffic is once more be- coming lopsided. For manganese can be brought from other countries more cheaply, and unless greater efficiency can be secured in mining, hauling and sell- ing the Brazilian ore, there will be no market for it. Even should Brazilian manganese dis- appear as a return cargo to the United States it will have taught a practical les- son to the Brazilians and ourselves — that there is usually some way for the constructive business mind to get out of a blind alley. In the vast range of Brazil's undevel- oped resources there are unsuspected raw materials which tomorrow, through ex- ploration, scientific research and indus- trial application, may create new ton- nage for our ships and new products for our factories. Opening up this blind alley is a job for the prospector, the chemist and the purchasing agent. European nations selling manufactured goods to Brazil are not handicapped in the same way. Dropping cargo at Rio de Janeiro, and lacking coffee for the return voyage home or on the triangu- lar route to the United States, where they load cotton for Europe after dis- charging coffee, they can steam down to Argentina and pick up a cargo of wheat or corn for Europe, which continually buys these foodstuffs where we have a surplus to sell abroad. We have im- ported occasional cargoes of Argentina's corn on the return voyage for use in making corn sugar to be exported for brewing, but the trade does not run to tonnage. Quebracho wood offers some cargo from Argentina, and so do beef, pork, meat products and hides. But there is not enough to balance our trade to the southern continent. There has been considerable apprehen- sion over the "Japanese invasion" of Latin-American markets. The Japs are there with their familiar line of imita- tion Occidental merchandise and their own cheap trinkets, carried on their own ships. But their ships come into east ports weeks apart, and sometimes months, and it is said that lack of return cargoes, together with the small bulk of Japa- nese goods, makes the building of trade very difficult. Actually, South America is a way station for Japanese ships bound to Europe, and some of the best business in true Japanese products, such as fine silk fabrics, is done by British houses sell- ing in South America. With an empty ship on his hands in Rio de Janeiro or Buenos Aires, the re- sourceful shipping agent looks over the world for cargo. To the east there is only Africa, which offers little to us as yet because we lack trade connections there. To the north are the West In- dies and Central American republics, which offer only occasional cargoes. To the northeast is Europe, with so little bulk cargo coming to the United States that it cannot keep its own ships busy except on triangular routes — coal and merchandise to Latin America, coffee to the United States, and cotton and other raw materials to Europe, to make more merchandise for Latin America. "The plain truth is that when you have a line of American ships fit to han- dle east coast South American trade," said a veteran shipping man in Rio dc Janeiro, "you can get more trade and make more money by putting them to work on some other ocean route." Does this mean that we cannot do busi- ness with Latin America in our own ships? Not at all; it simply shows our neg- lect in the past, and invites us to take off our coats and get busy. TREASURE HIDDEN IN BRAZIL DRAZIL is full of minerals. It may *^ not pay us to carry home her iron ore while we have great supplies in the United States and Cuba. But technical improvements in industry whereby man- ganese becomes a cleanser for steel, and menazite sand yields thorium for incan- descent gas mantles, demonstrate that unsuspected cargoes may be found in Bra- zil's wilds tomorrow by the chemist. Brazil is rich in hardwoods, and the de- velopment of hardwood cargoes seems to be a problem for our manufacturers, who could doubtless make many a factory product better, cheaper, more beautiful, more durable, more suitable technically, if they knew what these woods are and their characteristics. The Brazilian jun- gle is full of nuts, some good to eat, like the "niggertoes," some good for buttons, like vegetable ivory, and others full of oil. The latter invite attention as raw material for our vegetable oil industry, and unquestionably have undeveloped technical qualities. Brazil's soil will grow anything under the sun except, perhaps, Iceland moss, and the way her farmers ran up tonnage of beef and beans during the war revealed a world of cargo possibilities. During rhe war the European confer ence system of controlling ocean freight traffic broke down completely, but steps are being taken to establish it again. American shipping men maintain that this system, far from harming our world trade in the past, has been beneficial, and that, far from fighting the confer- ences, we should join them for team- work. Brazil decided to fight them in 1906 through her subsidized Lloyd Brasileiro steamships, and succeeded in carrying 50 per cent of the merchan- dise tonnage from the United States to her own ports before the war, in direct trade, as against the indirect traffic oi the conference lines. But she never suc- ceeded in carrying her own coffee in nor- mal times, and coffee makes up the big- gest bulk of return cargo to the United States. When we have fast, comfortable steamships running frequently to Brazil and Argentina, some of the disadvan- tages in securing return treight may be overcome by passenger traffic. Latin Americans are just as willing to use our country as a market, a school, a play- ground and a winter or summer resort as we are to use their countries and con- trasts in climate. Our sea route to the east coast of South America has become a blind alley, largely through own own neglect. We have solved much knottier transporta- tion problems at home by boosting the BRAZIL volume of traffic. It is up to the Ameri- can business man to boost our traffic both ways with Brazil and Argentina. R 1 ARTICLE XXX U. S. SALESMEN, SHY ON DETAIL, FAIL IN SOUTH AMERICA IO DE JANEIRO, Oct. 21.— The • biggest sale anybody can make in world trade is the sale at home, before he starts, to his own boss, or the board of directors, or whatever powers may be. Latin America is full of disappointed Yankees who have failed to make that sale at home and found themselves lack- ing support, and also full of half-organ- ized connections and outlets for Ameri- can goods for the same reason. So before H. H. Batcheller started for the southern continent last summer he took extra pains to have his boss visu- alize the possibilities in world markets so that he would be consistently sup- ported when he arrived abroad. In this case the "boss" is composite — the board of directors and management of the Elgin Motorcar Corporation, in Chi- cago. Mr. Batcheller is export man- ager of the company, with years of ex- perience in South America as a ship- ping man. He speaks Spanish and Por- tuguese, and went with all the advan- tages of acquaintance to back up the directors. But even then there were difficulties and omissions, and the story of just how he established the first Elgin branch in Rio de Janeiro gives a con- crete viewpoint of this direct branch proposition. The sale at home was made against typical 1919 difficulties. Like every other manufacturing concern, this com- 67 pany can find plenty of customers for its present output, and the allotment of even a small number of cars to world markets calls for careful management. World markets may not be really needed for several years. But they will be needed some day, and now is the time to establish real world connections. Be- fore starting it was necessary that direc- tors not only visualize this in terms of company policy, among many other pol- icy considerations, but also become en- thusiastic about it and determine to stick. Mr. Batcheller found the Brazilians decidedly excited about prospects of new automobiles from Europe. During the war they have been buying American cars, but before that European cars dom- inated the market. There is a belief that the European automobiles are bet- ter, and while the Brazilian cannot ex- plain why, the belief exists and must be dealt with. European cars of pre-war days, still running in Brazil, are highly ornamental, with their brass work and nickel plating, while the Yankee cars are rather plain in this respect. The Brazilian is beginning to see that Yankee lines have beauty, but is still partial to brass work. The idea of fashions in motorcars, with a new model each year, is still novel to him, because durability has always been the prime merit in Eu- ropean cars. Because he valued an au- tomobile for its lasting qualities, the second-hand branch of the automobile business is not yet developed in Brazil. EUROPE BEHIND IN AUTOS "pUROPE is not yet sending automo- biles to South America, but she is sending wonder stories about new cars made by Yankee quantity production methods — French cars, Italian cars, British cars and what not, of marvelous POLICE GUARD OUTSIDE OP POLLING PLACE ON ELECTION DAT 68 durability, ornateness and cheapness. In- vestigation of this situation leads Mr. Batcheller to believe there are very few cars behind the stories. In one or two cases European manufacturers really have developed cars with a view to quantity production, but the economies of quantity production are possible only when output reaches 15,000 to 20,000 automobiles a year, and these figures still seem enormous to European automobile manufacturers. The first step was to find a repre- sentative in Rio de Janeiro. This re- quired considerable search, and the right man proved to be a Brazilian, trained in mechanical engineering in the United States, who was connected with an im- porting house handling automobiles, but wished to embark in business for him- self. Not possessing sufficient capital to finance a branch, however, it then be- came necessary to form a connection with an importing concern in Rio de Ja- neiro, and that was done, the representa- tive becoming manager of the automobile department, with a substantial interest in every car sold. With one or two ex- ceptions, Mr. Batcheller found display, service and upkeep of automobiles in Rio de Janeiro capable of vast improve- ment. The next step was novel — that of let- ting Brazilians know in a very short time that the Elgin car had arrived and possessed interesting qualities. For that purpose a jumping demonstration had been planned on spectacular lines. Evolved at home, it was just the sort of "stunt" likely to appeal to the folks down in Latin America, where hardly anything of the sort ever has been seen. This jump was made by building an in- cline on some prominent street, sloping upward from the pavement to a height of two feet. The car is then driven up the incline at about fifty-five miles an hour and leaps fifty to sixty feet in the air, reaching a height of about four feet. It takes a light, strong, flexible automo- bile to do it, and is hazardous. The driver must be expert, meeting the shock by partly rising from his seat. A special driver accompanied Mr. Batcheller for this performance. DEMONSTRATION IS SUCCESS TX) SECURE permission for the use of a prominent street in Rio de Janeiro and police assistance in handling crowds took considerable time, for the idea was new. When arrangements had been made, invitations were sent to promi- nent Brazilians, particularly officials and automobile owners, and the jump was pulled off on a bright Sunday morning. The effect was magnificent. The Bra- zilians liked the show, and with true Latin enthusiasm carried the driver on their shoulders when the stunt was over. There is a circus element about our au- tomobile industry, and the Latin Ameri- BRAZIL cans make the finest possible circus audi- ence. This performance was later repeated at Sao Paulo and immediately brought the Elgin car into notice. Motor own- ers and drivers discussed it and came up to examine the car wherever it appeared. The car itself could have been sold many times over after the demonstrations, and this was one of the omissions in plan- ning Mr. Batcheller's trip. Through factory difficulties it was possible for him to take only a few sample cars, whereas had substantial shipments been possible, furnishing a stock of cars for direct sell- ing after the demonstration, buying en- thusiasm would have been utilized in immediate sales. After establishing branches with com- petent representatives and a good dis- play, backed by cars for immediate de- livery, the next essential is service to purchasers. The Elgin organization in Latin America will include trained serv- ice men at each branch, with traveling service men covering the territory, visit- ing branches and owners. Upkeep of automobiles in Brazil is far below our own standards. Brazilian mechanics have not enjoyed facilities for learning mechanism, and automobiles are consid- ered satisfactory so long as they actually run, regardless of squeaks and rattles. Because squeaks and rattles are not rem- edied from day to day automobiles stead- ily deteriorate. At the end of five years, lacking a second-hand market, the car becomes a taxicab. While Brazilian drivers are not yet good mechanics they are good chauffeurs because supervised by a very commend- able license system. It takes fully one month to secure a chauffeur's license. During that period the candidate must pass examinations and undergo road trials, be photographed and leave his fin- gerprints with the police and his license is a book in which the authorities keep his record. If he is arrested for careless driving that is entered in the book, to appear against him the next time he gets into trouble. Owners can drive by se- curing a different form of license, but this takes time and routine and deters driving by owners and especially driving by women, who find the police routine distasteful. The Rio de Janeiro authori- ties have co-operated with the American Chamber of Commerce in modifying license regulations so that American au- tomobile salesmen who are competent drivers secure permission to drive in connection with their work. Mr. Batcheller advises American au- tomobile manufacturers to decline cable orders for a few cars, sent by importers in world markets, who merely wish to add a few automobiles to their diversi- fied assortment of general merchandise. Unless the manufacturer goes into world markets right, with a real organization, he is merely dabbling with the business, getting nowhere himself and bringing discredit upon others. Automobile sales should be backed up with service. Great care should be exercised in se- lecting men sent abroad to establish world trade outlets. They should be first-rate American business men speak- ing the other fellow's language, not for- eigners chosen because they have the sin- gle qualification of language. Once abroad, business should be done by fast cable regardless of cost. Through some queer pennywise-pound-foolish viewpoint many a big American concern tries to do business by letter with its men in world markets, whereas with contracts and or- ders being shaped up from day to day and buying enthusiasm created through hard sales effort, even deferred cable mes- sages are too slow and cause delay which kills sales and buying ardor. ARTICLE XXXI "COAL" IS THE KEYWORD TO LATIN-AMERICAN TRADE jD^IO DE JANEIRO, Oct. 25.— "Coal" is the keyword to Latin- American trade, and Brazil shows why. Her fuel consumption amounts to 3,000,- 000 tons a year. This runs her railroads and river boats, bringing products of forests, soil and mines down from the interior to be sent abroad for manufac- tured goods. We need Brazil's coffee and rubber, while Europe needs Brazil- ian meat and hides. Lacking coal mines of her own, we must furnish Brazil the fuel to keep her industries going and de- velop new resources. Before the war John Bull sold more than 6,000,000 tons of coal yearly to Brazil, Argentina and Uruguay, while our sales were less than 500,000 tons. "Coal" was also the keyword in Brit- ish merchant shipping and world trade, because it kept ocean tonnage employed outward from England on the first leg of the triangular trade routes that char- acterized British overseas commerce. During the war the United States largely supplied Latin America's coal. To be sure there were only half rations, but profound changes occurred in the trade, and now that war is over there promise to be further changes. BRAZIL 69 Today Brazil is buying most of its coal from the United States, and Phila- delphia is doing the selling. Actual ship- ments are made through Norfolk, but the only American coal concern with its own representatives and branches in Rio de Janeiro and Buenos Aires is a Phila- delphia concern, Gano, Moore & Co. When the armistice was signed M. Rea Gano, president of the company, set out to investigate the coal situation from top to bottom. He began in France, being among the first civilian visitors to the devastated regions; went on to England, and followed with two visits to Brazil and Argentina. His investigations cov- ered every phase of the situation, which is complex, and when he sailed home from Rio de Janeiro in September he was able to answer many questions which men in world trade in the United States, England and Latin America have been asking themselves the last year. "The Latin- American coal trade is ours for several years to come," Mr. Gano said. "The first factor to be taken into account is the French mines. In my opinion, these are absolutely ruined and cannot be made to yield for many years. The next factor is British coal pro- duction. Before the war it amounted to 280,000,000 tons a year, of which 150,000,000 tons were used at home and 130,000,000 tons exported. Great Britain to- day is mining only 175,000,000 to 200,000,000 tons, and so is in position to export only from 25,000,000 to 50,000,- 000 tons. There can be no great British coal exports this year, because the indus- try is upset by labor troubles, and even should strife cease it will take years to bring production back to normal. For the British coal mines were 'robbed' for military purposes during the war, and can only be brought back into produc- tion by costly development. France will need all the export coal that Great Brit- ain can supply for several years. The state of the British coal industry is really pitiable and indicates that Latin America must look to us for her fuel supplies. AMERICAN COAL $24 A TON "/")UR own production has increased during the war, rising from 550,- 000,000 tons to 700,000,000 tons. Of this, probably 150,000,000 tons will be available for export, and with the pres- ent shipping facilities enjoyed by Ameri- can coal exporters it can be sent on defi- nite delivery contracts to virtually every country in the world. "But our task is not easy. The Ameri- can coal industry faces a labor shortage, with decreased efficiency of the individ- ual miner. Return cargoes for coal ships from Brazil have dropped off because we are buying manganese cheaper in other countries, and it will be necessary to organize for return cargoes from Argen- tina. But our advantage is strikingly shown here today in Rio de Janeiro. 1 have just unloaded a cargo of American coal at $24 a ton, and for bunkering one of our chartered ships just now am buy- ing British coal at $35 a ton." "Will it be possible to install Ameri- PATHBR PETRA. FIRST PRIEST CANDIDATE FOR ALDERMAN can automatic coal-handling machinery in Latin-American ports?" Mr. Gano was asked. "The present methods of unloading by hand labor, and especially into lighters, seem slow and costly. Would automatic machinery cut costs and cheapen coal to Latin-American con- sumers?" "That is a complicated problem," he answered. "It is political as well as economic. Let us consider Rio de Ja- neiro. Hand labor here is cheaper than people think. When stevedores are speeded up they will get 1200 to 1800 tons of coal daily out of a ship. An au- tomatic handling installation capable of taking several thousand tons daily out of several ships, and with 100,000 tons' storage, would call for a $2,000,000 in- vestment. It would be necessary to buy an island here and bring all the machin- ery from the United States. Fixed charges of interest alone, at 6 per cent, would be $10,000 a month. If all Bra- zil's coal could be handled that way there would be lower costs on 300,000 tons monthly. But the political complications are so many that a similar investment at home, in some other direction, might be more attractive. TARIFF ON COAL $3.50 "DRAZIL imposes a tariff duty of 14,- 500 milreis per ton on coal, equal to $3.50 our money. This is assumed to protect her own coal production. But the greatest possible Brazilian produc- tion is figured at only 200,000 tons a year. It is nearer 100,000 tons, actual output. The mines are far south in the state of Rio Grande do Sul, the coal is inferior and costs more delivered in Rio de Janeiro than American coal. 'Why protect coal that you haven't got?' is one of the first questions that Brazilian 1 e g i s- lators may well ask themselves, and from them must come the answer. "Another handi- cap of political character is the multitude of taxes and fines imposed upon business men hy the Brazilian government, fed- eral and state. A slight oversight in the wording of our company's sign here in Rio de Janeiro, for in- stance, would lay us open to a 5 per cent tax upon our capital. Both in Brazil and Argentina there is a disposi- tion to burden outside enterprises with taxes and regulations and very often su- perfluous employes. In the end it is not outside enterprises which pay these taxes, but the Brazilian and Argentine peo- ples themselves. They pay not only in the form of unjust prices for commodi- ties, but in tardy development of their resources. The Brazilians and Argen- tinians have wonderful opportunities to develop their countries. It is largely lack of experience in big business enter- prises, together with an unbalanced "scheme of taxation through a multitude of makeshift imposts, that leads them to hamper outside enterprises. No true friend of these countries should keep silent on such a point, for outside capital carefully weighs such considerations and sees the disadvantages, even though the 70 BRAZIL Brazilians and Argentinos do not, and goes elsewhere. It is not enough nowa- days to get capital to work for you — you must help it work with facility." During the war persistent efforts were made to discredit American coal among Latin Americans. In more than one in- stance cargoes of the cheapest grade were bought in the United States by middle- men of other nationalities and sold at a good profit in Rio de Janeiro and Buenos Aires. When purchasers found difficulty in burning this stuff, full of slate and rock, they were told that it was typical American coal, thus strengthening the prevalent belief on the southern conti- nent that our coal is inferior to that from other countries. TENDENCY TOWARD MAN-POWER D IO DE JANEIRO has only one coal deposit situated so that large ocean steamships can go alongside a dock and fill their bunkers. As bunkering facili- ties have been almost entirely controlled by other nations, and our effort thus far has been along the line of selling coal by the shipload to large purchasers in Rio de Janeiro, both our naval and merchant ships have been dependent on the facili- ties of other nations, paying higher prices than were charged for American coal bought by Brazilian railways, pub- lic utilities and manufactures. Mr. Gano intends to lay this situation before the Navy Department and United States shipping board, believing that the instal- lation of modern unloading and bunker- ing facilities at Rio de Janeiro and other Latin-American ports is not entirely a matter of private business. Some years ago automatic equipment for unloading American coal was in- stalled in Rio de Janeiro harbor to lower costs on the fuel supply to a public util- ity company and also one of the Brazil- ian railways. This equipment was de- signed in the United States, and op- erated very efficiently for a time, hand- ling 2000 tons a day. Through some shortcoming in installation, said to be due to scamp work on the part of a con- tractor, who used defective concrete pil- ing, a section of the unloading platform collapsed while an American steamship was discharging coal and the equipment now lies idle, the subject of a lawsuit. In another case an American automatic device for handling cargo lies idle be- cause there is prejudice against it. In still another case an American shipping company offered to install a $500,000 unloading device at the dock of a Bra- zilian steamship company, serving a Bra- zilian railroad as well, but the project fell through because the Brazilian com- , pany would not permit the American company to operate its Own equipment. So, on the whole, as Mr. Gano main- tains, the installation of labor-saving de- vices in Latin America seems to be very largely a matter of self-education for the Latin Americans. ARTICLE XXXII . AMERICAN BANK METHODS WON FIRM HOLD IN BRAZIL J^IO DE JANEIRO, Nov. 1.