amount of this currency to cover the sale is immediately sold for dollars. In this way the exporter is protected against exchange declines.

All members in the group are called upon to ship on consignment to the different markets. At the time the shipment is made the head office is charged; when the sale is effected a credit is entered in the name of the shipper. In the case of c. i. f. sales the bill of lading is always attached to the draft, together with the United States Bureau of Animal Industry certificate, consular invoice, etc., and the papers sent to the foreign bank for collection. They are not to be released until payment is made. When, as will sometimes happen, the papers are late in arriving, the importer may go to the bank and have it guarantee payment upon delivery of bill of lading. The importer then takes this bank guarantee to the steamship company, which releases the goods and accepts the bank guaranty in lieu of the bill of lading. When the papers arrive the importer generally accepts them and pays the draft. However, it has happened that an untoward turn of the market has caused irresponsible importers to refuse acceptance of the draft. The exporter then must either grant a concession in price or sue for the amount of the draft. Experiences such as this have made the American exporter wary, and where a repeat sale is made by the foreign agent to concerns guilty of such acts the exporter requests the agent to guarantee immediate payment of the draft without recourse, or, as is sometimes called, a del credere" (broker guaranty). For this guaranty the exporter is charged a certain fee; consequently he generally attempts to avoid the del credere by a careful selection of agents.

Shipments from members in these export groups are usually prorated according to productive capacity, but this is not always the practice. There may be times when one producer has a surplus of a particular product and another a surplus of another product. In these cases the orders are allotted those who have surpluses on hand. All consignments to agents are shipped under a three days' sight draft and the agent finances the transaction, the market loss or gain being for account of the seller.

LARGE PACKERS AS EXPORTERS

The larger packers, whose volume of business necessitates a large exportation to balance domestic distribution, soon learned that in order to protect their foreign trade it would be necessary either to develop their own branches in the important centers or in some other way to control the operations of their foreign representatives, if these representatives were not an integral part of the parent organization. At the present time the larger concerns and many small ones have their own distributing companies and agencies in the more important countries of the world, the foreign business being conducted through a network of selling agencies in these countries. Some are and some are not integral parts of the American companies; quite a few are firms which sell the products of American packing houses on a commission basis, thus functioning as commission merchants, while others are merely brokers. There are three main classes of foreign distributive agencies used by the large packers (1) those which are an integral part of the American con

cern and are called "branches," (2) those which handle products on a commission basis and are known as "foreign agents," and (3) "brokers" who sell under definite contracts with their American principles.

BRANCHES

The size of the foreign branches depends to a great extent on the amount of business done in that particular community, but in general there is a manager, salesmen, clerical force, and other personnel necessary to effect distribution. In those cases where the extent of the trade justifies, stocks of goods and facilities for storing them are maintained. Because of the length of time required in shipping goods to branches from the producing plants in the United States, it is necessary to carry stocks of lard and smoked and cured meats sufficient at least to take care of immediate needs.

The main office of these branches customarily is located in one of the large cities, usually a strategic place for directing operations, its manager being responsible to the parent organization. Only rarely are branches equipped with their own warehouses, and then they are located in centers where the business is so continuous and large as to justify the overhead expense. In most instances the stock is stored in public warehouses and drawn upon as sales are made.

Operations on the European continent at present center around Hamburg as the principal distribution center for Germany and central Europe. At present, when a large transshipment business is carried on, usually through Hamburg agents with central European countries, stocks are stored outside the customs areas in the free ports as described below and later reshipped to other distribution centers. The goods are shipped to Hamburg and then reconsigned to Austria, Czechoslovakia, Poland, or elsewhere, either on order or to replenish supplies. This custom is followed in order that duties may not be paid on products unnecessarily. Hamburg is a free port to which goods may be shipped, stored, and reshipped without being subject to tariff regulations. Goods entering a country from a free port for consumption are treated as ordinary imports. There are free ports at Hamburg, Bremen, Danzig, Rotterdam, Amsterdam, and Copenhagen, each of which has its own rules as to how far the customs regulations may be legally traversed.

