THE FOREIGN TRADE OF THE UNITED STATES(“THE TRADE OF THE WORLD” PAPERS)BY JAMES DAVENPORT WHELPLEYAuthor of “The Commercial Strength of Great Britain,” “Germany’s Foreign Trade,” etc.
(“THE TRADE OF THE WORLD” PAPERS)
BY JAMES DAVENPORT WHELPLEY
Author of “The Commercial Strength of Great Britain,” “Germany’s Foreign Trade,” etc.
Q
QUEENElizabeth was the founder of the school of “dollar diplomacy,” and to this day her memory is revered by the merchant gilds of London. This great queen paid much attention to the welfare of industry at home, and sent trade adventurers abroad to open avenues of foreign commerce; and in the degree with which the rulers and governments of all lands have observed the necessities and development of the material interests of their respective countries have nations flourished or marked time.
Through a peculiar misuse of the term, the foreign policy of the United States has been termed “dollar diplomacy,” whereas, partly because of national tradition and partly through lack of skill and experience, the diplomacy of America has less relation to the extension of foreign commerce than that of any other great modern nation. American diplomacy has been governed more by altruistic ideas, the protection of foreign peoples against themselves and others, the elimination of money tributes and indemnities, the recognition of new governments without conditions, and arbitration of international troubles as a neutral nation. In these and in many other ways America has played her part in various international controversies; but in the general scramble for selfish advantage in all these affairs she has taken little or no successful part. Yet American diplomacy has been called that of the “dollar,” and has been credited in the minds of many of her own citizens, as well as by foreigners, with a mercenary basis.
The people of a nation have it within their power to advance the interests of their foreign commerce in two ways: one by intelligent legislation at home, and the other by intelligent diplomacy abroad. The shipment of merchandise from one country to another means to the selling nation a foreign market for the raw material, the employment of labor to the extent of from thirty to ninety per cent. of the selling value of the goods, and the payment for this material and labor by foreigners in money or its equivalent. It is a clear gain in every phase of the transaction. There is an old frontier adage, which originated in the early days of the Western boom, to the effect that “outside money makes the camp.” It is a homely expression that summarizes the advantages of an export of two billion dollars’ worth of goods with a comprehensiveness equal to its original application. It is not too much to say that anything in the shape of legislation or of increased facilities which assists the outward flow of the products of labor is of unquestioned advantage to the producing nation. An unnatural, though perhaps comprehensible, attitude of suspicion toward successful export has come about in the United States. This has led to hostility toward special rail and water-rates for export, lower prices for bulk foreign business, niggardliness of national expenditures for diplomatic representation and for the work of the Department of Commerce and its foreign-trade bureau. It might almost be said that the great and growing figures of foreign trade, issued triumphantly every year by the government statisticians, have been achieved despite the obstructions placed in the path of their progress.
The growth of those figures in their largest aspect is due to organized privateeffort, the methods and operations of which are a sealed book to the government official or the general public, and which unfortunately have shared in the recent and sweeping condemnation of the business methods of all big corporations. There has been no sifting of the wheat from the chaff, the good from the evil, with most deplorable results, for which both public and corporations are to blame. The natural result has been that in attempting to regulate the home activities of “big business” their foreign activities have been hindered and even checked. Lost ground in foreign directions is more difficult to regain than at home, for certain artificial and natural barriers always exist, which favor home markets, while foreign trade meets well-equipped rivals at least on equal terms, and often with a handicap.
In the year 1913 the people of the United States are entering upon a radical change in the national attitude toward domestic and foreign commerce. There is a partial reversal of policy toward home industry; there is also an important experiment afoot in diplomacy. It is too early to say just how radical these changes will be in the final reckoning, or what may be the outcome. It is quite possible that increased freedom of trade may bring good results at home; and if Congress recognizes the need of a commercial diplomacy auxiliary to that of the litterateur, the reformer, the peace-advocate, the missionary, and the general uplifter of mankind, and the administration provides competent, permanent, and resident commercial diplomats or attachés to all important American missions, a threatened disadvantage may be turned into a victory. At present, however, American foreign trade is the foot-ball of national politics.
