Part 1

SELLING LATIN AMERICA

SELLING LATIN AMERICA A Problem in International Salesmanship WHAT TO SELL AND HOW TO SELL IT

BY

WILLIAM E. AUGHINBAUGH, M.D., LL.B., LL.M.

_Illustrated from Photographs_

BOSTON SMALL, MAYNARD & COMPANY PUBLISHERS

_Copyright, 1915_

BY SMALL, MAYNARD AND COMPANY

(INCORPORATED)

Printers S. J. PARKHILL & CO., BOSTON, U.S.A.

FOREWORD

I made the acquaintance of Doctor W. E. Aughinbaugh about eight years ago, when I was in charge of the advertising department of a large concern doing an international business. The doctor came with us to look after the export trade, especially in the West Indies and South America. My work naturally brought me into close association with him, and I soon began to appreciate his unusual ability in many directions and his special fitness for the position he occupied. There seemed to be no phase of merchandising in far-off markets with which he was not fully conversant; nor did this knowledge relate solely to Latin America. He had previously travelled the distant markets of the Orient in the interests of an American house whose products he successfully introduced there and to him the Far East was an open book.

He has been in Egypt eight times on business missions. He has travelled Somaliland, Palestine, Asia Minor, Morocco, Tunis, Tripoli, Algiers, South Africa, Persia, Arabia, Afghanistan, Cashmir, Beluchistan, India, Assam, Burma, Siam, China, Cochin-China, Japan, the East Indies and all over Europe with the single exception of Russia. The doctor also spent two years of his restless life in the Far North where a business mission of importance took him into Iceland, Greenland, Labrador, Newfoundland, Cape Breton Island, Prince Edward Island and the Hudson’s Bay Country. As to the West Indies and South America, he has been not only to them, but through them many times and in every habitable spot where business was to be done. Some idea may be gained as to the frequency of his visits to South America by mentioning the fact that he has made thirty-six trips across the Equator.

Dr. Aughinbaugh talks about the markets of foreign countries with the authority of long experience for he has been engaged in these special fields for more than twenty years; yet he is still a young man with a modern viewpoint. He speaks the languages of many countries and speaks them well. His information is first-hand, reliable data gathered on the ground where he lived and worked, whose people he knew and could speak to in their own tongue, not the unreliable, superficial vaporings of some dilettante globe-trotter who has given the high-spots of civilization the “once over” and therefore considers himself a competent authority to write upon the commerce, customs and manners of foreign countries the very languages of which he does not understand without the aid of an interpreter, or who could not find his way back to the railway station or dock without the assistance of a guide.

Doctor Aughinbaugh is no such lightweight. He has not written this book because he believes he knows it all. Left to himself he would never have written it. It was only after repeated urgings on the part of some of his friends who appreciated his ability to write an unusual book, that he consented to undertake the work, and then he did so under protest.

It may be asked with pertinence how a man could travel in the interest of one line and yet be in possession of so much information relating to every other line; or how one could master the intricacies of foreign banking and credits and still attend to his business. The answer to all of this is that no man can successfully negotiate foreign markets unless he is more than a mere “order taker.” As to the doctor’s ability to measure the requirements of a market all the way from cereals to concrete, that may be accounted for by the fact that he is both a physician and a graduate of the law, and while he never practised at the bar to any great extent he did have considerable experience in medicine, a profession which developed a naturally analytical mind, so that he looked at things with the eyes of a student and from the viewpoint of the trained diagnostician. For six years he followed medicine in Latin America, finally giving it up to accept an offer from a large company who compensated him accordingly. His experience in that line alone took him all over the world and the ramifications of the business brought him into close contact with the marketing of nearly every other commodity. But even had this not been so, he is the sort of man who would have sensed a business opportunity because he is naturally a keen observer and everything interests him. He is the type of man who absorbs information; he does not have to be shown—he sees.

Here, then, is a man possessed of a fund of particularly desirable information—especially valuable to-day when Europe is war-mad and, in her sanguinary frenzy, has left open the door of opportunity to peaceful Uncle Sam. Why not put this information in concrete form for the benefit of American commerce?

These considerations were put up to the author by some of his friends who knew him to be a keen, accurate, analytical observer, a writer and a _raconteur_ of more than ordinary ability, and this book was the result.

Probably never—let us fervently hope never for the same reason—will the United States have another opportunity such as the present one, to enter those fruitful fields to the south, where Europe in general, and Germany in particular, has reaped a golden harvest for so many years.

