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THE INDIA RUBBER WORLD 



[June 1, 1914. 



trade with foreign countries tliat comes from the smaller manu- 

 facturers, who may be big enough in their own fields, but who, 

 when it comes to comparison with the giants already described, 

 seem very small. Some manufacturers who could do so have 

 not ventured into the foreign liclds because of the belief that 

 it required too great an extension of their organization, and 

 others having secured some foreign business have allowed it to 

 run itself, which, of course, has been just as unsuccessful a 

 policy as it would be in the case of their domestic business. 



The export commission houses have grown to be great helps 

 to the American manufacturer. Every manufacturer who seeks 

 export business at all is l)ound sooner or later to have relations 

 with these exporters, and it is to his interest to have such re- 

 lations. There has been a great deal of misapprehension re- 

 garding export commission houses and their province, especially 

 by manufacturers located at some distance from New York. It 

 has been said by those who are in a position to speak, that more 

 than half of the entire export business of the United States today 

 is due originally to the work and eflfort of export commission 

 houses. Yet it would be surprising if into this field there had 

 not crept numerous "fake" schemes. But this article has to do 

 only with those of high character and standing. Export business 

 as a whole has been up to recently, and indeed still is, such a 

 very mysterious one to many American manufacturers, that it is 

 by no means strange that a class of exporters devoting themselves 

 solely to foreign relations should spring up, not always too 

 scrupulous as to representations likely to induce profitable re- 

 lations with manufacturers; but on the other hand, there are 

 names so well known that they carry their own guarantee with 

 them. 



An export commission house, properly so-called, is really the 

 buying agent in America for foreign merchants, whom it may 

 persuade to entrust to it the placing of their orders for certain 

 goods with the financing of such orders — that is, paying the 

 manufacturers bills, and in turn collecting from the foreign 

 merchants— and the shipping of the goods. It is easily seen 

 how it would be to the interest of the foreign merchant to 

 utilize the services of such a representative in American markets. 

 A foreign merchant buying a great many different kinds of 

 goods from various isolated manufacturers frequently finds it a 

 convenience, no less than an economy, to forward all his orders 

 under one cover to his American commission house, instead of 

 writing a number of different letters to individual manufacturers 

 and thereafter receiving a corresponding number of separate 

 and distinct shipments, and paying for the goods in the different 

 fashions individual manufacturers may require. Export com- 

 mission houses are properly devoted to this sort of business 

 only, and in fact many of them, by their articles of partnership 

 or their bylaws, are prohibited from doing any business on their 

 own account. They make their profit, or are supposed to do 

 so, from the commission which they charge their foreign cus- 

 tomers for attending to the details of placing orders, financing 

 them, and collecting and forwarding the goods. This commis- 

 sion is usually 2^^ per cent, in the case of miscellaneous goods. 

 but sometimes it is as high as S per cent, in special cases, while 

 on the other hand, when very large single purchases are made 

 it is sometimes as low as 1 per cent, or even less. Export com- 

 mission houses are not supposed to receive remuneration of any 

 •sort for their own account from the manufacturers from whom 

 •i.ty purchase the goods. As a matter of fact one of the chief 

 .iigumenls used by such houses to induce new foreign accounts 

 18 the claim that because of their very large purchases in prac- 

 tically all lines of American goods they are enabled to procure 

 for their clients— that is, their foreign customers — better prices 

 and discounts than such clients could themselves obtain, ,and 

 that in return for the commission they charge their clients the 

 latter receive the benefit of every discount and commission, cash 

 or otherwise, which the exporter is able to obtain. 



With the development of export business, the functions of 



export commission merchants have in some cases been modified 

 and extended. In addition to the export commission houses 

 of the character noted above, there are others which combine 

 wnh the original functions of such houses a selling organization 

 of one sort or another. In this case, the export house either 

 MinU iuio foreign markets its own salesman, or maintains in 

 one or several foreign markets its own branch offices with or 

 without sample and salesrooms. Among the large first-class ex- 

 port houses in New York there exist examples of both of the 

 classes already referred to. Some merchants of both classes 

 confine their opcratitms to certain parts of the world and some 

 of them do business only in certain goods, but, generally speak- 

 ing, export commission merchants are open to receive orders 

 for any sort of American goods whatsoever from any foreign 

 liouse of whose position and reputation they are assured. 



Also to be included under export commission merchants are 

 a few American houses which operate in certain foreign ter- 

 ritories exclusively as manufacturers' agents, altho, strictly 

 speaking, they are not commission houses in the sense generally 

 understood. These agents take the agencies for certain manu- 

 facturers, usually limited in number and to one line of trade, 

 and are supposed to act for them as their own salesmen and 

 agents, usually in return for a salary and commission. Another 

 class includes those who have of recent years opened offices in 

 the United States, usually in New York, as the representatives 

 of large foreign houses, handling considerable quantities of 

 American goods. These branch establishments in America really 

 take tlie place of the American export commission houses. They 

 execute orders for American goods, which are sent to them by 

 their foreign headquarters. They are usually successors to 

 former commission house connections, which their principals 

 have had, but whose business has grown to the point where it 

 could be better conducted by personal representation. 



Export houses in general handle their foreign connections as 

 does the large export manufacturer. They do business with 

 lorcign customers, whom they know just as a manufacturer 

 would, and as a rule extend no more liberal credit to their 

 foreign connections than would manufacturers who have taken 

 equal pains to investigate the standing of their customers. They 

 enjoy an advantage, however, very often from the fact that the 

 export house is also an import house and through the exchange 

 of commodities, arranges finances much more conveniently than 

 could a manufacturer. But as a rule most export houses ship 

 goods to foreign customers, subject to draft attached to docu- 

 ments or against confirmed credits, just as does the prudent 

 manufacturer. The advantage to the foreign customer is chiefly 

 in the convenience of transmitting orders under one cover and 

 receiving shipments on one bill of lading. It is true that export 

 houses, through better acquaintance, are sometimes willing to 

 allow longer term drafts than manufacturers, and because of 

 their large business in foreign banking circles, sometimes finance 

 such bills more readily than could an unknown manufacturer. 

 The advantage to be derived by the American manufacturer 

 from doing business through export commission houses is con- 

 siderable. He is relieved from the annoyance of petty details 

 connected with shipping the goods, and has only to follow the 

 instructions given him by the export house. He has all the usual 

 facilities for investigating the responsibility and character of the 

 export house in question and collecting from it precisely as he 

 would from a customer in the United States. Furthermore, he 

 is assured that his goods will reach his customer more econom- 

 ically, so far as ocean freights are concerned, than were he to 

 ship himself, as the export house is able to command better rates 

 than could an individual manufacturer, and in any event, through 

 combined shipments from several manufacturers, the export 

 house avoids excessive charges on each small shipment. 



The subject of export business in general is a large one, and 

 has only been touched on in this article. .Acknowledgement is 

 made to Mr. B. Olney Hough, editor of the "American Exporter," 