Private enterprise, with its able American representatives abroad, is the only real guard against serious damage possessed by this great asset of the nation. The advance of American foreign commerce may be likened to a more or less friendly conflict with an allied army of foreign competitors. This is specially true of American trade, for it is generally a new-comer, and is regarded with dislike and antagonism to such an extent as to induce combinations of rivals to resist its advance.
The strongest efforts of American diplomacy should be directed to Russia and China to bring about a commercial entente between the United States and these two countries. The future of China as a market for foreign enterprise and merchandise will develop slowly, it is true, but the results will in time prove stupendous. In view of this, firm foundations should be laid for the structure of international trade, which will inevitably develop in the course of years. In the case of Russia there is no time to be lost. Here is a great area of wonderfully productive territory inhabited by scores of millions of people. Education is spreading among these people, and their wants are multiplying. Such foreign trade as has found a lodgment there is of the kind America wants, and will need more and more as her productiveness increases and the oversupply of home markets becomes more noticeable. England, Germany, France, the Low Countries, and those of Scandinavia are losing no time. Political, financial, commercial, and industrial bonds are being forged with all possible rapidity to this awakening nation of industrious people. American interests in Russia are already large, but their existence is due to private and not national initiative. As a nation we have not only done much to discourage the betterment of intercourse with Russia, but have even actually threatened the existence of American interests therein by inviting antagonism instead of friendly coöperation. It is not too late to remedy this unfortunate attitude, but the situation needs prompt, wise, and fearless handling by those responsible for the foreign policy of the United States.
American foreign commerce rests on a basis of international friendship. Once established, the needs of the respective countries determine the extent of international trading, modified as it must be, however, by conditions of transportation and such fiscal restrictions as may be imposed. Leaving the matter of price and quality to be dealt with by the industrial exporter, as must be the case, the influence of the Government remains as the most important outside factor in determining the prosperity of this trade. Under the control of the Government come the treaty-making power, with its bid for favorable reception of American products; the official attitude toward facilities for the manufacturing of exports and toward transportation; and assistance in gathering information for exporters. The important, but more technical, details of foreign commerce can safely be left to private enterprise in its effort toward profitable trading. There is no doubt as to the good intention of government officials and of those who vote the money for their work: it is, of course, that American consumers shall benefit.
There are two points of view, however, well illustrated in the attitude of the British and the United States Government, respectively, as to the direction in which governmental efforts may be extended in the furtherance of foreign trade. The British Government pays great attention to the diplomatic end of the business, and lets private enterprise follow up any advantage gained. The United States Government spends vastly more money and effort upon the details of trade, but in many cases unfortunately attempts to build upon a shifting and insecure foundation, in that the relations of the two countries may be weak diplomatically, or there may be lack of knowledge or understanding as to the general conditions to be met. For some American consul to inform American manufacturers through the State Department of great openings for the sale of goods does not mean necessarily that these goods can be sold; for in some cases American competition would find itself hopelessly handicapped by the superior trade diplomacy and knowledge of its adversary, thus nullifying any possible superiority in goods or prices.
From a practical point of view, to analyze American foreign trade in detail would be an endless and useless task. It has grown to be what it is through exports of food-stuffs and raw materials, followed naturally by the surplus products of manufacturing. Of imports the same may be said, reversing the order of the progression. The land furnished the material, and labor came at its call from all parts of the world. The logical result of plenty of material, a constantly increasing supply of labor, combined with national ingenuity and a climate conducive to the development of nervous energy, is the production of more or less finished merchandise in such quantities as to keep half the ships of the world in daily use carrying it to and fro. Whether governmental intervention has helped or hindered has been the subject of controversy since this commerce began, and will continue until commerce ends; but out of it all must come a certain amount of wisdom, gained through experience, which should be of practical benefit to those on whom rests the responsibility of official coöperation with private adventure in foreign lands.
The three great foreign trading nations of the world are England, Germany, and the United States, in the order named. In 1912 the foreign commerce of England amounted to a little less than $6,000,000,000, that of Germany to more than $4,600,000,000, and that of the United States to nearly $4,200,000,000. The total foreign trade of these three countries is proportioned approximately between imports and exports as follows:
England
Germany
UnitedStates
Imports
60
per
cent.
