Here is a vocation that is not yet overcrowded. Here is a real future for the man who will do his part.

Foreign Trade and National Welfare

Foreign trade has begun to be conscious of a new spirit. The day of the individualist is waning. The interests of the foreign trader are closely knit with those of his native land and of the country with which he deals, and whether he is conscious of it or not his activities have an important bearing on their prosperity and welfare. The national advantages of foreign trade may be summed up as follows:

1. Foreign trade stimulates national progress and steadies prices.

2. It creates national wealth by widening the circle of exchanges.

3. It brings about a better adjustment of the creative forces of the nation.

4. It disposes of surplus products and gives employment to surplus labor.

5. It offers a new field in which the country's capital may replace itself with profit.

6. It improves the distribution as well as the production of wealth.

7. It tends to reduce the cost of money and it improves the national credit.

In a word, foreign trade is among the most powerful factors in creating and multiplying the wealth of the nation.

The New Spirit of Foreign Trade

It is in the exporter's attitude towards his foreign market that the new spirit is most manifest. He not only regards himself as the custodian of his country's honor, but he has begun to build for the future. He is no longer satisfied to grasp an

immediate profit and to seek pastures new. Today he is aiming to lay the foundations of a permanent trade. He wants the confidence of his market and he is seeking to cultivate it. He realizes, finally, that the highest business ethics and good business policy are as closely identified abroad as they are at home.

The exporter who, while he piles up his profits, thinks and speaks of himself as a missionary who is extending the fruits of this country's civilization and who therefore should be considered a benefactor of mankind, may evoke a smile, nevertheless there is much to be said for his point of view. It may be that he is raising the standard of living and of civilization itself and is helping to equalize the chances of all peoples in the pursuit of happiness. If the exporter really believes in his products and is successful in introducing them among people who but for him would never know them, the financial returns may well be the lesser part of what he has brought about.

The new spirit of foreign trade is born of a consciousness of the opportunity for service and of the responsibility which it involves. The trader who seeks success today must deserve it.

CHAPTER II

SIX FUNDAMENTALS OF FOREIGN TRADE

Fundamental Factors

There are six factors in foreign trade which may be considered as fundamental. They are:

1. Capital

2. Information

3. Method of distribution

4. Organization

5. Terms of sale

6. General policies

Capital

Capital must be considered first, for on the amount of capital the exporter has at his disposal will depend the character of the other factors. Large capital is not always necessary. If he is satisfied to grow slowly, but little if any additional capital is needed to start. When more rapid progress is desired a few thousand dollars will often suffice when the exporter does not depend entirely on his export business for his maintenance. Generally speaking, however, unless he is prepared to make a substantial outlay for the development of the business, it would be better not to enter the field.

Information

The amount of information necessary for an exporter depends entirely on the other factors. If the exporter is satisfied with the occasional order through a commission house which the casual advertisement in an export paper may bring, exten

sive information is superfluous. But if direct trade is contemplated, with a special organization to conduct it, all the information available becomes an absolute necessity. In the chapters which follow the kinds of information needed and the ways in which it may be acquired will be fully discussed. Method of Distribution

There are six general methods or channels of distribution:

1. Export houses (merchant and commission)

2. Mail order

3. Travelers

4. Local agents abroad

5. Branch office or special organization or arrangement abroad

6. Co-operation

The choice of the method depends on what the exporter aims to accomplish, on the amount of capital at his disposal, the kind of merchandise he handles, and many similar factors. Usually more than one and sometimes all of these six methods of distribution are adopted simultaneously.

If the would-be exporter is merely experimenting or making the preliminary moves, he may choose to solicit orders from a local export house. He may also use an occasional advertisement in an export paper, at the same time corresponding with foreign buyers and agents. Little outlay is required for such a procedure, but the results are extremely slow and uncertain. This course is wise in case a manufacturer wishes to dispose of a small production which he fears home markets will not absorb. It is wise if he wishes merely to develop inquiries from abroad and to establish foreign connections. slowly and at little expense. But he should not expect large. results from this method or become discouraged if the process is much slower than he originally anticipated. This method

has been pursued by most of the manufacturers in this country who are engaged in exporting-which in a measure explains why our direct export trade has not been larger.

At the same time it must be remembered that cautious procedure is much more desirable than that of the man who tries to do too much with too little-too little knowledge, too little capital, and too little organization. Such a man usually attempts to sell through commission houses, mail orders, travelers and local importers, or agents abroad-through nearly all the principal channels of trade, without first studying the requirements. He soon comes to the conclusion that the game is not worth the candle; he finds the expenditures altogether out of proportion to the profits and he concludes that there is nothing in the export trade. There will never be anything in export trade for men who aim to do business in a rush and attempt everything without first testing anything.

The only wise courses to pursue are either to enter exporting with thorough equipment, or to begin on the very small scale indicated in the first instance. Should the first method be selected the exporter will need sufficient capital, complete knowledge of the field, the establishment in foreign countries of branch offices, agencies, or subsidiary organizations, the adoption of proper terms of sale, and the formulation of policies that will stand the test of time.

If the resources of the concern are not large enough to enable it to stand alone, co-operation should be sought with other exporters in similar or non-competing lines with a view to a joint investigation and exploitation of the field by means of the combined resources in distribution, advertising, selling, and branch office administration.

Organization

In direct exporting the manner of developing and handling business is important. The type of organization must vary