Chapter 4

The young American dashed up to the agent's warehouse. The agent was an old man becalmed in a sea of empty space. All his young men were off at the front; a few grey beards aided by some women comprised his working staff.

"I have no American hardware in stock," he said, "but I may be able to get you some English or Swiss goods." This did not appeal to the young American. He is now making a study of Russian finance.

Full brother to this episode is the experience of another American in Paris who found out that there was great need among French women for curling irons. Despite war, sacrifice and sudden death, the French woman is determined to look her best. Besides, she is earning more money than ever before and buying more luxuries. Knowing these facts, the Yankee sent the following cable to a well known concern in the Middle West:

"Rush fifty thousand dollars' worth of curling irons. Cable acceptance." He also cabled his financial references which would have started a bank.

He, too, was doomed to disappointment. After a fortnight came the usual letter from America containing the now familiar phrase: "See Blank Blank, our Paris representative. He may be able to take care of you."

Manfully he went to see Monsieur Blank Blank, who not only had no curling irons but refused to display the slightest interest in them.

Still another American took an order for some kid skins, intended for the manufacture of fine shoe uppers. By the terms of the agreement they were to be three feet in width. The money for them amounting to $30,000 was deposited in a New York bank before shipment.

When the skins reached Paris they were found to be heavy, coarse leather and measuring five feet in width. They were absolutely useless for the desired purpose. The average French buyer, however, is not a welcher. He accepted the undesirable stuff, but with a comment in French that, translated into the frankest American, means, "Never again!"

All this oversight is aided and abetted by a twin evil, a lack of knowledge of the French language. Here you touch one of the chief obstacles in the way of our foreign business expansion everywhere. It has put the American salesman at the mercy of the interpreter, and since most interpreters are crooks, you can readily see the handicap under which the helpless commercial scout labours. A concrete episode will show what it costs:

A certain American firm, desirous of establishing a more or less permanent connection in France, sent over one of its principal officers. This man could not speak a word of French, so he secured the services of a so-called "interpreter guide." It was proposed to select a representative for the company from among a number of firms in a certain large French seaport. The firm chosen was to receive and pay for consignments through a local bank and act generally for the American company.

Friend "interpreter guide" said he knew all the big business houses in the city, so he selected a firm which the American accepted without making the slightest investigation. A bank agreed to take care of the shipments and the whole transaction was quickly concluded. The American grabbed the papers in the case (and I might add without the formality of having them examined by a third party) and left France immensely impressed with the ease and swiftness with which business could be transacted with that country.

But there was an unexpected and unfortunate sequel to this performance. A few months later another officer of this American company came post-haste to France to straighten out an ugly tangle. It developed that the French firm chosen by the "interpreter guide" was not of the highest standing: that the interpreter, for reasons and profits best known to himself, had entirely misrepresented the conversation, that instead of paying four per cent for services, the American firm was really paying about ten. The whole transaction had to be called off and a new one instituted at considerable expense of time and money.

Another American came to Paris without knowing the language, used an interpreter every day for nine weeks, and was unable to place a single order. Yet in this time he spent enough money on his language intermediary to pay the rent of a suitable office in Paris for a whole year.

The dependence of Americans with important interests or commissions upon interpreters is well nigh incredible. On the steamer that took me to France last summer was the new Continental Manager of a large American manufacturing company. I assumed, of course, that he could speak French. A few days after I arrived in Paris I met him in the Boulevard des Italiens in the grip of a five franc a day interpreter. He told me with great enthusiasm that an interpreter was "the greatest institution in the world." In six months he will probably reverse his opinion.

The lesson of this lack of knowledge of French as applied to salesmanship is this: That while the average Frenchman is greatly flattered when you tell him that his English is good, he prefers to talk business in his own vernacular. He thinks and calculates better in French. Frequently when you engage him in conversation in English and the question of business comes up, you find that he instinctively lapses into his mother tongue.

I was talking one day with Monsieur Ribot, the French Minister of Finance, whose English is almost above reproach, and who maintained the integrity of his English through a long conversation. But the moment I asked him a question about the proposed bond issue, he shifted into French and kept that key until every financial rock had been passed.

In short, you find that if you want to do business in France, you must know the French language. It is one of the keys to an understanding of the French temperament.