54
per
cent.
43
per
cent.
Exports
40
“
“
46
“
“
57
“
“
These figures mean that the United States is still a debtor nation. If the imports of gold brought the imports level with the exports in value, which they do not, but far from it, the figures would indicate that the American people were getting cash for their goods instead of merchandise, as would be the case if merchandise exports and imports were equal. The most considerable factors that annually balance this trade are the payments of interest and principal on American securities held abroad, remittances by American immigrants to foreign lands, money spent abroad by American tourists, and payments made to foreign-owned vessels for freight-charges on goods carried to and from America. There are several other factors in this balance, but the four named are the most considerable. In the case of England and Germany, as well as many other prosperous countries whose foreign-trade sheets show an excess of imports over exports, this excess represents the profit on trading abroad, and the inflow of returns upon capital invested abroad. In other words, these nations are creditor, or money-lending, communities. The imports of all money-lending countries, like France, England, Germany, the Netherlands, and others, considerably exceed the exports, while the exports of all borrowing, developing, or unequally developed countries, like Russia, the United States, Argentina, Rumania, and many others, exceed the imports, as the foreign investor must be paid his interest, and the only source of money for such payment is eventually either the product of the soil or of industry.
One hundred years ago, when the population of the United States was about seven millions, the American people imported annually considerably less than $100,000,000 worth of merchandise, less than ten per cent. of which came in free of duty. In 1912, when the population was more than ninety millions, the importations amounted to nearly $1,700,000,000, of which about fifty-four per cent. entered duty free. The average ad valorem rate of import duty on dutiable goods one hundred years ago was about forty per cent., and on the total imports, dutiable and free, it was about thirty-five per cent. In 1912 the average ad valorem on dutiable goods was about the same as one hundred years before, and on the total imports, both dutiable and free, it was about nineteen per cent. The progress of American foreign trade in one hundred years is recorded as follows:
Year
Imports
Exports
Total ForeignTrade
1810
$85,000,000
$67,000,000
$152,000,000
1830
63,000,000
72,000,000
135,000,000
1850
174,000,000
144,000,000
318,000,000
1870
436,000,000
393,000,000
829,000,000
1890
790,000,000
858,000,000
1,648,000,000
1912
1,818,000,000
2,363,000,000
4,181,000,000
In one hundred years the population has increased more than thirteen times, and the foreign trade more than twenty-five times. In 1810 the per capita foreign trade of America was about $21, and in 1912 it was nearly $40. These latter figures are really much more significant than appears at first glance, for the population of America, as estimated in 1810, was composed of a larger proportion of effective producing units than in 1912. Few but white people were counted, the percentage of women and children was smaller, and virtually every white American was self-supporting. The estimate of to-day includes, therefore, a much larger percentage of human beings who, though counted as units in population, are not so potential in the material activities of the nation. The $40 per capita of 1912 is much more significant of the growth of American foreign interests, therefore, than merely the increase from the $21 of 1810 appears.
