Part 13

The registration of your trade mark should be attended to as soon as possible if it is your intention to enter the Latin American field with the article which you manufacture. In many of these countries the laxity of the laws governing this important commercial protection work great hardship on legitimately established enterprises. I regret to state that in nearly every one of these lands, it is legally permissible for anyone to register any trade mark on fulfilling certain simple conditions and the payment of a small fee. The result is that a class of men without scruples are continually on the lookout for articles which are being well advertised in this country, knowing the probabilities are that sooner or later there will be a demand for them throughout the world and especially in the place wherein they reside. Magazines and periodicals of all classes are watched with care and as soon as extensive publicity campaigns are launched in the United States or Europe, the chances are that the trade name of the article being exploited will be simultaneously registered by a native in many Latin American Patent Offices. The next step in the technique of these rogues is to wait until some shipment of the goods in question arrives, a fact easily ascertained by noting the shipping news from the States and reading the invoices and the names of consignees, data which is eagerly sought after and published with great detail by all the papers of the port. An injunction is then immediately obtained and the entire shipment is either prohibited from landing or held in the custom house pending wearying and tiresome legal complications, with the result that the quasi owner of the trade-mark in question is always victorious and the shipment either excluded from the country in toto or awarded to the unlawful owner of the brand, in lieu of court costs and legal fees. In the latter event they are then sold, and the money derived therefrom goes of course to the pirates who had the foresight to register the name. These men often wait for years before accomplishing their purpose and with the idea of ultimately making money from their venture have been known to renew repeatedly the trade-mark, when it expired owing to legal limitations.

Of course on attaching a shipment of goods bearing one of these stolen and registered trade-marks, the native owner always offers to sell out his interest in the same, invariably asking a price absurdly excessive, particularly so when one stops to consider that he is asked to pay a sum for the right to use his own name. Knowing that he holds the whip hand in the controversy, and that you must meet his terms and conditions, if you wish to do business in the country, and further that he has you at a decided disadvantage in many ways, the situation which develops is trying in the extreme. Then follows a period of conferences, time-wasting interviews during which much patience must be exhibited until ultimately practically the original sum of money asked must be paid. This has been the general experience of almost every one who has been so unfortunate as to be confronted by such a situation.

Good business judgment therefore dictates that when you register your trade-mark in the United States, you should also protect yourself by registering it in the principal countries of Latin America. The easiest way to do this is through your patent attorney or legal adviser. If however you have failed to take this precaution, the first duty of your representative on arriving in each of the countries in question should be the registration of your trade name in the proper department of the government.

In order to give this his personal attention he should have a power of attorney authorizing him to act in this capacity. This paper may be prepared by your attorney, and should be in Spanish for all countries excepting Brazil, where the language is Portuguese. This document should be signed with the firm name by the individual having the right to do so and in the case of corporations by the proper officer, and the corporate seal attached. The signature should then be sworn to before a notary public, whose name and seal should be certified to by the Secretary of State for the State wherein the firm or corporation does business or is chartered. The notarial oath and the certificate of the Secretary of State may be in English. These papers should then be sent to the Secretary of State of the United States at Washington, D. C., who will in turn certify to the fact that the signature of the Secretary of State for the State in question is correct and they should then be forwarded to the Ambassador or Minister or proper representative of the Latin American country, wherein it is desired to register the power of attorney, who will in turn certify to the signature of the Secretary of State of the United States. Armed with this much verified and sealed document, your representative is then in a position to sign your name to the application for the trade mark on his arrival, and to conduct any further business before the local government arising therefrom. A separate legal document of this nature is required for each country in which you propose to protect your trade name.

In case your mark is not registered prior to the departure of your representative for Latin America, it is wise to pursue the course above outlined and have him take the matter up personally. It often happens that by the exercise of judgment and through acquaintances which will be made, or the prestige of the local attorney whom your agent will retain, many objections which might seem unsurmountable can be easily overcome by the man on the ground. Oftentimes too, the mark can be altered in word or design, so as to evade one already registered without in any manner affecting your rights.

When one stops to consider that much over 80 per cent. of the population of these countries are unable to either read or write, and that they are therefore forced to recognize an article by some distinguishing sign or character, the great value of an easily discernible, prominent and effective trade-mark becomes obvious. As a matter of fact the Indians who make up the greater portion of the purchasing public of these countries know goods only by brands and ask the storekeeper for them by their distinguishing names.

