The Extension of American Commerce

THE economic development of this country during three centuries of colonial and national life, has reached the point where the question how to develop our foreign trade is becoming of vital importance. Until recently this was a matter of little concern, owing to the fact that the problems of internal development were taxing all our energies. Consequently, domestic trade and its encouragement were considered of first importance. Foreign trade was too inconsiderable to receive serious attention. But the marvelous achievements of science and their application to the arts have recently made such rapid strides that the material development of the United States has proceeded at an unprecedented pace. Even as late as 1870 the population of this country was less than 39 millions. The total foreign trade was valued at $828,730,176, of which the imports and exports respectively were $433,958,408 and $392,771,768. Since then the population has more than doubled. The foreign trade has expanded so that it passed the three billion-dollar mark, for the first time, in the calendar year 1906. For the fiscal year which ended June 30, 1907, it was valued at $3,315,272,502, of which the exports alone amounted to $1,880,851,078 — nearly five times their value in 1870.

But it is not only the marked increase, but more especially the change in character, of the export trade which has called forth movements for its promotion. Until comparatively recently, agricultural and other raw products, notably the cereals and cotton, formed the greater bulk of our shipments abroad. Foreign nations stood in need of such commodities, and a ready market was generally available. Under such conditions the export trade could, in a large degree, take care of itself. To-day, however, manufactured goods constitute about 40 per cent of the value of our exports. Ten and twenty years ago the corresponding figures were 30 and 21 per cent respectively. This rapid increase of manufactured goods among the exports warrants the assertion that ere long they will form more than half the value of our foreign shipments. To insure a ready market for manufactures we must be able to compete with such advanced nations as Great Britain, Germany, and Belgium. For years these older countries, by means of private initiative, commercial organizations, and governmental activity, have been exploiting foreign markets through careful organization of their export trade. Experience has enabled them to evolve business methods as yet entirely unpracticed in this country. Consequently, in order to compete successfully with our future commercial rivals, there must be well-directed organized efforts on the part of all concerned to cope with the new problem of expanding foreign trade.

It should not be overlooked that trade conditions in foreign countries are essentially different from those at home, and that each particular market requires special study on the part of exporting firms. The greater the adaptation to such peculiar conditions, the greater is the chance for success. But there are certain larger and more general considerations that must be attended to in order that the lines of least resistance to trade may be developed. In this connection, it is interesting to note that already several movements are in progress. Of these, the most significant are the following: —

1. The reform of the consular service.

2. Attempts to revive the merchant marine in the foreign carrying trade.

3. Organized efforts by Chambers of Commerce and Boards of Trade.

4. Investigation of trade conditions in foreign countries by special agents of the Bureau of Manufactures in the Federal Department of Commerce and Labor.

5. The creation of a National Council of Commerce.

Reforming the Consular Service

The consular service is now a well-reeognized factor in trade expansion. Until comparatively recently, the commercial function of the consular official had scarcely been conceived. The reason lies in the fact that foreign trade, as mentioned above, was looking after itself, and the various expedients to facilitate its development had not been devised. Gradually, however, the possibilities involved by requisitioning the services of carefully selected and trained consuls in the work of exploiting foreign markets came to be realized. Consequently the industrial and trade associations of the country brought pressure to bear upon the government to reorganize the service on the basis of practical business methods. It has never been contended that the government’s representatives may give much direct aid in winning foreign markets; what they can do is to render assistance to the trained agents of individual firms sent abroad to solicit orders. Besides this, they can do a great deal toward maintaining a cordial relationship between our people and those of other nations. Prejudices thus are reduced to a minimum, and the way becomes paved for actual business.

Again, if the consul has business instincts and ambitions, as he should have, and is a student of markets and of conditions and competition that must be met, he can digest and catalogue information of this order. This can either be forwarded in reports to the State Department, or be kept accessible to American salesmen. Much has already been accomplished in this way, and it furnishes merely an index of what might be done were the whole consular force composed of men of the right stamp.

It seems clear, therefore, that there should be the same careful selection and incentive to good work among the consuls as prevail in the business world. In most of the European countries such is the case. In Belgium, for example, the candidates must pass a competitive examination. They must be familiar with the French, German, and English languages. They must have a certificate from the Institute of Commerce at Antwerp, and a degree in law or science from some recognized institution. When once in the service, promotion follows only after diligent work. The excellent British system, and its freedom from politics, is too well known to require comment. In general, in most European countries, the political opinions of consular applicants are not considered.

