in the oversea trade, therefore, entails the problems of how the products are to be manufactured, sold, financed and transported.

Although there are notable exceptions where individual concerns have created important foreign markets for their products, experience has taught that all foreign trade, in really worth while quantities and permanent, must be obtained by the coöperation of business men; and this is based on the fact that the markets to be conquered must be thoroughly studied. Moreover, they must be continuously watched and re-studied if the trade is to be retained. Such study and investigation is too costly for all but a few exceptionally large concerns. Personally I believe it is not the best method for even such firms to work alone, because a market laboriously earned may be ruined by commercial misdeeds of irresponsible or fraudulent home competitors or even by the ignorance or carelessness of honest firms.

Those manufacturers who have won success in foreign fields, especially in the less developed countries, have given first consideration to the fact that the foreign market must be treated as a primary market. This is a method followed by Germany, Great Britain, Holland, Belgium, and to certain extent by France. Therefore, it seems trite to say that the articles to be sold must be something that the foreign customer really wants. This truism, however, has never been fully appreciated by the American manufacturer. With a few notable exceptions, there have been no systematic efforts to meet the requirements of foreign buyers. In times of depression, the threatened congestion has aroused an impatient eagerness to sell, not what the foreign market needs, but what the domestic manufacturer has on hand. This policy has been largely responsible for the complaint of rejected shipments and unpaid accounts which has loomed like a scarecrow in the fertile field of foreign trade.

An important place also must be given to the attitude which the government of the exporting country maintains toward its citizens who are engaged in foreign trade. Thanks to the increasing efficiency of our consular service, and the helpful interest manifested by the department of commerce, we have another potential source of help to prevent the American manufacturer from rushing blindly into unprofitable errors. Specific reports on the demand for certain products, surrounding market conditions, tariff restrictions and credits are available from this source upon inquiry. The bureau

of foreign and domestic commerce of the department of commerce has been constituted the ganglion of our system of trade development. Recently, through the assignment of trained specialists known as "commercial attachés," to the task of studying foreign manufacturing and business methods, a step has been taken to grant to our commerce a place in diplomacy which will in due time rival that which previously has been monopolized by our international political relations.

In recent years diplomacy has been turning more and more to the furtherance of foreign trade. This function, previously largely confined to negotiation of commercial treaties, now works for government contracts, concessions, and participation in loans, the safeguarding of patent rights, and the opposition to laws inimical to the extension of trade.

Germany presents the most striking example of results achieved by the coöperation of government with business. Through the unremitting vigilance of its foreign office and the enactment of favorable legislation, German commerce has been given a stimulus and vigor which the energy of its manufacturers and merchants alone could not have imparted. The government policy even goes to the extent of forcing unusual credits from banks to exporters of granting freight reductions on railroad or steamship lines, in order that foreign competition may be met. And yet once more German methods may be cited with profit. The export business of thousands of small German manufacturers is handled almost entirely by large selling units, which have been found to perform the merchandising function more efficiently and economically than would be possible by the individual of moderate resources. It is necessary

to employ men of high character, thorough business training and equipped with a knowledge of the language and social and business customs of the country to which they are assigned. Strong selling organizations under American management, equipped to give adequate service to the exporting manufacturer and the purchaser, and to furnish the needed capital for extending credit, would solve the problem of the disposal of our product and remove from that branch of commerce many of the traditional difficulties which have hitherto stood in the path of our pioneers seeking foreign trade.

The mercantile intelligence of Great Britain, and later of Germany, has been alive to the importance of developing the resources

of the countries in which attempts have been made to expand trade. Funds advanced for the building of railways, tram lines, irrigation works and public improvements involve a preference in the furnishing of equipment and supplies and in numerous cases a voice in the administration of the new projects. It has become the established practice in loan contracts, made by the leading European countries with less developed countries, to stipulate that materials shall be furnished by manufactures of the country lending money. While we have been dazzled by the shibboleth-"trade follows the flag"-the practical old world merchant has built up his solid success on the principle that "trade follows the loan." The magnitude of European investment in the new countries is almost as difficult to grasp as astronomical dimensions. Sir George Paish in the last annual of the Statist estimated that upwards of $40,000,000,000 of the capital had been supplied to the less developed countries by the five lending nations of the world, Great Britain, Germany, France, Belgium, and Holland. The investment of this vast sum has enriched both borrowers and lenders. aggregate value of the imports of the five lending nations two generations ago was less than $1,250,000,000. Largely owing to the impetus given to industry by the advance of capital for development these same five countries are now buying $10,000,000,000 worth of goods annually from other countries. On the basis of the London stock exchange listings, British investments in Latin America are estimated at $5,800,000,000, yielding an annual return of more than $200,000,000. The purchases of the United Kingdom from Latin America in 1912 were only slightly in excess of $300,000,000 and the investment returns paid nearly two-thirds of the bill.

