12. Del credere.—When the agent undertakes to protect his principal against credit risks he enters into a "del credere" agreement. For this service an addi tional two or three per cent is charged. This del credere agreement relieves the manufacturer, but places a heavy risk upon the agent. Unless the agent has sufficient capital his security may mean very little.
Whenever possible, the American exporter will do well to select an American citizen as his representa tive. The legal relations and the settlement of dis putes arc much simplified if agent and principal be long to the same nationality. This is especially true in non-Christian countries, where foreigners are judged according to special laws fixed by treaty.
In some localities it may be wiser, even necessary, to carry on the business of an agency or branch house thru natives. Only a special inquiry or investiga tion will enable the exporter to decide this point.
13. Proposals.—In many countries material for army, navy, harbor boards and other official and semi official purchasing agencies forms an important part of the imports. The contracts to be let are usually announced publicly and a date set when all bids must be submitted. In some few countries, as in Ar gentina, a permanent commission controls the pur chasing of all government requirements. The United States Commerce Reports announce the more impor tant proposals opened, while other agencies in this country, like the Philadelphia Commercial Museum, keep their members informed.
Local representation is the most effective method of handling this type of business. It may be neces sary to act without delay and secure more detailed in formation before actually entering a bid. A knowl edge of the local manufacturers and their conditions of production is also helpful. Or it may be necessary to use official forms in submitting bids.
In asking for bids from over-sea firms it is cus tomary to allow the competing firms to insert the "fluctuation clause," by which a certain allowance is made for future fluctuations in price. Tho, as a rule, the contract is awarded to the lowest bidder, nevertheless, in order to combat unfair undercutting and dumping, the practice is becoming more and more general to award the contract to that firm whose bid approaches most nearly the mathematical mean of all bids received. In order to guarantee proper deliv ery, a payment, or a bond of from five to ten per cent of the value of the contract, is often demanded.
Unfair competition and dumping practices are common in bidding for government contracts, since prices may be cut without fear of injuring the gen eral market.
In Great Britain it is not unusual to find the "Brit ish manufacturers' clause," which limits competition to British manufacturers.
14. Traveling selling may be accomplished thru traveling salesmen. Such sales men can never quite supplant local permanent rep resentation, but they may prove valuable in securing up-to-date information in regard to markets and credits, and in establishing a personal relation.
The expenses of travelling salesmen are necessarily high. In South America and the Orient, trading centers are widely separated and much time is spent in travel. The prices in South America are, more over, much higher than in the United States. To the normal expenses for travel and entertainment must be added the tax which many countries levy on for eign salesmen. This is the case in Sweden, Norway, Denmark, Holland, Switzerland, Portugal, Brazil, Uruguay, Paraguay, Argentina, Bolivia, Mexico, British Colombia, British South Africa, and New Zealand: In addition to the state or federal tax, municipal taxes are sometimes found. The State of Buenos Aires charges a traveller's tax of $400 and the City of Buenos Aires an additional $500. This tax may be a monthly charge as in Sweden, or a yearly payment as in Switzerland. In France, foreign trav elers enjoy the same treatment accorded French com mercial travelers in the country from which they hail.
Samples carried by traveling representatives are frequently subject to duty, tho drawbacks are in many cases allowed if re-exportation takes place within a prescribed period. Samples "without value" are usually admitted free, but the definition of this term differs greatly. In Cuba, samples of textiles or carpeting are considered as of "no value" if not ex ceeding 40 cm. square and provided they have been spoiled for commercial use by slashes of at least 20 cm. length. In most countries "without value" is in terpreted to mean of negligible value, or else samples must be conspicuously marked "sample." In all cases the traveling salesman should provide himself with duly vised certificates of origin. This is necessary, both to satisfy the requirements of foreign customs services and to enable him to reimport his samples into the United States upon his return.