Chapter 3

It had no effect.

"Is it tonnage?" was the next query.

"Yes," said the official.

"Then we shall ship machines in our president's yacht," was the ready response.

This staggered the official. After a long discussion the director received permission to bring in what machines were on the way; and, also, he got a date for a second hearing.

Meantime he adapted a type of machine to the needs of a certain department in the Board of Trade, sold two, and got them installed and working before he next appeared before the Trade Censors, who, by the way, knew absolutely nothing at all about the article they were prohibiting. The first question popped to him was:

"Are machines like yours made in England?"

"Yes," replied the director; "but they have never been practical or commercial."

Then he produced the record of the machines he had sold to the government. Each one saved the labour of eight persons and considerable office space. This made a distinct impression and the company got permission to import two hundred tons of their product. But not even an application for more can be filed until the first of next year. Only the dire necessity for this article, coupled with the fact that it is without British competition, got it over.

I cite this incident to show what many Americans in England believe to be one of the real reasons behind the prohibition, which, summed up, is simply this: England is trying to keep out everything that competes with anything that is made in England or that can be made in England!

For some time after the war began our motor cars went in free. Then followed an ad-valorem duty of thirty-three and a third per cent. Despite this handicap, agents were able to sell American machines, which were both popular and serviceable. The tariff was imposed ostensibly to cut down imports, but mainly to please the British motor manufacturers, who claimed that the surrender of their factories to the government for making munitions left the automobile market at the mercy of the American product, which meant loss of goodwill.

Subsequently a complete embargo was placed on the entry of American pleasure cars and the business practically came to a standstill. What is the result? Let the agent of a well-known popular-priced American car tell his story.

"Before the war and up to the time of the embargo," he said, "I was selling a good many American automobiles. With the embargo on cars also came a prohibition of spare parts. It was absolutely impossible to get any into the country. Many of my customers wanted replacements, and, when I could not furnish them, they abandoned the cars I sold them and bought English-made machines whose parts could be replaced."

All through the motor business in England I found a strong disposition on the part of the British manufacturer and dealer to create a market for his own car as soon as the war is over. Some even talked of a large output of low-priced machines to meet the competition of the familiar car that put the automobile joke on the map. The only American comeback to this growing prejudice is to build factories or assembling plants within the British Isles. This will save excessive freight rates, keep down the costly-tariff "overhead," and get the benefit of all the goodwill accruing from the employment of British labour.

A by-product of British exclusion is the inauguration of a Made-in-England campaign. Buy a hat in Regent Street or Oxford Street and you see stamped on the inside band the words, "British Manufacture." This English crusade is more likely to succeed than our Made-in-U.S.A. attempt, for the simple reason that the government is squarely behind it.

This same spirit dominates newspaper publicity. You find a British fountain pen glowingly proclaimed in a big display advertisement, illustrated with the picture of men trundling boxes of gold down to a waiting steamer. Alongside are these words:

"The man who buys a foreign-made fountain pen is paying away gold, even if the money he hands across the counter is a Treasury note. The British shop may get the paper; the foreign manufacturer gets gold for all the pens he sends over here. What is the sense of carrying an empty sovereign-purse in one pocket if you put a foreign-made fountain pen in another?"

Behind all this British exclusion is an old prejudice against our wares. There has never been any secret about it. I found a large body of opinion headed by brilliant men who have bidden farewell to the Hands-Across-the-Sea sentiment; who have little faith in the theory that blood is thicker than water when it comes to a keen commercial clash.

What of the human element behind the whole British awakening? Will organised labour, an ancient sore on the British body, rise up and complicate these well-laid schemes for economic expansion? As with the question of practicability of the Paris Pact, there is a wide difference of opinion.

On one hand, you find the air full of the menace of post-war unemployment and the problem of replacing the woman worker by the man who went away to fight. To offset this, however, there will be the undoubted scarcity of male help due to battle or disease, and the inevitable emigration of the soldier, desirous of a free and open life, to the Colonies.

On the other hand, there is the conviction that unrestricted output, having registered its golden returns, will be the rule, not the exception, among the English artisans. England's frenzied desire for economic authority proclaims a job for everybody.

I asked a member of the British Cabinet, a man perhaps better qualified than any other in England to speak on this subject, to sum up the whole after-war labour situation, as he saw it, and his epigrammatic reply was:

"After the war capital will be ungrudging in its remuneration to labour; and labour, in turn, must be ungrudging in its output."

