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Many years ago the Baldwin Locomotive Works of Philadelphia got an order for a locomotive to go to Brazil. The manufacturers took special pains to see that the locomotive sent was capable of doing the work requred of it, and that it was as sound and trustworthy in every respect as they could make it. And do you suppose they then shipped it out and left the Brazilians to set it up and run it? Not a bit of it. They sent out with the locomotive a skilled mechanic from their own shops whose business it was to take charge of the landing of the locomotive, to set it up properly, to start it, and to teach the Brazilain engine driver how to run it, and to stay with him until the lesson was thoroughly and properly learned.

As might be expected, the locomotive gave perfect satisfaction, and lead to a large and profitable business for the Baldwin Locomotive Works that has gone on now for nearly seventy years.

But that company has never let up for a single day in its vigilant attention to its locomotives and to the interests of its Brazilian patrons. The result was that for a long period of years you could hardly give away in Brazil any locomotive that was not a Baldwin.

High tariff in the United States. I have no idea of discussing tariff laws. I merely call attention to the fact that inasmuch as our tariff laws have raised the cost of many of our manufactured articles, it follows that those articles cannot be sold in the open competition of the Brazilian markets. All such goods are shut out of Brazil, and must remain shut out until our manufacturers can compete with those of other countries.

There are some anomolous cases, however, in which the American manufacturers' profits are so large that they are quite able to compete with European manufacturers in the Brazilian markets. I have noted that certain American made sewing machines for example, are sold at much lower prices in Brazil than they are in the United States.

The question of American banks. Over and over again I have heard it urged that the lack of American banks in Brazil was a constant obstacle to American trade in that country.

I can only offer an opinion on this subject, based on much observation, and some experience.

That opinion is that if there were American banks in Brazil the great bulk of their business would be just what the existing British banks are doing. The bulk of Brazil's exports goes to New York, but the exporters do not want their money either in Brazil or in New York; they want it in London where they can buy merchandise with it.

If there were American banks in Brazil the situation would not be changed. If an American bank were called on to handle the finances of a coffee crop that bank would have to pay for the crop in London and nowhere else.

Lack of American ships and steamers. Very similar are the opinions in regard to the lack of American ships and American lines of steamers. Some people seem to think that we might gather in a lot of trade with Brazil if only there were American ships to carry things back and forth. But I have noticed that, in pratice, the merchants both in Rio de Janiero and in New York, other things being equal, ship by vessels that can carry their merchandise most cheaply. They are not influenced to any appreciable extent by matters of sentiment.

If we had so many ships that their competition for trade reduced the freight rates below those asked by British or other ships, then, and then only, would our ships get the carrying trade.


By Selden O. Martin, Ph.D., Graduate School of Business Administration, Harvard University

In preparation for the course now being given by the Graduate School of Business Administration of Harvard University upon the Economic Resources and Commercial Organization of Latin America I was sent to South America in October, 1910, to travel, to observe, and to interview. The object was to see the people; to see natural economic conditions such as climate, resources, products; and human economic conditions such as transportation facilities, industrial development, currency, banking; to see the goods that were being handled-for example, through how many middlemen between the countries, how many within the country; and to see changes that might be evident as taking place in the organization of the foreign and domestic trade.

Evidently this was a considerable subject or group of subjects. Of necessity in the time allowed it could be covered only superficially. Avowedly it was so planned. Only the main points could be touched upon. An economic perspective of South America that was approximately correct was sought for. With the frame work of the course constructed on general lines that were according to fact, it was felt that many additional details could be supplied from the material continually increasing at home, from current reports and from correspondence.

The trip lasted a trifle over a year, and amounted to some 26,000 miles of travel in every country in South America, except Venezuela and the Guianas. The Andes were crossed six times in the countries of Colombia, Ecuador, Peru, Bolivia, and Chile. The River Plate was ascended as far as Asuncion, Paraguay. In Brazil, the coffee country, the coast cities and the mouth of the Amazon were covered.

The course on Latin America in the Graduate School of Business Administration of Harvard University, of which much the largest part is devoted to South America, has now been given for five years. Each year has witnessed changes and additions with the increase of reliable information about South America. This sixth year will witness further changes in the course, but no reason has been seen yet for changing certain fundamental economic concepts about South America.

In the time allotted for this paper I should like to give you what seem to me to be important economic facts about South America and to present some economic conclusions which can be fairly arrived at in the light of present knowledge. These facts may be classified as physical facts, facts about the population, facts about trade.


First I should like to call your attention to certain physical features of South America which I believe are fundamental to a correct estimate of its possibilities.

South America is a century older historically than North America. The Spanish and Portuguese had permanent settlements in South America before Captain John Smith was born, yet South America today, with an area equal to that of the United States and Canada combined, has a population scarcely one-half that of the United States alone. Why? There are, of course, weighty reasons, political and racial, and the important economic reason of geographic remoteness. But these are not all the reasons.

One of the most eminent authorities upon the geography of South America has said that Nature must have been in her kindliest mood when she created North America, but not when she created South America. It was not until after my return from South America that I read this sentence and was struck by its pregnancy.


The map of the western hemisphere shows at once an important physical fact about South America. Both continents have a broad bulge in the north, tapering to a point in the south, but North America bulges in the temperate zone while South America bulges in the tropics. In other words, four-fifths of South America is in the tropics. Now the tropics do not necessarily connote snakes and jungles and disease. After seven months' residence in the tropical regions of the north, west, and east coasts of South America I can testify to the altitude and trade winds providing many habitable and even delightful spots within those tropics in Colombia, Ecuador, Peru, Northern Chile, Paraguay, and Brazil. Modern medical science and skill is removing the obstacle of tropical disease, but the fact still remains that there are tremendous areas in South America east of the Andes and north of the Pilcomayo where there is an average temperature of more than 70° F. and an average rainfall of more than 100 inches (40 is considerable)-regions where the tropical forest and undergrowth have to be combated continually with steel and acid spray.

Such conditions of climate and conditions that accompany such climate have not so far been hospitable for the Caucasian stock which up to this time has shown itself, in material affairs at least, the most progressive racial element of the globe. And it is significant to note in this connection that the country in South America which is most progressive and whose trade is over one third of that of the entire continent, although having scarcely a seventh of the population or area, is that country occupying the most of that narrow, tapering end of South America extending into the temperate zone namely Argentina, where conditions are most like those of North America. Nature has not been kindly to South America on the whole, from our point of view, in the climate she has given her.

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