— In April, 1915, a little party of Ameri- can bank men got off the boat in Rio de Janeiro, squeezed into the already crowded Rua Alfandega, the narrow side street which is the city's financial center, and began business with a torce number- ing less than a dozen people. They knew a good deal about banking as we do it at home, but not very much about Bra- zil or the Brazilians — but they were willing to learn. In September, this year, the branch of the National City Bank of New York which they started then moved into a three-story building of its own on the Avenida Rio Branco. Today the organi- zation numbers 130 persons, the bank has $65,000,000 deposits, is the largest of all foreign banks in Rio de Janeiro, except only the Portuguese, and is the fourth largest bank in the city, with other branches in Sao Paulo, Santos and Bahia. Moving a bank out on to the main boulevard is something new in the Bra- zilian capital. The Yankees quickly saw the convenience to depositors, and have combined prominence of location with a position in the old bank center, because the building is at the corner of the Aven- ida and the Rua Alfandega. They will not be alone on the Avenida very long, however, because the Canadians are set- ting up shop in Rio de Janeiro with a branch of the enterprising Royal Bank of Canada on the Avenida, too. Our Yankee bank has grown in Bra- zil because it gives the Brazilians better . banking service than they ever have en- joyed before. Take collections as an illustration. Brazil is scattered all over creation. It takes three weeks for a letter to travel from Rio Grande do Sul to Manaos, and communication to points in neighboring west-coast countries is often carried on best through New York. When the Yankees came to Brazil business men were paying as much as one-half of 1 per cent to banks for collecting money from customers in connection with the big do- mestic business carried on through Rio de Janeiro, and these collections were scattered among two dozen different banks, Brazilian, British, Portuguese, Spanish, French and Italian. The Ameri- can bank gave collection service for one- quarter of 1 per cent, built up volume, reduced its charge to one-tenth of 1 per cent, and today has half the collection business of the city. BANKERS SPEED METHODS \\^HEN the traveler stepped into a bank in Rio de Janeiro five years ago to get money on his letter of credit the teller asked him to come back several hours later, or perhaps next morning. There is quite a little paper work con- nected with drawing money on a letter of credit in Latin-American countries. First, three bills of exchange must be drawn, the original to go in one mail, the duplicate in another, and the third to be filed away bearing internal revenue stamps. The customer signs these bills, the amount is entered in his letter of credit, and then pounds or dollars must be converted into the Latin-American money at the fluctuating rates of ex- change. Cash slips must be made out for the bookkeepers after that. Bankers handled these details leisurely, like checks and clearings, after hours. The Ameri- cans immediately speeded up letter-of- credit service so the customer gets his money over the counter in a few min- utes. Foreign exchange is handled in the same aggressive way, and with salesman- ship and personality. Brazilian business is done in a dozen different currencies, European and Latin-American. As a rule, the British bank sticks pretty close to pounds and milreis, the French bank to francs and milreis, the Portuguese banks to escudos and milreis, and so on. None of them was at home with the dollar. The American bank put foreign ex- change in the hands of a man thor- oughly at home with all the curren- cies, quick at figuring the rates, prompt in buying any good paper presented and reaching out all over Brazil for it with salesmanship and service, not to mention better terms than were offered by other institutions. Therefore, the Yankees also have the bulk of the for- eign exchange business. Checks are very little used in Brazil as yet, though they would effect great business economies. The American bank and its American depositors are making checks better known by the practical method of using them in everyday trans- actions, and efforts are being made to in- troduce them with the co-operation of the Brazilian Government. In a country where virtually every- thing pays duty at the customs house even the small business man has almost daily dealings with the government. When a Brazilian importer pays tariff duties now he goes to the bank, draws cash, takes it to the customs house, and the money is then returned to a bank. This involves counting and handling a half dozen times. If checks were used, money need not be handled at all, but would remain BRAZIL 71 in the banks, and the business transacted by accounting and clearing. Govern- ment officials are beginning to see the convenience and economy of checks, and contemplate authorizing the acceptance of certified checks for the payment of du- ties and taxes. This would greatly fa- cilitate Brazilian business and lead to the use of checks in other transactions. The chief difficulty to be overcome is politi- cal opposition from thousands of govern- ment employes who are kept busy count- ing cash under the present system. SERVICE IS APPRECIATED HpHAT Brazilians appreciate service in banking is shown by the rapid growth of the American bank, which has become one of the leading financial in- stitutions of Brazil in less than five years. It is not easy to do business in Brazil. Distance and time enter into most trans- actions, for some sections of the country are farther away than the United States or Europe, so far as business facility is concerned. Banks are often lacking in the interior. There are few railways; the republic has an inelastic currency sys- tem which restricts credit, and currency is not merely insufficient to transact the business of the country but circulates with difficulty. European banking is often done on horse-trading principles. The banker handles each transaction for the utmost profit. One depositor bargains with him for a good rate of interest on a small balance this morning, and he makes it up this afternoon by permitting some nervous old lady to keep her money in the bank for nothing. The American idea in banking is to build volume of business through serv- ice, cut down costs, share economies with customers, treat everybody alike in the matter of interest and terms and facili- tate business in every way. Accustomed to European methods in the past, the Brazilians seem to like our methods bet- ter. American bankers have been financial teachers at home the last ten years, ex- tending the use of checks and trade ac- ceptances through educational methods, inculcating thrift, encouraging safe in- vestment of money and skillful use of credit, and so on. Brazilian finance and business can be facilitated through simi- lar improvements and business education, and so there is a field for the American banker in his capacity as teacher and business leader. Much good work for both American and Brazilian houses has been done through the American bank's commer- cial service department. If the Brazil- ian wants to buy goods in the United States the bank will put him in touch with responsible manufacturers and mer- chants, and, through its organization at home, make certain that the concerns to whom Brazilian customers are referred have the facilities and experience for con- ducting world trade. This teamwork is overcoming handicaps of time and dis- tance in dealing with the United States, and is eliminating mistakes, misunder- standings and friction generally. EMPLOYES TAUGHT IN SCHOOL HpO AMERICANS visiting or living in Brazil the bank offers every service, regardless of whether they happen to be depositors or not. Its commercial repre- sentatives will make a hotel or steam- ship reservation or an extended investiga- tion into some business field with the same facility. None of the other banks in Brazil has anything of the sort. Another interesting feature of the bank is the language classes. It has been difficultto get employes who understand American banking and also Brazil. Banking men from home were sent down at the outset and "translated" into Portuguese and the Brazilian busi- ness methods. Then Brazilians were added as the organization grew, and to- day it is almost entirely Brazilian ex- cept in management, and even there Bra- zilians have risen to the supervision of departments. This quickly raised the language question, of course, and it was solved by establishing classes in the bank where Americans could study Portuguese and the Brazilians learn English. There are two classes daily, from 8 to 9 in the morning and 5 to 6 in the afternoon, so that students come an hour before the bank opens or stay an hour later after business. All American employes are re- quired to learn Portuguese, and this ap- plies also to the Brazilians and English, with some exceptions. The Brazilians make good progress against difficulties which do not handicap the Americans, for where the latter use all the Portu- guese they can learn every day, the Bra- zilians find few opportunities to use their English. Therefore, they learn to read English first, and to understand it, be- fore they learn to speak the language. The ability to read in English is decid- edly helpful in their work, because much of the bank's correspondence is in our language, as well as its publications at home, like house organs. So are the technical journals and books dealing with American banking methods. These pub- lications, together with American maga- zines and newspapers, are available in the 1 ink's reading room. ARTICLE XXXIII SAO PAULO IS BRAZIL'S BEEHIVE OF INDUSTRY |^IO DE JANEIRO, Nov. 3.— "Say, where is that town anyway — is it on the map?" The speaker was a Chicago packing- house executive and his boss had just told him to go down to Sao Paulo, Bra- zil, finish building a big new plant and get it running. He had never heard of the place before — didn't know how to pronounce it. It is pronounced "San Paulo," and is the third largest city in South America, approaching 500.000 people. The Chicago man quickly found him- self at home there, for Sao Paulo makes a strong appeal to most Americans. It is an industrial center, backed by Brazil's developing west, and the practical Amer- ican, studying its location, business and future, understands it in terms of his own town at home and believes in Sao Paulo and roots for it. After Rio de Janeiro, balmy and color- ful, Sao Paulo is, in some ways, a city one might admire but not love. The fin- est railroad train in Brazil takes you there over night, the "Luxo," with com- partment sleeping cars. Leaving sunny Rio de Janeiro, you go "up south" and also up into the coast range of Brazil, so that next morning you probably land in rain or penetrating cold. Next you discover that this city, the size of Buf- falo, has only one good hotel, the Grand Hotel de la Rotisserie Sportsman. Its manager is a much harassed man. Each morning fetches its trainload of travel- ers who plead with him for rooms, bring influence to bear upon him, jolly him, bully him and wait all day, fluctuating between hope and despair. His hundred rooms are one of the finest monopolies in the world, but his job is nerve rack- ing. Sao Paulo's beauties are not architec- tural, but industrial and commercial. An amazing tangle of narrow, crooked streets, it outdistances Boston's cow paths for complexity. Were not coal so expensive in South America it would probably have Pittsburgh's smoke — for- tunately its factories run largely on water-power electricity, of which it has sufficient for a city four times the size. But when one studies it from the business standpoint it is revealed as a city with a remarkable past and a still more remarkable future. For, through its port of Santos, about sixty miles away, it is the outlet for the greatest railroad sys- tem in Brazil, which centers at Cam- pinas, about 150 miles to the northwest. Brazil is like Gaul, divided into three parts — the Amazon country in the north, with its gateway through Para ; the cen- tral portion that finds outlets through Rio de Janeiro, Bahia and Pernambuco, and the prosperous southern region, with 72 BRAZIL ports at Santos, Porto Alegre and Rio Grande do Sul. But Santos and Sao Paulo are also the gateway for Brazil's great New West. RAIL EXTENSIONS PROPOSED T OOK at the map and you will see that from Santos to Campinas the railroad is like a wrist, and northwest from Campinas the hand develops, with fingers reaching up into the states of Minas Geraes, Goyaz and Matto Grosso. These fingers are constantly growing. During the next five years they will probably be extended farther than any other railroad lines in South America. Each extension means the settlement of new coffee, cattle and farming lands, pro- ducing wealth for export, together with cotton, wool and other raw materials for the factories of Sao Paulo. Ultimately they will open up not merely the great Brazilian interior, but connect with rail- roads in Bolivia, Peru, Ecuador, Colombia and Venezuela. The Pan-Ameri- can railroad, with express trains from New York to Rio de Janeiro and Buenos Aires, will ultimately be sev- eral railroads, run- ning down through Mexico, Central America and the southern continent through Brazil, Peru, Bolivia, Chile and Argen- tina. Through con- nections may be made on several of these Campinas fingers by all-land route, and another finger may run almost due north through the Amazon country to some Venezuelan port, con- necting with steamships for New Or- leans and New York. Between Sao Paulo and Santos there is a granite wall, so steep that the single railroad climbs 2500 feet in a distance of about seven miles, and operation is by cable haulage, with electricity, part of the way, because locomotives are not equal to the grade, one of the steepest in the world. Freighting is not only slow but so costly that cheap bulk products cannot be sent to the ocean. Thus, Bra- zil's great interior is like a bottle with an exceedingly narrow neck, and a very little study of the situation demonstrates that some day the neck of this bottle must be enlarged or broken. Just outside of Sao Paulo, Armour & Co. are building the largest meat-pack- ing plant in South America. It has ca- pacity for loading eighty big refrigera- tor cars at once. Three such trains are needed to load the average refrigerator ship. That plant alone, working full capacity, promises to congest the single cable railroad to Santos, already carry- ing most of the coffee that the world drinks. This railroad, engineered, built and operated by a British company, is a monopoly, under concession, so that a competing line cannot be built within twenty-five miles on either side. Freight is hauled in the small ten-ton "waggons" used on British railroads, where forty- foot American-type refrigerator cars will be needed for meat traffic. The conces- sion ends in 1927, however, and Ameri- can railroad engineers, tackling what was declared an impossible job, have lo- cated forty miles to the south a route over which locomotives can cross the granite wall the entire distance on grades not exceeding 2 per cent. So there seems to be no real difficulty about enlarging PALAC'IO PRES1DENCIAI rilB WHITE HOUSE OP BRAZIL, AT RIO the neck of the bottle when it becomes necessary — and the pressure of soil prod- ucts from the interior of Brazil will do it. FREIGHT RATES HIGHER THAN IN THE U. S. A SINGER sewing machine can be freighted from the factory in New Jersey to St. Louis for $1, to Denver for another dollar and San Francisco for $3. In Brazil the freights are three times as high, and only commodities like coffee, which will stand charges of $1 a bag, are profitably exported. This is due to two conditions. First comes the high cost of imported coal for railroad opera- tions, and, second, the European policy of making railroads yield the highest imme- diate dividends for investors by heavy traffic charges. The fuel situation can be remedied in two ways. Brazil is rich in water power and could electrify much of her railways — indeed is now taking steps to do so in the Sao Paulo country. And the railroad fingers reaching out from Campinas are thrust through for- ests of trees which will supply fuel for many years to come. These trees must be cleared away before the land can be cultivated, and as they are useless for lumber, tanning extract or dyewood, burning them to haul Brazil's soil prod- ucts to market is the best use to which they can be put. As for railroad policy, that seems to be largely a matter of vision and dem- onstration. Our West was opened up by building railroads where no popula- tion or freight existed, making rates low enough to attract settlers, and waiting over periods of five to ten years for divi- dends, which were very satisfactory when they materialized. A plucky British railroader secured a concession for a short railroad tapping new coffee and farm country out where the trans- portation fingers are growing be- y o n d Campinas. Having built his line under many difficulties, and got a single locomotive, a passenger car and some "goods wag- gons" upon it, he began running one train a week, charging rates so high that dividends were earned imme- diately. An Ameri- can railroader tried to show him that with reasonable rates and one traih a day, while he could not pay dividends for several years, he would be developing bulk traffic by encouraging farmers to raise new prod- ucts, and that ultimately his earnings would be greatly increased. But the Britisher simply could not see it — his railroad viewpoint was not ours, and he is still running the weekly train with a handful of passengers and a "waggon" or two of high-value stuff. SAO PAULO ATTRACTS AMERICANS pVERY state in Brazil pays tribute to Sao Paulo, because it is the greatest manufacturing place in South America, with textile mills, shoe and clothing fac- tories, food and other industries, sup- ported by tariff duties much higher than our own. This tariff makes commodi- ties so costly everywhere in Brazil that many of the Brazilians advocate lower duties and larger importations of manu- factured stuff, cutting the cost of living and diverting people to agriculture. The BRAZIL 73 city and state of Sao Paulo, like Phila- delphia and Pennsylvania, are strong po- litically as well as industrially, and be- cause all Brazilians are intensely patri- otic and the young republic is almost boy- ishly eager to be self-supporting and self-contained in all things, Sao Paulo continues to receive its tariff tribute, and to make nearly everything under the sun in the 5000 factories, great and small, within the state borders. The "Paulista" admits that other states pay tribute upon his cotton cloth, woolen suits, shoes, hats and what not. But he also points proudly to the over- whelming preponderance of his coffee in Brazil's exports, making up one-third of the total sales in world markets. And to coffee his state is adding a diversified agriculture which will bring economic stability to the republic. The city of Sao Paulo has its Ameri- can Chamber of Commerce and one of the most hospitable and enterprising American colonies in South America. Before the war there were not more than forty or fifty Americans there, but today they number several hundred, with new- comers constantly arriving. Residents are re-enforced by hundreds of traveling American business men. Climatically, Sao Paulo is unique. Lying almost exactly upon the Tropic of Capricorn, it is exactly the position of Havana in terms of northern latitude. But it also lies on an elevation of 3000 feet, so that it is a tropical city with a temperate climate. Bananas and pine- apples can be grown within its borders, and garden stuff fully nine months a year, with two crop periods for field stuff, the first in September, the Brazil- ian spring, and the second three to four months later. Along with this genijity of temperature there are severe frosts every eight or ten years, and the Sao Paulo winter is less genial to people than to plants, because characterized by fogs and rain and penetrating cold that searches out every room in the unheated houses. ARTICLE XXXIV TENNESSEE WOMAN SHOWED HOW TO WIN OUT IN BRAZIL T> IO DE JANEIRO, Nov. 5.— Soap is a luxury in Rio de Janeiro — ordi- nary laundry quality costs thirty-five to forty cents a pound, and a fifteen-cent cake of toilet soap half a dollar. So people use caustic soda, instead, for washing clothes. Clothes do not last long in Rio de Ja- neiro — and like soap they cost about 150 per cent above New York prices. Soda crystals are better for washing, easier on clothes. What Rio de Janeiro needs badly is a good steam laundry, with dry cleaning on the side. But mean- time soda crystals or sal soda are the thing. There was an American sal soda fac- tory in the Brazilian capital, but for some reason it had grown sickly. Along came an American woman looking for something to do. With a woman's knowledge of home life she suggested a new field of development for the sal soda factory — that of domestic use. Up to then all the attention had been centered on industrial uses and the heavy chemical trade. This was consid- ered so promising that the factory was put under her management. Today she is building up grocer distri- bution for household soda crystals under BRITISH AMBASSADOR VISITING PRESIDENT PESSOA a trademark by methods which are famil- iar at home, but decidedly a novelty in Brazil. Once get a trademark established in Brazil, and the demand for your prod- ucts will make your old age comfortable. The conservative Brazilian is willing to pay more for a trademarked article that he knows, even though it is a sim- ple staple. Most trademarks have been estab- lished in Brazil by taking plenty of time. Our quick, intensive way through con- sumer advertising and direct sales work to secure distribution is hardly known. But this woman is doing the job Yan- kee-fashion, and mostly doing it herself. SHE OVERCAME OBSTACLES jyjRS. LUCIE M. MORGAN sold a successful specialty shop in Chatta- nooga, Tenn., about three years ago and wanted a vacation. She read a magazine article about South America, and, with feminine directness, decided to go there, set out for Buenos Aires, got off at Rio de Janeiro, liked it, stayed, and for sev- eral months alternated rest with war work. By and by she wanted something real to do, and tried to get a plain job selling goods for an import house. No- body would put her on the sales force — the idea of a woman selling goods in Brazil was too startling. With the great- est difficulty she finally got a chance with the Rio de Janeiro branch of a New York exporting house, and was sent out to sell silk. Neither the house nor the line seemed to be getting anywhere in Brazil. After their astonishment over the woman "salesman" (they thought she was a shopper who had got into a wholesale house by mistake when she first entered) the Brazilian merchants treated her mag- nificently. But they regretfully showed her orders for that identical line placed six months or a year before and never filled. It was hard, uphill work, but the fin- est possible experience in Brazilian busi- ness methods and the Portuguese lan- guage — three months' study on her ar- rival in Rio de Janeiro had given her a knowledge of Portuguese. This experi- ence also led to a resolution to next time overcome the distance handicap on im- porting by selling something made in Brazil, right at hand and under her own control. When she took up soda crystals a few visits to the wholesale houses that jobbed stuff to the 1200 retail groceries in Rio de Janeiro demonstrated that her scheme of distribution must be her own. The average grocery store in the Bra- zilian capital handles actual "grosseries." It is usually a little place, often in a poor neighborhood, run by a hardworking Portuguese. The stock is limited in quantity and variety, comprising chiefly Brazilian "xarque," or dried beef, salt meats, beans, rice, coffee, salt, soap and like staples, almost entirely in bulk, very few package articles being handled. The idea of creating demand through adver- tising, samples and judicious placing of small initial stocks with retailers is new to the wholesale trade. Mrs. Morgan decided that if distribution was made through wholesalers they would kill the business in its infancy by overloading the little retailers before they had learned to sell her product and the advertising had started consumer demand. GOT "LITTLE FELLOW" FIRST ''THEREFORE, she became her own distributor, got an automobile, loaded it with sample packages and small 74 BRAZIL dealer lots and started out to see the lit- tle grocers herself. The work was often amusing. When the busy little Portuguese saw her com- ing into his shop he sensed a profitable new customer, and it took considerable explanation to convince him that the se- nhora was really selling goods. No, not selling goods, but actually giving them away! For, first of all, she asked him to take enough samples for each of his cus- tomers free of charge. So far as is known, only two American package articles, Royal Baking Powder and Sapolio, had ever been introduced into Brazil by sam- pling. She also gave him a poster to hang in his store, with the trademark and some facts about the efficiency and harmlessness of soda crystals as com- pared with other laundry chemicals. Her product has a simple brand, "Gato," which means "cat," and can, therefore, be conveyed by a picture — an important consideration in Brazil, where 80 per cent of the people cannot read. That concluded the first interview. Coming back several days later, she usually found the little grocer selling the samples, not giving them away. Again the idea was explained, and Rio de Ja- neiro newspapers opened up to show the advertising which was going on to bring him customers. Presently he got the idea, and then wanted to buy a big stock of the "Soda Crystalizada Gato." He would take twenty milreis' worth — eighty pounds, a $5 order. Instead, she limited him to ten pounds— five kilos. This is only sixty-three cents' worth and looked like small business by our stand- ards; but it is the way to get things going in Brazil. The five-kilo order is packed in a bag bearing the trademark, to be sold in bulk, because the average sale to a grocer's customer is too small for pack- ages. He sells a handful of the stuff for a 200-reis piece. This is written $200, but it is only five cents. The whole business is novel to the lit- tle grocer. Very often his Portuguese conservatism leads him to declare flatly that he won't have anything to do with it. It is a distinct mental effort for him to link up the consumer advertising, the samples, the poster and his own profit on the five-kilo bag. But his profit mar- gin is generous, and the senhora explains that he is going to make some money, and comes back again to ask if he is ready to begin making that money now, and finally he gets it all straight in his head. After that he is the most loyal customer in the world. "LUCKY CATS" IN ADS TPHERE are two different lines of ad- vertising which might be followed for this article — one "reason why" and the other reiteration of trademark. Tech- nically, sal soda has advantages over other washing chemicals widely used in Brazil because it will not destroy cloth- ing. But, instead of going into the tech- nicalities, Mrs. Morgan simply keeps the brand before the public. Cats bring good luck in Brazil, and the advertising emphasizes the "lucky cat." Evening papers and illustrated magazines going to the home are used, the copy being chiefly short squibs about the lucky cat inserted in the reading column. Cover- ing the city herself and supplying goods out of her own car, Mrs. Morgan is organizing the grocers into routes for regular visits, to keep them stocked with- out overloading. Her experience leads her to favor the building up of her own permanent distributing service in Rio de Janeiro. In other cities agents are being appointed, and after the mechanism of sampling is explained, they are backed up with posters, printed matter and a certain amount of money monthly, based on their orders, for local advertising pur- poses. There are a good many discourage- ments in establishing such a business in Brazil. Advertising of the right kind shows astonishingly quick results, and the little grocers take hold loyally, too, and soon start rolling up volume. But there are innumerable federal, state and mu- nicipal taxes and regulations to meet. Every business transaction must be "fis- calized," which means a regular snow- storm of official papers, signed again and again by the proper authorities. This business requires an experienced de- spachante, or broker, for no stranger could keep track of it all. A straight business course is laid out, only to be blocked by some such regulation as that forbidding a woman to hold shares in a corporation in Brazil, and an indirect road must be taken. All this costs money, but the loss in time is even more serious in establishing a new enterprise. ARTICLE XXXV SOME STRAIGHT BUSINESS TIPS BEARING ON BRAZIL |^IO DE JANEIRO, Nov. 8.