Until recently our method of appointing consuls offered a striking contrast to the above, because the system was still “ in politics.” At certain posts our officials compared favorably with those of other countries. Yet vacant positions were filled, in a large degree, from the ranks of “ respectable indigent gentlemen who had failed here, ” and by appointing troublesome politicians whose needs rather than qualifications were the basis of selection. Such appointees were more likely to be competent to report upon such topics as the peculiar flavors of tobaccos and wines consumed in their districts than upon trade conditions of public interest. It was only reasonable to expect that such a state of affairs would not always be tolerated by the American public. Soon after the middle of the last century half-hearted attempts at reform were made at different times, but with little result.

As early as 1804 certain leading business associations began to interest themselves in consular reorganization. It was soon realized, however, that little could be accomplished without a united effort. Luckily, the New York Board of Trade and Transportation, backed by a number of other leading commercial organizations, finally evolved a plan that proved effectual. They firmly believed that Congress would respond by proper legislation if it were demanded with sufficient emphasis; also, that the business interests of the country were practically unanimous in desiring reform. Accordingly, a Consular Reform Convention was called at Washington, D. C., in March, 1906, when Congress was in session. It was arranged to have a satisfactory reform bill before Congress at the same time. The result was that the reform measure passed, and became effective as law on June 30, 1906. The consuls-general and consuls are now graded and classified, so that it is possible to confine original appointments to the lower grades of the service, and to a pply the merit system in promotions. Heretofore, a new appointee was assigned to a definite post, and not to a certain grade in the system. Without mentioning the other features of reform, it is fair to say that the reorganization of the service is satisfactory so far as it goes. The failure of Congress to incorporate in the act certain desirable provisions relating to the procedure governing first appointments to the lower grades and promotions to the higher ones, immediately called forth an executive order covering these omissions. Since the successor of President Roosevelt will not be bound to follow out the provisions of the latter’s executive order, it is now highly desirable that it be enacted into law. The business and commercial interests are practically unanimous in this matter. If this can be accomplished, it seems reasonable to expect that the personnel of our consular service will be greatly improved, that it will be given a permanence hitherto unknown, and will become an active ally of the great business interests of this country in the expansion of foreign commerce.

Our diminishing Merchant Marine

For the past quarter of a century the problem of increasing our merchant marine in the foreign carrying trade has been widely discussed. Since the opening of the present century, extraordinary efforts have been put forth by business organizations, students of trade conditions, legislators, and others, to arrive at a solution satisfactory to the American public. In general, the various schemes proposed involve some form of direct governmental aid to the shipbuilders and operators, or legislation intended indirectly to further their interests. Among the devices most seriously considered are federal subventions or subsidies; the admission, free of duty, without any limitations, of all shipbuilding materials; the adoption of the free-ship policy; and the levying of discriminating tariffs and tonnage dues. Within recent years, a number of organizations have been formed to forward some special propaganda. Of these, noteworthy examples are the Merchant Marine League of the United States, with headquarters at Cleveland; and the Shipping Society of America, at Denver. The former is an ardent advocate of subsidies; the latter, of trade regulation by discriminating dues and duties. In spite of conflicting policies, all such associations are bent upon reviving the merchant marine, so that, in addition to other benefits, our foreign trade can be carried largely in American ships.

The advantages that would thus accrue to our export merchants are too evident to require more than passing mention. We are now almost entirely dependent upon other nations for transporting our goods abroad. Ninety per cent or more of the foreign trade is carried in foreign bottoms. Some of the very nations that are our greatest commercial rivals are our principal carriers. In these days of keen business competition it is only reasonable to expect that American shippers should be discriminated against by alien steamship companies, and such is the case. Comparatively few complaints arise regarding the service provided to Europe. But it is unquestionably true that our merchants engaged in the South American trade are severely handicapped owing to the almost complete monopoly by foreign lines of the transportation service between South America and the United States. The same is true with reference to the Orient, and it is particularly in both of these directions that our shippers are anxious now to reach out.

The shipbuilding and foreign shipping interests of this country have not only failed to share in the great wave of material expansion, but they have actually declined since the Civil War. In 1860, the merchant marine in the foreign carrying trade was 2,379,396 tons register. In 1907, it was only 861,466 tons — over 100,000 less than in 1810. There seems to be little chance of any material increase above the present figure until the government comes to the rescue with some measure that will offset the advantages now enjoyed by our rivals’ subsidized marines. The defeat in Congress of the subsidy bill, framed by the Merchant Marine Commission after an exhaustive investigation of the whole situation, seems to have relegated the question to the background for the present. The business interests of the country, in their ambitious desire to win foreign markets, are not satisfied, however; for they appreciate more keenly than others the great handicap under which they will continue to be placed until the United States becomes less dependent than now upon foreign countries in shipments abroad.