Another feature to be most seriously considered in selecting a name for your article in Latin America is that the Spanish alphabet contains no “W.” This letter is formed, when it is necessary to use a word employing it, by combining two V’s,—thus VV. Even to the educated native this letter is unpronounceable. It is therefore quite obvious that no word containing it should ever be used for distinguishing any brand. Such a trade mark, for instance, as “White Wings” instead of attracting custom, would act otherwise, owing to the extreme sensitiveness of the native in fearing criticism in pronouncing the words.

Once your trade mark is established, no matter how crude it may be, never change it. I know of a firm in Baltimore who formerly did an enormous business in lard with Brazil. The cans which they used for export purposes were a gaudy blue color and decorated with a pig of elephantine proportions. For economic reasons they decided to use plain tin cans, stamping the porker in relief thereon, but preserving his pachyderm proportions. The result was a package equally as good, as far as shipping purposes were concerned, with a saving of about two cents on each one. As a consequence of the alteration the merchant was absolutely unable to sell the goods shipped in the new container, and when later on the manufacturers tried to regain the field which they lost, by sending their former tins, the natives were sure that they were being deceived and refused to buy these goods also. Competitors who had eagerly sought this market took advantage of the situation and the Maryland house was completely shut out of the territory and absolutely lost their business.

Another illustration may serve to impress the importance of maintaining your trade mark in its entire originality. The Chinese are great consumers of canned salmon, and our Western fisheries supply much of the article. One firm in San Francisco had a brand well liked and very famous among the Celestials. The label on the tin showed a highly colored salmon having the wrong number of fins, with tail elevated in the act of leaping over a waterfall down stream, while the background was filled with tropical palms and cocoanut trees. The trade mark was simplicity itself, and was recognized with favor all over the Flowery Kingdom. Higher education however completely removed the brand from the map. The head of the house had a son just from college, who had been recently admitted to the firm. He started to clean up things—to be 100 per cent. efficient. His æsthetic and educated eye at once saw that the label on the brand which had made the firm’s fortune was a living lie. Salmon were not colored like the rainbow; leaped up stream only; had less fins and depressed their tails when doing acrobatic feats. And horror of horrors—no tropical palms or cocoanut trees grew in the vicinity of the salmon’s habitat. So the label was reconstructed and made a work of art, scientifically and piscatorially correct, and not a mere illegitimate combination of wrong details. Then goods with the new and authentic label were shipped. When they got to China no Chinaman could be induced to buy them. They became dubious at once of the changed label. Living in a land of suspicion they knew intuitively that some designing schemer was falsifying their favorite trade mark. “No samee chop” was the laconic reply when told that these were the old and well known goods in a new dress. Argument was useless. The brand was completely lost to the market. I know one merchant in Hong-Kong who was forced to throw two car-loads of this salmon into the sea, because space in his “go-down” or warehouse was worth more than that occupied by unsaleable stock.

Should you for some reason contemplate altering your trade mark or the color or shape or size of your container, always take the wise precaution of consulting the merchant handling your goods abroad and if possible adopt or be guided by his suggestions. He is on the firing line and has his finger on the pulse of the buyers, therefore his opinion is worthy of the most serious attention.

As typical of the high-handed hold ups of the local Dick Turpins, who have registered trade marks under their own names in Latin America let me state that I know of two American patent medicine men whose products have been extensively advertised and are almost household words in the United States, paying $28,000 and $25,000 respectively for the privilege of using their own names in one country of South America. Both of these concerns had been doing business in the United States for forty years and they afterwards ascertained that the gentlemen (?) who had registered their names had been waiting patiently for their coming all the time. A well known mineral water, within the past two years, paid according to my positive knowledge $2500 for their trade-mark and considered that they got off remarkably cheap. The price originally asked was $20,000 and their representative spent three months on the ground using every possible means to reduce the figures of the original demand. In the meantime nearly 500 cases of the water in question were held up by the authorities, who refused to allow them to be landed until they had the written consent of the native holding the registration papers. A prominent typewriter company flatly refused to pay the excessively high sum demanded by the party holding the right to use their trade mark, reversed its name, and now sells its machine by this unpronounceable designation. Pages could be filled with similar illustrations, showing the great importance of properly protecting your trade mark at the start.