A careful reading of this book—not a difficult matter, for unlike most works on commerce it is full of lively interest—will be profitable to every business man interested in the subject of Latin America. It will be valuable to those who are equipped or willing to prepare themselves to cope with conditions as they really are, and just as valuable to those who are not, for it may save them from the costly mistakes of experimentation in foreign fields.

MAURICE SWITZER.

New York, March 20, 1915.

CONTENTS

CHAPTER PAGE

I GENERAL REMARKS ON FOREIGN TRADE 1

II BRAZIL 13

III ARGENTINE 31

IV URUGUAY 49

V PARAGUAY 57

VI CHILE 67

VII BOLIVIA 79

VIII PERU 91

IX ECUADOR 106

X COLOMBIA 114

XI VENEZUELA 126

XII CENTRAL AMERICA 138

XIII MEXICO 156

XIV CUBA 168

XV SANTO DOMINGO 176

XVI HAITI 182

XVII PORTO RICO 186

XVIII THE GUIANAS: BRITISH, DUTCH AND FRENCH 191

XIX EUROPEAN POSSESSIONS IN THE WEST INDIES 199

XX FOREIGN TRADE WITH LATIN AMERICA AND HOW IT DEVELOPED 212

XXI METHODS OF DOING BUSINESS 224

XXII THE SALESMAN AND THE CUSTOMER 242

XXIII CUSTOM-HOUSES AND TARIFFS 266

XXIV TRADE MARKS 276

XXV FINANCE AND CREDITS 288

XXVI PACKING AND SHIPPING 311

XXVII ADVERTISING 331

XXVIII RECIPROCITY 345

XXIX HEALTH PRECAUTIONS 368

APPENDIX 377

INDEX 401

ILLUSTRATIONS

PAGE

THE HARBOR OF RIO DE JANEIRO 14

AVENIDA RIO BRANCO AND OPERA HOUSE, RIO DE JANEIRO 28

TAKING PRODUCE TO THE STATION, ARGENTINE 36

GRAIN ELEVATORS, BUENOS AIRES 44

INTERIOR OF A GENTLEMEN’S HAT STORE, ASUNCION, PARAGUAY 60

A COUNTRY STORE IN COLOMBIA 60

VALPARAISO 68

LAKE TITICACA AT PUNO, PERU 86

OROYA LINE, PERU 98

A COMPARISON OF CLIMATES 224

DRYING HIDES AND SKINS IN ARGENTINE 240

AVENIDA CENTRAL, RIO DE JANEIRO 262

CALLE RIVÀDAVIA, BUENOS AIRES 288

A PACK-TRAIN ON THE ANDES TRAIL IN COLOMBIA 312

LLAMAS IN CERRO DE PASCO, PERU 316

CHILEAN INFANTRY. _See page 220_ 340

ADVERTISEMENT OF COGNAC BISQUIT 340

SOUTH AMERICAN APPRECIATION OF ADVERTISEMENTS “MADE IN U. S. A.” 342

THE PLAZA HOTEL IN BUENOS AIRES 368

MAPS

SOUTH AMERICA _Frontispiece_

CENTRAL AMERICA 138

MEXICO 156

THE WEST INDIES 168

SELLING LATIN AMERICA

I GENERAL REMARKS ON FOREIGN TRADE

War completely changes commercial currents. The victor takes the established and profitable trade, leaving to the vanquished the harder lines of business and the development of new fields. This is as true of the first war recorded by history as it will be of the last.

As an illustration of the veracity of this statement it is only necessary to recall our war with Spain. Prior to her defeat, Spain controlled the bulk of the banking and commerce of the Philippines, Cuba and Porto Rico. To her possessions she exported wines, foods, manufactured articles, textiles, drugs, perfumes, canned goods, shoes and hats, receiving in exchange their sugar, tobacco and coffee.

To-day the United States consumes all of these exports, while the requirements of the three countries are supplied by America, which also does their financing through banks organized in these possessions, and capitalized with American money. To be more specific and by way of a concrete example let me mention Cuba, which in 1913 exported $165,000,000 worth of products, all but 15 per cent. of which was taken by the United States, the amount shipped to Spain being about four-tenths of one per cent. During the same period of time she imported goods to the value of $132,000,000 of which we supplied 65 per cent. against Spain’s 8 per cent. Since 1902, Cuba’s foreign commerce has increased 250 per cent. due absolutely to the part played by the United States in the Spanish-American war. The same condition of affairs in exports, imports and other lines is equally true, although not on such a large scale, of course, of the Philippines and Porto Rico.