— There seems to be an excellent opportunity in Brazil for an American printing plant. Two weekly newspapers in English have recently been established there, the Times of Brazil, in Sao Paulo, British in man- agement and tone, and the Brazilian American, in Rio de Janeiro, edited by Americans. When the latter was estab- lished its editor and publisher, Robert C. Brown, found it necessary to have the typesetting done in three different places, the advertisements set up at two others, the engravings made in two dif- ferent shops, and the printing in still an- other. These details almost called for a "despachante," or customs-house broker. Rio de Janeiro has only one linotype operator who can read English. Ameri- can concerns doing business in Brazil value printing like that obtainable at home because it reflects American char- acter. An enterprise like a new Ameri- can packing concern, marketing its spe- cialties in Brazil, would use $25,000 to $50,000 worth of printed matter yearly — advertisements, labels, receipt slips, cartons and the like. Skillful type ar- rangements for advertisers would become an important branch of such a printing office. It is said that $100,000 would capitalize an up-to-date American print- ing concern in Brazil, and that it would have virtually undisputed control of busi- ness from American houses, provided it were manned by Americans and turned out a diversified line of work of Ameri- can character. * * * "gWIVEL-CHAIR experting" still seems to be a thriving industry in New York city. This is done by the ex- port concern with most of its organiza- tion at home, represented chiefly by ad- vertising and circulars. One concern, running full-page advertisements in New York newspapers, describing its connec- tions in Latin America most convinc- ingly, was found upon investigation in Rio de Janeiro to have only a small office — virtually desk room — and a single rep- resentative. At home such a concern has little more direct connection with manu- facturers, and should it secure Latin- American orders, places them with the manufacturer quoting the lowest price, and simply passes the documents along without any attention to details. There recently arrived in Rio de Janeiro a shipment of white cotton blankets from a New Hampshire mill. Each blanket was carefully wrapped in black tar paper and put into a burlap bale, with the ends sewed through burlap, tar paper and blankets. The latter were all discolored. The Brazilian customer was willing to take them at 25 per cent discount, a generous offer; but lack of basis for di- rect dealing made this difficult, as the transaction was a four-cornered affair between the Brazilian buyer, the Rio de Janeiro bank, the New York export agent and the New Hampshire manu- facturer. * * * T ACK of close teamwork among man- ufacturer, export house and branch banks abroad complicates many world- trade shipments which would turn out BRAZIL 75 happily if a little understanding and lee- way were permitted. The manufacturer ships the goods, the exporter passes the documents to the bank abroad, with a draft that must be paid before the buyer in a foreign country can get the docu- ments, and the latter are necessary before the buyer can get the goods. His ship- ment may be damaged, pilfered or not up to specifications. The bank acts strictly for the export house and manu- facturer — it must collect the money, that being its sole function under its instruc- tion. If there is damage or loss, the buyer discovers it only after he has paid. The other day in Rio de Janeiro an im- porter who, for such reasons, had grown canceled orders following the armistice last November. This is true of good houses in other Latin-American coun- tries. While goods were scarce during the war these houses placed orders which were often unfilled because of war re- strictions, shortages, lack of shipping and other handicaps. Consequently, dupli- cate orders were placed with different concerns in the United States, in the hope that at least one lot might come through. After the armistice many of these orders began to arrive, and in Bra- zil, with its inflexible banking system, money was not obtainable to take them up. Rejections and cancellations fol- lowed, and many an importing concern, pound. When he got the actual leather it had risen to $1 a pound. A MERICAN home-making and fash- ion magazines are read with eager- ness in Brazil, and the people copy de- tails in their homes wherever possible. Brazil has skillful craftsmen, capable of making furniture, decorating rooms and carrying out garden schemes at a cost with which we could not compete. That is, one of our bedroom sets might cost less if we could make a thousand all alike, but the Brazilian hand-craftsman's copy beats our best price on an individual lob. Readers of these magazines marvel OLD AQUEDUCT NOW USED FOR TROLLEY CAR VIADUCT bitter against American business meth- ods during the war, was found quite jubilant. "For the first time in three years," he said, "I have just got with an American shipment a letter from the manufacturer to the American bank here directing that I be permitted to examine the goods before taking up the draft, with the option of declining them if not in good order. I believe the Americans are really learning how to export !" DESPONSIBLE business houses in Brazil find that their credit ratings in the United States have suffered depre- ciation through misunderstanding over fundamentally sound and a good cus- tomer, today finds that its credit rating with American houses is inadequate, and that it is often asked for cash with order. The happiest results during this cancella- tion episode followed where American manufacturers instructed their Brazilian representatives or our American branch banks to adjust matters with their cus- tomers, allowing them the necessary time to finance their purchases. How well pleased a customer might be was shown the other day, when a Rio de Janeiro im- porter finally got a shipment of leather from the United States as the result of skillful adjustment. When he bought during the war he paid fifty cents a at the advertising — which they honestly call "propaganda." "A whole page of propaganda just for curtains!" exclaimed a Brazilian, reading one of our home- making magazines. "No, not curtains; just curtain poles," corrected an Ameri- can, which made it all the more wonder- ful. Like the movies, these magazines are creating desire for American clothes, furnishings and comforts. A MERICAN business men in Brazil hear rumors, attributed to Wash- ington, that commercial missions of va- rious kinds are to visit Latin America to "promote our trade." Having in 76 BRAZIL mind not rumors, but some definite official announce- ments about ships made by Washing- ton last summer, they say. "Give us ships, not mission- aries ! Mails are six weeks apart and come down irregu- larly on freighters. Goods come on one ship and docu- ments on another. Trade cannot be built without fast, regular communi- cation and trans- portation — give us the ships and we will promote the trade on the spot." It was stated recently by an investigator of east-coast conditions that a good American passenger steamship could, on the return trip, book a thousand passen- gers from Buenos Aires, Montevideo and Rio de Janeiro. [ IKE the second-hand automobile busi- ness, the business of renting type- writers is virtually unknown in Argen- tina, Brazil, and probably other Latin- American countries. Every other Ameri- can arriving in Buenos Aires and Rio de Janeiro wants a rented typewriter in his hotel room for business correspondence. Apart from the fact that new and rebuilt writing machines are very scarce in South America just now, typewriter concerns make no provision for this, and so have not built that department up to profit- able volume, although a rebuilt machine rented by the week to a business man would earn $5 and probably $10 a month and net 25 to 50 per cent profit yearly on its cost with good management and service. COME of the American medical men in Brazil advocate wider publicity there for our medical schools. They say that Brazilian medical training is either obtained in Paris or follows French lines. Under the French system much time is spent in listening to lectures, rather than in our practical clinical experience, with the student summarizing his results for himself, as a substitute for lectures. The French concept of medicine also differs from ours in that "shotgun" prescrip- tions of a dozen drugs are often admin- istered, where the American doctor gives one drug until its effects are apparent, and probably a dozen drugs make up the backbone of his prescribing. It is also believed that our interne system, giving practical hospital experience during their instruction, both in treatment and self- MUNIC1PAL THEATRE— THE GRAND OPERA HOUSE OF RIO DE JANEIRO reliance, has characteristics of its own which would appeal to Brazilians. Com- prehensive descriptions of our medical schools and what they have to offer, with- out critical comparisons, backed by the distribution of literature, seems to be the kind of publicity which would benefit both the Brazilians, freshmen and post- graduate, and our medical colleges. ARTICLE XXXVI AMERICAN METHODS MAKE ADS "PULL" IN BRAZIL JJIO DE JANEIRO, Nov. 10.— An American business house with a branch in Brazil began advertising in some of the Rio de Janeiro daily papers. One journal had been left off the list. Its man came around and asked for that advertisement. "You can have it on one condition," said the advertising manager of the American concern. "We want a special position on this news page instead of having our announcement buried Brazil- ian fashion." "But we can't put an advertisement on that page," objected the newspaper man. "Other American houses would want to be placed there too, and the page would soon be full of advertising." "Why not add another page to your paper, then ?" said the American. "Oh, that would make our newspaper too heavy!" was the reply. "People like to carry it home because it is light; we mustn't make our paper too heavy to carry." Brazil is a country of many newspa- pers, and has been called "the journal- ist's paradise" on that account. It is hardly an advertising man's paradise, however, for paid announcements, crowded indiscriminately onto the back pages, are poorly set, seldom illustrated and utterly lacking in attractiveness. The advertising solicit- or is everywhere, but offers nothing in the way of serv- ice or ideas in sell- ing space ; very often he is a free lance, getting a commission o n such business as he can find, having no actual connec- tion with the busi- ness department. The advertising agency, as we know it, is vir- tually nonexistent, lacking even a list of mediums and rates. The fixing of advertising rates is yet to come, so that even a limited campaign in the news- papers involves dickering with each pub- lisher. Many of the Brazilian newspapers, particularly in Rio de Janeiro, have been partly supported by government subsi- dies for political services. These subsi- dies are paid by state governments as well as the federal administration, not neces- sarily with ulterior motives, but often by way of community and national prop- aganda. It is said, as an illustration, that the enterprising state of Sao Paulo lib- erally backs one of the Rio de Janeiro dailies so that it may always be well represented in the national capital. The word "propaganda" is a synonym for ad- vertising in Brazil as well as through- out Spanish America. MORE DAILY PAPERS THAN N. Y. T3UT Brazil has now begun to build an advertising industry. One of President Pessoa's first steps in government economy was the cutting off of federal newspaper subsidies. This has forced publishers to seek new sources of revenue. They are now beginning to develop advertising service, as well as to increase their circulation by improve- ments in the gathering and arrangement of news. Brazilian newspapers have for years been most enterprising in securing cable news from the whole world, but it has been printed by countries, without regard for easy reading. Four separate items about President Wilson's health will be scattered through the coffee quo- tations from the United States, where an American newspaperman would bring them together, expand them into a "fea- ture story," and play it up with interest- ing headlines. Rio de Janeiro, with 1,250,000 popu- lation, has fully twice as many daily papers as New York city, but circulations are small. The largest is an evening paper printing 60,000 copies, while the BRAZIL 77 average for other popular journals is from 30,000 to 35,000 copies." The best- known Rio de Janeiro daily, internation- ally a journal comparable with the Lon- don Times for its comprehensiveness, is credited with only 12,000 circulation. Some of the smaller publications frankly live on what we would call blackmail, like the horde of obscure journals in our Wall street district — their editors call upon business houses and prominent citi- zens with proofs of articles that the lat- ter will pay to have kept out of print. Slenderness of circulation is due to the fact that Brazilian dailies have no na- tional circulation, each city reading its own journals. The leading newspaper in the city of Sao Paulo is credited with a circulation as large, if not larger, than the most widely circulated daily in Rio de Janeiro. American business men in Rio de Ja- neiro have begun active teamwork with newspaper publishers to improve adver- tising and demonstrate how it can pro- duce revenue when backed by service. SPORTS PAGE BROUGHT READERS FOR example, one of the leading morn- ing papers recently started the first automobile page ever published in Brazil, and perhaps on the southern continent. This particular publisher has been thor- oughly enterprising since the Americans came. Taking a comprehensive cable news service from the United States, he played the dispatches up on his first page and got all the Americans reading his paper. Then he took pains to place American advertisements in good posi- tions on his news pages. On top of that he' started a sporting page, which was very successful from a circulation stand- point, because most of the sporting events in Rio de Janeiro occur on Sunday, and the Monday morning sporting news made circulation the best in the week. One day an American automobile tire man showed this publisher the automo- bile section published weekly by an Amer- ican newspaper. With sixteen pages of automobile articles and advertising, it was bigger than the Brazilian's whole journal. He explained that Brazil, larger than the United States, has only 8000 automobiles, of which 7000 are old European cars, as against 3,500,000 au- tomobiles in the United States. Behind the automobile in the United States is the automobile "fan." Americans know cars, drive them, repair them, ask ques- tions about them. Our automobile fans are organized in clubs, and their organi- zations and interest have been a big stimulus for good roads. Much of our automobile public opinion has been cre- ated by the automobile departments in our daily papers, spreading motor infor- mation. Brazil needs automobile "fans" to get the motor transport and highways necessary to develop her. The Brazilian publisher saw the point at once. The first good roads conven- tion ever held in Brazil was to be called together shortly. He made that the oc- casion for starting a weekly automobile page. The American automobile and tire men helped him by writing articles, furnishing pictures and undertaking to supply technical information for a "ques- tion box" on Yankee lines, which would tell any inquirer how to adjust a carbure- tor, get mileage out of his tires or grind valves. Having seen the same ideas worked out successfully at home, and having estimated Brazil's potential mar- ket for automobiles at 100,000 cars, the Americans simply laid a broad foundation for popular interest, and Brazilian intelli- gence backed them. ADVERTISING AGENCY NEEDED ZITHER American concerns have dem- onstrated that advertising pulls in Brazil when newspaper space is used in- telligently. A second instance is the ad- vertising of an American branch bank in Rio de Janeiro. It has been made a rule that all announcements must have good position, and also definitely suggests something for the public to do, such as open a commercial or savings account. The idea of thrift is also new in Brazil, but a quiet campaign advertising the savings department is bringing this bank hundreds of new savings accounts. In the absence of a good advertising agency in Rio de Janeiro, the placing of consumer publicity by American houses with distribution in Brazil is rather diffi- cult. The best results have been secured by American concerns with their own representatives on the spot, giving per- sonal attention to the selection of me- dium, the translation of copy, position, rates and other details. Several adver- tising agencies at home have made con- tracts with Brazilian newspapers, con- templating the placing of American pub- licity from New York or Chicago. Simi- lar contracts have also been made with Argentine advertising agencies in Buenos Aires. So far as can be learned, how- ever, little advertising has been placed by this method. London advertising agencies have for years specialized in world advertising service, and the chief directories of the world's newspapers and periodicals are published there. Brazil- ian publishers allow a commission on advertising, so the basis exists for build- ing up a modern agency here. When it comes to concrete advertising appeals those familiar at home are gener- ally effective with the Brazilians. In fact, well-to-do Brazilians who read Eng- lish pay fifty cents to $1 for our maga- zines, especially those with plenty of advertising for clothes and home furnish- J'AXOHAMIC VIEW OF SANTOS. A COMMERCIAL CENTER OF DRAZIL 78 BRAZIL ings, and find the advertisements much more interesting than the reading mat- ter. "MADE-IN-BRAZIL" EFFECTIVE HpHE Brazilian, first of all, is patriotic A — proud of his country and citizen- ship, proud of her new manufacturing industries, and eager that Brazil shall have the best regardless of cost. This makes it advantageous to emphasize goods made in Brazil itself, or assembled there, or made from Brazilian raw materials. It also justifies the quality appeal on countless things bought for the commu- nity, such as railroad equipment, mate- rials and supplies for public buildings. Then the Brazilian is a family man in the Latin sense, with deep pride in his home and a keen interest in anything that will improve or adorn it. He does not always understand comfort, conveni- ence, time saving or labor saving as do Americans, but, like all our cousins on the southern continent, these characteris- tics invariably impress him when he visits the United States, and because he is quick to appreciate them when practically demonstrated, that appeal is capable of development. Brazilians value personal appearance. Probably they are not as "snappy" as the Argentinos in dress, but neither are they so conservative in the matter of wearing colors. French fashions prevail in women's clothes, and the men look more to Europe for dress standards than to the United States. There is an element of daintiness about masculine togs, in marked contrast to the athletic note in our men's wear. Well-to-do Brazilians probably pay as much for their clothes as any people in the world, but, in contrast, the very cheapest grades are purchased by the mass of the people. Brazilians are ambitious, and would unquestionably respond to the familiar American appeal of "Learn More and Earn More." There is a marked inter- est in technical education and practical things — where Brazilian students five years ago learned French and studied law or the classics, they now learn English, to profit by American technical books and educational facilities. ARTICLE XXXVII EUROPE LOSES AIRCRAFT FIELD TO U. S. MACHINES DIO DE JANEIRO, Nov. 12.— Al- most with the striking of the eleventh hour on the western front, the flying men set out for South America. European governments packed up war machines, selected crack military avia- tors, backed them officially and finan- cially, and sought South America's trade through "air missions." The reason for this promptitude is clear enough. At least half the Latin- American republics have armies, and are good prospects for military machines, while hydroplanes and flying boats offer them the most feasible way of protecting their long coast lines, supplementing their navies. And the great distances of the southern continent, with limited develop- ment of railroads and the long trips by coast steamer, make ample opportunity for airplanes to carry mail, passengers and express matter. For six or eight months Latin-Ameri- can eyes were in the air. "Raids" were conducted from one city to another, neighboring countries peacefully invaded by way of demonstration, and the Andes flown. During that period nothing was heard of the Americans. Everywhere the Brit- ish, the Italians and the French were breaking records and annihilating dis- tances, or getting ready to do so, and the government air missions on the spot were only evidence of greater things to come, it was said. On the steamer that took the writer to Buenos Aires in July was a lone American aviator, represent- ing one of our aircraft companies. He landed in Argentina without even a dem- onstration machine and found that the European governments were giving air- craft away for nothing — a pretty blue outlook for a man who was expected to sell them! EUROPEANS PREPARED FIELD UT in three months the whole situa- tion changed almost magically. The last European aviator went home, leaving Latin America virtually an open field for the Yankee aircraft salesman. The lat- ter arrived with machines and began go- ing after the business on solid commer- cial lines, which seemed decidedly better than the government air mission, although all credit must be given the latter for their pioneer work in arousing interest. It is obvious that this pioneer work laid foundations for commercial enterprise later. Our delay was due to preparations for entering Latin America right, with suit- able machines and a permanent business policy, according to C. H. Webster, sales supervisor in South America for the Cur- tiss Aeroplane and Motor Corporation. This is the first American aircraft con- cern to set up shop on the southern con- B tinent. Before the war ended this com- pany was studying Latin America and designing machines to meet its needs. While European governments were spending money for "stunt" flying, with machines left over from the war, Glenn Curtiss was getting new machines into production, and John Willys was back- ing him up with the American automo- bile man's vision and policy. When Eu- rope began to think about getting back to work to make commercial aircraft adapted to Latin-American needs the Curtiss company was ready with actual machines. Most of the aircraft given to Latin- American governments by the European air missions are useless even for military purposes, much less commercial flying. Chiefly bombing and combat planes, they are too big and heavy, or consume too much fuel, or cannot be kept in service economically. In many cases, it is said, they have not been unpacked. GASOLINE $1 A GALLON AX7TIAT Latin America needs are small airplanes and flying boats for train- ing both military and civilian aviators and for individual use in pleasure flying and air travel, with larger machines for mail and passenger use. Fuel consump- tion must be moderate, because gasoline costs seventy-five cents to $1 a gallon. When the Latin Americans tried some of the war planes left by the European air missions they found that their flying school gasoline supply for a month disap- peared in a few hours. Neither the great horsepower nor high speed of the war planes is needed, and against the highly sensitive combat motor, built for a short life of superperformance, with costly maintenance, commercial flying calls for a sturdy, long-lived motor that will stand up under a reasonable amount of neg- lect. The Curtiss company has one machine, put into production since the armistice, which has been found highly suitable to Latin-American conditions. Built both for land use and as a flying boat, this type has 150 horsepower, and will do 100 miles an hour as a land machine or eighty-five miles rigged as a flying boat. Birds' names have been adopted for the commercial machines instead of the mys- tic letters and figures thus far associated with aircraft. This machine in its fly- ing boat form is known as the "Sea Gull" and the land type is called the "Oriole." Another plane large enough to carry eight passengers, having three motors, is called the "Eagle," and a fight- ing plane for military use with speed ex- ceeding 160 miles an hour is known as the "Wasp." The idea is emphasized by painting the different machines in characteristic colors, the "Oriole" being finished in orange and black, and the "Eagle" having a feather pattern on its wings and talons on the landing gear. BRAZIL 79 Such machines are not only better suited to Latin America's needs than any- thing yet produced commercially in Eu- rope, but have certain refinements in design characteristically American. One example is the "V" shape of the flying boat, and also our hydroplane pontoons, which give minimum drag in rising from the water. European machines left in Latin America usually show clumsy de- sign and very often weak construction in boat and pontoon details. CURTISS OPENING TERRITORY HpHE first object Mr. Webster has in mind now is to get the Latin-Ameri- can people flying. Taken into the air themselves, instead of watching spectac- ular stunts from the ground, they see that it is safe and as easy as driving an automobile. Each passenger who is given a demonstration becomes a friend of fly- ing, ready to coun- teract apprehension in others. Perma- nent bases have been established by the Curtiss com- pany in Brazil and Argentina and others will be es- tablished in neigh- boring countries. Flights are made from these bases daily in both land and water ma- chines, and the machines invaria- bly carry passen- g e r s, invited as guests. Not five per cent of the people in Latin America have ever seen an airplane, and so the Curtiss avia- tors are invading the interior regions tions of war flying passengers. As large a city as Sao Paulo, Brazil, with its half million population" had never seen an airplane until Curtiss aviators gave it a show in October, with all the loops, spins and falls the Paulis- tas have been reading about in the war news. Sao Paulo simply went wild with excitement and delight. The first steps in developing commer- cial flying on the southern continent will be the establishment of mail service along the coasts. Arrangements have already been made for a Curtiss service from Bahia to Santos, a 1000-mile route which now requires nearly a week for mail, and which can be covered practically over- night by airplanes. This will later be extended to Para on the north and Rio Grande do Sul on the south and supple- mented with passenger service. Another region of Brazil scheduled for early de- velopment is the Amazon, from Para to Manaos, now requiring nearly a week by river steamer. Similar developments are being planned from Buenos Aires, along the coast north and south and up the La Plata and Parana rivers. DEVELOPING MILITARY AVIATION HPHE outlook for private flying is excel- lent all over South America. Ar- gentina, for instance, is a vast flying field with its great plains, and many an estan- cia owner might travel to and from Bue- nos Aires in a ninety-horsepower plane capable of seventy-five miles an hour, de- signed for landing in spaces as small as a football field. In other countries such planes would take people up to mines, and might even be used to haul out valu- able ore concentrates, covering directly in an hour distances which now require struction and other essentials. In mail and passenger service there is also room for costly blundering. As an illustration, the postmaster general of one of the smaller republics recently visited the United States to contract for air service between the coast and the capital of his country. With practically no experience in aviation, he selected planes of a mili- tary type entirely unsuited for mail serv- ice, and the aerial post in that country will unquestionably have to go through a period of failure before it is made suc- cessful. R SCENE OP THE BRAZILIAN RAILROAD BETWEEN CURITIBA AND PARANGUA giving demonstra- and then taking up one to three weeks of winding, climbing burro transportation. There is also the field of army and navy flying, in which the Curtiss com- pany has made a beginning with a con- tract from the Bolivian Government, having machines and an instructor work- ing with the Bolivian army. Most of the Latin-American countries have experienced aviators back from the western front, where they volunteered for service with the French, British or Ital- ians. Mr. Webster believes it highly im- portant that the experience of these prac- tical airmen be utilized in developing mil- itary aviation. Realizing the value of military aviation, the governments are beginning to develop it liberally and ea- gerly ; but frequently they organize a fly- ing service without utilizing their re- turned veterans, and errors are made in the selection of planes, methods of in- ARTICLE XXXVIII BRAZIL'S 30-YEAR STEEL NEED IS $3,500,000,000 IO DE JANEIRO, Nov. 15.