XXV FINANCE AND CREDITS

The science of foreign banking is the most difficult to understand of all the departments of modern finance. It requires the experience of experts whose knowledge must be the most profound and complete and includes such details as the conditions of the world’s markets, the existing crops, factory productions, local and extraneous political affairs, as well as external and internal commerce.

European financiers and merchants soon recognized the importance of reciprocal banking arrangements between the home countries and foreign fields and as early as 1862, anticipating the growth of Latin America and sensing the financial necessities of its future merchants, opened the London and River Plate Bank, which with its ramifications of branches and agencies in Argentine, Brazil, Chile, New York, and various European countries has been a potent factor in developing and controlling business along British channels. Following the pioneer move of this corporation, other institutions were organized in England, until to-day the amount of British capital invested in banks in all of Latin America is close to $500,000,000.

Realizing the benefits to be derived from such monetary connections in these countries and knowing that a bank’s co-operation meant much to both the buyer and seller and formed perhaps the strongest link in the chain of foreign commerce with which they hoped to girdle the world, Germany followed in the footsteps of England and opened a similar series of institutions in the same territories, even going so far as to have branches in England, knowing the decided preference for “bills on London.” Through their offices in the English capital, they succeeded in keeping as much as possible of the business they acquired abroad in their own hands, reaping all possible profit from every transaction. In their turn, and as their foreign trade demanded it, France, Italy, Spain and Switzerland entered the field but on a much smaller financial basis, at the same time restricting their activities so as to confine them more to the home countries and to persons of their own nationalities engaged in this field of commerce.

Only recently have statutory and business conditions warranted the advance of the American banker into this sphere of finance. To-day in Latin America our banking institutions may be found in the Argentine, Brazil, Panama, Cuba, Santo Domingo, Porto Rico, Mexico and to a small extent in Haiti. As it becomes apparent that our merchants and those of other countries require financial organizations to further and facilitate trade with the United States, additional establishments will be opened in these lands until ultimately the dollar will be so enthroned in the estimation of the business world that it need pay no homage to the Pound Sterling, which up to the present has been Emperor Supreme in the Realm of Finance.

That this movement is judicious no one familiar with this trade will for a moment dispute. The ability of the British banks, through their strong financial arteries, gave them exceptional opportunities to force business into the hands of English merchants, by obliging the seller of exchange, for example, in Buenos Aires on New York to pay from 1 per cent. to 1.5 per cent. more than if he sold on London, or if he desired to buy, to pay a correspondingly higher price for a draft on New York than on London. In addition to exerting thus their powers through a high rate of exchange to drive merchants into British markets, the profits in the transfer of money incident to the transaction were enormous. The truth of this statement is vividly apparent when we are told that in 1912, “bills on London” valued at $9,025,000,000 were sold, on every penny of which a fraction of a per cent. of profit was made by English bankers.

It is not deemed necessary for the purpose of this work to go into the intricacies of the banking problem in Latin America. Such incidents as local loans, credits and financing, need not concern us, and are best left for solution to those in this line of business. It is to be hoped however that the presence of American banking institutions throughout Latin America will result in the financing with American money of municipal and national improvements such as water-works, sanitation, electric and gas companies, subways, harbor improvements, fortifications, building of warships, telephones, electric and steam railways. It was the custom of the European financier in making such loans to stipulate that the work should be done under the supervision of citizens of, and with articles and machinery purchased in, the country placing the loan. This was as it should be. It gave their engineers and contractors an opportunity to force upon these countries their products and methods, provided permanent employment for many of their countrymen, who in return created a demand for articles of home production.

We may therefore consider the banking situation only in so far as it applies to the traveller, the house he represents and the customer he sells in the accommodation it can afford them and the service it may render all parties. One of its chief uses will be to give reliable information as to the credit rating of customers.