Speaking generally, the foreign trade of the United States has doubled every twenty years since 1830, regardless of wars, changes of government, administrative policies, the rise or decline of shipping interests, the increasing power of foreign competition, or the opening and development of competitive territory in other parts of the world. The development of industry in a country is usually written on the character of the imports and exports, and the changes that take place in the proportions of raw material and manufactured goods are most significant. In the case of the United States, these are strikingly shown in the more or less shifting percentages of a long period in the growth of the nation—a period fully covering the time the United States has figured to any marked degree in the economic affairs of the world. In the last eighty-two years American foreign trade has been roughly classified by percentages as follows:
IMPORTS
1830
1870
1912
11.77
12.41
13.93
15.39
22.03
11.86
6.72
12.76
33.63
8.22
12.75
17.77
56.97
39.82
21.78
.93
.23
1.03
100.00
100.00
100.00
The most noticeable features of the statement given above are that the importation of crude food-stuffs and food animals remain about the same in their relation to total imports, that the importation of partly manufactured food-stuffs has decreased, that the importation of materials for use in manufacture has enormously increased, and that the importation of manufactured goods ready for consumption has decreased by nearly two thirds. All of these figures, both of imports and exports, are based on values and not on quantities. The latter would be the most accurate measure of progress, as prices have changed materially—either fallen or increased, mostly the latter—on many important staples; but it would be virtually impossible to consider these matters from a point of view other than that of values, where everything is grouped under an inclusive total, and in all probability the change that might follow a quantitative analysis, rather than one based on values, would not materially alter any conclusions that might be drawn. The changes in American exports during the same period were by percentages as follows:
EXPORTS
1830
1870
1912
4.65
11.12
4.60
16.32
13.53
14.69
62.34
56.64
33.31
7.04
3.66
16.04
9.34
14.96
30.98
.31
.09
.38
100.00
100.00
100.00
The noticeable features of the record of American exports for the last eighty-two years are that the export of food-stuffs has decreased rather than increased in proportion to business in other commodities; that the export of crude manufactured material has greatly decreased, and in fact, with the exception of cotton, has become a negligible quantity; and that the export of manufactured goods ready for consumption has increased enormously. Exports of cotton are now the basis of American export of raw material. Whereas the total production of cotton in the United States in 1830 was only about 1,000,000 bales, in 1912 the United States furnished nearly 11,000,000 bales for export, valued at $625,000,000, amounting to fully five sixths of the value of all raw material for manufacturing purposes exported by the United States in that year.
The export of raw cotton in the case of the United States does not mean any appreciable backwardness of home manufacture. The importations of manufactured cotton goods are decreasing annually, so far as cloths are concerned. In 1912 less than $8,000,000 in cotton cloth was imported from abroad. The heaviest importation of cotton goods was in laces and such other things as are specialties of foreign manufacture, in many cases hereditary trades, or trades dependent upon cheap, trained female labor, such as is not available in America. America uses nearly 6,000,000 bales of home-grown cotton every year in her own factories, and supplies not only the home market with manufactured goods, but manufactures more than $30,000,000 worth for foreign sale, in competition with the great spinning and manufacturing countries of Europe. The growing of cotton is not a raw-material industry in the strict sense of the word, for, owing to peculiarities of climate, certain features of the American labor supply, and the great amount of money this staple crop brings from abroad and distributes in non-manufacturing districts, it possesses a peculiar and great economic value to the country. Coal, tobacco, petroleum, and timber are the more important of the crude materials exported from the United States in addition to cotton; but the total value of all these is, as stated, about one sixth of the whole.
The total value of the exports of domestic merchandise from the United States in 1912 was about $2,363,000,000. As stated, cotton stands at the head of the list. The iron and steel industry comes next; the farmers of the United States furnish the third largest amount of merchandise for export; and machinery of all kinds, oils, paper, fruit, and chemicals, are the leaders in American export. The most interesting changes that have taken place in American foreign trade in the last few years are those that indicate certain possibilities of the future; in fact, they are in a way prophetic of what is to happen in the economic life of the nation. In 1902 93,000 head of cattle were imported, and in 1912 the importations numbered 325,000. In 1902 about 327,000 head of cattle were exported, and in 1912 only about 46,000. This means that the American people have nearly reached the point where the home market absorbs all cattle grown in the country, and that in futureother peoples, who in the past have been dependent upon the United States for their beef supply, must look elsewhere. The exportation of bread-stuffs has decreased materially, while importation has quadrupled, thus telling a story of shortage in food-supply, as did the change in the cattle movement. This same shortage is shown in like changes in the trade in meat products, dairy products, eggs, and nearly every other variety of staple food.
The United States produces half the copper of the world, but both exports and imports of this metal are increasing, showing that other countries are sending copper to this country for treatment. In 1902, America imported 135,000,000 pounds of tin plates, and in 1912 only 4,500,000 pounds. The exports of tin plates increased during the same period from 3,500,000 pounds to 183,000,000 pounds. Iron and steel show a marked decline in imports and an enormous gain in exports. The American people are no longer importing automobiles to any extent, but are increasing their sales abroad, and in 1912 sold $28,000,000 worth to foreign buyers. The importations of coffee virtually hold their own, amounting in 1912 to nearly 1,000,000,000 pounds; but owing to increased prices, the value of this importation is nearly double that of 1902. The exports of the iron and steel industry of the United States, including the manufactures of these materials as well, now amount to about $1,000,000 per day. Europe takes the higher class of goods, and Canada and South America take the rails, structural iron and steel, heavy castings, and other like products that constitute the heavy tonnage of the industry.