The

Investing power is a national asset. It can be utilized when other advantages, such as cheap labor, cheap raw material and improved machinery have been reduced to a common factor and cancelled. We are a nation of borrowers. So was Germany when she started to build up her foreign trade. She took advantage of her high credit to borrow at low rates, in order to have funds available for her customers at higher rates. The big returns on these advances rest on the principle that the obligation of the borrower is not confined merely to the repayment of the debt.

I propose one other important new piece of machinery which will help us greatly in our quest for trade expansion-the insurance

of contracts. By this I mean that trade organizations, or insurance companies created by them, shall insure the contracts for delivery of goods that they sell. What I mean is this: Every man who buys a bill of goods from the United States should get with the purchase an insurance policy which will insure his getting, within the agreed upon time, the quantity and quality up to sample of goods he has ordered, or else an agreed upon indemnity which will make up for the loss which the failure to fulfill the contract may have occasioned.

Connected with this should be a system of arbitrating on the spot any differences that may arise between buyer and seller. As the insurance company would have the right of recourse to the producer, the cost of such insurance would be comparatively trifling and could be paid without any hardship.

On the subject of adapting American products to foreign ideas, United States Consul General at Large, J. E. Dunning, has this to say:

The requisite for permanent foreign business is a genuine superiority in the goods themselves a superiority so obvious that it will always stand above mere price, terms and distances of deliveries. Cheapness never has been, and never need be, the distinctive feature of American export goods. High quality of the maximum of service are the best assets for American exporters and it is on these features that they have made their way where they have succeeded and can continue to do so. This is equally true of automobiles, of typewriters, office supplies, machine tools, or novelties. Europeans can compete with Americans in cheapness, but no one has equalled us, or will be likely to do so, in factory refinements.

The need for American ships to transport American products has not yet become a commercial ideal with us. Until that time comes our goods will continue to be taxed with higher freight rates than Europe pays. The tonnage assembles where commerce is most active and commerce above all things has a habit of moving along the lines of least resistance.

If the American genius for organization, already demonstrated in the domestic field, is really about to be concentrated on the extension of oversea trade, many existing obstacles will be removed. The courage of our industrial leaders and the common sense of the people at large warrant such a prophecy. Sacrifices must be made, but these have no terrors. Notwithstanding our limited experiences, we have already learned that, in the game of world commerce, psychology plays a part almost equal to that of economics.

BOOK DEPARTMENT

COUNTY GOVERNMENT

For the first time within the memory of civilized man, county government was made the subject of a state-wide conference, at Schenectady, N. Y., November 14-15, 1914. The proceedings of this conference have just been published and comprise some dozen addresses by specially qualified men on various phases of county administration, and proposals for its reform. All the speakers agreed that county government, at least in New York state, was a proper subject for treatment at the hands of the constitutional convention to the end that administrative responsibility and more effective popular control might be established. Among the subjects treated at this conference were county audit, county charities, county courts, tax administration and county constabulary. Copies of this pamphlet may be had by addressing the writer at 381 Fourth Ave., New York.

County government as a field of critical and constructive study has been opened up in a number of political science magazines. Among this number may be counted the January number of Political Science Quarterly, directed particularly to the needs of the New York constitutional convention, and the August, 1914, number of The American Political Science Review.

A number of organizations in different parts of the country are, from time to time, making important contributions to the subject. The Tax Association of Alameda County, 803 Oakland Bank of Savings Building, Oakland, Cal., the Citizens Federation of Hudson County, 537 Summit Ave., Jersey City, the Bureau of Public Efficiency, 315 Plymouth Court, Chicago, the Westchester County Research Bureau at White Plains, the Civic League of Cleveland and the National Short Ballot Organization, 381 Fourth Ave., New York, have produced studies of various county offices, methods and forms of organization. The relation of county government to charities and corrections has been detailed from time to time in the Survey.

The only book on the whole subject to date is the volume of THE ANNALS for May, 1913.

H. S. GILBERTSON

Executive Secretary,

The National Short Ballot Organization,
New York City.

NOTES

BÖHM-BAWERK, EUGEN VON. Kapital und Kapitalzins. Pp. xxxv, 747. Price, M. 18. Innsbruck: Verlag-Abteilung der Wagner'schen k. k. UniversitätsBuchhandlung, 1914.

The original editions of this monumental treatise appeared in 1884. Most Americans know it in English translation. A second edition appeared in 1900.