Foreign trade to be permanent should be established on a reciprocal basis. To expect to ship a nation your raw or manufactured materials, receiving only in exchange therefor a monetary consideration, is neither equitable, sensible nor practical. It is decidedly lacking in business judgment and reflects on the sincerity of the country endeavoring to do its trade along such lines.

Perhaps the chief reason that European Powers have obtained such a foothold in foreign markets is due to the fact that they take in exchange much of the crude exports of these lands and convert them into finished factory products. This from an economic standpoint is as it should be. It gives employment to the citizens of the importing nations, develops and maintains their merchant marine, necessitates less material movements in the medium of exchange in payment for goods on the part of those concerned in the transaction and more firmly entrenches each in the other’s business and friendly relations.

The various countries comprising Latin America are in no sense manufacturing ones. They possess few if any factories or plants and these are usually devoted to the perfection of some local necessity, such as wines, cigarettes, cigars, soap, sugar, and other articles for personal use or consumption. They are however the largest producers of raw materials the world knows. Due to our shortsightedness as a nation, we have allowed the European merchant and manufacturer to take these products from Nature’s laboratory, elaborate the finished article therefrom and during each stage of its perfection, from its origin to its completion, we have paid a profit, not to one, but to several enterprising foreigners.

The Latin Americans—in fact no nation—will buy from us for sheer love or their high regard for us as a people, or even from dire necessity for that matter. Most of these countries achieved their independence from Spain because they refused to be further exploited by the mother country. It behooves us as modern and liberal minded, wide-awake business men, to develop our trade in these territories so that our exports to each country will be paid for by the things which we import from it. This is not a difficult problem to solve, especially as at the present time our imports from them exceed the value of our exports to them by approximately $100,000,000 yearly. This sum should represent the amount of trade expansion with the United States these countries will be in a position to stand on a reciprocal basis.

Another feature in this connection which has developed since the beginning of the present war is the monetary situation in Latin America. These countries as the world knows were borrowing nations, and practically dependent upon Europe for all of their financing. To-day Europe cannot aid them in this respect and they have turned toward us for assistance, thereby placing us in a much more advantageous position than we formerly occupied with relation to developing our trade along reciprocal lines, for a lending nation can always dictate to the borrowing one.

Following the stringency in the European money markets and their inability to lend further financial aid to Latin American enterprises, there has been a decided slump in property values of all kinds, thereby giving the American investor desirous of entering these fields an excellent opportunity to acquire controlling interests at the minimum expense in undertakings which will ultimately rehabilitate themselves as money making propositions. These conditions should not be lost sight of during the readjustment of values in this part of the world.

To be more specific, perhaps 80 per cent. of the world’s supply of bismuth comes from Peru. This metal is largely used in the arts and medicine. An Italian company owns practically all the mines. Germans and English buy the ore and ship it to their respective clients in Europe. On its arrival it is sold to smelters which produce the metal therefrom. Manufacturing chemists purchase this and convert it into the bismuth subnitrate used so extensively by the physician of to-day. This product is imported by the American drug broker who sells it to the jobber, whose traveller in turn disposes of it to the wholesale chemist through whom it reaches the local druggist and finally the consumer. It is safe to say that fully 30 per cent. of the prescriptions written by the doctor and compounded by the apothecary call for this drug. If the metal is to be used in the arts it goes through as many hands before reaching the ultimate user. It is not difficult therefore to see that from the mine to the consumer there are six or seven profits made, several of which might be eliminated, thereby reducing the cost of the article, provided the ore was brought direct to this country and the reduction made here. Furthermore instead of going around the Horn to Europe, the freight through the Panama Canal to an American port would be much less, consequently effecting a great initial saving. Why does not some manufacturing chemical house take advantage of this opportunity?

This same condition of affairs is true of cinconah, from which quinine is made, iodine, opium, belladona, menthol, castor oil, licorice, linseed and many other extensively used and well known drugs. What a chance exists in this field alone to establish a reciprocal trade, and at the same time to reduce the high cost of these medicines!