— A Brazilian cabinet minister sat down recently and carefully drew up the iron and steel bill of his country for the next generation — Dr. Cincinnato Braga, minister of agriculture, indus- try and commerce. It was interest- ing in two ways: First, from the standpoint of sell- ing steel from the United States and other countries ; second, from that of providing Brazil with an iron and steel in- dustry of her own. Among all the Latin - American countries Brazil has the best pros- pect for establish- ing her own steel industry, and has shown the greatest interest in the subject and gone farthest toward realizing her ambition. Her requirements for the next thirty vears are estimated bv Doctor Braga at 60,000,000 tons. That is, 2,000,000 tons a year, or four times our own total rail export of steel before the war. At upward of $60 a ton estimated cost it is a tidy little order of $3,500,000,000. Right now it can . be figured by the steel salesman, unaided, in terms of ton- nage and price. But tomorrow the capi- talist and technical man will be called to Brazil to see if the stuff cannot be made on the spot. For if it can, then Brazil's growth should be greatly stimu- lated, along with that of neighboring Latin-American republics, which would become customers for her steel imhrstry. Without Bessemer and his converter, the United States would have had no Hills or Harrimans, no Pittsburghs or 80 BRAZIL Detroits. It may well be that some gen- ius of the same caliber will, during the next decade, through some technical im- provement in metallurgy, turn Brazil's mountains of iron ore into the steel rails, locomotives, bridges, barbed wire and machinery that she needs for growth. NEEDS 150,000 MILES OF RAILS DRAZIL has today 25,000 miles of rail- road. Doctor Braga points out that it has taken her seventy years to build them, chiefly because all iron and steel have been imported. She will need from 150,000 to 200,000 miles of railroad for growth the coming generation, repre- senting a steel bill of 30,000,000 tons. Because peace finds her railroads and rolling stock in lamentable condition, 500,000 tons are needed for immediate repairs and growth. Other items during the coining generation are river and ocean steamships, 500,000 tons; steel bridges, 500,000 tons; barbed wire and farm equipment, 1,000,000 tons; national de- fense, 1,000,000 tons, with steel and iron beyond detailed estimate for city construction, public utilities, the develop- ment of hydro-electric power, roads, san- itation and the development of Brazilian manufacturing industry and motor trans- portation. Iron is found in every state in Brazil, ranging from small deposits and ore so mixed with other metal that it would be difficult to work, up to billion-ton masses of workable ore averaging 50 to 60 per cent pure iron. Every Brazilian who writes on the subject boosts the Brazilian iron deposits as the greatest and purest in the world. But, of course, the value of any iron ore deposit depends entirely upon what you can do with it technically as well as commercially. The big shortcoming so far, apart from the fact that Brazil is still a very young country in point of development, has been lack of fuel to work the ore. Good coking coal for iron smelting prob- ably exists in Brazil, but so far only a few deposits of low-grade coal have been found and worked, and they are inade- quate both in quality and quantity. Pending the time when suitable coal is available, the Brazilians propose to make iron and steel by two other processes, the oldest and the newest in the world — charcoal and water-power electricity. EUCALYPTUS FOR CHARCOAL r^HARCOAL has not only been the fuel for infant iron industries every- where, the Brazilians remind themselves, but makes an exceptionally pure article. And that it can be built up to respecta- ble tonnage is shown by the production of 400,000 tons of charcoal pig iron in Michigan today despite the competition of Pittsburgh, and also in Sweden's pro- duction of 1,000,000 tons yearly in times past through systematic forestry to main- tain the charcoal supply. Brazil's for- ests have been pretty well depleted near the railroads, but the planting of eucalyp- tus trees is suggested, making charcoal from the five-year growths. A British iron company that planned extensive op- erations in Brazil before the war has already planted a big tract of eucalyptus for charcoal. It is estimated that fifty trees will yield enough charcoal to smelt a ton of iron, and that a beginning might be made by setting up small furnaces in the midst of newly planted forests over the iron areas. These sections happen to be rich in water power, and that might be utilized for turning charcoal pig iron into steel, and the latter into finished rails, bars, structural shapes, machinery and so forth. Of course, there is the little item of cost — very much loaded ! Hydro-elec- tric installations are not exactly cheap these days, and the electric furnace is practical chiefly for fancy steels in mod- erate tonnage. Whether Brazil can even make charcoal iron in competition with the marvelously efficient industries in the United States, Great Britain, Ger- many, France and Belgium, with a thundering protective tariff, must be dem- onstrated. The Brazilians, however, have already taken steps to try the thing out. Under a presidential decree in 1918, they offer government aid to anybody setting up in the iron or steel business in their republic. If a plant has a daily output of twenty tons or more, making iron or steel with charcoal, coke, elec- tricity or other fuel, the government will, until March, 1921, lend money up to the full amount of the cost of installa- tion, taking a mortgage on the plant. To secure this aid full details of plant and process must be submitted to the govern- ment, which will continue to audit trans- actions during the life of the mortgage. A certain number of Brazilian appren- tices, named by the government, must also be employed. The money is lent for twelve years at 5 per cent interest. The government agrees to buy its own iron and steel from these plants at the price of imported iron and steel plus tariff duties. It also agrees to build small branch railways to supply plants with ore and fuel, and arrange favor- able railroad and steamship rates upon imported apparatus and upon steel prod- ucts sold in Brazil and neighboring countries. However, not more than $1,300,000 will be loaned to any single plant. This government aid also extends to Brazilian coal mining, any enterprise producing 150 tons of coal daily being loaned one-half its investment in equip- ment and mineral land on the same terms, with a limit of $520,000. Under this plan it is estimated that an expenditure of $40,000,000 to $50,000,- 000 during the next seven years will es- tablish an iron and steel industry, save at least 30 per cent over the cost of im- ported steel, and greatly advance the development of the country. Naturally, different authorities take different views of that. On one hand, Brazil has made astonishing industrial advances along other lines during the last five years. But it will unquestionably take years of high protection to put her textiles, shoes, clothing and other products on a par with those of advanced industrial coun- tries, both in price and quality, and the same is probably true of Brazilian iron and steel. FIELD FOR STEEL SALESMEN D EGARDLESS of the future, whether it brings success or failure, there is going to be some good steel business for the salesman in Brazil. It will take five to ten years for gov- ernment-aided plants to build up im- portant tonnage even if they are success- ful. So far virtually no advantage has been taken of the government's offer on iron and steel. This may be due more to the world's general delay in getting back to work, however, and that there are possibilities in the situation is shown by the British project for a $10,000,000 iron development in Brazil before the war, undertaken without government aid. To be sure, this syndicate planned chiefly the mining of iron ore and its shipment to England, taking advantage of the large tonnage formerly employed in carrying British coal to Brazil and Argentina, which might make it feasible for England to work Brazilian ore. This company apparently saw possibilities in charcoal iron, even without high protec- tion, when it planted its forest of 2,000,- 000 eucalyptus trees. Brazilian iron and steel are probabili- ties of tomorrow. Brazil's need for im- ported steel is an actuality of today. Her importations during the last year of peace were 575,000 tons, while her im- ports the last year of war were less than one-tenth that amount, 45,000 tons. Germany led in tonnage in 1913, 150,- BRAZIL 81 000 tons, France came second with 120,- 000 tons, Great Britain next with 105,- 000 tons and the United States fourth, 90,000 tons. During 1918 we sold nearly all the iron and steel Brazil imported, 36,000 tons, though Great Britain man- aged to supply nearly 3000 tons even in war times. Like every other country in the world, Brazil is out at the elbows for iron and steel. Her industries must be reclothed. Part of that $3,500,000,000 order may eventually go to the promoter and engi- neer, but there is a generous slice of it cut for the American steel salesman right now. course, it cost decidedly more than freight, but in this case was well worth the money. It is not generally known that American express service is avail- able in Latin America. In 1916 the American Express Co. found such a de- mand for service on the southern conti- nent as a result of the war that branches were established in Argentina, Brazil and other countries. The Brazilian branch is representative. A Brazilian corporation called "Companhia Expresso Federal," capitalized in the United States, will quote through rates on mer- chandise shipments from the United States to any part of Brazil, including TARIFF ON COLOR PRINTS ADVERTISING matter shipped into Brazil is subject to a complicated schedule of tariff duties. Probably on no other detail do Americans have so much trouble, either when catalogues or printed literature are sent in quantities to their Brazilian representatives or salesmen bring advertising material with them. To begin with, the Brazilian cus- toms house is supposed, under the law. to charge about three and one-half cents a pound on all advertising matter. Ac- tually, through numerous rulings, duties are assessed according to the number of colors in the printing. This basic rate of GUAYRA PALLS ON THE ALTO PARANA RIVER. WHERE HYDROELECTRIC POWER DEVELOPMENT IS UNDER CONSIDERATION ARTICLE XXXIX FOUR FREE TRADING PORTS CONTEMPLATED BY BRAZIL RIO DE JANEIRO, Nov. 17.— An American automobile man came down to Buenos Aires accompanied by a sample car. Within twenty-four hours this car had passed through customs and was being driven to a prospective repre- sentative's door — something said to be quite without precedent for speed in Argentine customs routine. It was done by shipping the car through an Ameri- can express company, at express rates, and the Buenos Aires branch of this company attended to all details. Of customs routine, the payment of duty for the shipper's account or its collection from the consignee, cartage and railroad charges in Brazil and all other items. As the calculation of Brazilian customs duties resembles one of our income tax statements, this is a decided convenience for American shippers without Brazilian connections. Special customs service is given on parcel post shipments — for sam- ples and shipments of small value both time and money can be saved by using parcel post. Our express organization in Latin America also has facilities for furnishing lists of merchants in any line, credit reports and surveys of market pos- sibilities for any given line, with de- tailed customs duties and other expenses. three and one-half cents is charged only where one color obtains in the printing, and plain black and white leaves the least room for discussion. Two-color printing is charged seventy cents a pound, and three colors increase the duty to $1.25 a pound. Consequently, your Brazilian representative is chary about accepting shipments of advertising matter, for a little extra printing and gilding may make the stuff cost him more for duty than it costs you to print. Such shipments are usually refused. The right way to supply him with advertising is to . see that everything is printed in black and white and then shipped in to him through our express service or your Rio de Janeiro representative with instruc- 82 tions to deliver free of all duty charges. Brazil contemplates the establishment of four free ports at Rio de Janeiro, Bahia, Pernambuco and Para. At pres- ent, however, freedom from customs charges and routine will apply only to coal for steamships, so that they can ob- tain it at world prices. Customs com- plications throughout Latin America greatly hamper business. An American manufacturer might cover Argentina, Uruguay and Paraguay through a branch in Buenos Aires, supplying deal- ers in those three countries from one warehouse, had Argentina free port privi- leges. But goods landed at Buenos Aires would have to pay Argentine duties, and additional duties in Uruguay or Para- guay if re-exported to those countries. Even shipments in bond from one port to another in the same country in- volve prohibitive delays and expenses. Brazil has facilities for re-exporting without payment of duty, but on many shipments it is cheaper to pay the duties than to go through the routine. Even where the latter course is followed the shipment re-exported must pay storage charges, port charges, statistic tax, hand- ling charges and fees to customs guards, bondsmen, translators and consuls. COUPLE CARGO AND MAIL N AMERICAN corporation with a big plant in one of the Latin- Ameri- can countries sent down a new general manager from the United States. Its business in that country is done through a local corporation, headed by a Latin American as president. It was sug- gested that the president get in touch with the new executive. "I shan't be able to receive him," said the Latin American, "until the social season is over." Being the honorary president of such a corporation is becoming almost a profession in itself with the increase of foreign activities on the southern conti- nent. It is usually a job awarded through political or social influence, carries a good salary, and the other fellow does all the work. It is said that the United States post- office has for years delivered navy mail all over the world efficiently through a special dispatching service that keeps track of naval vessels, wherever they may be, and reaches them by keeping track of mail steamers. Our Postoffice Depart- ment has obviously not extended this dis- patching service to business mail — at least not on east-coast routes to South America. For the British passenger ships which were formerly our only mail connection have continued to carry the bulk of the letters. They take fully twenty-five days between New York and Buenos Aires, calling at various ports between. Meanwhile our new freight BRAZIL A ! ships, making the voyage direct to Rio de Janeiro and Buenos Aires in from seven- teen to twenty days, have offered the best postal facilities, but have been utilized only in a haphazard way. In many cases freight has arrived in these ships two weeks before documents sent on pas- senger ships. Letters and periodicals one month old have often been received in advance of others mailed two or three weeks earlier. It is now reported that the Department of Commerce, United States shipping board and Postoffice De- partment have held a conference to see what can be done to utilize our fairly fast freight ships for postal purposes. Ameri- cans trying to do business on the east coast of the southern continent, seeing these freighters coming in almost weekly, wonder why a postoffice dispatching serv- ice has not been busy all summer put- ting the right mail on the right ship in New York. COLONIES NEED HOME WEEKLY VI^ITH American business colonies in- creasing all over the world there is need for a good weekly newspaper chron- icling United States events on lines simi- lar to the weekly editions of the London Times and London Daily Mail. It is difficult to realize just how hungry peo- ple abroad grow for home news in their own language and with their own view- point. American news in Latin-Ameri- can papers amounts to several columns daily, but is chiefly of political and dip- lomatic character. We have several weekly magazines widely read by Ameri- cans abroad because they comment upon current affairs in a general way, but none that actually condenses the news itself — they summarize opinion for peo- ple at home who are reading the daily papers. Monthly news reviews come too far apart. Daily papers from the United States are too costly for the average reader. The overseas editions of the Lon- don Times and Daily Mail cost less than a dime a week, and not only keep Britons posted on home affairs, but are profitable world trade advertising me- diums for British manufacturers and merchants. In the case of the Times the general news weekly has made possible the establishment of special supplements dealing with world trade, engineering, education and literary matters. This field invites the American newspaper pub- lisher willing to spend a year or two and some money developing circulation for a weekly news summary among Americans abroad. After a delay of thirty years, Brazil is now going to work to organize a bank clearing house. Plans were laid for such an institution during the last days of the Brazilian empire, in 1889, but were interfered with by the revolution which made Brazil a republic. Now the presi- dent of the Bank of Brazil, Dr. Cardosa de Almeida, has drawn up a new plan, with the necessary law, and the sugges- tions of bankers in Brazil have been asked for. A committee of five bankers to re- ceive suggestions and give the institution final shape includes two representatives from Brazilian banks, one Portuguese, one British and one American. Ulti- mately this clearing house will handle a great volume of checks as Brazilian busi- ness men substitute them for cash pay- ments, but today there is not sufficient volume of checks to keep a Brazilian clearing house busy. But a quick, eco- nomical clearing system is already needed to simplify the transactions between the many banks in Rio de Janeiro and throughout Brazil itself. In the capital alone, besides the National Bank of Bra- zil and the Brazilian Commercial Bank, there are branch banks of the following nationalities: British, French, Dutch, Italian, Belgian, Portuguese, Japanese, Spanish, United States, Canadian and German. TEA NOT "DRY" RELIEF tj^YTRY American who hears about verba mate for the first time wants to try it. This is the South American tea, drunk by the Indians of Paraguay, Brazil and Argentina before the coming of the whites. In Brazil it is known as herva matte and 65,000 tons of it were exported n 1917. High hopes have been roused by the statement that mate is a harmless beverage with a kick like beer. But alas! it is as kickless as harmless, tasting somewhat like grandmother's "yarb tea." That virtually all Argen- tina and Paraguay prefer it to tea, how- ever, and the greater part of Brazil to coffee, shows that it must have some last- ing merit. Mate grows wild, in groves near pine trees, and is gathered by In- dians, who locate the groves by finding the higher pine trees and gather the mate after the establishment of camps. Some- times the trees are cut down, while again the tenderer twigs are cut off. The leaves are then singed over fires and packed in bales when dry. Mate has also been es- tablished in plantations, where the gath- ering of the twigs is more easily and skillfully done. In view of the world's interest in prohibition as well as the ris- ing price in coffee and tea, Brazilians believe that the use of mate can be ex- tended to Europe and the United States by demonstration and advertising. BRAZIL 83 T ARTICLE XL BRAZIL'S GREAT FOREST WEALTH A HANDICAP Rio de Janeiro, Nov. 19. A substance excellently adapted to the purpose of wiping from paper the marks of a black lead pencil, and of which Mr. Main, opposite the Royal Exchange, sells a cubical piece of half an inch for three shillings. — Dr. Priestley. 1779. HIS half-inch piece has now grown to a full four-pound chunk per capita in the United States, and thereby Hangs an interesting triangle of increas- ing rubber consumption in the United States, increasing production in the Brit- ish East Indies, and stationary produc- tion, with hard times, in the Amazon country of Brazil. No other nation uses rubber as we do. Virtually two pounds out of every four per capita goes into our automobile tires, and the growth of that industry has raised our importations from about one pound per capita to four in the last five years. England is the next largest con- sumer with one and one-quarter pounds per capita, France one pound and Ger- many a half pound before the war. We take more than 60 per cent of the world's rubber crop. When the British demonstrated that rubber could be grown as a plantation crop back in the seventies, and set out enormous acreage during the eighties and nineties in Ceylon, Borneo and the Malay states, the automobile was still to come. Nobody really knew what was to be done with the plantation rubber that began to materialize about 1900. But industry has a way of utilizing such things, and through some unsuspected general plan often provides them, like plantation rubber, before the actual need materializes. Had there been no plantation rubber, Brazil's output of wild rubber would to- day provide a single tire and an extra inner tube for each automobile in the United States, with no rubber for any other purpose or any other country. For the Brazilian production hovers around 38,000 tons. If she had good roads and motor transport in keeping with her size and population, her rubber production would not meet her own needs, and the British rubber planter would find her a good customer. MODERN METHODS LACKING A FEW years ago Amazon rubber brought $2 a pound. Today it brings only thirty-five cents. Under the system of gathering wild rubber, with trees widely scattered through the forest, the unhealthy tropical climate, the exces- sive cost of food up in the Amazon coun- try, the shortage of labor and the diffi- culty of developing new areas of wild rubber, Brazil finds it difficult to com- pete. Manufacturers prefer the planta- tion rubber because it is clean, being coagulated with chemicals instead of smoked over a fire, and coming in uni- form sheets ready for working, instead of the crude, dirty bricks of Brazilian for- est rubber. But "fine hard Para" still has a qual- ity all its own, and experts declare that Brazil might improve her market by im- proving the industry, and probably in- crease her output. Every pound of Para rubber has to be washed when it reaches the United States. This is done by ma- chinery, the hard biscuits being soaked, broken up into chunks, worked through rollers that eliminate the dirt accumu- lated in the smoking process and press the stuff into sheets. It is maintained that a rubber-washing plant in Para would once more raise the price of Brazilian rubber to the profit point. There is also room for improvement, it is said, in tap- ping the wild trees by the scientific methods devised on the rubber planta- tions, increasing the yield per tree, and for better methods of coagulation. The Amazon rubber country probably leads the world in high cost of living, provi- sions being taken in and sold at three to five times our prices, yet Brazil might raise staple food articles near by. Nor is there anything to prevent her embark- ing in the rubber plantation industry her- self. As with coffee, Brazil's rubber has been worked on the single-crop system. But where coffee production grew beyond the world's consuming power rubber was gathered wild without provision for the world's enormously increasing de- mand. Looking ahead ten years ago, American rubber manufacturers endeav- ored to stimulate the Brazilians to in- crease production. Meeting with little response, they thereupon turned to the plantation rubber of the East, where they have made investments in rubber proper- ties. RESOURCES ARE UNLIMITED DRAZIL'S rubber industry is now pass- ing through a perfectly natural and logical transition period. When the Bra- zilians found their market going they first tried a tariff stimulant, imposing heavy duties on articles made from for- eign rubber imported into Brazil, and a light duty on articles made of Brazil- ian rubber. This has not helped mat- ters, because Brazil imports fewer than 2000 tons of rubber articles, and it is difficult to prove the origin of the raw material. Real development is intri- cately involved in the general develop- ment of Brazil itself — roads and rail- roads into rubber regions, drainage and settlement, better methods of gathering and coagulation, organization of the workers for increased production, and rubber production in combination with food and other crops. The Amazon valley is so rich that its wealth is a handicap in solving this prob- lem. For while rubber is down today, Brazil nuts are up, and can be gathered wild, too — not merely the kind that you eat, but the vegetable ivory nuts from which your buttons are made and others yielding edible and industrial oils. Cocoa is a fine Amazon crop, bringing Brazil one-third as much as rubber, and there are medicinal plants, dyewoods, hard- woods and other resources. Brazil's hardwood forests are another instance of resources so abundant that development has lagged for lack of in- centive. With the forest right at their door, many of the Brazilian cities have found it cheaper to import lumber than to organize a local industry. In Rio de Janeiro granite fence posts are used by farmers, because, at about seventy-five cents apiece, they are cheaper than any wooden fence posts obtainable. In the north there is an amazing va- riety of woods so fine and with so many different uses that they will bear trans- portation to the United States and Eu- rope when the industry is properly organ- ized. Thus far the world knows chiefly Brazil's mahogany, rosewood and ebony. But these are supplemented by a hun- dred others. For cabinet work, furni- ture and like uses, it is possible to obtain almost any color or texture, and many have beauties of grain. Other Brazil- ian hardwoods resist water, decay and insects. Still others yield dyes, oils, per- fumes, essences and medicines. FORESTS FULL OF FINE WOODS HPHERE have been great difficulties hindering the development of hard- wood lumbering. For one thing, the different trees are usually isolated, so that it is necessary to search out in the forest those most in demand, and the cost of getting them to the mill is often prohibitive. Straight lumbering would require virtually a department store sys- tem of marketing the different varieties to different industries — one tree would be suitable for piano veneers, the next for cabinet and mosaic work, the next for construction under water, the next for dyeing or tanning, and the next might yield a balsam, a gum, a calking mate- rial, an imitation of sandalwood or fancy walking sticks and umbrella han- dles. Many of these woods are of iron- like hardness and will not float in water, which complicates lumbering, and on top of that the quest for rubber has made labor scarce and costly. Perhaps the greatest difficulty of all, however, has been inadequate seasoning, so that fine Brazilian woods worked up in the United States and Europe have cracked, checked and given trouble generally. Through improved drying kilns developed in the 84 BRAZIL United States the last few years, in which moisture added to the heat prevents the uneven drying common with dry heat, and the "case hardening" common with old-fashioned kilns, it is now possible to season such wood quickly and evenly for any purpose. The Brazilian hardwood industry has been struggling along for years under its difficulties. It needs large- scale production methods, backed by a distribution system which would make its wide variety of products known to manufacturers all over the world and supply what each customer wanted in variety, quality and form, to cut freight to the minimum. What can be done with American lumber methods in Brazil's forests has already been demonstrated with soft wood, in the southern state of Parana. A big American sawmill has been in- stalled, equipped with the latest devices, including moisture kilns. Parana pine was found to be so wet that it would not float, but it is snaked out on skidders, hauled to the mill by rail, kiln-dried and worked up into boards, timbers, box ma- terial and other products for home use and exportation. A thriving market is found in Uruguay and Argentina to the south. ARTICLE XLI TAX GREED STRANGLED BRAZIL MANGANESE TRADE |^IO DE JANEIRO, Nov. 22.