No one doubts that after the war the British worker will have his full share of profits. As one large manufacturer told me: "We have so gotten into the habit of turning our profits over to the government that it will be easy to divide with our employees." Here may be the panacea for the whole English labour ill.

But, whatever may be the readjustment of this labour problem, one thing is certain: Peace will find a disciplined England. The five million men, trained to military service, will dominate the new English life; and this means that it will be orderly and productive.

With this discipline will come a democracy--social and industrial--such as England has never known. The comradeship between peer and valet, master and man, born of common danger under fire, will find renewal, in part at least, when they go back to their respective tasks. This wiping out of caste in shop, mill and counting room will likewise remove one of the old barriers to the larger prosperity.

England wants the closest trade relations with her Dominions. But will the Colonies accept the idea of a fiscal union of empire, which practically means intercolonial free trade? Or will they want to protect their own industries, even against the Mother Country? Like the French, they are willing to risk life and limb for a cause, but they likewise want to guard jealously their purse and products. They have not forgotten the click when Churchill locked the home door against them.

This leads to the question that is agitating all England: Will peace bring tariff reform? Both English and American economic destiny will be affected by the decision, whatever it may be.

Canvass England and you encounter a widespread movement that means, as the advocates see it, a broadening of the home market; security for the infant "key" industries; a safeguard for British labour--in short, the end of the old inequality of a Free England against a Protected Germany.

Protection in England, hitched to a world-wide freeze-out business campaign against Germany, would doubtless divert a whole new international discount business to New York. German exporters under these circumstances might refuse payments from their other customers on London, demanding bills on New York instead. To hold this business, however, we should need direct banking and cable connections with all the grand divisions of trade, adequate sea-carrying power, dollar credits, and a government friendly to business.

Then, there is the middle English ground which demands a "tariff for revenue only," and subsidy--not protection--for the new industries.

Combating all this is the dyed-in-the-bone free trader, who points to the fact that free trade made England the richest of the Allies and gave her control of the sea. "How can a nation that is one huge seaport, and which lives by foreign trade, ever be a protectionist?" he asks.

If he has his way we shall have to struggle harder for our share of universal business. More than this, it will block what is likely to be one of Germany's schemes for rehabilitation. Here is the possible procedure:

Germany's financial position after the war will be badly strained. She can be saved only by an effective export policy. To do this she must seek all possible neutral markets; and to get them quickly she will offer broad--even extravagant--reciprocity programmes. They may conflict with the proposed Franco-British programmes of protection and embargo against neutral trade interests.

But if the Franco-British programme leaves the allied markets for goods and money open, as before the war, the German reciprocity scheme will fail of its effect by the sheer force of natural competition. Hence England can throttle the re-establishment of German credit by a free and liberal trade policy, open to all the world. Though poor, after the war she can actually be stronger, in view of her great army and navy, her new individual efficiency, and renewed commercial vitality.

Will all this keep Germany out? There are many people, even in England, who think not. Already Germans by the thousands are becoming naturalised citizens of Holland, Spain, Switzerland and Denmark; building factories there and shipping the product into the enemy strongholds, stamped with neutral names. Much of the "Swiss" chocolate you buy in Paris was made by Teutonic hands.

A French manufacturer who bought a grinding machine in Zurich the other day thought it looked familiar; and when he compared it with a picture in a German catalogue he found it was the identical article, made in Germany, which had been offered to him by a Frankfort firm six months before the war began. Only certificates of origin will bar out the German product.

Amid the hatred that the war has engendered, England wonders at the price she will pay for German exclusion. Men like Sir John Simon solemnly assert in Parliament: "In proportion as we divert German trade after the war we throw the trade of the Central European Powers more and more into the hands of America, with the result that, unhappily, if we became involved in another European war we should not be able to count on the friendly neutrality which America has shown in this war." Others inquire: "What of the future trade of India, the great part of whose cotton crop before the war went to Central Europe?"

Sober-minded and farseeing men, in England and elsewhere, believe that, despite the ravage of her men and trade, Germany will come back commercially.

"You must not forget," said one of them, "that, no matter how badly she is beaten, Germany will still be a going business concern. She will have an immense plant; her genius of efficiency and organisation cannot be killed. Through her magnificent industrial education system she has trained millions of boys to take the vacant stools and stands in shop and mill. England and France have no such reserves. Besides, if we pauperise Germany, no one--not even Belgium--will get a pound of indemnity."