Reports on stocks held in the various centers are usually fowarded each week and consignments are made on the basis of these reports and on the recommendation of the foreign agent. It sometimes happens that the parent organization has on hand a surplus of certain meats which it ships on consignment to the foreign agent for disposal at the market price.

The packer seeks to avoid future sales so far as possible, as this business is hazardous from the standpoint of both buyer and seller, and consignments take on the nature of future sales, since the principal is never sure of his market until the products have been disposed of.

The branches, after receiving cabled c. i. f. quotations from the home exporter, compute the handling and landing charges and requote to interior agents. When an acceptable offer is made the branch house issues a release order to the broker or agent, who delivers the goods to the customer.

Control of the entire selling forces of the foreign branches is effected by men who travel, usually from the Hamburg or Paris offices. These men push sales and adjust local stocks as conditions require. The foreign branches, as a rule, keep records of stocks on hand, sales, etc., on their own books of record and close these periodically and forward reports to the main office.

Most of the products handled by branches are sold on a consignment basis; sales to agents are practically always on c. i. f. terms. Whenever possible, the branch sells c. i. f., because it makes the sale and profit margin definite.

Free ports. As stated above, the packers make frequent use of free ports in carrying stocks abroad. There are several free ports in Europe strategically situated so that international trade is centripetally drawn toward them, because of the advantages they offer for further distribution from the port as a hub, without regard to such customs regulations as is the case with merchandise intended for consumption within the country.

A free port may be an entire city or merely a section of a city which has been partitioned off so that foreign merchandise may be loaded or unloaded from vessels without being subject to customs duties or inspection. Usually bonded warehouses are available and in fact the free port really represents a great warehouse under bond in the sense that the port is patrolled and the products permitted entry into the country only after compliance with the usual customs procedure.

Free ports are such only so far as foreign commerce is concerned. In those cases where the business justifies it, stocks of lard and cured products are maintained in the larger cities in order to supply immediate demand and thereby extend business.

Trading in Hamburg, as in a good many other large cities, is done on the "bourse," which is a large exchange organization bringing together the bankers, the large stock operators, the wholesalers of all kinds, and the large importers into one great trading place. Many sales are contracted for at these exchanges.

FOREIGN AGENTS

While the organization of foreign branches is more or less uniform, foreign agencies vary considerably. In establishing representation of this sort the best possible connections are made and a contract covering operation, brokerage charges, territory, etc., is drawn up. Where the representative is a commission house, the commission paid varies from 1 to 5 per cent, depending upon the kind of goods sold. The packer, as a rule, embodies in his contract a stipulation that he shall sell products at a price furnished by the main office, and the broker in all cases is required to guarantee a large portion of the accounts. This is insisted upon in order to protect the exporter and to prevent the broker from becoming overzealous and selling to irresponsible customers in order to increase his fees.

FOREIGN ORGANIZATION CONTROL

In order to control his foreign organization each export packer has some central governing body in the United States, and usually

this centralized control is in an export department. This department is charged with the duty of regulating the foreign business in its relation to the domestic trade. The domestic sales department is kept advised of domestic stocks and sales, and when a surplus accumulates it communicates this fact to the foreign sales department. These two departments cooperate in keeping stocks both in the United States and at the foreign branches above the demand level in order to permit orders to be filled quickly.

The allocating of stocks of the principal export pork products to both the domestic and the foreign demand involves constant readjustments of foreign stocks and prices as changes occur in the United States. For this reason a check is kept upon the stocks held in foreign countries. Shipments are usually made to branches upon order of the branch manager, but the export sales department may, because of domestic conditions, ship larger or smaller amounts or order goods diverted from one branch to another.