— There was no war cloud on the horizon in September, 1913, when the United States Steel Corporation put the American flag on the ocean route be- tween our own country and Brazil. The Stars and Stripes had not been seen on a steamer for twenty years in that quar- ter of the world. Americans were not worried about it. Foreign steamships gave us such splendid service! Why be sentimental about the flag? But James A. Farrell, president of the steel corpora- tion, did not find foreign steamship serv- ice so splendiferous when it came to sell- ing steel in Brazil. Countries furnish- ing the service were all selling steel themselves. Study of freight rates dem- onstrated that after we had effected economies in manufacture and were able to save the Brazilians some money on steel, they lost the saving and we lost our market through manipulation of steam- ship rates. So monthly steamships of the highest class were put on between New York and Rio de Janeiro. Steel is a heavy, compact cargo, so bulk freight could be carried with it. The regular sailings immediately stimu- lated merchandise sales to Brazil. The only problem was return cargo on the 5000-mile voyage home. To pro- vide this cargo the corporation began hauling back Brazilian manganese ore, making its own ferro-manganese, the SAO PAULO'S LEADING HOTEL. THE HEAD- QUARTERS OF THE U. S. TRADE SCOUTS scavenger of steel. At that time our steel industry was also getting splendid ferro-manganese from Europe, and there seemed no reason for making it our- selves. But when war came out of a clear sky and supplies of ferro-manganese were cut off by Europe and the material rose to several hundred dollars a ton, the wisdom of doing such things for our- selves was quickly seen. Had we not been able to get Brazilian manganese through this careful balance of steam- ship service with steel sales, bulk freight and ore, we should have been in a pretty pickle for munitions. GREAT INDUSTRY DIED VUAR demand for manganese later brought a Philadelphia concern into the field — E. J. Lavino & Co., who make special alloys for the steel industry, and began bringing the ore from Brazil to Philadelphia in chartered ships through the International Ore Corporation, Ltd. The Brazilians were delighted with this new market for their manganese. From small shipments, the traffic grew to 122,000 tons in 1913 and 532,000 tons in 1917, virtually all taken by the United States. Mines were worked in a larger way, new deposits opened up, and eco- nomical modern methods of mining de- veloped under American engineers. Then entered the complications of Brazilian state taxes. Back in the old Colonial days the distant king of Portu- gal got revenue out of Brazil by clap- ping heavy taxes on every enterprise that showed activity. The Brazilian states have done the same, pending their work- ing out of a sounder local tax scheme. Most of the manganese is mined in the state of Minas Geraes. When the Ameri- cans first came for ore this state imposed a reasonable export tax by valuing the stuff arbitrarily at $12 a ton, and col- lecting 4 per cent on that — forty-eight cents. By 1917 the value had been raised to $24 a ton, at 8 per cent, $1.92 export fee. By armistice time there was talk of charging 25 per cent at $25 — $6.25 per ton! Railroad freight rates from the mines to the ocean were a/iother item of ex- pense that rose progressively. In 1913, with moderate cost coal, they were rea- sonable by Brazilian standards. But as coal grew scarce during the war they steadily rose. The railway bringing down manganese is a government line. It is heavily overmanned. Instead of encour- aging manganese traffic growth by mak- ing lower rates for larger shipments, the tendency had been to increase rates as the business grew, though, without man- ganese, freight cars must be hauled back empty from the interior. BUSINESS WENT TO INDIA AT THE present writing 280,000 tons of manganese ore are lying on the docks in Rio de Janeiro because the United States can get the stuff from India for less than the Brazilian article costs laid down in New York, with its railroad and steamship freights, state and federal export taxes and other items. India's ore is being marketed under an arbitrary government ruling whereby re- turning ships are really used to valorize the mines and make them pay. "Brazil can get into the manganese game again, and probably stay in," says an American student of the situation, "if she cuts down the export duties, runs the railroad with 3000 employes instead of 15,000, and quotes a freight rate that will encourage volume." But that is only the first chapter in the story of Brazilian manganese under American development. The second chapter is written here for the first time and illustrates what American enterprise can find in a country so rich as Brazil : About fifteen years ago J. Richmond Guimaraes, an American of Portuguese descent, went from Montclair, N. J., to the interior of Brazil and secured a con- cession from the state of Matto Grosso, more than 18,000 square miles in area — twice the size of New Jersey. This concession then lay in a section little explored. Colonel Roosevelt went through part of it on his Brazilian expe- dition. But it was known to be rich in rubber, which could be gathered and brought to market south on the river Par- aguay, instead of north over the Ama- zon. The man from Montclair organ- ized rubber crews and started explora- tion. He began to find other things. There was gold, for one, and water power in abundance, and a wilderness of ipecac back there in God's great outdoors BRAZIL 85 big enough to supply the world with emetics. Development did not go very fast, be- cause the territory was so enormous, and also because political disturbances in the state of Matto Grosso hampered the work. About six years ago another Ameri- can arrived in Brazil — Captain William Lowry, who had been sent down to man- age the United States Steel Corpora- tion's steamers at Rio de Janeiro. He quickly became interested in Mr. Gui- maraes and his concession. WORLD'S LARGEST DEPOSITS HpHE man from Montclair is imagina- tive and enthusiastic, while Captain Lowry is a promoter in the constructive sense of the term. The man from Mont- clair would go back into the wilderness of his concession, exploring, charting, gathering information and specimens, and return to Rio de Janeiro full of won- der stories. In the intervals of his steam- ship business, Captain Lowry listened to Guimaraes, and to other people who brought him information, and sitting in Rio de Janeiro, began putting together a picture puzzle of unrelated facts — which is the promoter's distinctive job. One of the first bits in the picture puzzle came in the form of manganese ore specimens. These had been found on a Belgian concession. Having never worked it, the Belgians had lost their rights, but Brazilian sympathy was averse to cancellation during the war. Some quiet negotiations led to the purchase of the Belgian rights and the formation of a mining and transportation company. Then some of the best mining engineers were sent in to investigate, and one man- ganese expert pronounced the deposit "probably the largest one mass body of manganese ore in the world." This ore lies fully 1000 miles from the ocean by railroad, so that rail trans- portation would be prohibitive under Brazilian rates, al- though there is rail connection all the way except twen- ty-five miles. But a twenty-mile rail- road from the mine to the Para- guay river would provide a water route to market — "a Pittsburgh-to- New Orleans prop- osition," as Cap- tain Lowry puts it. Loading at Corum- ba, ore could be floated down the rivers Paraguay, Parana and La Plata to Monte- video, and there loaded on ocean steamers for the United States. Those were war times, and manganese coming down from Minas Geraes to Rio de Janeiro, with the steamship business too, made work enough for a busy man. But looking ahead five years to see how he might possibly have to load his steam- ers with return cargo, Captain Lowry found the time and the money to fit an- other piece into his picture puzzle, build- ing the railroad from the mine to the river. At the same time he had an engi- neer investigate and report upon river transportation from Corumba to Monte- video. It was found that ore could be carried ten months in the year by steamer and barges for $3 a ton, as against $4 by railroad from Minas Geraes to Rio de Janeiro. Arrangements were made to lease steamers. ANTHRACITE BEING SOUGHT /")NE day a strange Brazilian called on the captain with a story and a piece of coal. Coming down a little-known river on the Guimaraes concession in a canoe, he had found himself running through a gorge with black stuff crop- ping out on both sides. Stopping five minutes he knocked off a single specimen of this black stuff and brought it along. People told him it was coal, and he had heard that Captain Lowry was inter- ested in coal. He left his specimen. A Brazilian chemist, after analysis, de- clared it anthracite of a quality so good that it could not have come from Brazil, but must have been taken from a steam- ship. The captain concluded that the Brazilian was perhaps a crank or a faker and forgot the incident until he suddenly discovered that this was an- other important piece in the picture puz- zle. Now, most minerals are concentrated by crushing the ore and effecting water separation. But not manganese, which is stubborn stuff, and must be smelted out with coal or coke, or at a pinch, per- haps, water-power electricity. That sin- gle lump of coal became so important that the captain started looking for the strange Brazilian — and learned that in the meantime he had died. Another engineer was sent off into the wilderness. "Find that coal," directed the captain, "and bring me a ton of it — I want enough to work with.'" At this writing the ton of coal has not yet materialized, but there is reason to believe that it will, providing not only fuel to concentrate manganese, but start a coal trade to Paraguay, Argentina and Uruguay. AVENIDA TIRADENTES. THE MAIN PARKWAY AND STREET OF SAO PAULO ARTICLE XLII PENSIONS AND PAYROLLS USE 80 P. C. OF REVENUE RIO DE JANEIRO, Nov. 24.— The Brazilian republic is now thirty years old. The other day the Brazilian people got virtually the first trial balance they have had since their republic was estab- lished. This document took the form of a mes- sage to Congress — the first message of President Epitacio Pessoa, the Latin- American executive best known in the United States through his recent visit. Doctor Pessoa reached Rio de Janeiro on the U. S. S. Idaho July 22, was inau- gurated six days later, and six days after that sent to Congress a state document which, for its plain speaking, downright common sense and absence of graceful generalities, is something admittedly new in Brazilian statesmanship. He talked to Brazil as a sober admin- istrator to a young spendthrift. In the last five years the country has run up a government deficit of more than $250,000,000. Everything has been going out and not enough coming in. Brazil's chief fed- eral revenue is from import duties on goods, and these were cut down luring the war. In- stead of economiz- ing, however, the govern ment in- creased expendi- tures. Brazil's par- ticipation in the war cost some- thing, but was money well in- vested for the pres- tige it gave her in the United States and Europe. But her chief burden has been an enor- mous increase in CHIEF RESIDENTIAL, 86 BRAZIL the number of government employes. Every government department has been adding assistants, many of whom do little real work. Federal job-making has gone such lengths that four-fifths of Brazil's revenue is spent for salaries and pen- sions, leaving only 20 per cent for the equipment of the army and navy, the maintenance and improvement of the government's railroad and steamship lines, and the purchase of department supplies. Each year during the war the growing deficit has been met by foreign and domestic loans in paper money. Twice during the war interest and pay- ments upon the public debt were sus- pended. Yet only two months before Doctor Pessoa took office a large number of new employes were added to the fed- eral payroll. "You are not only a spendthrift," he said in effect, "but have been taking nar- cotics. You have given me the job of straightening you out, but you have got to help yourself." NATION IS IDEALISTIC rpHE Brazilians sat up and listened to "Epitacio," as they familiarly call him, and his first mes- sage was followed by others, a week apart, outlining the work to be done in other direc- tions, such as the relief of the drought - stricken northern states, the reorganization of the bankrupt gov- ernment steamship lines, the provi- sion of a sound banking and credit system, the improve- ment of sanitation throughout the re- public and other practical administra- tive measures. Doctor Pessoa faces problems not un- like those that lay ahead of Doctor Wil- son when he first took office, and an in- teresting comparison has been made be- tween Brazil's president and our own. "We are a practical people, and in President Wilson have had a leader who added idealism to our practicality," says an American living in Rio de Janeiro and intimately acquainted wjth Brazil- ian politics. "The Brazilians are ideal- istic, and in President Pessoa have a leader who adds much-needed practical common sense." "Epitacio" is in several ways an en- tirely new type of executive for Brazil, and one upon whom center many hopes. Born in 1865 in a little country town in Parahyba, one of the smallest states, he is a self-made man. He has risen without means or influence. He worked his way through school and college, grad- uating in law. While only seventeen he was acting public prosecutor in Pernam- buco, then held small judicial offices until elected to the Legislature in his own state. In 1899 he was made minis- ter of justice in the national government, took an active part in reforming Bra- zil's civil code, and in 1912 rose to the Supreme Court. A year later he was elected to the federal Senate from his own state, and when sent abroad as Bra- zilian representative in the Peace Con- ference quickly demonstrated such abil- ity that he was chosen for president under the system which prevails in Brazil — a system which, compared with our own, is somewhat peculiar. Doctor Pessoa is a battery of energy. From north to south Brazil is divided into three zones. In the central zone, which includes Rio de Janeiro and the wonderfully rich but undeveloped state RAILROAD TERMINAL AT SAO PAULO of Minas Geraes, the climate is so fa- vorable that the Brazilians there blame it for their lack of energy. In the cool states of the south and the hot drought- stricken little states of the north life is more difficult, and has developed ener- getic people. "Epitacio" is a little hus- tler from the north. He can be seen at seven every morning taking horseback exercise in the grounds of the presiden- tial palace. Within a week after taking office his time for two months ahead was scheduled with work, conferences and in- vestigations. Next to energy, his chief characteristics are plain common sense, belief in his own ideas, courage to carry them out and a disposition to decide and do all things for himself. NEW RULER IS PRACTICAL DLAIN common sense has been decid- edly scarce in Brazilian government. The Brazilians live in a perfect economic and political fairyland. With half a continent calling for development and a shortage of people to do the work, they have made government jobs for idlers by wholesale. In a country naturally agricultural, they have withdrawn labor to create manufacturing industries under protective tariffs so stiff that there is probably no other country in the world where prices of merchandise are so uni- formly high — industrially they seem to have artificially speeded ahead of natural growth. When outside capital and en- ergy are enlisted for development, they have given rich concessions and monopo- lies on any terms, but when actual de- velopments begin, often stop it with a multitude of special federal and state taxes and restrictions. In neither poli- tics nor business does the Brazilian take the direct road, but this is due more to lack of experience than any particular sophistry in the real Brazilian tempera- ment. "Epitacio" appears to be the man who will lead them out of the jungle, and there is reason to believe that the Brazilians are ready to follow a practical leader. Confident of his own ideas and ability, he is going to give Brazil what it has long lacked — an admin- istration. Brazil ranged herself be- side the Allies in the war, and then, for lack of a vigor- ous ruler, conserva- tively went to sleep and took no further steps. Through govern- mental indecision the German ships in Brazilian harbors were not actually seized, so that compli- cations arose later in the Peace Confer- ence over their ownership, involving feeling against Brazil's idol, France. Through similar short-sightedness, ship- ments of Brazilian manganese ore, urgently needed for our munition mak- ing, were interfered with several months during the war crisis. Doctor Pessoa is unmistakably a ruler. He has announced a practical policy of reconstruction and development. At this writing it remains to be seen whether Congress will back up his measures. His very confidence in himself and his par- tiality for doing things himself may lead to a test of strength between the execu- tive and legislative powers. But out in the vast interior of the republic, where the plain country people live with reali- ties, far from the artificialities of Rio de Janeiro, there is a strong national BRAZIL 87 common sense which will support "Epi- tacio," if he can enlist it. APATHETIC IN POLITICS TTHIS in itself is an almost superhuman task by reason of Brazil's undevel- oped sense of political action and lack of responsive national public opinion. Our popular presidential vote in 1916 was 18,500,000. At the same ratio Bra- zil should cast 4,500,000 votes for a president. Actually the total national vote in the last election was only 367,645, about equal to the voters in Wisconsin, Doctor Pessoa receiving 249,342 bal- lots and Dr. Ruy Barbosa, the only other candidate, 118,303. The Brazilian president is not elected by popular vote. He is selected by the political bosses of virtually three states — Minas Geraes, Sao Paulo and Rio Grande do Sul — with a certain amount of influence from the states of Pernam- buco, Bahia and Rio de Janeiro. Minas Geraes is the most thickly populated state in Brazil, with 3,500,000 people, but it is also the most con- servative and back- ward in develop- ment. The previ- ous Brazilian ad- ministration, which took one step in the war and then took no more, was rep- resentative of that state. Sao Paulo is the next most populous state with 2,500,000 people, and also the most energetic in Brazil — its capital city of the same name, with its industries and railroads, is the Chicago of Latin America. Rio Grande do Sul, still farther in the cool south, with 1,200,000 population, a neighbor of energetic Uruguay, is also enterprising. To show that the word "boss" does not mean in Brazil what it means to us an illustration may be taken from Rio Grande do Sul. The French philosophy of positivism has taken such strong root in Brazil that its motto, "Order and Progress," is part of the Brazilian flag. Positivism deals with facts alone, and excludes in- quiry into causes. Rio Grande do Sul is a stronghold of positivists, and has a positivist system of state government. It has also had the same state president during the last thirty years, the entire period of the republic, and been pros- perous and well governed under him. This is the type of man who dominates the federal elections in Brazil and, while by our political standards such a system seems to hold vast possibilities for abuse of power, in Brazil it has worked fairly well and is part of the country's growth into real self-government. Brazil has no political parties. From time to time factions arise around some leader, but never grow into strong par- ties with definite programs. Voting is made difficult by poll fees amounting to ten or fifteen dollars, so that few citizens can afford the luxury. Recognizing this shortcoming, business organizations and merchants sometimes pay the poll fee for their employes, but ballot reform has not yet become a healthy political issue. Doc- tor Pessoa recognizes absence of political parties and smallness of the electorate as grave shortcomings, and has pledged him- self to constructive reform. Obviously reform in the ballot and broader public opinion are to the advantage of the execu- tive. The most interesting thing about this GRAND OPERA HOUSE AT SAO PAULO "boss" system in Brazilian politics just now is its selection of Epitacio Pessoa for president. A PRECEDENT BROKEN pOR he does not come from one of the "Big Three" states, and this is the first time that a Brazilian president has come from any outside state. He does not even come from one of the "Little Three," nor is he finally a man who has domesticated himself in the Brazilian capital, thus gaining political influence. He comes from a state that is small, poor, with about half the population of the city of Rio de Janeiro, and no political in- fluence at all. The Brazilian presiden- tial election has been called a "selection." The "Big Three" selected "Epitacio" be- cause they needed him, and because Bra- zil needs him, and because no other man stood out as he does, and while he lacks behind him, in case of dissension, the powerful influence of an executive native to one of the "Big Three," it is conceded that he has the backing of all for the good of Brazil in any reasonable constructive program. They selected him because Brazil needs a strong man to take hold and pull her out of difficulties. And "Epitacio" lost no time in taking hold. His first step was the appointment of a cabinet. In making his selections he broke several precedents. There was a delicately balanced cabinet inherited from the previous administration, and people wondered which of those ministers he would retain and how he would shift them about. He made an entirely new selection of his own, not one appointee having been previously mentioned in the press. The ministers of war and navy in Brazil have always been military men in the times of the republic. Against a general feeling that the appointment of civilians would cause dissatisfaction in the army and navy, he appointed civil- ians to both port- folios and every- b o d y likes the change. Young officers in both services were in favor of civilian ministers, but the older ones were not. The step was taken boldly but tactfully. Admiral Gomez Pereira, former minister of the navy, aided the president hand- somely by stepping down to be chief of staff under a new minister, and the situation in the army was eased by keeping General Ben- ton Rebeira as chief of staff. The president of Brazil has several im- portant appointments outside his cabinet — the directors of government steamship and railway lines, of the Bank of Brazil, and the mayor and chief of police of Rio de Janeiro. New men were appointed to all these posts and new policies laid down for some of them. For nearly thirty years the Brazilian Lloyd steamship lines have been under government operation and ownership, and likewise a burden to the country. This is one of the few steamship enterprises in the world that could not make money during the war. Successive deficits have put it into bankruptcy, and for years there have been bitter complaints from passengers and shippers about its service on ocean, coastwise and river routes. Doc- tor Pessoa has suggested a new basis of operation, whereby government control and private enterprise will be combined 88 BRAZIL by forming a new corporation, with pri- vate business interests holding part of the stock and running the enterprise while the government owns the balance, with simple rights as a shareholder. The Bank of Brazil has restricted capital, small rediscounting ability and no power to issue currency in a crisis on the lines of our federal reserve system. Brazil is where we were in banking mat- ters during the crisis of 1907, and her business interests lost millions of dollars during the war simply because currency and credit were inflexible. A plan for correcting these shortcomings has been drawn up. DROUGHTS ARE PERIODIC PERIODICAL droughts in the north- ern states of Brazil — among others the president's own state of Parahyba — have caused such tragic suffering in addi- tion to money loss that a far-reaching plan of irrigation was among the first things outlined by him in a message to Congress, under which large reservoirs and canals will be built with money bor- rowed on bonds and the improvement of that region ultimately made to repay the government. Rio de Janeiro abounds in newspa- pers, many of which have drawn subsi- dies from the federal treasury for vari- ous political services. One of the new president's first steps was to cut off these subsidies — a step as bold as it was hon- est in view of the damage that might be done an administration by a hostile press. Another step showing results of study in our own country was the suggestion to Congress of a heavy tax on alcoholic liquors. Still another departure susceptible of interesting political interpretations was his attitude during a hot factional fight for the governorship of Pernambuco. Several factions were in the field, and the excitement boiled up into riots. This state is just south of the president's own state, and he has many relatives there. He was appealed to in the belief that he would come to the aid of his relatives, and asked to intervene with federal mili- tary forces. In one way such interven- tion could have been interpreted as merely keeping order, but in another way it might have amounted to taking sides with a given faction. "Epitacio" did not side with his cousins, and neither did he intervene with the army, and when this stand had been taken the trouble quickly bubbled down again. Doctor Pessoa's honesty, ability, ex- perience, character and patriotism are unquestioned, and his rise to power has aroused high hopes in other Latin-Ameri- can countries. In carrying out his policies he will enjoy a certain prestige accorded to the president of Brazil from the days of the empire. The deference paid to the execu- tive reflects that formerly paid to the per- son of the emperor and is found in no other Latin-American republic. When the president goes to the railway station for even a suburban trip, his whole cabi- net goes to say a formal farewell, and receives him in the same way when he returns. This is a definite advantage in carry- ing out policies, and if he also has the backing of Congress and the political powers in the influential states in put- ting through the constructive projects he has already outlined, there should be happy days ahead of Brazil — days of de- velopment and prosperity when the trial balances will show dividends. ARTICLE XLIII THEFTS FROM SHIPMENTS TO BRAZIL ARE COMMON J^IO DE JANEIRO, Nov. 26.