The Convention for the Extension of Foreign Commerce

The most significant movement of the commercial organizations is shown in the “ National Convention for the Extension of the Foreign Commerce of the United States,” held at Washington, D. C., in January, 1907. The call was issued by the New York Board of Trade and Transportation to all of the leading business associations throughout the country. Besides, the governor of each state was requested to appoint ten commissioners. Seven hundred and fifty delegates were present, representing thirty-one national and ninety local organizations, nearly all the states, as also Hawaii and Porto Rico. Undoubtedly this was the most representative collection of business men ever assembled in this country. Alert beardless upstarts, and gray-haired veterans bent with long years of fruitful toil; imposing politicians, and reserved, but thinking, capitalists; those present out of selfish motives, and those whose country’s welfare was chiefly in mind; manufacturers and shippers from the East; cattle-rangers from the West; cotton planters from the South; millers and lumbermen from the Northwest, met face to face for the first time to discuss trade issues of national interest. The avowed purpose of the convention, as announced in the letter requesting the appointment of delegates, was that of “considering and devising measures for the enlargement of our foreign trade, and to promote the demand abroad for the products of our farms, workshops and mines.”

As a result of three days’ discussion and deliberation, a number of resolutions were adopted, and later submitted to Congress for consideration. In substance, the most important were those that favored the adoption of a maximum and minimum tariff schedule, with a 20 per cent margin, as a basis for treaty arrangements with foreign countries; the establishment of a non-partisan commission to study trade relations with other nations, and to recommend, from time to time, such modifications in customs duties as seem desirable; the revival of our merchant marine; the enactment into law of President Roosevelt’s executive order of June 27, 1906, concerning appointments and promotions in the consular service; the extension of American banking facilities in foreign countries; the development of a uniform and simple system of through bills of lading for foreign shipments; and the preparation and recommendation to colleges and universities of a course of study adapted to the needs of young men who are to engage in business and commerce, the curriculum to be prepared by a committee consisting of the presidents of sixteen representative colleges and fifteen leading business men.

It is impossible, as yet, to measure the results of this convention. Probably it is only the beginning of a larger movement. The general impression seems to be that so much good already has resulted that another convention will be called within the next few months. The business interests of the country are bent upon losing no opportunity to further their aims in developing foreign trade, and they keenly appreciate the fact that one of the best means to this end is organized effort.

The Work of Government Agents

The practice of sending special government agents abroad to study market conditions has been followed by most of the European countries for a considerable time. It appears that Mr. Cortelyou was the originator of the scheme in the United States. In his plan for the work of the Department of Commerce and Labor the first year after its formation, he suggested an appropriation for this purpose. Accordingly, $30,000 was at once set aside for the work. Later the yearly sum available was increased to $50,000. The Bureau of Manufactures was given charge of the investigations. A number of expert inquiries were undertaken, and the results, embodied in special reports, were published and distributed among interested parties.

The fields already studied include Canada, the Latin-American countries, India, Asiatic Turkey, China, Japan,and Korea. As regards specific commodities, the markets for cotton products and leather and its manufactures have been given special attention. That the services of the government agents are considered of value by the business men of the country is shown by their numerous appeals to the Bureau urging that investigations be undertaken, similar to those made of cotton and leather, of markets for their own special products.

The further value of such expert agents is clearly set forth by the Chief of the Bureau of Manufactures in his report for 1907, as follows: —

“ Important service was performed by several of the special agents immediately following their return to the United States. The expert who investigated the Lancashire district obtained samples of every grade of cotton piece-goods exported from that district, including a number of fabrics not manufactured in the United States, but the manufacture of which, it is believed, can readily and profitably be undertaken; and upon his return to the country an itinerary was arranged for him, which embraced the principal cotton-manufacturing centres of the Southern States. He thus met and conferred with the managers of mills in those states, exhibited samples, and supplied information with fullness of detail that could not be given in a written report. The samples from England, and those furnished from Egypt, India, and China, were sent, upon application, to manufacturers and their export agents in almost every section of the country. The expert in leather also met leading representatives of the associated leather industries in New England, and advised with them concerning their interests in foreign markets. At annual gatherings of national associations of manufacturers, held at New York and Philadelphia, addresses were made by special agents of the Department, their observations and experiences abroad forming subjects of discussion.”