It is the custom of the parent organization to keep the foreign agents at all times informed of price changes by cable. Each week the domestic sales department informs the foreign sales department what its "asking" prices are for the various products, and the foreign sales department, by the use of prepared schedules, figures out the c. i. f. price of products for each foreign branch or agency. Price changes are cabled as they occur. The branch or agent then adds to the c. i. f. price thus quoted the landing, handling, and storing charges and quotes to the foreign purchaser on this basis. When a sale is effected the branch or agent cables an acceptance. which serves as an order to ship the quantity of goods described at the price named. Bargaining, of course, exists in export trade as in any other branch of the business, and when a branch receives an offer cable messages are resorted to; that is, offers and counteroffers are exchanged until an agreement is reached or the offer is finally rejected.

The foreign sales organization makes weekly reports to the main office, in which are embodied the amount of sales, the average price realized, and the average rate of exchange during that week. A statement of the value of unsold stock, stock sold afloat, value of accounts receivable, bank balances, etc.; in fact, everything that is necessary in order to balance the books of the particular branch or agency and determine its financial condition is furnished. Besides these weekly reports, the foreign branch renders complete statements each month to the foreign auditing department.

Nearly all of the export pork products of the larger packers are shipped from their western plants, where the hogs received are more of the type demanded in export trade. These western plants charge the amount of the original invoice to the main office, which in turn establishes a credit for the plant making the shipment and charges the proper branch or agent accounts. At the end of the month the branch prepares a departmental control statement. This statement includes opening inventory, receipts for the current period by plants. total receipts, gross sales, commissions due the branch, storage, inland freight and other such deductible items, net sales for the period itemized according to the plant from which the goods were shipped. closing inventory by plants, total net sales and inventory, and profit and loss. By this statement the export sales department is kept

informed of the products shipped from each plant and is enabled to balance and adjust its various foreign accounts and to epitomize its entire foreign trade. Such a control arrangement, while practical in the case of branches, is not always possible with agents who act in the capacity of commission agents or brokers. When the agent makes a sale his commission is charged against the customer for whom the agent buys and the invoice is sent to the customer. The monthly sales and commissions due are summarized and a statement rendered.

In order to expedite foreign business, the packer usually has a seaboard office which assists in making sales through port brokers.

HANDLING AN EXPORT ORDER

When an order from a foreign representative is received it is referred to the proper department. This department selects the plant from which the order shall be filled. After the order has been entered for shipment on a definite date and from a definite plant, it is listed by the export sales department for shipment and sent to the export order-writing department, where a "sale" is written and copies delivered to the interested departments. These include the department which actually packs the goods; the export desk of the transportation department which books the ocean space gets the required export (general operating committee) permit from the railroads used in connection with through bills of lading, and actually orders out the goods for shipment to clear on the boat booked; the shipping department, which groups orders for the same boat, in order to insure the most economical inland freight rate, and provides the railroad billing required; and lastly the invoice department, which invoices the individual orders to the foreign branch or agency. The export desk of the transportation department is charged with the duty of seeing that the goods arrive at seaboard in time to permit a convenient and satisfactory transfer to the boat.

The export sales department is charged with the duty of checking the work of each department to see that the dates, goods, packages, documents, and invoices are all correct, and must check up finally on the clearance of the goods. On consignment shipments the export sales department cables a sufficient description of the goods to enable the foreign branch or agent to sell the goods afloat or on arrival if occasion arises. In order to assist foreign buyers somewhat, cabled notification is often sent on c. i. f. shipments at time of clearance to enable the buyer to purchase dollars to cover the commitment.

Meat-product exporters are at all times in touch with their foreign agents by cable and otherwise, and each exporter, after discussion with his agent, judges the probable trend of the market and decides on the goods to be consigned. The agent's recommendations are usually accepted unless conditions in the United States compel the principals to do otherwise.

When a sale has been made it is the duty of the domestic department to see that the particular goods sold are furnished. Shipments are made from headquarters or from branch plants as circumstances require. In the large packing organizations the "export desk" of the transportation department usually starts operations for shipping goods.