the United States in Argentina will not change this fundamental fact.

The long credits required by South American importers have been an unquestionable drawback to the extension of trade with the United States. For years to come it will continue to be a drawback, but the situation is susceptible of amelioration. A compromise, or an approximation of credits, may be worked out, on the basis of the ninety-day draft on New York. The establishment of branch American banks makes this possible. It also overcomes the other serious handicaps that have existed. So much has been written about the lack of banking facilities that, since this deficiency is now in a way to be overcome, it does not need detailed discussion.

Two basic requirements must be heeded if the South American market for the products of the United States rises beyond the $125,000,000 to $150,000,000 limit which now measures it, and if the United States is to reap the full and legitimate advantage growing out of the dislocation in trade connections caused by the European war.

One is the encouragement which should be given American manufacturers and exporters to coöperate or combine, by means of selling organizations, in marketing their products. Competition of other countries can only be met by this means, and the South American market in all circumstances, and under all conditions, is essentially a competitive market, If our anti-trust laws make such combinations illegal, as is maintained, they should be amended. No amount of generalities will do away with the necessity of permitting coöperation or combination in the foreign market. It is a question of pooling South American trade.

Another fundamental proposition, and the most important of all in increasing trade with South America, is the investment of capital from the United States in loans and in construction and similar enterprises. The country, whose capital is invested in a South American country, is going to get the most of the contracts for materials used in construction enterprises, railway building, and the like, as well as the contracts for public improvements carried on by the governments. England's investments in Argentine railways, banks, and loans are the living evidence of this fact.

German investments in banks, and in commercial partnerships, are in further testimony to the efficacy of this plan.

The exhibit is before the United States. A beginning was made in the absorption of the Argentine loan. Participation in other South American loans and in investment enterprises should follow on an expanding scale. In proportion as it does, the trade of the United States with South America will expand.

THE UNITED STATES' OPPORTUNITY TO INCREASE ITS FOREIGN TRADE WITH SOUTH AMERICA

BY LORENZO DANIELS,

New York City.

Trade opportunities in South America are now before the public of the United States. Much has been said about them by the departments of the government, chambers of commerce and commercial trade conventions throughout the country. To appreciate exactly the practical side of these opportunities, it is desirable to start with the fundamental conditions governing the development of such trade or business. To do this it is desirable to divide the business under several captions: first, financial operations and permanent investments; second, enterprises that pertain to the development of the growing countries of South America, such as public service corporations, railways, the construction of manufacturing plants in the countries themselves, companies for colonization and industrial development and mining operations; third, the movement of competitive products, such as grains, wool, meat, coffee and other natural products of the countries; fourth, the export of our manufactures.

In entering any one of the above fields, it is desirable to decide whether the entry is to be on a permanent basis, qualified to meet local conditions and competition at the foreign points as may arise from time to time, or whether the opportunity is only desired when the market is a profitable one as compared to our domestic market or other world markets that may be more favorable.

Reverting to the question of finance, it would be of great assistance to the trade as a whole if American banks could be established in all the principal centers of South America, with their own organizations on the spot eager to promote American business and interested in its success and development. These banks would have not only the opportunity of financing the general banking business of merchandise and travelers, but would also unquestionably have the opportunity of backing promotive enterprises, if money could be obtained in the United States at a competitive rate of interest as

against the banking centers of Europe, such as London, Paris and Berlin. These centers have in the past furnished most of the money for South American developments and, as compared to the United States, they have always been able to procure and supply this money at a lower rate than its equivalent value in our own markets. Whether the war will change this condition is problematical, but on this question lies largely the extent and character of the development of our own identification with the growth of South American interests. It is to be hoped, if our banks enter this field seriously, that they will look at the matter in the broad term of years and not of daily fluctuation of interest values.

If the United States should invest several hundred millions in South American enterprises promoted by this country and with the securities marketed through our own stock exchanges, the personal interest of the people of the United States would be largely increased in the results of South American business; and, incidentally, because of these promotions a great many people from this country would be called to active participation and to take up their residences abroad. American communities would promote the extension of business in a much wider field and the personal contact would lead the merchants and governments of South America to look to the United States for support in their development and would give us the backbone and strength of a much broadened business opportunity in South America.

To accomplish the success of these enterprises, to establish confidence and to give security to the investors, our home government would be called upon to adopt a policy of coöperation and security that up to the present has not been one of the recognized policies of the government. Capital and investors can hardly be expected to place their money at such a distance and beyond the regulation of our own laws, without some assurance or pledge from our own government that the international relationships and obligations will be safeguarded. It is unquestionable that the European countries now at war will for a number of years at least have much less capital to spare for investment in foreign countries than they have had in the past. Our largest opportunity, therefore, is in this field of development.

The movement of raw materials, such as crops, agricultural products, minerals and foodstuffs, will all take a natural course of

supply and demand and need hardly come under the head of business opportunities. As our own country becomes more thickly settled and our wants increase and supplies shorten, we shall have to look to the large area in South America to supply us more and more with a share of foodstuffs. The supplies from the cattle ranches in South America are today easier and more cheaply marketed on our seaboard than our own supplies from the far west. These conditions will become a question of route and territory definition. I feel that the large users of raw material, whether in our food consumption or in our manufactures, will arrange to supply their demands and needs from the cheapest source and that the development of this class of trade will, as I have said, be one of natural supply and demand, governed chiefly by natural conditions.

We now come to probably the most detailed and interesting opportunity of all, that pertaining to manufactures. If we include in this class the large manufacturers of steel products, rolling stock, machinery for power plants, mines, etc., the volume of this business will feel very decidedly the growth of the American financial and promotive interests in South America. In actual competition with Europe today these trades are often handicapped by the large purchasing companies owned and controlled by foreign capital who naturally prefer to place their orders where their personal interests lie. But our larger manufacturers have studied the world fields very carefully; they know the quality and value of their goods. If they are able to supply a superior article at a relatively lower price, they are able to seek the orders and to establish a connection through the purchasing departments of these active companies.

As regards the smaller manufacturers who cater to the individual wants of the people, there is, of course, with the shutting off of the European markets, a great opportunity to introduce American articles. But, as I have stated earlier, it is a mistake for any of these manufacturers to enter the South American markets just on the spur of the moment and with the knowledge that they cannot compete with similar goods from Europe after the war is over. This class of business must only exist and reap its profits during the unusual conditions that prevail today. Should the United States manufacturer desire to open a permanent connection in South America and, having taken advantage of the present opportunity