The Napoleonic wars gave to England the strong position she now occupies in the financial and commercial world. Her bankers and shippers, merchants and manufacturers, with one accord grasped the opportunity that presented itself then and have held the supremacy thus gained for more than a century.

Perhaps it was the recollection of what gave Great Britain her start in this field which led the London _Spectator_ to remark, at the outbreak of war in 1914:

“The present war gives the United Kingdom an excellent opportunity to capture the export and import trade of Germany and Austria-Hungary.”

If England, engaged in the most desperate and expensive war she or the civilized world ever has known, with her enormous resources taxed to their utmost, saw an “opportunity” for trade expansion, how much greater is the chance in this line for an absolutely neutral power, populated with keen business men, and provided by Nature with unparalleled productive possibilities.

The war in Europe developed the most remarkable business situation for the United States ever presented to any nation. The virtual closing of all the doors of the export and import trade of the Old World and the almost total dependence heretofore of the Far East and Latin America, especially, on Europe for finance and trade connections made the war truly the psychological moment for us, as a nation, not only to overcome the lead of the European commercial world, but also to cement by other than ties of business the bonds of friendship due us not only on account of our ideal geographical position, but also because of our similar republican form of government.

By embracing this extraordinary opportunity—apparently almost created for our express benefit, we being the only people able to profit by it—we can make the nations which formerly depended on Europe for support in their trade ventures our business allies, our sincere friends and well-wishers, and at the same time bring about a new trade alignment so that all America will reap the benefit.

Let us briefly consider some of the enormous possibilities of foreign trade in Latin American countries.

Latin America—that is, the countries of Central and South America, together with Mexico, Cuba, Santo Domingo and Porto Rico—comprises twenty distinct states, with a total population of about 65,000,000, a large portion of whom are Indians and half-breeds—a fact which we should not lose sight of in view of the tremendous imports.

Statistics recently compiled by the Pan-American Bureau show that these countries, in 1913, conducted a foreign commerce valued at $2,870,178,575. Of this the imports were $1,304,261,763, and the exports, $1,565,916,812, thus giving Latin America a favorable balance of $261,655,049.

Ten of these countries alone purchased goods to the amount of $961,000,000. Of this sum Great Britain supplied $273,000,000; Germany, $180,000,000; France, $84,000,000; Italy, $54,000,000; Belgium, $47,000,000, and Austria-Hungary, $8,000,000. The United States exported to these ten countries last year $160,000,000 and imported from them $250,000,000. Brazil, in 1913, imported $15,000,000 in textiles alone, of which amount the United States supplied only $500,000. In the same length of time Argentine imported goods to the amount of $468,999,996, of which amount less than 8 per cent, was supplied by this country. The United Kingdom exported to all of Latin America $23,500,000 worth of coal in 1913, the United States, during the same period of time, $750,000.

Practically the same story in all lines of exports could be told of these countries, demonstrating that individually in nearly all cases the United States is the largest consumer of their raw or finished products and the smallest exporter of the goods they most require.

Fearful that some one may infer after looking at these figures that European countries have preferential duties with Latin America, let me state most emphatically that this is not the case. With one single exception no favoritism is shown any of the trading nations, in the matter of import fees, and in that instance we benefit by it. Brazil makes a decided preferential tariff in favor of some of our goods in view of the fact that we are the largest consumers of her chief product—coffee.

Everyone of these countries is in process of development and expansion. They have in profusion the things the busy world most needs. Their mines are the richest known to man. Some have been worked for thousands of years and are still productive. Their broad fields are destined to make them the granaries of the world. Their miles of pasture lands and their extensive acreage mean that Europe and the United States will depend upon them for meat. Their vast virgin forests are capable of supplying humanity with cabinet and other woods for several centuries. Their trade and imports must therefore increase. It is apparent that they cannot diminish. We cannot as a nation afford to remain indifferent any longer to their possibilities and opportunities.

Very naturally there have been many objections on the part of our business men to going after this trade which all of Europe strained every resource to acquire and control. It was urged that we had all the business we required; that we lacked foreign banking facilities; that our merchant marine was small and inefficient; that to go abroad for trade meant learning new languages, acquiring new customs, opening new accounts, taking more risks. These conditions were equally true when the European merchant decided to enter this field. He met and overcame all these difficulties under far more adverse circumstances than exist for us, to-day. His experience in this territory has charted the path for us to follow, and if we take advantage of the beacons he has erected we shall be saved from many pitfalls.

