In Germany, on the other hand, where pork is consumed primarily for the fat, dietary tastes have not proved such a stumbling block. This country is a very important export market for American pork products, as it takes mostly lard, fat backs, and fat bellies, products obtained from the corn-fed type of hog so generally and profitably produced in the United States. The German taste favors pork fat, and conditions in the livestock industry in that and surrounding countries are not such as will likely affect the dominance of American products seriously during the next decade. Potential competitors for the German market are Hungary, the Balkan States, Brazil, and even Argentina. The hog industry in the last-named countries is still in its infancy, but may develop under the leadership of packing houses. The Balkan States naturally will attempt to regain some of their pre-war trade in hog products and, as German factories become more and more able to pay for pork products with manufactured goods which are badly needed by the Balkan States, a certain competitive pressure may be felt from this source.

FACTORS AFFECTING EXPORT TRADE IN PORK PRODUCTS

There are several factors which affect the consumption of meat products both as to quantity and kind. Chief among these are habit, custom, economic stability, finance, and prosperity. These elements combined with other considerations have made American export managers cautious. They have learned through experience that it does not pay to ship goods indiscriminately without resort to all the usual safeguards. They have learned also that in the export of meat products an overzealous use of consignment shipments can react to their sorrow.

The packer exporter must be very careful of the kind of goods he ships to each country. For example, it would be useless to ship bacon to Denmark; on the other hand, he does ship lard. He must also consider the taste and habits of the various consumers. Great Britain demands a certain type of bacon, preferring a lean meat. Germany demands a fat meat-the fat backs, bellies, sides, some bacon, and both countries call for lard. There is also a great difference in the tastes and demand between localities in the same country. This applies to style and cure also. Before the war Germany permitted the importation of live hogs and the Scandinavian countries supplied them with large numbers of animals of the lard type. When the German agriculturists began to supply this product in sufficient quantity to meet domestic demands importation of live hogs was prohibited.

Scandinavia, being in a northern zone, desires fat meats and, not having sufficient feeds to fatten its hogs without heavy importations, prefers to ship the hogs light and then import its fat requirements. Since the imposition of German import restrictions Scandinavian countries have been retaining their hogs and fattening them as much as possible for their own use. This to some extent has curtailed American trade with Norway and Sweden in heavy fat stock. The latter country has recently adopted a vigorous policy to encourage export trade of pork. Central Europe, as before stated, because of taste and financial difficulties, has determined upon fatty meats, animal fats, and oils as the most food for the least money, and our trade

there is now confined largely to these products. Scandinavian countries take the entire fat sides, which are cured in dry salt. Denmark, a large consumer of margarine, uses little animal fats other than butter and oleo oil in its national diet. Holland, the other large manufacturer of margarine, took and still takes large quantities of neutral lard and beef fats, but these have now to some extent been replaced by vegetable oils. Heavy fat backs, middles, and bellies, which have a small sale in the United States, are disposed of in Belgium, France, Spain, and Italy, but to a larger extent perhaps in Germany and northern and central Europe.

The United States is not now a beef-exporting country. However, any change which affects the meat trade of Great Britain, Germany, the Netherlands, and our other foreign markets affects also the consumption of American pork products in these countries. It is therefore evident that the export operations of packing houses in Denmark, Canada, Ireland, Argentina, Australia, and New Zealand in other meats has an effect upon the sale of American pork products in the English and Continental markets. The first three countries ship their surplus pork and the last three their beef, mutton, and lamb to European markets. There is, of course, a limit to the amount of meat products consumed by any country, and this limit varies to an extent with financial and industrial conditions, migration of consuming populations, and national habits and customs. Larger shipments of cheap beef, mutton, or lamb to America's principal export pork markets must act directly in limiting our pork sales in those

areas.

EXPORTERS OF MEAT PRODUCTS

Exporters of meat products may be divided roughly into five classes: (1) General exporters, (2) export brokers, (3) small packers as individuals, (4) small packers combined under the Webb-Pomerene law, and (5) large packers as individuals.