This feature of the work of the Bureau has received the strong approval of representative business men, who urge its continuance and extension. Moreover, the general indispensable value of the expert agent, in the broad scheme of promoting our foreign commerce, already has been clearly demonstrated.

The Bureau of Manufactures has just rendered another important service by preparing a volume of 256 pages, entitled Winning Foreign Markets. It contains numerous suggestions for the extension of trade, on such practical subjects as obstacles to trade, shipping facilities, proper packing, foreign advertising, and the parcel post. The preparation of the monograph was prompted by numerous letters received by the Bureau from manufacturers, inquiring as to the best methods to pursue in seeking foreign markets.

The National Council of Commerce

The most recent effort, and one whose influence promises to be far-reaching, was the formation, in December, 1907, of a National Council of Commerce. The purpose of this body is to establish a connecting link between the Department of Commerce and Labor and the business organizations, thus making team-work possible in the matter of developing foreign trade. The necessity of making his department of real service to the business men of the country was keenly appreciated by Secretary Straus upon assuming office. In order to profit by the experiences of European countries, he directed Mr. N. I. Stone, a tariff expert, to study and report upon the work done by those departments of foreign governments corresponding to our Department of Commerce and Labor. Germany was the country to which particular attention was given, for there the work of promoting foreign commerce is carried on in a thoroughly systematic manner.

Without attempting even to sketch the outlines of the German system, it is clear that the organization and efficiency of the government’s work is unsurpassed by that of any other country. Moreover, the work of the Chambers of Commerce, which are semi-official institutions in that their functionsand activities are regulated by law, is equally as well marshaled. But the one feature of the whole system which makes toward efficiency and maximum of usefulness is the close coöperation between the government and the business interests. The connecting link is the Imperial Consultative Board, created in 1898. It consists of thirty-two members. One-half are appointed by the Chancellor of the Empire upon the recommendation of the German Agricultural Association, the German Association of Chambers of Commerce, and the Central Association of German Industry. The other members represent the same general interests, but receive their appointments directly from the Chancellor. As pointed out by Mr. Stone, this commission rendered invaluable assistance in the preparation of the new tariff, by taking an industrial and commercial census of the Empire, and by digesting the data. Moreover, it was this body that carried on the elaborate investigation, in which over 2000 technical experts gave evidence, to shed light upon the tariff question. It is merely a consultative board, but its opinions are in a large part the determining factor in governmental action in matters of foreign commercial policy.

It was largely with a view to establishing a similar close relationship between our government and the business world, along the lines best adapted to our peculiar system of government, that the scheme for a National Council of Commerce originated. Upon the invitation of Secretary Straus, delegates from thirtyseven leading business-men’s associations from the principal cities of the United States assembled at Washington in December, 1907. A tentative plan designed to accomplish the desired results was submitted to the convention, and, in all of its essential features, was adopted. A National Council of Commerce was created, to be composed of one member from each of the leading commercial and industrial organizations representing the principal lines of commerce and manufacture in every section of the country. An Advisory Committee, consisting of fifteen members, appointed by the larger body, is to come into direct contact with the officials of the Department of Commerce and Labor. But the council hears and acts upon the reports of the committee of fifteen. More specifically, the latter is to receive reports and communications from commercial bodies as to their needs, as also unpublished information from the Department which may be of interest to the business world. It will then confer with the officials of the Department regarding the above. Again, it will furnish the Secretary of Commerce and Labor with authentic information as to theneeds of different industries when commercial treaties are under consideration. Furthermore it. will act as an intermediary between the government and the business organizations in preparing exhibits for international exhibitions, and will keep the Secretary of Commerce and Labor informed as to the remedial legislation approved by the National Council.

The establishment of this connecting link between the Department of Commerce and Labor and the business organizations, whereby united effort is now made possible in foreign trade development, is unquestionably a most timely move. It should combine with those other conscious movements toward the same general end, as outlined above, to open up for our merchants and manufacturers the lines of least resistance to trade. If such is the case, it seems reasonable to expect that the United States, in view of her abundant and diversified natural resources, and the indomitable energy of her captains of industry, should, ere long, not only compete successfully with her older rivals, but eventually win out in the keen struggle for the control of foreign markets.