Even when Americans do become energetic in France, they sometimes fail to fortify themselves with important facts before entering into hard and fast transactions. As usual, they pay dearly for such omissions. This brings us to what might be called The Great American Deluge which overwhelmed not a few Yankee pocketbooks and left their owners sadder and saner.

Fully to understand this series of events, you must know that since the beginning of the war the question of an adequate French coal supply has been acute. Indeed, for a while the country faced a real crisis. Many of her mines are in the hands of the Germans and she was forced to turn to England for help. Not only has the English price risen, but to it must be added the high cost of transportation, the heavy war risk, and all those other details that enter into such negotiations.

France had to have coal and various enterprising Americans got on the job. At least, they thought they were enterprising. Before they got through, they wished that they had not been so headlong as the following tale, now to be unfolded, will indicate.

A group of New York men made a contract to deliver three shiploads of coal at Bordeaux at a certain price. _After_ they had signed the contract, freight rates from Baltimore to the French port almost doubled. This was the first of their troubles. When their vessel finally reached Bordeaux, the dock was so crowded with ships unloading war munitions that they could not get pier space. In France demurrage begins the moment a ship stops outside of port. The net result was that these vessels were held up for nearly two weeks and the high price of transportation coupled with the very large demurrage practically wiped out all the profits.

Another group of Americans made a contract to deliver coal to a French railway "subject to call." Without taking the trouble to inquire just what "subject to call" meant in France, they signed and sealed the bargain. Then they discovered that the railroad wanted the coal delivered in irregular instalments. Meanwhile the consignors had to store the coal in French yards where space to-day is almost as valuable as a corner lot on Broadway. They were glad to pay a cash bonus and escape with their skin.

Still another group made a contract with the Paris Gas Company for a large quantity of coal. They discovered later that the company expected the coal to be delivered to their bins in Paris.

"But the American plan is to sell coal f.o.b. Norfolk," said the spokesman.

"We are sorry," replied the Frenchmen, "but the coal must be delivered to us in Paris. The English have been doing it for forty years, and if you expect to do business with us you must do likewise."

When the Americans demurred the company held them to their contract.

This last episode shows one of the great defects in the American system of doing business abroad. We insist upon the f.o.b. arrangement, that is, the price at the American point of shipment. The foreigner, and especially the Frenchman, wants a c.i.f. price which includes cost, insurance and freight and which puts the article down at his door. The German and English shippers, and particularly the former, have made this kind of shipment part of their export creed, and it is one reason why they have succeeded so wonderfully in the foreign field.

The Great American Coal Deluge also precipitated a flood of miserable titled ladies all selling coal for "well known American companies." Most of them were clever American women, married, or thinking they were married, to Italian or French noblemen. Their chief effort was to get a cash advance payment to bind the contract. Such details as price, transportation, credit, and other essentials were unimportant.

Here is a little story which shows how these women did business and undid American good will.

One day last August, the telephone rang in the office of the General Manager of a long established American concern in Paris. A woman was at the other end.

"Is this Mr. Blank?"

"Yes."

"I am Countess A. and I have a letter of introduction for you."

"Yes."

"I represent several large American coal companies and have secured a large order for Italy."

"Yes."

"Can you tell me how I can get the coal to Italy?"

"Yes."

"Splendid! But how?"

"By boats."

"Oh, yes, I know, but have you got the boats and can I get them? I have the order, you see, and that is the main thing."

"But, madam," asked the man, "have you cabled your company in America about the contract?"

"No," answered the woman. "What's the use of doing that. I have no money to spend on cables. Besides, I have full power to act. The price is all right and the buyers are ready to sign but they want to put into the agreement some silly business about delivery and I am asking you to help me get the boats."

"Come and see me," said the Manager.

The woman promised to call the next morning, but she never came. Just what she had in mind the Manager could never quite tell. But one thing was proved in this and similar activities: The "Countess" and most of her sisters who have been trying to put over coal and other contracts in Paris, have little or no real authorisation for their performances, and the principal result has been to prejudice French and Italian buyers against us.