— Somebody passed a counterfeit Bra- zilian bank note on an American in Rio de Janeiro. "Never mind — I'll get rid of it," he said. "Let me have it." said a friend who was with him. "I'll take it down to the American Bank Note Company's office and they'll give me its face value." This was done, and the company was glad to buy a new counterfeit for study. Pretty much all the paper money of Brazil is printed in the United States, and has been for many years, along with Brazilian postage and revenue stamps and Brazilian bonds. The purchase of counterfeits at face value simply illus- trates the safeguards thrown around Brazilian money by this American com- pany. Naturally, it would not buy all the counterfeits offered, but it is glad to buy samples, and where the counter- feit is especially good makes a detailed study by throwing an enlargement upon a screen, warns the banks and co-op- erates with the police authorities. Latin America offers certain advan- tages to the counterfeiter because he can set up shop in one republic, make the money of another country and sell it to people who put it into circulation, so that he himself runs little of the risk. With the development of photographic reproduction methods counterfeiting has become easier than when engraving was necessary and a counterfeiter spent weeks making one plate. But the industry for- tunately has its disadvantages. The equipment required is elaborate and can- not be usually hidden, while it costs so much that a man with capital sufficient for counterfeiting might just as well go into some other industry. U. S. MAKES THEIR MONEY jV/IAKING money and postage stamps for the Latin-American countries is a large industry, with keen competition among American, British, French and Italian concerns, as well as government printing establishments in the Latin- American countries. The American company has been very successful in holding Brazil as a customer against cheaper work obtainable elsewhere, be- cause its product offers better protection against counterfeiting. For one thing it prints money on the same paper that is used for our own currency. For another it relies upon fine steel engraving to put obstacles in the way of counterfeiters, whereas European printers rely more upon water marks and devices which American experience has shown inade- quate. Added to these, there is a rigid system of counting and inspection in the company's New York plant, so that theft or loss of money through employes is very difficult. In fact, when Brazil buys her money of us she gets a first-rate arti- cle — as well made, durable and safe as our own. Pilfering of merchandise from ship- ments going into Latin America has be- come so common recently that United States Consul General Raeberle, at Rio de Janeiro, is taking steps to have Ameri- can manufacturers "fiscalize" their ship- ments before they leave factories. These thefts occur in shipments from Eng- land and Europe as well as the United States, and investigation gives ground for suspecting that they are committed by well-organized gangs in Latin-Ameri- can countries, and probably other gangs in countries from which shipments are made. Boxes arrive apparently intact, but with valuable goods missing, and re- placed with bricks or stones wrapped in newspapers. Now these will be New York newspapers, and again those of the Latin-American port where goods are received. Goods checked and packed by trustworthy employes in the United States and delivered intact to steamship piers have been found short on arrival. Again, goods intact on arrival have been pilfered after unloading. In still other instances losses have evidently oc- curred on steamers or in customs. Short- ages are so common today that in Brazil, at least, the receipts for goods under- going inspection in the customs house are so worded as to relieve the govern- ment of responsibility for shortages. By "fiscalizing" all shipments before they leave the factory, American manufac- BRAZIL 89 turers can assist in running down a wide- spread system of theft. Goods should be carefully checked and packed by re- sponsible employes. There is good rea- son to believe that some pilfering is done in shipping rooms. If the shipper is cer- tain that consignments leave his prem- ises intact, that will eliminate some of the ground to be covered in tracing thefts, aid his customers abroad, and be evidence of his own skill and good faith in filling orders. Quite a number of American business men, leaving suddenly for Brazil, have found that information about what to wear was hard to obtain in the United States, being one of the little details so simple that it is overlooked altogether. Consequently they arrived in Rio de Ja- neiro equipped for the tropics, but without an over- coat, or with heavy clothing, but short of light things. CLIMATE IS VARIABLE REAVING the United States in summer, the lightest possible clothing will be needed through the tropics, and then light woolen suits after crossing the equator, changing to a warm winter suit in Rio de Ja- neiro, where the weather is then cool. Interior cit- ies like Sao Paulo, in the mountains, make overcoats necessary and sometimes furs comfortable be- cause hotels and houses are unheat- ed, Leaving the United States in winter, heavy clothing is needed at the start, gradually changing to light wash" suits in the Brazilian summer. Our Palm Beach suits are comfortable. The Bra- zilians wear even lighter suits of pongee silk. If a stop is made at Barbados, the traveler can take a tip from Yankee sea captains and have white linen wash suits made up — linen comes into Barbados free of duty, and tailors make clothes to measure almost overnight. Many Brazilians, like Spaniards in the tropics, wear black wash suits in- stead of white, having evidently found through several centuries of experience that black turns the penetrating actinic sun rays which play such havoc with white people. For traveling in the in- terior a hammock and mosquito netting are necessary for comfort, keeping one's own clean bed out of reach of the swarm- ing insect life for which Brazil is fa- mous. Evening clothes are widely used and should be taken. A morning coat and silk "topper" are often handy. Latin America is neither particularly wild nor particularly hot. Rough and ready clothes are needed for country travel, but people in the cities dress as formally as in Lon- don or Paris — much more so than our- selves. Even in the tropics one may quickly pass from sweltering heat to cool weather by climbing up the mountains to an interior, capital, while along the west coast, with its cold Humboldt cur- rent and great altitudes, it is never safe to be without heavy underclothing or overcoat. ONE OP SAO PAULO'S BUSIEST STREETS FROM RUBBER TO CATTLE TPHE Brazilian Government believes in advertising, and from time to time issues publications in English giving facts about the country. Before the war it had begun the publication of a book which appeared every two years, but war in- terfered with this volume, as it was printed in England, and "Brazil in 1913" was the last issue. For the United States there was recently published a hand- book, entitled "What Brazil Buys and Sells," with general information about the country turned into dollars, tons and miles. Such publications are sent to newspapers and public officials, as well as distributed through Brazilian consuls. Brazil has one consul in the United States just now who is doing a great deal to make his country known in the right way. This is Sevastiao Sampato, stationed in St. Louis. Writing and speaking to the corn belt, with its agri- cultural viewpoint, he puts Brazil before people in the plainest corn-belt terms, showing that this South American coun- try, assumed to be so strange and far off, is turning from rubber and coffee to cattle raising and packing houses; that it is not a jungle, but an undeveloped corn belt waiting for farmers, and that, like every one-crop region in our own coun- try, it needs diversified farming for per- manent prosperity. The American Chamber of Commerce in Rio de Janeiro has recently suggested that the Brazilian Government print a much larger edition of its next handbook in English, and that this be dis- tributed among business men in the United States through our wide- spread Chamber of Commerce or- ganization. It is believed that such distribution by our own business men from our own business viewpoint would add greatly to the value of the book for both the Bra- zilians and our- selves. As a great many inquiries would be received from people seek- ing more informa- tion about Brazil, it is also suggested that our Chamber of Commerce in Brazil either an- swer these inqui- ries directly or co- operate with the government i n handling them, so that information be given with a knowledge of the United States as well as Brazil. ARTICLE XLIV HAMPERING WORLD TRADE THROUGH THE INCOME TAX ■RIO DE JANEIRO, Nov. 29.— Everybody agrees that we want more broad-gauge Americans of execu- tive caliber in world markets. An American of that character came home from Argentina, where he has been building business for his country. After a visit, starting back, he found that he needed an embarkation permit to get out of the United States. It was neces- sary to produce his income tax receipt. Having been abroad since the income tax 90 BRAZIL started, he had never made returns. Uncle Sam demanded $12,000 to let him out of the country. By declaring his intention of becoming an Argentine citi- zen in New York he could have obtained his permit gratis. But he values his citizenship, and so wrote a $12,000 check. An Argentine lad in the employ of an American company on the southern con- tinent came north when we entered the war, volunteered for the army, fought in a machine gun company at Chateau- Thierry and St. Mihiel and was mus- tered out in the United States last April. Returning to his sales territory, he found that Uncle Sam wanted income tax for the time he had spent in the United States, including his terms of service in the army, although he is an Argentine citizen. In Rio de Janeiro there is a Spanish citizen connected with an American cor- poration who, largely through his own efforts, has made it very successful in Brazil. He has never been to the United States. Last year our government col- lected from him $20,000 under the in- come tax regulations — not the basic law, but simply on a treasury ruling. TOO MUCH RED TAPE AN AMERICAN doing business in Argentina visited the United States, and when asked about income tax stated that he had paid faithfully, but had never been accorded the courtesy of a receipt. His payments had been made in his own southern state. Before he could leave the country it was necessary to make a personal visit to that state, at a cost of $200 and the loss of several days' time, and also his steamship passage, because only a personal visit was effective in se- curing the necessary receipt — letters and telegrams brought no action from the revenue officials. Other incidents of the same kind might be added, for they are occurring wherever Americans do business abroad. The sub- ject is being discussed everywhere and is clearly one which must soon be taken up intelligently for settlement on a basis of simple justice and the elimination of government red tape or grave harm will be done to American world-trade inter- ests. Government red tape is the first out- standing handicap. Thousands upon thousands of Americans who pay their income tax both at home and abroad have never been given receipts. The writer knows by experience that nothing short of a personal visit to the office where in- come tax has been paid will secure the necessary receipt in reasonable time. Where the revenue office happens to be remote, all the expense and work of se- curing the receipt, like .everything else connected with our income tax, is shifted to the citizen who pays, regardless of the value of his time or his business. Count- ARBEST OP BOLSHEVIK IN BIO DE JANEIBO less petty regulations crop up to ham- per international business — an operation once so simple as depositing a bond cou- pon may now involve two or three months' wait and correspondence and perhaps a power of attorney if the bonds are in the United States and the owner in South America. Feeling on this sub- ject is so strong in Latin America that organizations of American business men are taking steps to lay the matter before our governmnet. Then there is the question of expense. Thousands of American business men are now going abroad to establish our world- trade organization. Many of them are young fellows on moderate salaries who see the value of business experience abroad as training for earning capacity later in life. They count salary secon- dary, and rightly. But living expenses in other countries are usually higher than at home, and if one is married it takes close calculation and sometimes sacrifice. Income tax is not only an added expense, but perhaps represents money which would otherwise be invested in life in- surance protection. With longer experi- ence in income tax administration, Great Britain and France, realizing the value of their citizens building trade abroad, have provided exemptions. LATIN AMERICA GETTING HABIT TROUBLE taxation is another phase of the subject. Many Americans abroad reside in countries where they must pay income tax, and even the Latin- American countries are now considering the adoption of such taxes. One Ameri- can in Argentina, in business for him- self, after a prosperous year had to pay 64 per cent of his income to our govern- ment. Had there been an Argentine in- come tax he might have been compelled to pay more than 100 per cent of his in- come to both governments, as in the fa- mous case of Mr. Astor, in England, whose taxes last year exceeded his in- come, and who was declared by a British Government official "simply unfor- tunate" ! Under our income tax as now admin- istered Americans abroad are taxed with- out representation, because unable to vote during their absence from the country. However, in this case they are no worse off than thousands of traveling Ameri- cans at home who cannot vote simply because election day finds them at an in- convenient distance from the town pump. It will be remembered that there was rather a lively disturbance over taxation without representation from 1776 to 1783. Federal income tax on Americans en- gaged in world trade is also discussed in terms of paying for something not ac- tually delivered. If an American abroad owns property in the United States he enjoys direct government advantages, such as police protection, and should clearly pay for government service. But while our federal government renders some service to him while abroad, and perhaps protection in trouble, many who discuss the subject feel that less service is rendered, and that Americans abroad should be taxed less heavily, if at all. Our income tax system does not yet work smoothly, nor with justice, and is often irritating in its regulation and ad- ministration. Viewed from another country, it appears to have been planned and to be applied entirely from the view- point of people at home. Blanks for making returns are often unobtainable at our consulates in other countries, and routine is complicated by distance. Yet should an American wish to leave an- other country nowadays, red tape is wound round him at our consulate or embassy, which will not issue a pass- port unless he can produce income tax receipts, which are probably weeks away in the mails, if they have been sent at all. TAX METHODS DANGEROUS TTHERE is a real danger that, if good business methods are not applied to income tax administration, many of our world-trade interests will, like our mer- chant marine in pre-war days, be trans- ferred to foreign flags by incorporation abroad ; and in many cases transfer of citizenship to other countries is a dis- tinct advantage. World trade in most countries is car- ried on under grave handicaps of taxa- BRAZIL 91 tion and red tape. For instance, the American going to Brazil to represent one of our business houses on the spot, and finding that his company must be domesticated before it has a legal status, encounters* the following expenses and routine: Stamp tax for decree of authorization, $75 ; $2 tax per $1000 on capital used in the business; $20 registry tax for docu- ments; expense of publishing documents in government journal; expense of offi- cially translating documents; commis- sion on temporary deposit of one-tenth of capital devoted to the business in Bra- zil in government bank; special yearly taxes by federal and r.tate governments on the business, according to its charac- ter, upon rent paid for business prem- ises, on salaries, signs and in other ways. In Argentina likewise business ex- penses are increased and business facility hampered by many different taxes and regulations. One may be taxed $25 a month by the municipality today as owner of the place where he does busi- ness, and pay again tomorrow as occu- pier of the premises, and if the govern- ment fails to send him a bill and he over- looks a certain tax on a certain date there will be a fine as well. A ten-cent sample of merchandise sent him from New York by parcel post may take several hours' time running between the postofHce and the customs house, and cost a couple of dollars for stamps on official documents. And so it goes day by day. With taxes and tariffs and licenses and stamps and travel regulations the gov- ernments of the world during the last five years have intricately enmeshed the business man. Where there was one government requirement before the war, there are now a dozen, arid against one government official in the old days of business facility there are now two or three. Government officials everywhere seem to regard the business man as their particular prey. Government regula- tions are not made to fit business in terms of facility and service; on the contrary, business and the business man must be made to fit the regulations. In all coun- tries it is difficult to do business at home, but when one goes abroad the complica- tions multiply. The American engaged in world trade today is practically pen- alized and put at a disadvantage with his competitors of other countries by the inflexibility of laws and regulations ad- ministered wholly from the domestic viewpoint. ARTICLE XLV "GROPING" FOR BUSINESS IS ERROR OF EXPORTERS DIO DE JANEIRO, Nov. 31.— A corn-belt manufacturer dictated a circular letter one gloomy winter morn- ing. Sales were as dull as the weather. Reading a trade journal article that pic- tured the possibilities for sales in other countries, he decided to branch out in Latin America. His letter was very short. It said he made powdered but- termilk ; that he wondered if it could be sold to Latin-American bakers; that he would like to know what kind of breads were baked in Argentina, Ecuador, Cuba and so on; likewise whether butter was made in those countries; likewise what was done with the buttermilk. He told Tilly, the stenographer, to get the atlas and send a copy of this letter to Ameri- can chambers of commerce in each coun- try. When his letter reached the various chambers of commerce some weeks later they did various things, according to their facilities. Some put it on a bulle- tin board so members could see a pow- dered buttermilk manufacturer at home was seeking trade. Others published a brief reference in their bulletin. Still others may have had time to make per- sonal inquiries about local baking math- ods. The corn-belt manufacturer was grop- ing dimly. Not understanding exactly what he wanted, his letter gave little information upon which to make a real investigation. When it reached commer- cial chambers of commerce secretaries or United States consuls abroad they had to grope, too. There is much of this vague groping being done all the time in world mar- kets. American export and import houses are constantly circularizing the world, seeking trade through form let- ters, and not even taking the trouble to mention the kind of trade they want to handle. American buyers of foreign prod- ucts grope for new channels of supply in the same vague way. The collection man gropes. Writing to Rio de Janeiro he asks that somebody there run out to Manaos and get some money from a cus- tomer — he has heard that Manaos is in PARADE OF BRAZILIAN TROOPS 92 BRAZIL Brazil, but does not know that it is on the Amazon, five weeks away. The ad- vertising man gropes — some time ago an American automobile was advertised in Rio de Janeiro newspapers, and cus- tomers were referred to the agent at Quito, Ecuador, which is as far from that capital as San Francisco from New York. GROPING AT HOME AND ABROAD J? VERY Latin-American port has its stranded American salesmen, who have been sent out to get orders and left high and dry, without remittances, their cables and letters unanswered, their or- ders unheeded, pathetic victims of spas- modic groping at home — somebody warmed to world trade and then cooled, or one executive's initiative in sending a man abroad checkmated by another after he had sailed. Even the curiosity seeker gropes, and Americans abroad receive letters from the lady who is to read a paper on Ar- gentina next week at the Woman's Club, and writes to Buenos Aires for informa- tion, her letter arriving a month after the meeting. Perhaps the prize for groping might be awarded to Uncle Sam himself, who during the war cabled to Rio de Janeiro that no ship must leave a port in Brazil until the naval attache there could compare its passenger list with his list of enemy suspects — which would mean that a ship at Para must wait a week until he could get there, and a ship in Santos perhaps three months while he went up to Manaos and re- turned. One organization of American busi- ness men abroad is now taking steps to deal with this groping in a constructive way, sifting out from every hundred vague inquiries the one which looks like business and putting under it a solid business foundation. This is the Ameri- can Chamber of Commerce for Brazil, established in 1916 at Rio de Janeiro, the first organization of its kind on the southern continent, and the plan is being worked out by Paul C. Trimble, its manager, who has had twelve years' ex- perience in Uncle Sam's consular service. When an inquiry about the market for powdered buttermilk is received, for example, an effort will be made to give the inquiring manufacturer a definite picture of possibilities, provided he has been fairly definite in seeking informa- tion. A visit to two or three local bak- ers would show that they use fresh but- termilk from the creameries in the neigh- boring state of Minas Geraes, where dairying and butter making are estab- lished industries. Costs and qualities will be ascertained, as well as opinions concerning the substitution of powdered buttermilk. Then the manufacturer at home will be advised to take further steps if he believes his product can com- pete in price or has advantages in qual- ity and convenience. This picture of possibilities will be made definite for two reasons — to give him something concrete upon which to work if he really means business, and to forestall further groping if his inquiry was idle. WORK AND TIME REQUIRED TN SUCH a case he will probably be told that if price or other considera- tions seem to make the Brazilian market feasible, he must put into the project an honest contribution of money, time and teamwork. Samples of his product should be forwarded to Rio de Janeiro for test by two or three of the leading bakers. These tests, supervised by the Chamber of Commerce or an import rep- resentative, will involve some outlay. which he should pay. If the bakers like his stuff, then a local selling agent can be found. This agent will require a stock of goods and a decent appropria- tion for sales work and advertising. Probably methods of advertising can be suggested, such as circulars to bakers, samples, personal visits and demonstra- tions — the outlay for such work may not be great, but will be necessary. The manufacturer will be shown that time is also needed — he cannot expect sales in any volume for a year or more, and dur- ing that period must hang on with de- termination, make regular shipments of goods and take hold of the undeveloped Brazilian demand as he would take hold of Omaha or Atlanta. If he has merely hoped to get a few chance world-trade bites through circulars, at no cost or trouble, he will drop out long before this stage is reached, and American trade abroad will be better for his defection. But if he really sticks, and puts money, time and teamwork into the product, there is probably a place for him in world markets, and his fellow-Americans in Brazil want to help him occupy it. Another illustration : A wholesale house in the Mississippi valley writes to ask how it can make direct purchases in Brazil of rubber, coffee, hides and skins, beeswax and Brazil nuts. Hardly any information is given concerning its pres- ent purchasing methods or the volume of business handled. This may be merely an inquiry from some inland merchant who thinks it possible to secure Brazil- ian products direct at a saving over pur- chases through established importers from whom he has been buying. Or on the other hand he may be an importer, buying from other countries and now seeking Brazalian connections. Perhaps he is just groping, and a definite picture will stop him. But if he handles volume and means business, the same picture will furnish a basis for action. MARKET ENTRANCE NOT EASY TN THIS case the picture willl be de- cidedly composite. The purchase of rubber cannot be recommended, because it is organized in volume by big Ameri- can manufacturing interests. Coffee offers opportunities only to those who can purchase shiploads. Hides and skins offer some opportunities, but are also well organized. Brazil nuts, beeswax and the similar specialties of Brazil may be secured in moderate quantities through good representatives. The Mississippi valley wholesaler will need, first of all, good facilities in New York or New Orleans for importing produce. He must also have representa- tion in Brazil at two points at least — Para for Brazil nuts and goat skins and Rio de Janeiro for hides, coffee and beeswax. Representation at Para, Rio de Janeiro, Sao Paulo and Porto Alegre would cover the territory better. Really his competition in buying is much stiffer than would be the case were he seeking to sell manufactured goods in Brazil. Therefore, his Brazilian repre- sentatives must be capable and trust- worthy. It is not possible to select them at a distance, nor through any one living in Brazil. Setting up his buying ma- chinery necessitates sending a competent representative to visit the country. Rail- road and steamship expenses for this rep- resentative will amount to fully $1000, and six weeks' traveling in Brazil, at $250 to $400 weekly, including the sal- ary of a capable man, would bring the cost up to approximately $3000. With a picture like that, composed of facts and figures, such an inquirer would no longer grope. Knowing exactly the cost, both of going further with the deal or staying out, he could intelligently do one thing or the other. In our solicitude for world trade the past few years there has been a tendency to make entrance into distant markets appear simple and easy ; so much so that thousands of American business men, looking upon world trade as a conveni- ent outlet to be secured without much trouble, have been set groping. Taking the viewpoint that there can be no half- way measures in real world trade, our Chamber of Commerce in Rio de Ja- neiro means to help business men at home crystallize this world-trade proposition. ARTICLE XLVI BRAZIL AN ALADDIN'S LAMP GIVING WEALTH FOR A RUB RIO DE JANEIRO. Dec. 2.