Latin America with the things the world most requires—wheat, meat, wool, coffee, sugar, nitrates, minerals, woods—can never collapse completely through any financial crisis. Furthermore its power of reviving quickly from any unfavorable panic is truly phenomenal. I recall Venezuela, the year she terminated her bloodiest revolution under Castro, harvesting and exporting a bumper crop of coffee, which immediately cleared up her monetary depression, and this rapid convalescent condition has been duplicated time and time again after every period of internal trouble experienced by all of these countries.

Nature has been bounteous in her gifts to these favored lands of the sun. If in a given locality the soil is not fertile, it is rich in mineral wealth, or covered with luxuriant forests. Throughout Latin America large and small rivers afford easy and cheap means of transportation. Drought or excessive rainfalls are comparatively unknown. Despite the fact that a majority of the population lives primitively, epidemics of a severe nature have been few and far between. Revolutions, formerly the blight on these lands, are becoming rare and in most of these countries there have been no such uprisings or demonstrations of this character for more than twenty years.

The opportunities for successful business in almost any chosen line in Latin America are unlimited, provided one uses ordinary judgment and simple tact in the undertaking. Furthermore less capital is required to start an enterprise than in lands where competition is keener, and less energy necessary to insure success. The truth of these statements is demonstrated most completely by the fact that millions of Europeans—many of them uneducated and possessed of no great amount of ability or money—have settled throughout these lands and established themselves in prosperous occupations.

The greatest possibilities exist along the lines of general development. All these countries are new; most of them practically unexplored—many of them not even having their boundary lines definitely established. Think of what must be the opportunities in Brazil—a country larger in area than the United States, and supporting only 20,000,000 people—or of Argentine, spreading over almost as much territory as Europe, excepting Russia and Austria-Hungary, with a population slightly more than 7,000,000. It is to these countries that overcrowded Europe must come for elbow room—for a glimpse of the sun.

Once a business or a plant is established in Latin America one need not have the intense fear of bitter local competition. These people have never been manufacturing or creative in their desires, and the chances are, if we are to predicate their future from their past, that they never will become competitors in any of these fields. Climatic conditions, racial and inherited traits have made them follow the lines of least resistance and they have become cattle raisers and large farmers, while comparatively few have entered commercial life. This being true it follows that these countries are ideal for those desirous of leading an active commercial or manufacturing career.

All of Latin America is in the process of awakening. They are building railways, making vast municipal and national improvements, exploiting their natural resources, modernizing their agricultural methods. The advent of the foreigner has been potent in raising their standard of living. If these people were to raise their standard of living to that of the United States at the present time, it would be the equivalent, so far as market possibilities are concerned, to creating three new Americas. Each day sees some progress in this direction, and with it a desire for more of the comforts of modern civilization—for more of the things which go to make up the full and complete life. This means employment for their people—civic progress—and prosperity.

Their markets are easily reached, the merchants willing to buy, our producers capable of providing the things they require. Their first orders may be small, but they become enormous buyers when they find the article adapted for their needs. The European marts which might have supplied the things these nations require in their growth cannot do so for a long time to come, thus giving us an ideal opportunity to capture these markets and at the same time introduce American methods throughout the length and breadth of the land.

II BRAZIL

The Republic of the United States of Brazil, including the Acre Territory, is the largest of the South American countries and if we include Alaska and our island possessions is really larger in area than the United States of America, by about 200,000 square miles. It is fifteen times larger than Germany and sixteen times larger than France. With the exception of Ecuador and Chile its frontier touches every country of South America, being bounded on the north by British, French and Dutch Guiana and Venezuela; on the west by Colombia, Peru, Bolivia, Paraguay and Argentine; on the south by Uruguay, while the Atlantic Ocean forms its eastern and a portion of its northern limitation. Its most eastern point is but three days’ sail from the western coast of Africa. It is the fourth largest country in the world, and is widest between the Equator and the Tropic of Capricorn, covering an area of 3,292,000 square miles.

The population has been variously estimated at from 20,000,000 to 24,000,000, of whom less than 1,000,000 are aborigines, thus giving it about one-fifth of the population per square mile of the population of the United States of America. Its inhabitants are white, black, mulattoes, Indians and mixed breeds, a heavy percentage being descendants from the slaves imported originally from Africa, slavery in Brazil having been abolished in 1888.

The language of Brazil is Portuguese except among the Indian tribes, each one of which has its own dialect. These Indians are to be found in the interior and the remote districts, and are a negligible quantity as far as trade is concerned, living primitive lives and having few wants that the rich country and rivers cannot supply.