In seeking to make French contracts, some of these adventurers (and they include both sexes) make the most extravagant claims. One group circulated a really startling prospectus. At the top was the imposing name of the corporation with a long list of branches in every part of the world. Then followed a list of names of individuals and firms with their assets supposed to be part and parcel of the corporation. One man whose name I had never heard before and who was set down as a Pittsburgher, was accredited with assets of $250,000,000. Under other individual and firm resources ranged from one to twenty-five million. The list included the name of a great American retail merchant, without his consent I might add, but the promoters had cunningly misspelled his name, which kept them within the pale of the law. The total assets of these "concerns personally responsible for all orders entrusted" was precisely $340,000,000. In spite of this dazzling array of misinformation, let it be said to the credit of the French buyer that he failed to fall for the glittering bait.

The more you go into the reasons why so many of our business men have failed in France, the more you find out that plain everyday business organisation seems to be conspicuously absent. Take, for example, the question of credit. The average American doing business in France proceeds in the assumption that every Frenchman is dishonest. This being his theory, he either exacts cash in advance or sells "cash against documents." Such a procedure galls the Frenchman who is accustomed to long credit from English, German, Swiss and Spanish manufacturers and merchants.

Of course, behind all these American errors in judgment and tact is a lack of organised credit information. To illustrate:

When I was in London, the English Managing Director of one of the greatest of Wall Street Banks received an inquiry from his home office for information about the Compagnie Generale Transatlantique (the French Line). The amazing thing was that this bank, that prides itself on its world-wide information, had no data regarding the leading steamship line between England and France. You may be sure that the Credit Lyonnais or any other French banking institution has a complete record of the American Line.

Not long ago, one of the largest banks in Chicago refused to extend credit to a French concern, although the French Government backed up the purchase. This concern had occasionally done business with a New York Trust Company in the Rue de la Paix, whose French Manager was a live, virile, far-seeing young American. The President of the French Company laid his case before him. Quick as a flash he said:

"All right! If they won't guarantee it, I will, and on my own responsibility."

Whereupon he put the deal through. It was the kind of swift, dramatic performance that appeals to the Frenchman. The net result was that the service has come back a hundredfold to the Trust Company.

The idea prevailing in America that French firms are not worthy of credit is a matter of great surprise all over Europe. Here is the way an Englishman whose firm has done business in France for fifty years, sized up the situation:

"There are no better contracts in the world than those entered into in France. Americans who have had little experience in such matters may find the negotiations leading up to the signing of a French contract somewhat tedious, but we do not mind this and one is so completely protected by the laws of the country, that losses are almost unknown.

"Not long ago we had a case in point. A purchaser of lathes who had already made an advance payment, received his machines and then by various excuses put off the final payments for the remainder from week to week. We waited four weeks and then made our complaint to the judge at the tribunal. Two days later the judge ordered the delinquent firm to pay up in full and we received our money the very same day. How long do you think a New York court would have taken to decide a simple question of business of this kind? The fact is that in spite of the war, French credit remains to-day as good as any you can find."

On top of their resentment over our lack of confidence in their credit is the added feeling which has cropped up since the beginning of the war over the way American manufacturers have ignored many of their French contracts. A French manufacturer summed it up in this way:

"There is no doubt that some American manufacturers who had signed contracts for the delivery of machinery in France, deliberately sold these machines at home at higher prices. It has created a very bad impression and I am afraid that henceforth your salesmen will find it much harder to operate in my country.

"The trouble is that Americans have been spoiled by too many orders. Before the war they were all crying out for business. Now that they have everything their own way, they have become independent and arrogant. With the ending of the war, all this will change, for the French are not likely to forget some of the bitter lessons they have learned. Henceforth they will profit by them."

One reason for our laxity all up and down the French business line is that the American has never taken the French export business any too seriously. On the other hand, stern necessity has been the driving force behind the English and German manufacturer. The American, too, has made the great mistake of assuming that the foreigner, and especially the Frenchman, is not always serious-minded and to be depended upon. If he wants his mind disabused in this matter, let me suggest that he see him at war. He will realise that the superb spirit of aggression and organisation that mark him now is bound to last when peace comes.

You must not get the impression from this long list of American business calamity that all our endeavour has failed in France. Those few great American corporations who have planted the flag of our commercial enterprise wherever the trade winds blow, have long and successfully held up their end throughout the Republic. So, too, with some individuals. The story of what one New Yorker did is an inspiring and perhaps helpful lesson in the right way to do business in France.

