Years ago, with the exception of those products which were produced near the seaboard or along an internal waterway, goods were consumed, to a very large degree, near the point of their production. All this has changed today. In many lines of industry the producers, hundreds or thousands of miles apart, compete with one another in markets far remote from the scene of production. The volume of business has so increased that many manufacturers whose plants are located in some part of a single state now market their goods in practically every state in the Union as well as in foreign markets. Manufacturers have therefore a very different problem to face in the disposal of their goods from that which confronted the establishment with a localized market. Prices have been made more uniform throughout the country, and the styles of goods and their quality likewise have been brought more nearly to a standard. In many cases the widening of the area of competition has increased its intensity. The more or less monopolistic control of particular local markets, which was formerly enjoyed by many manufacturers, has largely disappeared. . . . One of the results of this widening of the field of competition has been the tendency toward the combination of separate establishments, in order to rid themselves of the too sharp competition, as well as to save in freight rates by avoiding cross shipments as much as possible.1 Marketing problems in domestic trade. In our study of America's industrial life as a basis for her commercial development, attention was centered primarily upon the production of the various commodities which were considered. But the business man or the man engaged in industry is also vitally concerned with the matter of marketing his product. The goods which he has produced have been sold but the selling has been largely an experimental rather than a scientific matter. Concentration of attention primarily upon production has resulted in working out productive methods to a 1 See Vol. XIX, p. 545, Final Report of the Industrial Commission. fair degree of efficiency. It is coming to be appreciated, however, that the subject of marketing the goods after they have been produced is worthy of scientific and systematic inquiry fully as much as is production. As a matter of fact it is fair to say that marketing is one of the most important features of our domestic trade awaiting careful and scientific study, and it is gratifying to note the increased interest in this subject which is now being manifested in various quarters. Marketing the products of agriculture. The study of marketing problems in this country arose at first in connection with agricultural produce. For several decades the farmers of the country have been disturbed by the relatively low prices they actually have received for their products as compared with the city prices for the same articles. Various attempts were made by the farmers to remedy this evil but most of the attempts were short lived, and this was due, in part at least, to the lack of coöperation among the great agricultural population which is so widely scattered from coast to coast. No problems of marketing farm products arise until society has developed to the point where population becomes centered in cities, and until specialization in agriculture results in having farmers in each region devoting their energies to raising certain crops in excess of the requirements of the population near by. When this situation has been reached, however (and it was reached decades ago in this country), a complicated and highly developed distributing organization arises which, though costly, is indispensable to insure the even and prompt distribution of goods among the final consumers. As markets have differentiated and increased in scope, the number of middlemen between the original producer and the final consumer has increased. The present tendency, however, seems to be to organize the distributive forces so that the number of middlemen may be reduced. This applies not only to the marketing of agricultural produce but to the marketing of the raw materials of manufacture, and the manufactured goods themselves.1 Marketing manufactured goods. Great as are the problems of marketing farm produce and the raw materials of manufacture, the problems of marketing manufactured goods, in a country like the United States which commands the home market of more than 100,000,000 people, with a high average of purchasing power, are still greater. Time was when all of the simple needs of the population beyond those things which could not be produced at home were supplied by individual order. Long ago, however, we outgrew the production to order system; goods now have to be turned out in large quantities far in advance of their being finally consumed. From this apparently simple fact arise the problems of marketing manufactured goods; for there are problems of no small magnitude in getting the enormous volume of manufactured goods distributed from the mills to the final consumers without incurring too much waste, time, and expense. Importance and magnitude of marketing problems. Without going into details, it may be affirmed as an established fact that the commercial side of business activities is one of great importance and magnitude in this country. То асcomplish the distribution of our enormous annual output of agricultural produce and the raw materials of manufacture, we have an elaborate organization embracing local dealers, middlemen, coöperative associations, cold storage plants, car lines, warehouses, elevators, produce exchanges, and so on. Similarly, to effect the distribution of the tremendous annual output of our manufacturing plants there is a complicated organization including jobbers, wholesalers, retailers, 1 Early in 1921, Congress, as an emergency and temporary measure, revived the War Finance Corporation, thereby contemplating, in particular, financial assistance in the marketing of farm products. The Agricultural Credits Act of August, 1921, broadened the powers of the Corporation, authorizing it to make advances for both domestic and export marketing. traveling salesmen, selling agents, factors, commission merchants, brokers, department stores, chain stores, mail order houses, direct selling, and the like. Changes of importance have been effected from time to time to improve the general organization of our distributive machinery, but perfection has not yet been reached. American business men are awake, however, to the necessity of further improvements so that it is highly probable that still further changes and improvements in marketing methods in agricultural produce, in the raw materials of manufacture, and in manufactured goods will be brought about in the future. What has been said above relates chiefly to domestic trade. In matters of export selling, still greater problems arise, especially in the matter of marketing manufactured goods abroad in the face of the competition of older and more seasoned traders. Here the most scientific methods must be employed. A discussion of the export trade will now be given; and, in a later chapter, the efforts which are being put forth for increasing sales abroad will be considered. CHAPTER VI THE EXPORT TRADE Foreign commerce is bilateral. Foreign commerce, as already pointed out, includes all transactions involving the purchase and sale of commodities and services as carried on between buyers in one country and sellers in another country. If this conception is correct, the business of foreign trade for the United States, as well as for all other countries, is bilateral. There has been a marked tendency, in this country, in matters pertaining to foreign trade, to concentrate attention upon selling goods abroad, and to overlook the necessity of importing; as a matter of fact, in the minds of many people foreign trade means little more than selling abroad. There has been manifested, in recent years, a tendency, however, toward a stronger realization of the fact that a country cannot expect to continue selling large volumes of goods in foreign countries without expecting, at the same time, to buy liberally from abroad. Properly considered, the foreign trade of the United States involves two complementary concepts the buying from other countries, and the selling to other countries. Partly for the purpose of emphasizing this twofold relationship, our discussion of certain aspects of the foreign trade of the United States will be centered, to a considerable degree, first upon the one and then the other activity. Accordingly, the present chapter will be devoted primarily to a consideration of the export trade, whereas the following chapter will be concerned with questions pertaining to the import trade. Measuring foreign commerce. A common method of measuring the world's foreign commerce for any particular year has |