Last year Bolivia sent to Germany and England 50,000 tons of tin. We bought back 30,000 tons of this tin from the wide-awake Teuton and Anglo-Saxon merchants, or expressed in figures we contributed more than $16,000,000 to the bank accounts of these gentlemen. We are the largest users of tin in the world and Bolivia is the second largest tin producing country, with thousands of acres of unexploited tin fields yet to be developed. It is about two-thirds as far again from Bolivia to Europe as it is to the United States. With proper shipping facilities and the use of the Canal or by going to California, the saving in freight alone should be sufficient to interest some progressive concern in the handling of this article direct.

Europe sends its wool buyers to Argentine and Uruguay. I have attended these markets and have yet to meet an American buyer representing any of our woolen cloth manufacturers. We buy much of our wool from European markets, thereby giving Belgians, French, English and Germans who have initiative and enterprise a profit on their business acumen. Is this sensible? It only adds to what each one of us pays for our clothes.

Ecuador’s chief product is cocoa. It is the largest grower of this commodity in the world. The bean is perhaps the richest and most highly flavored and is in great demand in the trade. Europe buys 80 per cent. of this article and although we are the biggest individual users of chocolate on earth, our merchants purchase but 20 per cent. direct. Then England and Germany, and even little Switzerland, turn around and sell us back—at a profit of course—fifty per cent. of what they bought in Ecuador. And we call ourselves merchants! Who exhibits the good judgment in such a transaction?

The linseed of the world is produced by Argentine and India. The small farmer trades it for supplies to the village merchant, who in turn exchanges it for goods with the jobber in the capital or seaport. To these men come the buyers for the Greek firm which practically controls this industry and purchase the seed, and we, the most extensive users of linseed oil in the world, pay our toll and tribute to the able and shrewd men who have their headquarters in Athens. Isn’t there something radically wrong here?

The alpaca gives a fine soft wool. Practically all of this material is bought in Bolivia by Europeans who manufacture the cloth which they afterwards sell us. I cannot understand why some sagacious American has not entered this profitable market.

The seasons in the southern part of South America are reversed, so that they have summer when we have winter, which means that their fruits and vegetables, melons and berries are ripe when we have snow on the ground. The apples, peaches, pears, plums, apricots, nectarines, cherries, grapes and melons of Chile are as good as our own. A profitable return awaits the one who will forward these goods in refrigerator ships to our big northern markets.

In Colombia and Ecuador large quantities of tagua or ivory nuts formerly grew wild. They are about the size of a goose egg, or slightly larger, very hard and a dead white, protected by a thin black skin. For years no one knew what to do with them. Finally an enterprising German found that they could be converted into buttons. To-day the ivory nut is cultivated for this purpose, and forms one of the leading exports from the countries named; the shipments for 1913 amounted to over $5,000,000. The finished button is sold not only to the Latin Americans, but throughout the world as well.

Brazil is the second largest diamond producing country in the world. English companies have $50,000,000 invested in these mines, which means that the diamonds obtained therefrom pass through the hands of several Europeans before they ultimately reach the wearer in the United States. One State of Brazil—Minas Geraes—has for the past six years been exporting gold to Europe, sometimes as much as $2,000,000 a month, because Germans, Belgians and Englishmen own the mines.

Chile contains the largest known deposits of “caliche”—that is, the earthy material from which nitrate is made. This article is extensively used in the arts, in the production of gunpowder and other high explosives and also as a fertilizer. Last year she exported 50,781,241 quintals, the world’s total consumption for the same period of time being 51,296,489 quintals. I know of but one American house established in these fields. The business is controlled almost entirely by English and German companies.

We should also make a more determined effort to finance municipal and national improvements in these countries. The money lenders of Europe have been quick to take advantage of such opportunities. They proved good investments for them. We should also find them profitable, under the right conditions. In this field there are and will be for years to come great possibilities, especially in electric and gas plants, electric and steam roads, water works, sewers, and sanitations, mines and smelters. The benefits to be derived from such a source of investment are only too obvious. They give our engineers and contractors and all connected with such an enterprise an opportunity to force upon these countries our products and methods, provide permanent employment for many of our countrymen, who in return will create a demand for goods made in America. England leads the world in outside investments of this nature, having over $10,000,000,000 in various foreign lands, $5,000,000,000 of which is in Latin America. The German long ago saw the advantage of following in the footsteps of the Briton and is the second largest investor in such enterprises abroad.