From a financial point of view all of Latin America may be divided into seven groups: (1) the east coast countries of Brazil, Argentine, Uruguay and Paraguay; (2) the west coast countries of Chile, Peru, Bolivia and Ecuador; (3) the northern countries of Venezuela and Colombia; (4) the Central American Republics of Guatemala, San Salvador, Nicaragua, Costa Rica, Honduras, with which Haiti may be considered; (5) Mexico; (6) the countries wherein American banking systems exist, such as Panama, Cuba, Santo Domingo and Puerto Rico, and (7) the extensive group of foreign possessions and islands such as British, French and Dutch Guiana, British Honduras, Trinidad, Barbados, Jamaica, Martinique, Guadeloupe, Curaçao and St. Thomas.

The first and second groups of these South American countries are almost entirely under the domination and control of the European financier, the English being paramount, followed by Germans, French, Italians and Spanish, in the order named. Throughout Brazil, Argentine, Uruguay, Paraguay, Chile, Bolivia, Peru and Ecuador, in all the larger cities and ports, as well as in the interior and isolated towns, where business is to be had, may be found branches, agencies, or representatives of banking houses of these nationalities. They keep their fingers on the pulse of trade, know mine outputs, crop prospects, cattle productions, stability of governments, possibilities of revolutions or political unrest, the condition of business—in a word everything that has any bearing on banking or that could by any possibility reflect on the money market. Taking all these elements into consideration together with the important factor of the question of supply and demand, they decide the price of exchange each day or how much a merchant having a foreign obligation to meet, must pay for the necessary sum to liquidate his indebtedness. Very naturally a better price is quoted for the money required if payment is to be made in coin of the bank’s nationality for the reason that it necessitates less actual movement in the medium of exchange, the entire transaction as a rule being done on paper. This preliminary saving of a fraction of a per cent. in a big business means much in the course of a year and it has a strong tendency to make the buyer seek markets so situated that he might profit thereby. On the other hand the Latin American trader desiring to remit to the United States for goods bought in this country is forced because of lack of direct financial connection in South America to buy his exchange on London, Hamburg, Paris or some other European money center, thereby giving the European banker a profit of a fraction of a per cent. on every dollar of our foreign business. Furthermore, invoices and bills of lading are frequently attached to banking documents for custom house clearance and other purposes, thereby giving the European banker and through him, his clients and friends, an opportunity of learning our prices and terms. And so, not content with giving the foreign financier a chance to make money on our export trade, we also aid our greatest competitors by supplying prices and information to defeat our commercial purpose.

Some mercantile houses in the larger of these countries maintain for their own use accounts in New York against which they draw when liquidating bills in the States and do a general banking business as well, including the cashing of drafts and selling of exchange. Obviously only a large business concern could afford to do this and their natural tendency is to sell direct exchange on New York as high as the European banks. The dealer with small capital or the foreign merchant is invariably for one reason or another forced as a general rule to do business through the European banker when in need of American exchange.

In both Venezuela and Colombia, their nearness to the United States, a direct steamship service to our leading ports and the fact that we as a nation take the bulk of their products, combine to overcome all attempts on the part of Europeans to establish banks in these countries. As the local exporters ship their goods to our shores where they are disposed of they instruct their agents to deposit the moneys so received in local American banks, against which they issue checks in liquidation of indebtedness, thereby eliminating the necessity for the services of the international banker. Local banks in these countries, never very strong, and always subject to forced loans from financially embarrassed governments, do not enter materially into the business life of the community although they also maintain credits in New York and sell drafts against them. The consequence is that every leading merchant throughout these lands develops into a foreign banker, on a small scale, and buys and sells exchange. As long as this condition prevails, and it works most satisfactorily, the foreign bank will not be required to open its doors.

Practically the same state of affairs occurs in Central America, the general tendency to political unrest and the existence of an inconvertible paper currency in some of these countries, (similar conditions being current in Colombia) serve to emphasize distrust in local banks and concentrate banking operations in the hands of the larger mercantile houses.

Prior to the revolutionary troubles which are now convulsing Mexico, American, English, German, French and Spanish banks were to be found throughout that country. The presence of the American banker in this territory and the great bulk of trade movements between Mexico and the United States, kept the price of exchange within reasonable bounds.

In Panama, Cuba, Santo Domingo and Porto Rico, American banks exist and American currency is in use almost exclusively. All financial calculations are made in dollars and cents and a complete and perfect system of exchange on leading cities of this country is current so that the subject need not be further discussed.