GENERAL EXPORTERS

The general exporter does not confine his efforts to any one particular line or field. He may at one time export grain, at another time oil, and so on. He has connections with foreign importers who from time to time receive orders for various American commodities, which are transmitted through their connections in the United States. In cases where meat products are purchased for export the sale is usually consummated in the same manner as a sale for domestic distribution on an f. o. b. basis, title passing immediately, the exporter in most cases shipping the goods on a through bill of lading and accepting payment against established credits in American banks or drawing upon the foreign importer according to the arrangement between the two.

There is comparatively little meat exporting done in this manner because of the perishability of the product and the large risk of spoilage or loss. The exporting of meat products usually requires a very definite knowledge of the product and methods of handling.

SMALL PACKERS ENGAGED IN EXPORT TRADE

There are over 100 meat packers engaged in export trade. Since there are 5 so-called "large" concerns and 11 smaller, the latter

being members of the American Provision Export Corporation, it can be readily seen that in point of numbers about 84 per cent of the firms engaged in exporting meat products are doing so independently of any external influence or assistance. If the aforementioned 11 members of the American Provision Export Corporation are included, the importance of the "small" packer in our export trade is quite apparent.

Not all in this group of exporters have established agencies in foreign countries, as quite a few do business through export brokers or sell spasmodically to foreign buyers, depending upon freight forwarders to handle the transportation for them. This group of exporters may therefore be divided into two classes-those doing a steady foreign business through foreign agents and those selling for export their surpluses as they accumulate.

An organization intended specifically for the purpose is not necessary to do an export business in meat products. Any American packing house having Federal inspection can, with its existing organization, inaugurate and build up an export trade. The plan is comparatively simple. One may, of course, engage in export trade by selling products on an f. o. b. plant basis to export brokers or dealers, as previously mentioned, but, disregarding this as being rather too indirect to be strictly called export, a packer may still adopt a very simple course. At the beginning connections should be established with two or three domestic brokers of packing-house products having foreign connections. By offering surpluses through more than one broker the packer has a wider outlet and is able to secure competitive bids. Having come to an agreement with the brokers as to commissions and territory in which the products are to be offered, the packer should offer his surplus on either a c. and f. or c. i. f. basis, preferably the latter.

In order to quote in the manner suggested, the packer's representative should inform himself of the extent of his liability under such contracts. For instance, when a sale on a c. and f. basis is made the packer must consider that he is bound to make the freight contract and pay or allow charges sufficient to carry goods to the agreed destination and to deliver to the buyer or his agent clean bills of lading to the agreed destination, and he must also assume all risk of damage to or loss of the goods until they have been delivered to the carrier and a clean bill of lading obtained. The liability of the packer is limited to the foregoing in such a sale and the buyer's responsibility then begins. The buyer must take out all insurance and be responsible for loss or damage after the above requirements have been met by the packer; he must handle all subsequent movement of the goods, delivery, costs of discharge, lighterage, and landing at foreign ports, and assume the payment of all foreign taxes, customs, duties, and wharfage charges. In all sales it is suggested the packer make clear in his contract that consular fees for legalizing invoices, stamping bills of lading or other documents required by the laws of the country of destination are to be paid by the buyer and are not included in his prices.

When the packer's business becomes of such magnitude that it may be carried on directly through foreign agents, a judicious selection of agents will result in a saving of both money and trouble later on.

The Bureau of Foreign and Domestic Commerce maintains a carefully selected list of agents and purchasers of meats and meat products in foreign countries and has representatives in those countries whose assistance and advice may be secured in such selection. The packer should avoid selecting an agent who is also agent for a firm handling competing products, and he should not permit his agent to act in the capacity of agent and buyer. The reasons for this are quite obvious. An agent representing more than one meat exporter is enabled to "play one against the other." If then he is permitted to buy for his own account he will garner the most profitable business for himself. To guard against this, a principal may compel disclosure of the agent's buyer and make out documents in buyer's name to be transmitted through the agent for buyer upon payment of draft.

A general commission of 1 per cent on sales is paid overseas agents, but 2 per cent is generally allowed on consignments.