The countries taking their largest proportionate share of their imports from the United States are: Haiti, 69 per cent.; Honduras, 68 per cent.; Canada, 62 per cent.; Santo Domingo, 61 per cent.; Panama, 56 per cent.; Mexico, 55 per cent.; Cuba, 53 per cent.; and Costa Rica 51 per cent. England takes 17.3 per cent. of her imports from the United States, Germany 13.3 per cent., and France 8.6 per cent. Of the South American countries, Colombia, Ecuador, Venezuela, and Peru take from 20 to 30 per cent. of their imports from the United States, while others take smaller percentages, ranging from the 13.8 of Argentina and the 12.8 of Brazil to the 2.8 per cent. of Bolivia. Other countries draw very slightly upon the United States for their imports, notably China, which takes only 5 per cent.; India, 3 per cent.; Morocco, less than 1 per cent.; Servia, 1 per cent.; and about the same for Turkey and Rumania. The great markets for American products at the present, in total value of goods sold to the peoples of these countries, are England, purchasing as she does from America goods to the amount of $572,000,000; Canada, $285,000,000; Germany, $283,000,000; France, $119,000,000; the Netherlands, $117,000,000; Italy, $70,000,000; Cuba, $57,000,000; Mexico, $56,000,000; Russia, $52,000,000; Austria-Hungary, Argentina, and Belgium, between $45,000,000 and $50,000,000 each, and Australia, Brazil, and Japan, between $27,000,000 and $32,000,000 each.
Of the export trade of the United States, 60 per cent. goes to Europe, 23 per cent. to North America, 6 per cent. to South America, 5 per cent. to Asia, 4 per cent. to Oceanica, and 2 per cent. to Africa. American producers send more than 90 per cent. of their entire foreign shipments, or more than $2,000,000,000 worth of goods, to nineteen countries, and the remaining ten per cent. covers the trade with all the rest of the world. England buys about 26 per cent. of the total American export; Canada 15 per cent.; Germany 13 per cent.; France 7 per cent.; the Netherlands 4 per cent.; Italy, Cuba, and Belgium, each 3 per cent.; Mexico, Japan, Argentina, Australia, Russia, and Brazil, each 2 per cent.; and Spain, Austria-Hungary, Panama, China, and the Philippines, each about 1 per cent.
Official figures of imports and exports are useful as indications from which deductions may safely be drawn, but they are not an accurate record of the trade relations of any two countries. In some cases the indirect trade of the United States with certain countries is much larger than custom-house figures would indicate, in that American goods are purchased by other nations, who act as distributors or intermediaries in conducting the foreign trade of the world. This is very largely so in American trade with England. That country is credited with purchases of American goods far in excessof the needs of the British people. These goods are bought by English firms whose dealings are largely with other foreign countries, and by them sold to their customers on the Continent of Europe, in Asia, Oceanica, or elsewhere. A striking example of this is the American trade with Russia. It is impossible to state exactly the value of American goods which in time find their way to the Russian consumer, but it is vastly in excess of the amount of trade between the United States and Russia, or $52,380,000, as given in government statistics. In the official statement of exports of American cotton, Russia is credited by the Department of Commerce figures as receiving 64,590 bales, valued at $3,796,867.