You have now seen the moving picture of half a world in process of significant change, wrought by clash of arms, and facing a complete economic readjustment with peace. Whether the Paris Pact is practical or visionary, no matter if England is free trade or protectionist, regardless of Germany's ability to find herself industrially at once, one thing we do know--the end of the war will find the Empire of World Trade molten and in the remaking.

Fresh paths must be shaped; the race will be to the best-prepared. Whatever our position, be it neutral or belligerent--and no man can tell which now--we shall face a supreme test of our resource and our readiness. What can we do to meet this crisis, which will mean continued prosperity or costly reaction?

Many things; but they must be done now, when immunity from actual conflict gives us a merciful leeway. More than ever before, we shall face united business fronts. Therefore, co-operation among competitors is necessary to a successful foreign trade.

Since the coming trade war will rage round tariffs, it will be well to heed the resolution recently adopted by the National Foreign-Trade Council: "That the American tariff system, whatever be its underlying principle, shall possess adequate resources for the encouragement of the foreign trade of the United States by commercial treaties or agreements, or executive concessions within defined limits, and for its protection from undue discrimination in the markets of the world." In short, we must have a flexible and bargaining tariff.

We must train our men for foreign-trade fields; they must know alien languages as well as needs; we must perfect processes of packing that will deliver goods intact. With these goods, we must sell goodwill through service and contact. Secondhand-business getting will have no place in the new rivalry.

Our money, too, must go adventuring, and courage must combine with capital. Our dawning international banking system, which first saw the light in South America, needs world-wide expansion. Dollar credit will be a world necessity if we capitalise the opportunity that peace may bring us. No financial aid should be so welcome as ours, because it is nonpolitical.

This trade machinery will be inadequate if we have no merchant marine. Chronic failure to heed the warning for a national shipping will make our dependence upon foreign holds both acute and costly.

Our trade needs more than a government professedly friendly to business. It requires a definite co-operation with business. An advisory board of practical men of commercial affairs would be of more constructive benefit to the country than all the lawmakers combined.

Here, then, is the protection against organised European economic aggression, the armour for the inevitable trade conflict. Unless we gird it on, we shall be onlookers instead of participants.

III--_American Business in France_

Two Americans met by chance one day last summer at a little table in front of the Café de la Paix in Paris. One had arrived only a month before; the other was an old resident in France. After the fashion of their kind they became acquainted and began to talk. Before them passed a picturesque parade, brilliant with the uniforms of half a dozen nations, and streaked with the symbols of mourning that attested to the ravage of war.

"There is something wrong with these Frenchmen," said the first American.

"How is that?" asked his companion.

"It's like this," was the reply. "I have sold goods from the Atlantic to the Pacific, and yet I can get nowhere over here. I give these fellows the swiftest line of selling talk in the world and it makes no impression."

"How well do you speak French?" queried his new-found acquaintance.

"Not at all."

"Have you studied the ways and needs of the Frenchman?"

"Of course not. I've got something they want and they ought to take it."

The man who had long lived in France was silent for a moment. Then he said:

"The fault is not with the Frenchman, my friend. Think it over." He did, and with reflection he changed his method. He put a curb on strenuosity; started to study the French temperament; he began to see why he had not succeeded.

This incident illumines one of the strangest and most inconsistent situations in our foreign trade. By a curious irony we have failed to realise our commercial destiny in the one Allied Nation where real respect and affection for us remain. France--a sister Republic--is bound to us by sentimental ties and the kinship of a common struggle for liberty. Her people are warm-hearted and generous and _want_ to do business with us.

Yet, as long and costly experience shows, we have almost gone out of our way to clash with their customs and misunderstand their motives. In short, we have neglected a great opportunity to develop a permanent and worth-while export business with them. It was bad enough before the war. Events since the outbreak of the monster conflict have emphasised it more keenly.

* * * * *

Why have Americans failed so signally in France? There are many reasons. First of all, their whole system of selling has been wrong.

For years many of our manufacturers were represented in Paris and elsewhere in France by German agents, who also represented producers in their own country. The energetic Teuton did not hesitate to install an American machine or a line of American goods. But what happened? When the machine part wore out or the stock of goods was exhausted, there was seldom any American product on hand to meet the swift and sometime impatient demand for replacement or renewal. By a strange "coincidence" there was always an abundant supply of German material available. The German salesman always saw to that. Necessity knows no nationality. The result invariably was that German output supplanted the American. The Frenchman did not want to be caught the second time.

This prompt renewal created an immense goodwill for German goods. Right here is one of the first big lessons for the American exporter to learn, no matter what country he expects to sell in. It lies in keeping goods "on the shelf," and being able to meet emergency demand.