If one's domestic business is of such proportions that an immediate sale of the surplus can not be profitably made and such a condition is continuous, then, and only then, should a consignment business be developed.

A consignment trade, while expediting sales by permitting the foreign importer or broker to buy from day to day for his immediate needs and to take advantage of variations in exchange, may, unless skillfully managed, react to the owner's disadvantage. The mere fact of having these stocks in a foreign country compels the owner to dispose of them at the prevailing price in order that warehousing, insurance, and other charges shall not eat up the profit.

WEBB-POMERENE CORPORATIONS

The people of the United States have voiced their opposition to monopolies and combinations in restraint of trade by passage of the Sherman antitrust law. This law was designed to prevent merging of interests which might through their size be able to control distribution and prices or, in other words, to restrict competition.

In contrast to this policy several European countries, notably Great Britain and Germany, encourage a combination of interests in large companies, thinking that by so doing the units thus created are enabled to more efficiently produce and market with smaller overhead charges and less waste. They are also able largely to control prices of their exportable surpluses. From the standpoint of those countries producing major portions of the world's requirements of certain commodities, such a policy is undoubtedly the correct one, but countries competing in international trade with the former are at a disadvantage when their laws prohibit similar agreements. In order to place American exporters on the same basis as their competitors Congress passed the Webb-Pomerene law, which traversed the powers of the Sherman law in so far as it referred to export trade and a part of the Clayton Act. This law is commonly referred to as the export trade act, and its primary purpose is to facilitate the export of American goods. Associations operating under this law may be either incorporated or unincorporated, but it has been found that most associations incorporate under State laws.

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Among the advantages of associations under the Webb-Pomerene Act may be mentioned: Reduction of overhead through joint adver tising, selling, and pooling of administrative expense; securing of valuable exclusive representation; rapidity in filling orders through distribution of such orders among several members; and the securing of all-year-round markets for commodities which in this country may be limited to seasonal sales.

To contrast with these advantages are certain equally manifest disadvantages. Unlike a large organization with branches all over the country, such corporations are composed largely of firms whose export trade must be handled from a single plant. All such plants are not situated in the same city, so possibly of disagreement over allotment of more profitable business is present. For instance, assume a certain maximum amount of business for a corporation of this character and an allotment of it among the members according to capacities or on whatever basis may be agreed upon. A certain amount of the business is, of course, more profitable than the rest. Should this business be apportioned to those nearest export ports where more favorable railroad rates are obtainable or should it be allotted those farther west? Then, again, when business is secured which permits of handling only through eastern manufacturers by reason of its narrow margin of profit, a question might then arise as to whether or not this comparatively unprofitable trade is to be chargeable against that particular firm's allotment. It may again happen that a firm has business allotted which through lack of supplies can not be handled. Again, some firms may secure business during the rise and the allotment of others come during the fall of market prices. These are some of the possibilities for dissension in a corporation operating under the provisions of the WebbPomerene law.

Twenty-two concerns in the meat industry have combined into two groups, each group containing 11 members. One group, the American Provision Export Corporation, is in operation, while the other, the National Provision Export Corporation, is inactive. Each group has established a central office which controls the shipments and export affairs of the group. However, the firms which joined these groups had been engaged in export trade in the British Isles for some years and their trade-marks and brands had become firmly established. Not being willing to surrender this good-will asset, the groups confine their activities to sales in continental European countries.

These groups have established agencies in all continental European countries and at times ship their products on a consignment basis to the agents, at the same time drawing upon them for 90 per cent or the full amount of the sale, the drafts being discounted immediately by American banks. As in the case of the larger concerns, the banks rely upon the shipper to protect them in the event the draft is not accepted. The agents employed are generally natives of the country and operate on a commission basis within certain prescribed territorial limits. When a bid is received in the Chicago office, the price of the product is figured, together with all charges, and a cable reply sent either accepting or rejecting it; if the latter, a counteroffer is made. These corporations quote in foreign units on the basis of dollars, and when a sale is made in a foreign currency a sufficient