American consuls in Russia, and the cotton experts of that country, estimate that Russia consumes annually nearly $50,000,000 worth of American raw cotton, an amount nearly equal to the total export to Russia of all American goods, according to United States government figures. That the government figures are misleading is due to the fact that they are figures of direct business only; and direct trade between the United States and Russia is, for geographical, transportation, and financial reasons, more or less hampered. American cotton is bought for Russia in London, Hamburg, Antwerp, Copenhagen, and other great European markets. The exports are credited in the United States to the ports mentioned, and while the ultimate destination does not affect the totals of American foreign trade, it does lead to wide-spread confusion as to the comparative value of the various foreign markets for American products. This is particularly unfortunate in the case of Russia, a country with which the United States has recently had some difficulty in the matter of a treaty of mutual trade and friendship. Judging from United States government statistics, American trade relations with Russia might be regarded as almost negligible; whereas in fact they are already of the greatest value and importance, to say nothing of the brilliant prospects of possible trade expansion in the near future. Even the government figures show a direct sale to Russia of nearly $50,000,000 worth of American goods, deducting the direct sales of cotton. With a known consumption of $50,000,000 worth of American cotton, this gives at least $100,000,000 as the value of American sales to Russia. Cotton, however, is not the only merchandise sold indirectly, and if other goods are handled in the same way to an equal amount, it is possible that the annual sales of American goods to Russia amount to nearly $200,000,000, or four times the amount allowed by United States official figures.
This correction would give Russia fourth instead of ninth place in the list of great buyers of American goods. This is the most striking illustration of the deceptive feature of government trade-statistics in determining the order of importance of foreign buyers of American goods, though there are other countries which suffer in the estimation of exporters for the same reason. As has been already stated, it was peculiarly unfortunate that this was so in the case of Russia, for those who, for reasons of their own, favored national retaliation against that country through mutual trade relations used United States government statistics to support their argument, and the American public naturally accepted these data at their apparent value. A final and accurate determination of the value of each foreign country as a market for American merchandise, a laborious and almost impossible task, would undoubtedly lead to interesting and unexpected results. It would not only make many changes in the list of the most important customers, but would immediately suggest possibilities of more direct trading, which would stimulate American rail, shipping, and financial interests, increase profits by cutting out the middleman, and in the end give added stimulus to American foreign trade.
One of the most serious difficulties that confront the American Government in its dealings with foreign nations is the inelasticity of the American tariff laws. The most sensible and scientific tariff law which the United States could have,—allowing that the principle of tariff for revenue and protection is to prevail,—is such rate of duty as may be deemed advisable, all things considered; an arrangement whereby a surtax could be imposed upon goods from countries discriminating against American merchandise, and a trading margin for treaty-making purposes, ranging from the normal rate of duty, asset forth in the customs laws, to absolute free trade between the treaty-making powers. There is little or no hope that such a law can prevail or will be formally advocated by any political party in power; but it is a hopeful sign that it has been seriously suggested and discussed by men prominent in the councils of the nation. That tariff laws will in time be formulated on that basis is likely, but such a statement reaches further into the domain of prophecy than is apparently warranted in the present temper of actual legislation. There is a simple truth, apparently often forgotten or ignored, and it is that to give is necessary, to be able to take, in all dealings between nations, as much as between individuals. All trading is in the end a compromise, presumably mutually beneficent and equally so. It rests with the wit and ability of the trader to see that he at least comes out even. It would be interesting to know just how far the late President McKinley intended to go in his advocacy of better foreign-trade relations for the United States had not his tragic death cut short his program. The last speech he made at Buffalo was crowded with significance of what might come later. It was in a sense as though he were only preparing the way for an important development of American fiscal policy in connection with foreign trade. Those who were in his closest confidence in the days just prior to his death have knowledge of an evolution that had taken place in his mind—a mind that had given more thorough thought and study to tariff matters than almost any other in America at that time. They firmly believe that at the moment the life of President McKinley ended, he had planned a pronunciamento in favor of concessions to American foreign-trade interests which would have startled the country, put the Republican party in line with the mass of the voters who desired tariff revision, and of which his Buffalo speech strongly advocating reciprocity in commerce was only the opening paragraph. Had he lived, this one thing might have made a vast difference in the subsequent fortunes of the Republican party; but when he died his place was taken by a man whose marvelous activities did not include an interest in the tariff. In fact, as he frankly expressed it, the subject “bored” him, as it does many others, unfortunate for the country as this may be.
