M uu H 1. 1915.] 



THE INDIA RUBBER WORLD 



353 



AMAZON TRADE CONDITIONS. 

 By Miguel P. Shelley, <>: Para. 

 A CCORDING to the latest statistics. Brazil during the fiscal 

 •*»■ year 1914 imported goods to the value ol $308,409,000. Of 

 this amount, imports from the United States only amounted to 

 $29,963,914; while, on the other hand, the United States im- 

 ported from Brazil merchandise chieflj crudi rubber and coffee 

 to the value of $101,329,073. 



Referring to the Amazon country alone, the exports of rubber 

 and caucho from thai district for the year 1913 were as follows: 

 i Othei 



To — Stat I ngland. France. Countries. Total. 



From P $8,962,195 $8,778,145 $1,838,451 $519,000 $20,097,791 



i os 7,329,500 6,946,6 9 I, 1,001 466,616 16,615,806 



ii $16,391,695 $15,724,834 $3,711,452 $985,616 $36,713,597 



With regard to the imports into the Amazon district, separate 

 reliable figures '1" not exist, but they import only those things 

 from the United States that are absolutely necessary, such as 

 kerosene oil, flour, lard and a little machinery, or other articles 

 which they cann.it obtain from England, Germanj or France, 

 notwithstanding the facl that America is nearer to the Amazon 

 than any of those countries. 



Why does American trade with Brazil lag so far behind? The 

 table o vma ..man exports indicates that the United States is 

 importing about 40 per cent, of the total mainly crude rubber. 

 But in reality it is using 60 per cent, of this crude rubber. The 

 additional 20 per cent, is reimported from England after Eng- 

 land has imported it from the Vmazon. The main reason for 

 this paradox is the use of letters of credit issued by English 

 banks in financing the operations of American importers. An 

 additional factor is the reach shipping facilities that the Eng- 

 lish merchants have. 



The freightage from Brazil through England to the United 

 State- is often less than to the United States direct This is 

 rendered possible by the deplorable lack of an American mer- 

 chant marine. 



BANKING PROCEDURE IX BRAZIL. 



I el us now enter upon a more explicit understanding of the 

 mi.,, ,n Lei me explain in detail the real system by which 

 exportation and importation are carried on, and thereby disclose 

 the real cause for the failure of the United States to participate- 

 properly in the Brazilian trade. 



Rubber, cocoa and Brazil nuts, the principal products ex- 

 ported, are sent from the interior to the two central markets 

 and shipping ports— Para and Manaos. I lure they are bought 

 1>\ a few houses, namely, Zarges, Berringer X Co. (German and 

 Engli- ' l.ayotellerie & Cie (French), Adelbert II. Alden 



and tl,i General Rubber Co. (American), Suarez Hermanns 

 (English), and J. Marque-. Pires Teixeira cc Co. and Pralow & 

 1 i (local). These firms ship the rubber to it- destination, 

 drawing against the shipments. This draft is made out in pounds 

 Sterling Even American dealers have to accept the draft- in 

 pounds, although they are buying them in dollars. This is the 

 whole drawback in the situation. Since there is no American 

 hank in the Amazon country, but only English, namely, London 

 & River Plate Bank, Limited. London & Brazilian Bank, Limited, 

 and the British Bank of South America, the \mazonian dealer 

 has no other choice in selling his drafts. This triple exchange 

 from Brazilian currency to pounds sterling and from this to 

 dollars, and the consequent banker's commission-, of course ren- 

 der the merchandise dearer for the American than for the Eng- 

 lish. The financing of imports is similarly affected \dd to this 

 the fact that the importer is less versed in business methods 

 than the exporter, one can readily see that the six exchanges in 

 In- drafts weary and trouble him so that he is glad to have 

 nothing to do with American imports. 



The English hanks operating in Brazil, according to the sta- 

 tistic- of 1906, cleared profits aggregating the not inconsider- 



able sum of £1,271,611, or about $6,180,023 in American gold. 



The manufacturer, instead of being directhj in contact with 

 the producer, buy- bis rubbei From thi dealer, who. taking ad- 

 vantage oi the situation, -peculate- with this rubber. The dealer 

 buys it in advanci i r; cheaply, to sell at a high price- when the 

 manufactui i i needs it. 



\n American bank would make it possible for rubber trans- 

 actions to take pi: lirectlj between the producer and the 



consumer. Besides relieving the export articles oi their great 

 burden, the middlemen's profits which are not less than 8 per 

 cent, -and American financing would bring the whole rubber 

 trade to the I nited States. It would also do away with the 

 pei illation existing now in the rubber trade, which i- so harmful 

 to the manufacturer as well as to the producer. The organized 



co-operati f the manufacturers on one side and the producers 



on the other, would con olidati the rubber business. But it 

 must have the American bank's financing first. 



The importation oi g I to the Amazon from England and 



Germany is due chiefly to thi existence of British banks, there 

 for the English trad,, and to German special agencies for the 

 German tradi ["hi [lection of bills for merchandise bought 

 from all nations of the world, including the United States, is 

 carried on by the English banks in pounds terling. ( i 

 quently, besides the profits from exchange, England dominates 

 the Brazilian market. The English banks keep a good record of 

 all the business transactions made with Brazil so that they may 

 be able to advise all who are employing their capital there and 

 who wish to do so. 



THE NEED OF EFFECTIVE ADVERTISING PROP I 

 Besides the lack of banking and shipping facilities and the 

 confusion of the credit system, then- is still another can-. Eol 

 the failure of American trade in Brazil. This is the ineffectual 

 propaganda. The greale-t portion of the adverti ing matter 

 sent to Brazil is in the Spanish language, and it i- sent to some 

 of the dealers in the big cities. In the first place. Portuguese, 

 not Spanish, is used in Brazil, and the two languages have about 

 as much relationship as Dutch and German. Secondly, it is not 

 the dealers that need the propaganda. They require a demand 

 for the goods they handle. Thi- demand you must create among 

 the consumers. For this reason the Germans are far ahead 

 even of the English, wh., dominate in the main through their 

 banks. Every commercial center has a German agency which 

 i- capable of giving full information to consumer, dealer and 

 manufacturer. These distribute pamphlets, circulars and general 



literature of German g I- in exactly those quarter- where it is 



needed. They advertise the g 1- in tin- local papers. Thej 



also have a very clear knowledge of tin- credit system and can 

 furnish full information in this connection to any German mer- 

 chant who requires it. This applies to all South American coun- 

 tries. 



\- an effective means of promoting United Stale- trade in 

 Brazil, and especially on the Amazon, I would suggest to the 

 American Manufacturer-' Export Association that they create 

 a department oi a separate corporation— which should come in 



contact directly with the rubber producer. din sann 

 lion could promote the establishment of an American bank, 

 winch should lake charge of th< collections for the goods sold 

 and bin the draft- of the goods bought 



In order to have all the information recpiired by the producer 

 and the consumer, I would suggest the co-operation of the United 

 States government, which is showing great interest now in for- 

 eign trade b\ sending out agents and issuing a daily commercial 

 bulletin. The American consuls are furnishing report-, but they 

 are quite inadequate, since the consul- have no time to do this 

 work: and besides, it requires a local man who is acquainted 

 with local conditions. My idea is that every consulate should 

 have a commercial department, managed by a local business ex- 

 pert, on a salary or commission basis. 