— Do you remember the messy shoe "blacking" of your boyhood? How much better the shoe polishes BRAZIL 93 of today — clean, smooth, resplendent and almost waterproof. Every time your shoes are polished nowadays you use a product of Brazil— carnauba wax. The carnauba palm is regarded as a gift of Providence in the Amazon states of Brazil, because it grows by thousands along the rivers and furnishes a money crop for the people. The wax is gathered from a powder, shaken out of the leaves of this palm from September to March, 1000 leaves yielding an "arroba," or about thirty pounds of wax. Originally carnauba wax was used by the Brazilians them- selves to make candles, but for sixty years manufacturers all over the world have been discovering new industrial ap- plications. It is a substitute for resin in soap making, yields picric acid for explosives, makes a good polish for fur- niture as well as shoes, a good varnish and a tasteless, aseptic ingredient in oint- ment and pills. The improvement in shoe polish effected through study and adaptation of this product is an illustration of whaf may be done with the riches of Brazil when your factory chemist, engineer, de- signer and purchasing agent take hold. The carnauba palm contains other dor- mant industries — the sap yields sugar, the stem starch, the roots have pharma- ceutical properties, the fibers make cordage and the wood is decay and in- sect proof. Brazil is not merely a wonderland of undeveloped resources, but probably the greatest storehouse of diversified wealth on our globe. It is an Aladdin's lamp which has apparently only to be rubbed to yield whatever humanity happens to want. ENDLESS CHAIN OF WEALTH DROBABLY your chief interest in Bra- zil has been along the line of selling your goods there. But Brazil is of far greater practical business interest if you look at it from the standpoint of raw materials. What does it hold which will make your fac- tory products cheaper, better, more at- tractive and salable ? Brazil needs markets to develop her resources, and we need more tonnage for our ships on return voyages. If your stuff is to compete in the Brazilian mar- ket, don't let the sales department mo- nopolize Brazil — put the purchasing agent and your technical men on the job. Just look at the country on the map. You will see that Brazil is not simply big, but that it extends over a greater stretch of latitude than any other single country in the world — from four de- grees north of the equator to thirty- three degrees south. In terms of our own country that means from Atlanta, Georgia, to the middle of Ecuador, with land all the way, rich land growing cold- ueather crops by latitude, and also alti- tude on mountain slopes, and running from wheat and wool right down to tropical products which grow themselves and have only to be harvested. On this soil are great impenetrable forests, and beneath the soil mineral resources of in- conceivable diversity and richness. Eor 350 years puny man has been liv- ing on the eastern fringe of this coun- try, gathering such things as from time to time had market value, leaving the interior hardly explored, much less de- veloped. From time to time the mar- ket demands change, but it has only been necessary to begin gathering out of the inexhaustible storehouse something else that the world wanted. At first it was sugar, raised along the coast with Indian slaves, and for a hun- dred years Brazil, beyond the coast range, was an unexplored land of canni- bals, dwarfs, two-headed giants and myths generally. The need for more slaves led to expeditions, when gold and diamonds were found, along with other things. THE BIRTH OF RUBBER FOR instance, a queer kind of pot was used by Indians on the Amazon, made from the milk of a tree. Taken to Europe, it was learned that a chunk of this pot rubbed pencil marks off paper, so it was called "rubber." Then an American named Goodyear, one of the grandfathers of industrial chemistry, found out how to turn rubber into over- shoes and raincoats, and Brazil found a ready market for the stuff on a small scale. Then the automobile and the rubber tire created Detroit and Akron, and demand outgrew Brazil's supply, and the plantation rubber of the East Indies furnished the required volume, largely because Brazil was too rich in other raw materials to boost the supply up to the demand. By that time Brazil was growing rich in the south, rubbing Aladdin's lamp for coffee. Rubbed too hard, the lamp yielded more coffee than the world could drink at profitable prices. So Brazil turned to beef and beans, cotton and corn, manganese and monazite sand. With each turn of world demand and production she rubs the lamp elsewhere, and her genie appears, instant and obedi- ent, and wealth comes in some other form — so easily that it has been a handicap in the development of the country. Other nations have rubbed the lamp, too, and will again. The genie is par- ticularly benign to deserving individuals like the American, Charles Goodyear, who first vulcanized rubber, and the Englishman; Henry Wickham, who car- ried 70,000 rubber seeds from Brazil to London, raised seedlings, and estab- lished the plantation rubber industry in Ceylon. California rubbed the lamp and got oranges. For virtually all the oranges grown in that state are descendants of a single wild tree in the Brazilian state of Bahia. California with its 60,000 cars of oranges yearly can now teach Brazil many useful things about the fruit business. For while Brazil abounds in delicious fruits, little attention has been given to systematic marketing, so that things grown in the suburbs of Rio de Janeiro cost as much, or maybe twice and three times as much, as New York pays for oranges from California, grape- fruit from Porto Rico and bananas from Central America. GREAT VEGETABLE OIL WEALTH A GAIN and again our own industries have been modified by something found growing wild in Brazil, or dug out of the ground, or grown by the easy Brazilian farming method — Yankees say that the Brazilian farmer need only throw seed into the air, and when it comes down his crop is ready, and ac- tually beans, cotton, corn and bananas are found all growing together in the same field. Cotton has made our southern states rich and given us almost a world monop- oly. It is believed that the finest varie- ties of cotton we grow, including Sea Island and also the Egyptian, were origi- nally found in Brazil. Just the other day we sent some American doctors to Brazil to fight hookworm. They went to work curing people by doses of thymol oil, which hap- pened to be too expensive, considering the vast work to be done. But oil of chenopodium is just as good, and the Brazilian countrysides are full of cheno- podium, growing wild, along with count- less other drug plants. In the florist's window you see or- chids, and by the price might conclude that somebody has built a profitable in- dustry in these flowers. Another chap- ter in the past of Brazil — though they are now an expensive staple everywhere, Brazil was a source of orchids during the years when people were learning to transplant and grow them in cool coun- tries. "Brazil, where the nuts come from," was a catchline in a popular farce of the days when shoes were blacked instead of polished — who remembers "Charlie's Aunt"? The nuts are still there in Brazil. Amazon rubber is down just now, but "nigger toes" are bringing record prices, and the people gather those instead. However, they .are probably a minor spe- cialty compared with the oil nuts and 94 BRAZIL seeds that abound in the same sections of Brazil, and which await the investiga- tion of men like those who developed our cottonseed oil industry. Turn such a man loose in tropical Brazil with some crushing machinery and he should be as happy as a youngster with a new toy. Brazil's wealth in vegetable oil is so great that only the handiest things have been developed. Between Bahia and the Amazon she has 100,000,000 cocoanut trees each producing from 100 to 300 nuts yearly. The world's appetite for vegetable oils is growing enormously — our own importations of copra, or dried cocoanut meat, increased ten-fold dur- ing the war. The Philippines lead in copra production, but as against 500,- 000,000 pounds a year which we import from our Pacific territory cocoanut trees of Brazil would yield 5,000,000,000 pounds. Little copra is made in Brazil, none ex- po r t e d, and a ripe cocoanut costs as much in Rio de Janeiro as it would in New York. Then there are other neglected vegetable oil resources on a smaller scale, such as the "pinnao de purga," or purging seed, a Brazilian hedge plant, the seed of which is taken as a cathar- tic and yields an oil good for dressing wounds and also for il- luminating and in- dustrial purposes. GUTTA PERCHA SUBSTITUTE HpHERE are fashions in furniture. The black walnut and rosewood of your boyhood were replaced by mahogany, and that by quartered oak, and that by Circassian walnut, and so on. Fashions in furniture are the life of great Ameri- can industries. In the hardwood for- ests of Brazil you can find future furni- ture fashions, along with railroad ties resistant to insects and decays — some of the railroads in northern Brazil run over ties of rosewood, selected because that wood is abundant, lasts for years and has not yet had its market organized abroad. John Bull has a potential monopoly in ocean cable service just now because gutta percha is the chief insulating sub- stance for ocean cable and comes entirely from the British East Indies — and is constantly getting scarcer. In its "ba- lata" Brazil has a variety of rubber that promises to be the only perfected substi- tute for gutta percha. The list might be lengthened with the pillow lacemakers of the northern states, who are capable of being organized like the cottage workers of Europe ; the starch and other such common Brazilian crops as the mandioca, which yields tapioca ; the abundant water-power of Brazil ; her iron deposits, and what not. ARTICLE XLVII SAO PAULO IS BECOMING A CHICAGO COUNTERPART §AO PAULO, Dec. 5.— When the contractors got ready to buy 5,000,- 000 bricks for the new Armour meat- packing plant now under construction in Sao Paulo, the Brazilian brick makers threw up their hands in astonishment. "But, senhor!" they said, "there are RESTAURANT IN - RIO. CHIEFLY PATRONIZED BY MEMBERS OF THE AMERICAN COLONY not that many bricks in the world." And when persuaded that such an in- finity of bricks could be made, they asked a higher price because they would have to make so many — it was going to be a lot of trouble. When this plant is done and running in the summer of 1920 it will be the largest individual meat-packing plant in South America, and it will also be a typical piece of Chicago, U. S. A., set down in the Chicago of South America. Our Chicago will meet its Latin- American counterpart not merely on a basis of bricks but of enterprise. Just now the bricks loom largest — there are more than 12,000,000 going into the plant all told, with 60,000 bar- rels of cement, 3500 tons of structural steel, 8,000,000 feet of lumber, 500,000 pounds of nails, 30,000 panes of glass, and so on. There will be capacity for handling 1600 cattle, 6000 hogs and 2500 sheep in a ten-hour day, with freez- ing, cold storage and loading capacity to put a shipload of meat (12,000 car- casses) over the mountains to Santos in about forty-eight hours. Sao Paulo is used to big things, be- cause it makes millions of yards of cloth and pairs of shoes in its factories. But this is easily the biggest enterprise that has come to Brazil's Chicago, and the large-handed Chicago way of ordering brick and planning capacity is new. BRAZILIANS GOOD WORKERS f)NE amusing story shows that the Brazilians have enterprise of their own and can dispense with patronage from us. About the oldest problem of the contractor is to get bricks to the top of a wall. Pharaoh was up against it in building the pyramids. Yankee contrac- tors have contrived many slick mechani- cal devices since the days of the Irish- man and the hod. They brought the latest with them to Sao Paulo and found that the Brazilians played baseball with bricks faster than any machinery could handle them. The game is played by two or six men, according to the height of the wall under construction. A batsman on the ground catches a brick on a wooden paddle, tosses it to first base, it flies to the next man above, and the team keeps bricks moving faster than one per second, and nobody ever saw a brick muffed. The Brazilians are also splendid trowelmen on concrete work and fine carpenters, and the American contractors find that they take readily to our methods of push- ing a big job by teamwork. Some people believe that Mr. Armour is building this plant on misinformation. They do not see where the cattle, hogs and sheep to keep it going can be found in Brazil, and so assume that some opti- mist must have investigated superficially and sent him too rosy a picture of the possibilities. But others fully believe that, despite its large capacity and its great overhead costs, it will be running full tilt within a reasonable time after opening. The Brazilians have even spread among themselves a rumor that all this "frigorifico. business" threatens to de- populate their country of its cattle. BRAZIL 95 There is not much fear of that, for Brazil has 30,000,000 head of cattle, 20,000,000 head of hogs and 10,000,000 sheep, standing fourth on beef in the world. India is first, the United States second, Russia third and Argentina fifth. It is not a question of quantity but of quality. EXPORTS OF MEAT TNTIL the European war Brazil had never exported a pound of fresh meat. She was a meat-producing coun- try, with enormous home consumption. The Brazilian farmer eats vast quanti- ties of fresh pork, and people in Brazil- ian cities re-enforce their rice and black beans with "xarque," or dried beef. This is prepared far in the interior by slaugh- tering range cattle, cutting the meat into strips, drying it in the sun and ship- ping the coarse, fly - blown product to market in bales. Some of this xar- que is exported — the Cubans and West Indians are », " ^ fond of it also. , J^J But Brazil's re- quirements have been so great that xarque has often been imported from Argentina, Paraguay and Uru- guay. It was a red-let- ter day for Brazil when, in Novem- ber, 1914, a single ton of fresh chilled beef was exported to Europe. The following year ex- ports grew to 8500 tons, and this year, the shipment will exceed 100,000 tons, with five meat-packing concerns producing from Sao Paulo down to the borders of Paraguay and Uruguay and four more building — a $10,000,000 in- vestment virtually all American. This investment by Chicago packers shows their belief that Brazilian farm- ers will effect the improvements in cat- tle breeding necessary to supply fresh beef meeting the requirements of hungry Europe, where war depletion of herds has set up an unprecedented demand. Also that they will improve their hogs and sheep and greatly multiply the num- ber. The quality of Brazilian cattle is inferior from the fresh beef standpoint because standard European and Ameri- can breeds have been almost unknown. The Brazilian "beef critter" is a cross between the zebu, or humped sacred cow of India, and the acaracu of Brazilian type, which is believed to be the result of crossing between two kinds of native cattle from Portugal. Intermixed from time to time during colonial days was the blood of various types from Spain and China with some Dutch cattle for milking purposes. Turned wild on great ranges, these animals proved entirely sat- isfactory for xarque, and also developed a resistance to pests and diseases which must be incorporated into improved beef types if they are to prove profitable in Brazil. For the country has more than its share of cattle pests. There is foot and mouth disease always, along with anthrax. The cattle tick takes its toll and a pest known as the bernie fly per- the necessary foundation for breeding up Brazilian beef types which will yield 60 per cent of first-class meat against 35 per cent for the Brazilian native. The big question is, "How to do it?" There are various opinions about that. Some of the Brazilian ranchers believe that our shorthorns and herefords and the beef breeds of Europe must be crossed either with the zebu or the acaracu, while others maintain that satisfactory beef types can be built up from the zebu or the acaracu alone by scientific selection. The American packers have sent their best breeding experts to Brazil to assist, undertaking breeding experiments of their own on "fazendas" which they have purchased and stocked. What sort of opinion one gets about this business of creating beef cattle for Brazil depends upon whom one talks with, as with all farm matters. But the very di- versity of opinion and experiment shows that the job is being tackled along broad lines, and already there have been actual results in the pro- duction of good beef animals by both the Brazil- ians and the Amer- icans working each in their own way. PACKERS' TRANSPORT METHODS O 1 BOATING A POPULAR SPORT forates and spoils 50 per cent of a Bra- zilian cattle hide. IMPROVING CATTLE STANDARD HPHE Hindu zebu, through ages of ex- istence in India, has become wonder- fully resistant to tropical pests. Found in nearly all warm countries, it is used for farm work and freighting as well as for meat. It has a patience and long suffering truly Buddhic. The Latin- American peon, accustomed to kicking his zebu ox on the nose when he wants it to hustle, is much astonished when he first meets a shorthorn bull from the United States — one kick and he imme- diately becomes an aviator. The Bra- zilian acaracu is also noted for its resist- ance to pests and diseases, and these two breeds, thoroughly acclimatized, furnish UT of this dis- cussion and Brazil's determina- tion to stabilize her coffee and live- stock will come not only resistant breeds of animals, but a basis for cleaning up the pests that hamper the industry. The destructive bernie fly usually disappears when un- derbrush is burned away, the tick can be eliminated by dipping and starvation, and most cattle diseases gotten rid of through general measures such as we use in stamp- ing out foot-and-mouth disease. Alto- gether, it's a matter of agricultural edu- cation. The Brazilian pig has been largely of the razorback type, grown for local use and valued for his ability to forage for himself. He runs to lard and bacon and is deficient in ham. Duroc Jerseys and Poland Chinas thrive in Brazil, and will increase as fast as export demand makes a stable market at the packing houses. American packers are importing well- bred animals for sale to Brazilian farm- 96 BRAZIL :;:;iS : >: : . ; w ::;:■:;: J : : .'■■ v : : :, : : V NATIONAL, MUSEUM AT RIO DB JANEIRO ers and some of the Brazilian states are distributing boars and establishing breed- ing farms. Sheep raising is still in its experimen- tal stage, but it has been demonstrated that both mutton and wool can be raised over large areas of the country. Frozen mutton finds a ready market abroad, and Sao Paulo's woolen mills will take all the wool produced, because the home pro- duction still requires considerable import of that fiber. When the Chicago packers went out on to the open prairie at home and began developing a national meat business with the rough-range cattle from our West, they started an industry that had to be built from both ends — improved methods in the packing house and improved live- stock in the country. The technique of the industry has been perfected so minutely that in the first year after our packers bought a co-opera- tive farmers' packing house in South America they made $250,000 out of a single waste material which the South Americans had been paying to have hauled away. Chicago is transporting this industry bodily to Brazil, with all its technique, from chilled beef sides to sausage, soap and sandpaper. In Sao Paulo they are likewise setting up shop far outside the city. But when they get going, Sao Paulo, like Chicago, will unquestionably grow out to them and far beyond. ARTICLE XLVIII SPECULATIVE "KICK" BEING TAKEN FROM COFFEE CROP CAO PAULO, Dec. 7.— One day last summer the first silo in Brazil was completed. The president and ministry of the state of Sao Paulo took a day off and journeyed up into the country to dedicate it. Had some Brazilian planter added 10,000,000 more coffee trees to the state resources they would have con- sidered it no more notable than a thou- sand new silos to the governor of Indi- ana. But if Indiana suddenly discov- ered that it could grow coffee, you can see the governor planting the first tree on a big fazenda, and that is the way the Brazilians felt about their first silo. Experts disagree as to whether coffee has any kick as a beverage. Brazilians are unanimously of the opinion that it has a "kick" as a crop — a morning-after effect like the kick of a mule. Once upon a time they believed other- wise, and said, "O cafe dara para tudo" — coffee will suffice for everything. But now they know better, for coffee has made Brazil a one-crop country in the south, just as rubber made it a one- crop country in the north. Single crop- ping anywhere usually runs into specu- lative tipsiness, and now the Brazilians are ready to sober up and diversify their farming. In the grocery store coffee has always borne strange foreign names — Java, Mocha, Bahia and the like. Probably you have not noticed these names change, but in your grandfather's time Pernam- buco and Bahia were favorites, and in father's time Rio, while today Santos is the most familiar term. These are sim- ply names of Brazilian ports through which coffee has been shipped from gen- eration to generation as the coffee soils of Brazil became exhausted through sin- gle cropping — not a bag of coffee is grown in Santos itself, but many a bag of coffee shipped through that port turns up in the world's grocery store under some other name, because Sao Paulo pro- duces half the world's supply. COFFEE PRICE MAY DOUBLE /""OFFEE grows on small trees, in a cherry-like berry containing one to three beans. It is not altogether a tropi- cal crop, but has to be shaded in hot countries. But it is tender to frost. Sao Paulo's uplands are warm enough to grow coffee, with the possibility of dam- aging frost about once in ten years, and cool enough to grow it without shade. Coffee exhausts the soil in periods of twelve to forty years. When the trees no longer bore profitably Brazilian plants in the past moved on to virgin soil, leav- ing deserted lands behind them. Now they have reached the southern limit for BRAZIL 97 coffee growing, although there is some room still to grow west and north. Another handicap has been the pecu- liar Brazilian labor system. When the planter could no longer buy slaves in large numbers to tend the trees and pick the berries he sent over to Portugal and Italy, bringing in peasants to do the work. Instead of being settled on land of their own, these peasants were allot- ted tracts of land to clear and farm in general crops on the condition that they planted coffee at the same time. When the coffee came into bearing, at the end of five years, the land was turned back to the owner and another virgin tract as- signed, perhaps to the same laborer or to a new arrival, if the former went home to live at ease on his fortune of $5000 or $10,000. Thus Brazil lacked real settlers, and the big fazendas grew big- ger. The owners could not check their growth, in fact, and presently Brazil was producing more coffee than the world could drink — and the fazendas went on growing. Then the world's markets began to go to pieces. The state government of Sao Paulo, backed by the federal government and a syndicate of capitalists, went into the famous "valorization" scheme, where- by the state bought the coffee from the planters and fed it out to the world so that prices were maintained. But cof- fee began to accumulate in Brazil until it seemed certain three years ago that valorization would result in the loss of millions of dollars. A speculative crop never ceases to be speculative, however. Nature suddenly intervened with a frost in June, 1918, cutting the Sao Paulo crop square in half, giving a three-year breathing spell for market recovery. Bra- zil sold her accumulations at a profit of several million dollars, and for the next three years the world may have to pay from half to twice as much per month for its morning beverage. The state of Sao Paulo is not going to dawdle away that breath- ing spell from now to 1922! It has put its Department of Agriculture to work, re-enforcing it with agricultu- ral specialists from Washington, and started movements for diversification along half a dozen lines. M R. AND MI DIVERSIFYING AGRICULTURE DROBABLY the most interesting of all is the possibility of taking the "kick" out of coffee itself, agriculturally speaking. "Why should coffee exhaust soil?" the experts have asked themselves, and are seeking the answer. Plants take nitrogen, phosphorus, potash, lime and other chemicals from soil. Coffee hates lime, and Sao Paulo is so deficient in lime that poor teeth make it a fine field for the dentist — so it can't be lime. Brazilian soils are rich in potash, the most expen- sive fertilizing ingredient. If it is phos- phorus that coffee eats up, then it may be bought in bags and fed to the trees; and if it is nitrogen that can be secured by planting legumes between the trees and plowing them under. Experiments on old coffee lands that have been lying fallow for fifty years in the north dem- onstrate that they will grow coffee again. So, maybe, there is a long rotation whereby coffee can be grown fifteen or twenty years, then replaced by other crops that restore the soil, and coffee planted again in five or ten years. The whole subject is a fertile field for sci- entific investigation. Secondly, Brazil can grow cotton for her own textile mills as well as export, and cotton is a crop strikingly like coffee from the standpoint of cultivation and picking. The experts have advocated its planting between the rows of coffee trees and to replace frosted coffee while the latter is coming back. The cotton seems to feed much like coffee, and now the experts advocate keeping them separate. JAMES H. COLLINS AFTER A FLIGHT AT THE NAVAL AVIATION SCHOOL Cattle and livestock, with modern packing plants that ship chilled meat abroad, are the biggest field of diversifi- cation, and Sao Paulo had got into them on a large scale before the frost came, stimulated by war demand for meat and the top-heavy coffee situation. Up in the neighboring states of Minas Geraes, Goyaz and Matto Grosso there are great cattle ranges unfit for intensive farming, while Sao Paulo itself, with corn, alfalfa, by-products from its packing industry and meal from its cotton seed, could finish range animals for market. Like our own South, with its devotion to cotton, Brazil has not been feeding itself. Wheat and flour are still being imported. But wheat can be grown in nearby states — Goyaz, Parana, Matto Grosso — and determined efforts are made to grow it and bake Brazil's bread at home. Rice and beans are great dishes in Brazil, both imported from other countries until the war, when Brazil turned to these crops and now exports both — we bought army beans from her during the war. Better farming of all kinds will help the situation. MODERN IMPLEMENTS ACCEPTED pWEN in enterprising Sao Paulo state you can ride through the country and see the Brazilian farmhand whacking away at the soil with a crude implement like that used by "The Man With the Hoe." He whacks the soil over instead of plowing, whacks the seed in with no regard for straight rows that might be cultivated with horses, and later, when perhaps one hill in six materializes, whacks away the weeds. The Sao Paulo Department of Agriculture experts have lately been out to study the "man with the hoe," to see who bent back his brow, and they find that it isn't bent at all, but is a perfectly normal brow, with a large capacity for knowledge about better farming methods. One of the most famous farming centers in Brazil is the colony of Americans who left our southern states after the Civil War because they wanted to live where slavery was tolerated. They have been farming with mod- ern implements all these years, and wherever the Brazilian farms round about them you will find him 98 BRAZIL working with good plows and culti- vators, too, and planting his crops in straight rows and putting the old horse through them when the weeds spring up. Only two things have hampered ma- chine farming in Brazil. One is the lack of practical examples and the other the high cost of farm implements. The Department of Agriculture of Sao Paulo state is giving practical demonstrations to farmers in the fields, and may ulti- mately adopt something like our sys- tem of county agents, whereby a farm expert lives with the farmers from day to day, helping them increase production and meet pests and emergencies. High cost of farm machinery is usually at- tributed to Brazilian tariff duties, but the agricultural experts maintain that duties are moderate compared with dis- tribution costs and dealers' profits, par- ticularly on farm implements and ma- chinery from the United States. One specific illustration was given — that of an American tractor which is sold in Brazil at twice the price asked in the United States, and with margins of profit to the local dealer so generous that resentment is being aroused — for the Brazilian farmer has a long head. Such higher prices are probably due to the higher cost of distribution on the smaller volume of Brazilian purchases, but there is no good reason why our manufac- turers might not conduct a five-year cam- paign to get implements on to Brazilian farms, increasing the volume by practi- cal missionary work. The Sao Paulo experts say that European manufacturers are keenly interested in the new agricul- ture toward which Brazil is working, and that an Italian concern is offering a tractor on the lines of the American machine i^entioned above, with more power, greater mechanical strength and finish and at a lower price. Brazil is bound to diversify her farm- ing and stabilize her prosperity. If we don't help her, somebody else will ! ARTICLE XLIX BRAZIL KEEN FOR HONEST NEWS FROM UNITED STATES DIO DE JANEIRO, Dec. 9.