The American diplomatic service has passed through some remarkable phases in the last twenty-five years. A few years ago it was quite frankly used as a means for rewarding political services to the party in power. No good could possibly come out of such a system. There were some exceptions to the general rule that American ambassadors and ministers were either indifferent to or else ignorant of the needs of the United States in international politics, but they were few and far between. More recently men have been selected for the most important places by reason of their wealth and social standing. Some of those selected made excellent representatives, but owing to the shortness of their terms of office they had no more than familiarized themselves with their surroundings than they were either recalled or found it expedient to return to their native land.
President Wilson has apparently established a new plan, or rather revived an old one. He is selecting his foreign representatives from the class known in Europe as the “intellectuals.” This policy is adopted at a highly critical time in the history of the foreign trading of the United States, and at a time when virtually all the great international questions and controversies are those of respective economic advantage, one nation over another. It comes also at a time when the great commercial and industrial rivals of the United States are pursuing a different policy, one which is perhaps worth considering. England and Germany to a notable degree, and France, Russia, and some others of the great Powers to a sufficient degree to be noticeable, are training men for all diplomatic positions, and promotions are made even to the highest places almost entirely upon the merits and suitability of the candidates. The young man who enters the foreign office service of England or Germany in a subordinate position has within his power, if he develop accordingly, to become in time an ambassador to some important country. He is thoroughly tried out, step by step, as consul and minister before the highest rank is given to him. He is moved about from one part of the world to another until he becomes in truth a cosmopolitan not only in thought andhabit, but in language and knowledge. The most serious part of the education of these men is, first, the economics of their own country, and, secondly, the economics of the country to which they are to be accredited. This education is practical and not theoretical. This is true to so great an extent that, when a technical matter of trade enters into a controversy between the two state departments, the minister or ambassador is often found fully qualified to fight the battle himself in aid of the material interests of the country he represents. There are no more practical men anywhere than a majority of these who now represent the progressive industrial countries of Europe as foreign ministers or ambassadors. This particular feature of their equipment for the office is not unnecessarily paraded, however, for their social and political qualifications are more in the public eye. It is in the private talks at the State Department at Washington, in London, Berlin, Paris, St. Petersburg, or elsewhere, that their real fighting strength is disclosed. It is not a question of private fortune with them, for their governments remove any anxiety on that score by an adequate and even abundant allowance of funds not only for salaries, but for housing and maintenance. The British ambassador to Washington receives more in salary and expense allowance than does the President of the United States in proportion to the necessary expenditures of his office.
To the American manufacturer, deeply engaged with his cost of production and the filling of orders, it may appear that too much stress is laid upon the function of foreign diplomacy in the success of American business abroad; but it will not be necessary to give emphasis to its importance with those Americans who have already pioneered their business into remote parts of the world. They know, through bitter experience, how inefficiency in an American embassy or legation can hinder and even destroy the greater possibilities for American success.
At present, and for years past, the fortunes of American foreign trading depend, so far as diplomacy is concerned, upon the character, ability, common sense, and adroitness of the individual government representative abroad rather than upon the Government or the system as a whole. Within the year 1912 we had the two extremes: in one country an able, intelligent, and practical man, working persistently for weeks to bring about a commercial entente cordiale between the United States and the country in which he was stationed; and in another country American interests were forced to appeal to English or other foreign representatives to help them through a time of stress, because the American representative considered things commercial as outside of the province of his labors. Both of these men are out of office now not because one was useful and the other useless, but because of the system, or lack of system, which required their places for others.
An English minister who was stationed in an important country a few years ago failed when there to secure certain large contracts for English builders. This same minister is still in the service, but is now kicking his heels in an unimportant place, where what he does or does not is of little consequence. A certain German ambassador was recently denied the place of his choice because he had done so well where he was that his services were still needed at that point; but when the crisis has passed, he will get his reward all the more surely.
The day will come in America when it will be realized that a nation can well afford to cheapen for export by every means in its power, and that such cheapness does not necessarily mean discrimination against the home consumer. There are few signs of the dawn of this day at the moment, and it will come only when the ultimate and general overproduction of manufactures forces the attention of the whole nation upon the need of still greater markets elsewhere. There is one comfort for the people of the United States, possessed in no such degree by any other nation at the present time or for several generations to come, and that is, the abounding possibilities of the North American continent in its natural resources, and the amazing vitality and resourcefulness of its inhabitants.