International bankers when making loans to private persons or governments interested in these progressive movements always stipulated that the materials to be used should be purchased from the country which furnished the money for the development. This was a fair and far-seeing business proposition and should serve as a guide for us in our future dealings with these markets.

Chile to-day is spending $400,000,000 on harbor improvements and fortifications, most of the work being in the hands of Europeans. The plans contemplated will require many years to complete, and during all this time European material will be used and workmen from the Old World will derive profit from the undertaking.

An American first had the concession to build the subway in Buenos Aires. He spent months trying to get capital in the United States without success. Finally a German raised the money in Hamburg and now everything about the line from the electrical installation to the motorman and his uniform is “Made in Germany.” Being the first and only underground road in Latin America it was written about and talked of everywhere, and at all times the Germans got credit for the enterprise and were well advertised as efficient and wonderful engineers. This was another opportunity lost to us.

Before the European War started a syndicate of English, French and Germans had agreed to expend $200,000,000 in Colombia building railways and in making the Magdalena River, the only highway to the capital at Bogota, navigable at all seasons of the year. Due to present hostilities they had to abandon the project. The terms offered by Colombia were excellent, including 5 per cent. interest on the capital and the further provision that the government would ultimately within a specified period take over the road, paying an exceptional profit to the original investors. Here is an excellent opportunity for American capital to develop a reciprocal market.

One of the chief reasons for the scarcity of invested American capital in Latin America is the indefinite and indifferent attitude of our State Department in failing to protect its citizens abroad or in seeking redress for injuries done individuals or business conducted in these countries.

No race of men are as enterprising or venturesome or more truly pioneers in every sense of the word than we Americans. This trait is a natural inheritance from our forefathers, who left comparatively civilized and comfortable Europe to gain a livelihood in the wilds of unknown and unexplored America. We are a practical people, also, and when through years of trying experiences we became definitely impressed with the fact that in our foreign ventures we had neither the co-operation nor the protection of our government, very naturally we abandoned these tempting fields of business and allowed them to be profitably tilled by the citizens of European governments which sympathized with their subjects in their efforts to develop trade and at the same time provided them adequate protection of a substantial and impressive type.

In the early days which marked the European campaign for the commercial supremacy of Latin America, most of these countries were the scenes of much bloodshed and the violence of devastating revolutions. As a result of the instability of their governments, there was positively little or no security of life or property. Concessions solemnly made were ruthlessly cancelled. Business ventures involving the outlay of immense patience and large capital were completely wiped out. In brief the foreigner in these lands was looked upon as an intruder and treated with scant consideration. When Americans were involved in such occurrences, our State Department, with very few exceptions, ignored the petitions of the victims, until its neglect in this regard became so notorious that finally no promoter had the temerity to seek capital in this country for any Latin American enterprise. This condition of affairs had much to do with turning the current of these ventures toward European money markets, an opportunity eagerly accepted by all parties.

On the other hand, the European, whether prospecting in the snow-topped mountains or uplands of Bolivia, or in the jungles of the Amazon, knew that his government kept a watchful eye on him and encouraged his every effort, first because this was the privilege and duty of a government and secondly the success of the individual in these lands ultimately meant prosperity for the nation. If he was robbed, imprisoned or murdered, if the result of his years of labor was destroyed in national or local uprisings, the warship would always materialize to emphasize the collection of compensation when diplomacy failed.

Such consideration for their people on the part of the European governments duly impressed the Latin American mind, and more so especially when he was heavily taxed to reimburse the foreigner for injuries received. As a result the European became respected more and more from Mexico to Patagonia, and was allowed to pursue his way in comparative peace, the converse of this proposition being true of the unfortunate American, who could not expect governmental protection and who became the object of much abuse and ridicule in these lands. The truth of these statements is so obvious that it is unnecessary for me to cite any illustrations in support of them.