— Sup- pose you had two neighbors, one a pretty girl and the other a hated rival. Suppose your hated rival alone talked about you every day to the pretty girl, telling her what sort of a fellow he thought you were, and you never spoke up for yourself. Where would you stand with her? South America is the pretty girl, Eu- rope the hated rival and the United States is you, and that's where we stood until war virtually compelled us to es- tablish an export trade in one of our overlooked national products- — daily news service. Brazil is typical. Like all the impor- tant South American countries, it has good newspapers and an alert public opinion which keeps track of world affairs through cable service and special correspondence. But for years the bulk of its foreign news has been coming from Europe, including such news as it got about us. Some of this news has been frankly propaganda. With valu- able trade and diplomatic interests to protect, the Briton, Frenchman, Italian, Spaniard, Portuguese and German have been saying nice things about themselves, hinting awful things about their neigh- bors, and all saying awful things about us. Some of the news has been inspired by the diplomats and some of it colored by the journalists. Leaving out propa- ganda motives, there was still the fac- tor of selection, so that European jour- nalists who knew little about the United States took from our own news the things they believed about us and cabled them to Latin America. DIRECT U. S. NEWS WELCOMED POLITICAL graft, divorces, murder trials, lynchings and millionaires have always been the most interesting things about us to the European jour- nalist, and, making his startling selection, he used to cable it to Latin America and let the people there draw their own con- clusions. Thus the United States was almost a mythical country of crooked pol- iticians and rich bounders, where wives were swapped overnight, white men hunted black men through the streets for sport and the Monroe Doctrine would get you if you didn't watch out. "Caramba! What a country!" When we got into the war it became highly important to have Latin-Ameri- can sympathy, and investigation of pub- lic opinion in even so friendly a country as Brazil showed that southern republics knew very little about us — at least, lit- tle that was true. In countries like Chile, still cherishing grudges over past diplo- matic clashes and filled with enemy agents, the situation may be imagined. Uncle Sam started a counter-propa- ganda in the different countries and dis- covered that Latin Americans were hun- gry for everyday facts about the United States, our war purposes and prepara- tion, our industries and methods. Even in Chile all one had to do to counteract the lies a German agent had told a Chil- ean farmer about us was to tell the latter something about farming in the United States or let him see us farm in the movies. At the same time two of our big news agencies began marketing their service in Latin America — the Associated Press and the United Press. Today you can pick up newspapers in Rio de Janeiro, Buenos Aires, Santiago or Lima and find news from Washington, New York, Chi- cago and San Francisco on the front page. It has been bought by the publish- ers for money, sometimes in competition with government-subsidized news from Europe, which can be had for less money or even for nothing. It is printed because South America frankly has a new interest in the United States, and is learning the truth about us and wants more of it. Associated Press service is being sup- plied to four daily papers in Rio de Ja- neiro— -Jornal de Brazil, Imparcial, Cor- reio de Manha and Jornal. About 2500 words of American news are received daily, extending to 3500 words when printed. United Press service is taken by O Paiz, in Rio de Janeiro, and Esta- dos de Sao Paulo, in the city of Sao Paulo. About 3500 words of American news are cabled, together with special articles by the United Press correspond- ents in Europe. INTEREST IN YANKEE POLITICS AMERICAN news is a novelty in Brazil, but the people like it. Pub- lishers have found it so popular that they "play up" the stories on their front pages. Demand has increased to such an extent that more news from the United States is now printed than from any other one country. Brazilians like our crisp style of re- porting and writing — it is a marked con- trast to the solid and ofttimes prosy style of the European journalist. Our news sparkles with headline materials, and in handling it the Brazilian editors instinc- tively bring out suggestive headings and break the solid classified arrangement of news which has made so much work for Brazilian readers. Another thing Brazilians like about our news is its impartiality. They have learned that if something in the news is unfavorable to the United States, that will be sent just as faithfully and fully, without coloring, as the story that is fa- vorable to us. Long experience with European news agencies makes it diffi- cult for them to believe that an institu- tion like our Associated Press is not subsidized by the United States Govern- ment. But in the news itself from day to day is reflected the Associated Press impartiality and exactness, and readers are learning that the reports of this big news-gathering service can be depended upon. The effect is already apparent in European news cabled to Brazil. Cock- and-bull stories about American affairs BRAZIL 99 do not find credence now, because the Brazilians know more about us. Ameri- can affairs are handled with greater breadth and dignity. Brazilian preference is chiefly for our political news. Politics are an every- day interest with all Latin America. Washington dispatches reporting the acts and utterances of the President, the de- bating and voting in Congress, our rela- tions with other countries and daily hap- penings in diplomatic life are given the greatest prominence in space and posi- tion. Major happenings in general news are also valued — important gatherings, big sporting events, industrial disturb- ances, business matters and the like. There are very comprehensive reports on affairs of special interest to Latin Ameri- cans, such as coffee prices in New York, the Mexican situation, Latin-American relations reflected in Washington and United States plans for trade and development in the southern continent. CABLE SERVICE LACKING "READING our own reports concerning our politics, especially internatio nal affairs, Brazilians are learning more of our acts and policies. This promises to coun- teract old fears about "Yankee ag- gression," and set Brazil straight on the Monroe Doc- trine. The Bra- zilian has a sound sense and an in- stinctive friendli- ness for us, which makes it less easy for politicians to alarm him by cries of "Wolf!" than in some of the smaller Latin-American countries, where the Monroe Doctrine is the politician's bread and "Yankee aggression" his meat. But even in Brazil this doctrine is often distorted with a view to stirring up trou- ble, and it is helpful in our relations to have the Brazilian watching our interna- tional affairs day by day from a front seat on our grandstand. Our cable news has to be sent in to Brazil through the back door. We have no direct cable connections, and the Brit- ish cable company does not see fit to give American news associations adequate service over its heavily burdened wires. So our news is cabled to Valparaiso, and from there telegraphed to Buenos Aires and Rio de Janeiro. American news service is thus far lim- ited entirely to the actual news itself — day-by-day reports of happenings of wide interest. General information about the United States of semi-news nature lies outside the news associations' field, being in the province of the Sunday editor, magazine contributor and technical writer. Yet there is undoubtedly a great mass of general information about the United States which Brazilians would like to read and which would be of prac- tical value to themselves in the develop- ment of their country and beneficial to us because making for better acquaint- ance. Brazilian newspapers have noth- ing corresponding to our Sunday edi- tions, but they do publish many fine in- formative articles from special contribu- tors, particularly Brazilian writers liv- ing in Europe. If similar articles deal- ing with American life and tendencies, DISTRIBUTION OP CHARITY IN RIO DE JANEIRO work and play, achievements and ideals were available they would unquestion- ably make a place for themselves in Bra- zilian newspapers. ARTICLE L BRAZILIANS HAVE HORROR OF PHYSICAL VIOLENCE DIO DE JANEIRO, Dec. 12.— Thousands of persons will throng the streets of Rio de Janeiro in carnival time, yet one person seldom touches an- other. This is a peculiarity of the Bra- zilian — that he does not like to be touched by strangers. Even the young Brazilians, now going in for sports, pre- fer the noncontact sports, such as rowing, soccer, football, tennis and track sports. Wrestling and boxing would be alto- gether foreign to Brazilian tastes. In- deed, the Brazilian has almost a hor- ror of fist fighting on American and British lines. Doctor Hackett, of the Rockefeller Foundation, tells a good story along this line. There was an ar- gument in his office, and a Brazilian called an assistant a liar. "Why, Can- dido, do you really mean to call Henry a liar?" asked the doctor. "Yes, I do," was the reply. The doctor rose from his seat. Candido ran to the door, shut himself outside and called back nervously, "Now, I don't want any of this boxing business." Among other reasons given for Char- lie Chaplin's lack of popularity in Bra- zil is this Brazilian dislike of violence. To nearly every other nation in the world, and especially the Spanish Ameri- cans, there is something uproariously funny in pie-throwing, falling downstairs and slapstick and fire-hose humor generally. But the Brazilian doesn't see anything funny in a drunken man, or in one man kick- ing another in the stomach. About the only American film of this kind regarded as funny in Brazil is the Mutt and Jeff type of animated draw- ing, in which pup- pets figure instead of people. The Brazilians are learning to like them, yet seldom laugh out loud. The newly arrived American, openly "haw-hawing" at the show, finds with astonishment that he is laughing all alone. # * * HpHE Egyptians used to carry a mummy among the guests at every feast, as a reminder that we are all mortals. One of the sights in Rio de Janeiro is the delivery of coffins, which are carried empty on men's heads. At a certain Avenida restaurant one can sit eating at a window table and see a coffin carried by at least once in five minutes — an equivalent of the mummy at the feast, very characteristic of the Brazilian capi- tal. Coffins, hearses and funerals gen- erally, like many other things in Brazil, are a government concession and monop- oly. But they are systematically stand- ardized, with official charges for eight different classes of funerals. A first- class funeral, complete, is quite a gor- geous affair, with a gayly gilded coffin 100 and a gilded hearse to match, drawn by six mules, and costs, $150. The pitiful little eighth-class funeral of the suburbs, with even the motorman respectfully lift- ing -his hat as it passes, has some paper flowers and a little gilding, and costs only twenty milreis — $5. * • * A MORE cheerful subject is the public wedding automobile in Rio de Ja- neiro, hired for marriages by all who can afford it. This is a small town car, in which the bride and groom ride to the church and civil ceremony. The whole body of the car is made of plate-glass panels — sides, front, back and doors. Each panel is outlined with sprays of white wax flowers, re-enforced by a big bouquet of wax blossoms. The interior is trimmed in white,, and the bride and groom sitting inside look as stately as the little figures on a wedding cake. Mar- riage without this car is unthinkable to the Rio de Janeiro bride. * * * VJTTHEN two automobiles crash into ' V each other in Rio de Janeiro, in- stead of sending for a wrecking crew the police place a guard oyer the remnants and see that they remain undisturbed until a formal investigation is made by the authorities, and also the attorneys on either side. Very often the wreck will lie a week, even if it becomes necessary to divert traffic. Nothing connected with legalities is ever skimped or done in a hurry in Brazil — everything must be painstakingly recorded, attested and fis- calized. So if you like automobile wrecks, or take a technical interest in tests of de- struction, the streets of the Brazilian capital are an ever-changing museum and scrap heap. BRAZIL A LTHOUGH constantly repeated by greenhorns, there is virtually noth- ing in the myth that the American woman walking alone on Rio de Janeiro streets is certain to be pestered by mash- ers. To be sure, the masher exists in Brazil and other Latin-American coun- tries, as he does on Broadway, Market street and State street. But he believes in safety first, and the American girl is automatically protected by — her shoes! Brazilian women wear the stilt-like, foot-deforming, short-vamp shoe com- mon throughout Latin America, because they believe it makes their foot look small. The mere sight of a woman wear- ing normal shoes is a danger signal to the Avenida Rio Branco masher. He has evidently heard terrible things about the militant American girl, and intends to risk none of "this boxing business." # # * A BRAZILIAN newspaper solicitor called upon the only American busi- ness woman in Rio de Janeiro, as she was advertising a consumer product in other GENERAL RONDON, IN CHARGE OP A NEW GEOGRAPHICAL SURVEY OF BRAZIL journals, and he wanted the business for his own. She told him his paper would be used when she got ready. He came again in a few days, and called regularly for several weeks, but without success. She was as persistent in waiting as he was in calling. Finally she was ready, and signed a contract. As the grateful advertising man put it into his pocket he said: "Senhora, there is something else. We are establishing a new enterprise. We will offer you a suitable salary to attend at our office two hours daily, be- cause we need some one who knows how to say 'No.' " a • * '"PHE Brazilians are constantly saying "No" as a matter of habit, but they really mean "Yes." "You like Brazil — nao e?" they ask, with a nasal French "nong." "You are feeling well — nao e?" "You will have a drink— nao e?" The right interpretation was put upon this idiomatic expression by the Yankee who answered, "I'll have a drink — yes!" CPORTS are taking such a foothold in Brazil that the Portuguese language lacks sufficient words to report the events, and familiar English words crop up all through the sporting news. Soccer, foot- ball, rowing, horse racing, swimming and tennis are the chief sports, and the word "sports" itself heads the sporting page, because there is no equivalent for it in Portuguese — the French, Spanish and Germans have had to adopt it, too. Other English words used and under- stood are football, turf, rowing, tennis, training, team, club, player, kick, free kick, goal, record, scratch, penalty, sportsman, jockey, derby, game, match, etc. Our world's series is usually re- ported in cable news as a "matche de baseball" with a quaint idiom to the effect that "yesterday at Chicago there was realized a matche de baseball which was disputed with the assistance of 24,- 000 persons." A big pugilistic event will also be reported as a "matche de box." Flying has also introduced English words like "raid." AMERICAN ragtime is popular in 1 ■"* Brazil and the one-step and fox-trot alternate with the maxixe, waltz and tango. When the Brazilians play our national music, however, they uncon- sciously tone it down with their own rag, and leave out a lot of the jazz and the noise. Prof. Harry Kosarin, well known in New York cabarets, recently took a real jazz band to South America, with banjos, saxophones and trap-drum effects — the professor himself plays traps. In both Argentina and Brazil this band caught on instantly, dancing being or- ganized first by the Americans and then taken up by the Latin Americans. The latter freely admit that something is hap- pening to them. Certain traditional for- malities in etiquette and thinking are breaking down. The play spirit is res- cuing the Latin American from an empty etiquette which rests almost as heavily upon him as puritanism upon ourselves. Like ourselves, he is glad to get out and be a boy again, and American jazz is part of it. t * * DESIDES curing Brazilians of hook- worm, the Rockefeller Foundation conducts an educational campaign to pre- vent reinfection by the installation of sanitary toilets and small sewage-disposal systems. As an illustration of Brazilian hospitality to new ideas, one of the Amer- ican doctors tells, the story of a country widow who was so determined to protect her children and servants that she had a sewage-disposal system built. She was not very well-to-do, however, and had to pawn her only jewel to pay the contrac- tor. "You have done better than any one in this neighborhood," declared the doctor, when he made his return tour of inspection. "Ah, yes, doctor; but I BRAZIL 101 had to pawn things, and when people ask where your only jewel is, you can show them this my only diamond," she said. ARTICLE LI NEW CABLE WILL HELP U. S.-LATIN- AMERICA TRADE DIO DE JANEIRO, Dec. 13.— For fifty years now American cable in- terests have been seeking an entrance to Brazil. At last there are prospects that this dream will be realized, but some of the skeptics are keeping their fingers crossed. The original dreamer was James A. Scrymser, one of the most daring Ameri- can pioneers in submarine telegraphy. Mr. Scrymser began laying cables in 1866, with a line from Florida to Cuba, under Spanish concession. He intended to go on to Brazil, touching Para, Rio de Janeiro and ultimately Buenos Aires. Negotiations with the Brazilian Govern- ment for permission to land and operate a cable in 1868 were successful. So Mr. Scrymser started down the west coast, organizing the Mexican Telegraph Co. and Central and South American Telegraph Co., running from New Orleans to Mexico, thence down to Colon, across the isthmus, and from port to port until Chile was reached. From Valparaiso he strung telegraph wires across to Buenos Aires and cable to Montevideo. In his efforts to enter Brazil he gave American cable connections to every country in Central and South America except Brazil itself and Venezuela. But after fifty years' knocking the door was still closed when he died, in 1918. The fast cable rate over American lines from Buenos Aires to New York is fifty cents a word and a rate of sixty cents will be possible when the American lines reach Rio de Janeiro. The present fast cable rate from Brazil to New York via England is eighty- four cents a word, while if the sender wants to send via Buenos Aires and over the system that Americans are seeking to com- plete, the rate is raised to $1 a word. It is a story of monopoly and cor- porate blindness. British cables running from Brazil to St. Vin- cent, the Madeira and Azores islands, and thence to Eng- land and the United States are owned and operated by the Western Telegraph Co., a British concern, which, years ago, secured a cable monopoly from Brazil and succeeded in having it renewed until 1913. Even then it had the right to construct any new cable line proposed by a newcomer, the latter going ahead only if the British company refused. AMERICAN CABLE SOON \XfHEN the monopoly ended the American company asked for a con- cession from Rio de Janeiro to Santos and thence to Buenos Aires. The Brit- ish company would not undertake the construction of a cable to connect with American lines, especially as the Yankees asked for no monopoly or government subsidy. So it looked as though the last link of American cable communication would be completed. The British com- pany brought suit against the Brazilian Government, however, in the endeavor to maintain its monopoly, and nearly three years were spent in litigation, terminated by a decision against the monopoly by the Brazilian Supreme Court. Then the Brazilian Government gave permission by contract to land and op- erate the American cable in August, 1917. There is a Brazilian Government in- stitution known as the Tribunal de Con- tas, originally established to review gov- ernment contracts and straighten out discrepancies. In recent years this tri- bunal, like government bureaus every- where, has been taking executive power unto itself. When the American cable contract came along the tribunal refused it registry on technical points. Under two clauses the Americans were permit- ted to bring cable equipment into Brazil free of duty. The Americans conceded that there might be justice in this objec- tion and were willing to eliminate those clauses. But legal advice was to the BRAZILIANS PROW ALL SECTIONS SEEK "MIRACLE CHURCH" OF OUR LADY OF PENHA. NEAR RIO. ON SPECIAL FEAST DAYS effect that an offer of that sort would probably give the British company ground for a new lawsuit. The decision of the Brazilian Supreme Court had legally broken the British monopoly. So the Americans asked for another contract with the objectionable clauses left out, and this has just been approved by the President. At the pres- ent writing the Tribunal de Contas ap- parently has no ground upon which to refuse registry. In the long legal bat- tle the Americans have won point after point, along with Brazilian sympathy. Immediately after the registry of the contract the construction of land termi- nals can begin, and if present plans go through the cable will be laid and work- ing in 1920. An American cable official recently spoke at the American Chamber of Com- merce in Rio de. Janeiro, his talk being followed by a quiz. "When is that American cable going to be ready?" shouted one questioner. "The American cable is now being made in England," he replied. Which brings up the subject of na- tional rivalry between the British and ourselves in this whole cable affair. Despite many dark interpretations of the Brazilian cable monopoly as to Brit- ish repression of our trade, there seems to be nothing deeper than shortsighted selfishness on the part of a British cor- poration. This corporation has worked its monopoly for all it was worth. Rates have discouraged cable communication instead of increasing it. Service has been tardy and inaccurate. Many an Ameri- can doing business in Brazil has reason to believe that valuable business informa- tion sent by cable becomes known to his competitors. British cable news comes to Brazil over British lines, but facili- ties are not afforded for transmitting American news, which comes over our own lines to Buenos Aires and must there be taken off the wires and retelegraphed to Rio de Janeiro to avoid the Brit- ish cable c o m - '• pany's penalty of * fifteen cents a word on through messages over the American line. But the fact that the American cable is being made in England demon- strates that ill will is confined to one British corpora- tion, because the making of ocean cable is virtually a British monopoly of skill, just as the control of gutta 102 percha for cable insulation is a monopoly of British resources. Level-headed Amer- icans in Rio de Janeiro resist the tempta- tion to make dark interpretations, and, as in the case of shortsighted British steamship companies, are waiting for the day when there will be competition in both cable and steamship service. Then the vision of these companies will un- questionably be improved, and their serv- ice, too. DIRECT CONNECTION WANTED DRAZILIANS want direct cable com- munication with the United States. During the war, under the monopoly, cable connections with the rest of the world have decreased 50 per cent while the traffic has quadrupled. The British company has recently laid a new cable to Ascension island, relieving the pres- sure, but Brazilian trade with the United States, no less than our own with Bra- zil, calls for direct communication. We buy more than 40 per cent of Brazil's exports, and Brazilian exporters want their business messages to us carried di- rectly, avoiding transmission through other countries and possible scrutiny. They want the reduced rates and more liberal use of cables offered by the Amer- BRAZIL icans. Since 1 882 the rate per word be- tween Buenos Aires and New York has been cut down from $7.50 to only 50 cerits and transmission reduced to twenty minutes. A reduction of 25 per cent in rates to all South American countries reached by American cables, made some years prior to the war, was maintained during the war period despite greatly increased costs. Argentina, Uruguay and Chile not only have a competitive advantage over the Brazilians in cheaper cable service to the United States, but during the war were able to send direct messages to New York with a single censorship,. whereas the Brazilian coffee exporter, cabling through England, had to pay nearly double the rate and submit to double censorship. Very often he took the still stiffer option of paying the pen- alty to have his messages sent over our lines to take advantage of the single censorship. In the coming industrial de- velopment of Brazil it is clear that busi- ness communications must often be trans- ferred to cables, as even fast mails are too slow. The immense economic and strategic value of cables demonstrated during the war has not escaped the Bra- zilian. The Americans have another cable contract with Brazil, although construc- tion will take longer than the connection between Rio de Janeiro and Buenos Aires. This line will run north from the Brazilian capital to the island of Fer- nando de Noronha, which is Brazilian territory, and from there to Maranhao and Para and thence to St. Thomas, Porto Rico, Guantanamo, Cuba and New York. This cable will give Brazil a more direct connection with the United States, and have the further advantage of passing only through Brazilian and United States territory, as the landing station in Cuba is on Uncle Sam's naval reservation. American cable men seek one other improvement in communication with Brazil. Under a special tax imposed over the Brazilian Government's tele- graph lines a direct cable message from New York to Rio de Janeiro at sixty cents a word would be charged twenty- five cents a word for transmission in- land to Sao Paulo, although the local telegraph rate between the two cities is only five cents a word. This is simply another of the many hampering taxes and regulations which the Brazilians have contrived for revenue purposes and which they now seem disposed to modify. ■tew R m H9Sffc: ac''|nnciiffljvE| *j3i~ - u -£- ruguay Q ^ Calle Saranda, Montevideo's Fashionable Shopping Street. The Uruguayan Capital Has Over 300 Avenues All Well Paved and Lighted ARTICLE LXI URUGUAY IS THE BIGGEST LITTLE REPUBLIC IN SOUTH MONTEVIDEO, Dec. 25.— "A. B. C. plus Uruguay" is a happy phrase. It stands for Argentina, Brazil and Chile, the dominant Latin-American re- publics, adding the littlest South Ameri- can republic of them all because she is one of the biggest of them all in pro- gressiveness, character and spirit. Uruguay is plus in all save area and • population. Buy some of her pesos at the bank and you will have to pay $1.03 apiece for them, the soundest money in Latin America, backed by the best gold reserve and the best national bank and banking system. Uruguay has more im- proved highways than any other South American country not simply in propor- tion to her size, but in actual mileage, a total of more than 5000 miles, largely macadamized, and her people own nearly twice as many automobiles as the Brazil- ians. She has the best public school sys- tem. Her per capita wealth is nearly $1800 against our own average of $2000. John Bull has been investing his money in Latin America since the days of Na- poleon, and ought to know something about security and profits in the various countries. Uruguay ranks fourth in British esteem, with $250,000,000 in- vested. One of the big American packing con- cerns in Montevideo has been selling its specialties to the local retail butchers for two years. Many of these merchants have a very modest turnover, yet in that period only one bad account of $100 was lost, and even that because the merchant died and his affairs were badly tangled. The Americans in Uruguay find the Uruguayan word above par like the Uru- guayan peso. If an Uruguayan makes a bargain he sticks to it. If he makes an appointment with you he keeps it. If you hire him to work he does work, and there is no "manana" in his temperament or vocabulary. SEE THE MOUNTAIN DEFORE leaving New York the writer made inquiries about the lead- ing Latin-American countries from their consuls. The Uruguayan consul at once sent a descriptive booklet about his country in English. In other Latin- American countries the Uruguayan away from home, learning of the "Public Ledger's" enterprise in investigating business conditions on the southern con- tinent, always turns up to speak a good word for his own country, and a good word for the country where he happens to be living. Uruguay is just a little larger than Missouri, with an area of 72,000 square miles and a population of about 1,400,- 000. It lives chiefly on its wool, mutton, beef and hides, with some wheat and corn. Sheep are the chief industry, num- bering 25,000,000, or half as many as in the entire United States. Cattle number 8,000,000. Lacking the rich alfalfa lands of Argentina and the min- eral and forest wealth of Brazil, the Uruguayan has had to "farm it" indus- triously, and his intensively developed lit- tle republic stands on a footing with our best states. That ther-; is room for fur- ther development is shown in the fact that the average area of our states is 63,000 square miles, against Uruguay's 72,000 square miles, and that the aver- age population of our states is 2,100,000 against Uruguay's 1,400,000. Uruguay plus her industry and character probably could support three times the popula- tion, for it is still a country of ranches rather than farms. Montevideo is the capital, and because one's geography may be hazy when it comes to the secondary cities of the southern continent, the story of its nam- ing makes a good memory tag. "Monte 104 URUGUAY AND PARAGUAY I ^ -i^ *i«v p^^ f ^*'.