the bankers.

From them one can also ascertain whether or not the financial conditions in the country are sound, and warrant the trade.

The Social Status

A person who knows nothing of the ways of the people with whom he proposes to deal, their manner of living, and their temperament, cannot succeed as a business man among them, and is certainly not qualified to draw plans for a commercial campaign.

There will always be those who think they can go into a foreign country and do business on their own terms and in their own way, but the international business man must learn, first of all, that he cannot change the habits, customs, and methods of the people with whom he is coming to trade, and that he must adapt himself to their particular civilization. The closer he gets to them and the more in sympathy he is with them, the greater will be his chances of success. To be successful he must first know how to make himself liked.

Much is said about national susceptibilities and racial characteristics. They must be studied separately in each case. Broadly speaking the races may be divided into three categories, according to their temperaments. These classes may be called: the emotional, the phlegmatic, and the eccentric.

To the emotional group belong all the South American and other Latin races, and the Slavs, including the Russians and Poles, Czechs, Jugoslavs, Serbians, Bulgarians, Croatians, and Ukrainians. These people are exceedingly sensitive and prompt to take offence if not handled tactfully. As a rule, they are ready to forego business advantages if they feel that they are not approached or treated properly.

The principal peoples of the phlegmatic class are the British and the inhabitants of the United States. These peoples are not so particular as to how they are treated so

long as they gain a commercial or financial advantage. They do not relish an insult, but they are ready to overlook it if it should seem to them good business policy to do so.

In the class of eccentrics might be placed the Oriental races. These people may be said to possess a mixed temperament. They frequently have the qualities of both the phlegmatic and the emotional temperaments. They are eccentric only when one tries to get something out of them. It is otherwise when they are trying to get something out of someone else; then there is no limit to their persistence. Although most of the Oriental races—except the Jews, the Japanese, and the Syrians—seem to lack persistence, it is not that they do not possess this quality, but that they do not care enough for money to exert themselves to the utmost for its acquirement.

In cases where one is desirous of creating a demand for a product among a certain people, more than a casual study of their characteristics should be undertaken-their desires, their habits, and their mode of living then require close attention.

The development of a new demand involves advertising, as well as a close study of national wealth and its distribution. The press of the country must be studied and the best mediums for advertising selected. In this connection one should not forget to look up the statistics of illiteracy. If a large portion of the people cannot read, the advertising policy will have to be adjusted to suit the conditions. Under such circumstances it may be possible to use posters and other pictorial appeals to advantage. The subject of advertising in foreign trade is discussed in Chapter XXX.

The Commercial Status

The investigation of the commercial status of a country. concerns itself with the structure and psychology of the for

eign market and with all the technical details which pertain to it. It includes the status of local supply and demand, quality, prices, current rates of exchange, possible uses of the article to be sold, the purchasing power of money, the cost of labor and materials, commercial customs and trade methods pertaining to sale, credits, demands and acceptances, and the volume, quality, and extent of competition in a given line.

Under this heading will come the study of the type of organization adapted to business with a particular country and whether the particular business should be transacted through local jobbers, through agents and personal representatives, or through branch offices.

Every exporter realizes the necessity for the study of the commercial status of the prospective market, but only a few see the value of investigating the other conditions which have been pointed out. The man who is thorough in his business methods and who leaves undone nothing which should be done, will give to each of the lines of inquiry here suggested his best thought and study.

CHAPTER VIII

PRINCIPLES OF INTERNATIONAL DISTRIBUTION

Factors of Distribution

Any general selling operation by which marketable goods change ownership and pass into the hands of a considerable number of people is called "distribution" in the commercial sense of the word.

The distribution of commodities is an intricate subject. It involves so many principles and is so closely correlated with every conceivable economic factor that it is out of the question to consider it here in any but its most fundamental aspects from the standpoint of the producer.

The factors of distribution are many and complex. Among them must be included the problems involved in moving the commodity from the place of production to the ultimate consumer, also its storage in the warehouse, and the cost of its display in the retail store. All the details of its several transfers of ownership until it at last reaches the retail customer-everything that goes to make up its selling cost which of course includes the cost of advertising- is properly charged to distribution.

The elements involved are both physical and psychical. The physical elements are relatively simple; the psychical are involved and to them are due the complications that make distribution so expensive, so difficult, and in a sense so inefficient.

The principles of international distribution are the same among all peoples and among all classes and conditions of humanity at all places where trading is carried on. On the

one hand they are governed by economic laws and, on the other hand, they are developed by the element of fortuity in isolated cases and among individual traders.

Distribution and Trade Channels

Nevertheless, distribution in the last analysis can be most successfully accomplished through the regular trade channels. The domestic channels of distribution for the American manufacturer are illustrated in the following diagram:

Chart Showing Domestic Channels of Distribution

It is obvious that the more intermediaries there are intervening between the manufacturer and the consumer, the greater the cost of distribution.

Intermediaries in Foreign Trade

In foreign trade the intermediaries are, of course, greatly increased. The accompanying diagram illustrates the chief factors of distribution and their various auxiliaries involved in the process of transferring a commodity from the producer in one country to the ultimate consumer in another.

It will be seen that seven groups of factors intervene between the producer, I, and the consumer, VIII. Groups II and III represent two general types of collectors; IV, V, the