The Competitive Situation in South American Trade

Abstract

T HE acute South American aspects of the present world-wide depression have raised in the minds of American exporters a number of anxious queries regarding the status of our European and other competitors in the southern markets. Doubts are being expressed as to our ability to retain those parts of British trade which we took over during the war. Fears are entertained as to Germany's recuperation in that region, and as to the intrusion of such newcomers as Japan, the Scandinavian countries, and even the larger Latin American republics which have begun to exploit each other's markets at a modest but steadily increasing rate. As a climax to the whole situation the premium on the dollar in each of the more important southern capitals has persisted at abnormally high figures, thus giving to European exporters an advantage which those in certain lines, such as ribbons, wire, and galvanized iron, have been recently capitalizing in considerable amounts. The problem of appraising the competitive possibilities of our more important rivals in South American trade involves of course a review of their commerce with that continent in the recent past as a partial basis for an identification of their fields of special interest and of our incursions into their markets. One other important factor which is being all too frequently ignored by many American exporters, is the transformation which the war has wrought in the import requirements of the southern markets. In spite of the radical economic changes in Europe and the United States since I9I4, many of the northern exporters from both sides of the Atlantic are returning to their South American markets with the expectation of finding buying conditions there very much as they were in I9I3. This assumption ignores entirely the present widespread determination in practically all of the South American countries to make permanent a considerable portion of their new war-born industries. Ample evidence of this intention can be found in the shape of readjusted protective tariff programs, corporation and income tax inducements, and active preparations for the exploitation of hitherto untouched hydroelectric power projects and petroleum fields. The effects of these new developments upon the commercial situation are already apparent, as will be indicated below; their most significant bearing is upon the relative standing of the various competitors who are now trying to secure or to retain footholds in those markets. That standing will be determined very largely by the agility and resourcefulness displayed by the rival merchants in anticipating and meeting these fundamental industrial changes in South America. Great Britain is obviously the most formidable of our competitors and the effects of any actual or potential industrial transformations in the southern republics upon her trade are therefore significant. The recent history of her important coal trade with Chile illustrates this point. The changing of the nitrate industry from a coal-burning to a petroleum-burning basis during the past six years has greatly reduced and will ultimately practically eliminate the importation into Chile of the commodity which had for many years before the war made up not less than 30 per cent and frequently more than 40 per cent of Britain's total exports to that country. Table I shows the decline of Chilean coal imports since I9I3 and the acquisition of a part of the British trade by the United States. The curtailment of