This man is resolute and resourceful: he speaks French fluently and he was familiar with the foreign trade field. With the outbreak of war he did not lose his head and try to get business indiscriminately. Instead, he made a careful survey of the field; he did not listen to the optimist who said it would be a short war: his instinct told him, on the contrary, that it would be a long one. "What will France need more than anything else?" he asked himself.

He realised that most of all France would need machine tools. He got the cables busy assembling goods, and by every known route he brought them to France. When he had a warehouse full of material, he began to sell. He not only had what the French were hungering for, but he had them to deliver overnight. While his colleagues were frantically trying to get their stuff in, he was getting all the business. The French like the man who makes good.

This man met their expectations and to-day he stands at the top of the selling heap.

More than this, he is building a factory on the outskirts of Paris where he will make and assemble his product. Ask him the reason why he is doing this, and he will tell you:

"First, it means good will; second, we will get the benefit of native and cheap labour; third, we will be able to replace parts at once; and, fourth, we will get inside the wall of the Economic Alliance."

IV--_The New France_

No matter how we heed the example of the few progressive Americans who have successfully planted their business interests in France, we will face a new handicap when the war ends. As in England, we will be bang up against an industrial awakening that will mark an epoch. Coupled with this revival will be an efficiency born of the war needs that will act as a tremendous speeder-up.

In France this galvanised industrial life will be stimulated by a brilliant imagination wholly lacking in the English temperament. It will go a long way toward opening up fresh fields of labour and distribution.

Self-sufficiency will be the keynote. The automobile is a striking instance. We had established a very promising motor market (and especially with moderate-and low-priced cars) among the French. When the Government assumed control of the French automobile factories and changed their output to war munitions, the two great automobile syndicates protested that the cutting off of the French motor supply would mean an immense loss of good will. First came a 70 per cent duty on practically all American cars and this was followed up by an almost complete restriction of all American cars.

This prohibition will have the same effect as the English exclusion in that it will stimulate the demand for the native French cars. Here we get to one of the striking phases of the new industrial development of immense concern to us. France has her eye on quantity output. Many signs point to it.

When the war broke out, a certain young French engineer saw great opportunity in shell making. He was immuned from military service, he had a little capital of his own, and with Government aid he set to work. Within four months he had built an enormous plant on the banks of the Seine almost within the shadow of the Eiffel Tower. In six months he had enlarged his capacity so that he was producing 15,000 shells a day. Last summer he sent for the agent of a large American machinery company: "I am going to make automobiles in series after the war." "In series" is the French way of expressing quantity output.

"All right," said the American. "What can I do for you?"

"Simply this," said the Frenchman. "I wish to order sufficient automatics to meet the demand when peace comes."

This is the spirit of the awakened French industry. I know of half a dozen automobile and other producing establishments who are making plans to manufacture popular-priced cars when the war is over. This output will not only affect the sale of American cars in France, but will also interfere with the market for our cheap machines in South America. Already France is making every effort to increase her Latin-American trade. She has immense sums of money invested in Brazil and she will follow up this advantage keenly.

It is important for us to remember that France like England will have a well oiled productive machine after the war. It will not only be better but bigger than ever before. The German ill wind that devastated the northern section will blow good in the end. Hundreds of factories operated by hand labour before the war will now be equipped with American labour-saving machinery. The products of these machines operated by cheap labour will be in competition with our own commodities manufactured by more expensive labour in many of the markets of the world.

Formerly the French artisan could produce an article almost from raw material to finished product: now he has learned to stand at an automatic and labour at a single part. In short, he is becoming a specialist which makes him a cog in the machine of quantity output.

What is true of machines and men is also true of money. The old wariness of the French banker in underwriting industry is passing away. He is thinking in terms of large figures and vast projects.

I could cite many examples of the new Gospel of French Self-Supply. Before the war France manufactured lathes that were beautiful examples of art and precision. The firms that made them were old and solid and took infinite pride in their product. Now they realise that output must dominate. A simple type of machine has been chosen as model and will henceforth be made in large quantities.

Then there is the sewing machine. Before the war two groups--Anglo-American and German--controlled the French market. By the ingenious use of export premiums, the Germans had the best of it.

"Why always pay tribute to strangers?" now asks the French housewife. So far as Germany is concerned, this question is already settled. But the American sewing machine will have to struggle for its existence hereafter in France, for plans have been made for at least three huge factories for its production.