The Frenchman in trade is a sort of Missourian. He must be "shown." He shies at samples; distrusts drawings. He likes to go into a warehouse and look over stocks; it gives him satisfaction to pick and choose. He is the most fastidious buyer in the world and he likes to do things his own way. Any attempt to ram foreign methods--either in buying or selling--down his sensitive throat is bound to react.

Here is a case in point: The General Representative in France of a large American manufacturing concern decided to engage some French salesmen. He was a shark on business system; he fairly oozed with "scientific salesmanship"; he decided to gird his Gallic emissaries with the most improved American selling methods. So he prepared an elaborate "What I did" schedule for them. Into it was to be written every evening the complete record of the business day.

When he handed one of these blanks to his leading French salesman, that gentleman shrugged his shoulders and said:

"It eez imposseeble."

When the American became insistent all the French salesmen resigned in a body. This objection was purely temperamental. If there is one thing above all others that puts a Frenchman into panic it is publicity of his personal affairs. He believes that the greatest crime in the world is to be found out, whether in business or in love. There was nothing perhaps to hide in a biography of his daily work, but it was the wrong tack to take.

In the same way militant and masterful salesmanship also fails. A man may be a crack seller in Kansas City, Denver, and all points West, but he finds to his sorrow that his dynamic process goes straight over the head of a Frenchman. He refuses to be driven; he wants time for mature reflection and an opportunity to talk the thing over with his wife.

This irritating attempt to force uncongenial methods on French buyers is duplicated in a corresponding lack of plain everyday intelligence in meeting the simplest French requirements.

Indeed, the omissions of Americans are wellnigh incredible. Take the matter of postage to France. The head of a great French concern made this statement to me in sober earnestness: "Won't you be good enough to beg American manufacturers to put their office boys through a course of instruction in postal rates between Europe and the United States?"

When I asked him the reason he said: "We sometimes get twenty letters from America in one mail and each comes under a two cent stamp. This has been going on for years despite our repeated protest about it. Some months my firm was required to pay from ten to fifteen dollars in excess postage."

Now the amount of money involved in this transaction is the slightest feature: it is the chronic laxity and carelessness of the American business man that gets on the Frenchman's nerve.

Here is another case in point: A well known French firm has been writing weekly letters for the past eighteen months to a New England factory trying to persuade the Manager to mark his export cases with a stencil plate and in ink rather than with a heavy lead pencil, as the latter marking is almost obliterated by the time the shipment arrives at Havre. In fact, this French firm went to the extent of sending a stencil and brush to New England to be used in marking the firm's cases. But the old pencil habit is too strong and a weekly hunt has to be instituted on the French docks for odd cases containing valuable consignments of machine tools. Vexatious delays result. It is just one more nail that the heedless American manufacturer drives into the coffin of his French business.

These incidents and many more that I could cite, are merely the approach, however, to a succession of mistakes that make you wonder if so-called Yankee enterprise gets stage fright or "cold feet" as soon as it comes in contact with French commercial possibilities. Let me now tell the prize story of neglected trade opportunity.

Last spring the American Commercial Attache in Paris made a speech at a dinner in Philadelphia. He painted such a glowing picture of trade prospects in France that the head of one of the greatest hardware concerns in America, who happened to be present, came to him afterwards with enthusiasm and said: "We want to get some of that foreign business you talked about and we will do everything in our power to land it. Help us if you can."

The Attache promised that he would and returned to his post in Paris. He studied the hardware situation and found a tremendous need for our goods. He was about to make a report to the hardware manufacturer when an alert upstanding young American breezed into his office and said:

"I have been looking into the hardware situation here and I find that there is a big chance for us. In fact, I have already booked some fat orders. Will you put me in touch with the right people in America to handle the business?"

"Certainly," replied the Attache. "I know just the firm you are looking for." He recalled the enthusiastic remarks of the man who came to him after the Philadelphia speech, so he said: "Write to the Blank Hardware Company in ----, and I am sure you will get quick action."

"No," said the enterprising young American, "I will cable." He immediately got off a long wire telling what orders he had and giving gilt edge banking references.

Quite naturally he expected a cable reply, but he was too optimistic. Day after day passed amid a great silence from America. At the end of two weeks he received a _letter_ from the Export Manager of the firm who said, among other things: "We are not prepared to quote any prices for the French trade now. We have decided to wait with any extension of our foreign business until after the war. Meanwhile you might call on our agent in Paris who may be able to do something for you."