Socially speaking all of Latin America may be divided into two general classes, the politician and the business man. As a rule the “politico” has been the cause of all the unrest and upheavals these countries have experienced, while the advance and progress of these nations is due to the “commerciante”—the man who uses his brain and invests his money in its various ventures. The larger progressive enterprises in Spanish America—the building of railroads, the developing of mines, exporting, importing, in brief, commerce as a whole—is chiefly carried on by foreigners, aided by a few ambitious, practical, far-seeing, native business men, never the politician. Commerce is a great civilizing agency. The higher in the scale of civilization a people are, the more secure will trade relations with them be. The larger and more important countries of Latin America have at last begun to realize that internal peace means prosperity, that prosperity attracts, yes invites capital, even from the timid and those whose government does not stand behind them in a dignified manner.

As a consequence, despite the unfavorable attitude of the United States State Department toward foreign investment, and with the idea of showing our Latin American friends that we are sincerely interested in establishing our trade relations with them on a reciprocal basis, American capital in large sums is beginning to find its way into this hitherto, for us, closed market. Panama has just been loaned $3,000,000 American money to be used in the construction of railways and roads, thereby bringing the producer nearer to the markets and the shipping points of the country. Within five years I venture to predict that as a result of this investment, our trade with Panama will have materially increased, owing to the fact that agricultural products heretofore prevented from reaching the consumer will be able to do so with comparative ease, especially in the case of tropical fruits, cocoanuts, copra and sugar.

American bankers have loaned the Argentine Government $15,000,000 in 6 per cent. gold notes. The temperament of the public as to the attractiveness of the loan may be readily estimated when I state that the entire amount of securities to cover the indebtedness was sold before four o’clock of the day on which they were offered. The successful consummation of this business—the first ever concluded directly between the Argentine Government and the bankers of this country—will serve greatly to strengthen the “entente cordiale” now so rapidly developing between the United States and the rest of Latin America.

Nor is this all. Movements are now on foot leading to investments of American capital in large sums in practically all of our sister republics. With each step in this direction we as a nation, and also our manufacturers and merchants, become more firmly entrenched in the Latin American commercial world, and our mercantile supremacy in these lands is more positively assured.

As a typical illustration of what can be done in these countries when the subject is handled intelligently let me mention the case of the United Fruit Company, which operates in Colombia, Cuba, and practically all of Central America. Starting in 1870 with a small beginning, this organization is now one of the most solid to be found anywhere in the world. In Costa Rica alone they have invested over $19,000,000 in bananas, while enormous sums are also being expended in other countries in sugar, coffee, cocoa, cocoanuts, the development of mines and the building of railroads and hotels. In fact the prosperity of all these nations is directly due to the presence of this great organization, which finds a market for its products in Europe and the United States, and which through its various local branches and stores, as well as its numerous employes, is a potent factor in introducing American goods and American ideas to all with whom it comes in contact. Its large fleet of ships come to all the leading seaports of this country, and the vast trade which it now controls, and which is still in its infancy, is capable of enormous growth. As one example of what its business means in freight alone, I may state that from the port of New Orleans this company shipped, last year, nearly 150,000 car-loads of bananas to the West and Middle West. The model hospitals which it has installed in each of the countries in which it operates for the free treatment of its servants have caused our physicians to be highly respected throughout this portion of Central and South America, and as a consequence the native now comes to the United States for serious surgical operations and medical treatment, instead of to Europe as formerly. Further than this, the intimate association bound to result from so many Americans living in Latin American communities has tended to develop in each due respect for the ability and integrity of the other, and this has been beneficial to all parties concerned.

It is to be hoped that all the countries of Latin America will take advantage of the disposition so apparent on the part of our financiers to extend external credits among them and that every effort will be used by those in power to establish lasting internal peace and a guarantee of protection against unwarranted attacks on foreign capital. Such an assurance will do much to develop the commercial side of these really wonderfully productive lands.

Is it not the duty of our State Department to assist such a movement by giving capitalists and merchants of this country its positive and definite assurance that legitimate investors and investments will be efficiently and effectively protected by the United States Government, along the same lines as those in general use by the European powers? Such an edict on the part of the United States would remove the last great barrier to American trade development in Latin America.