Orders received for a certain kind of goods may be filled by substituting "just as good" articles of dif ferent manufacture. To provide against this, manu facturers sometimes ask for foreign buyers to send them duplicates of the purchasing order submitted to the house and they reciprocate by sending duplicate invoices to the foreign buyer. In this way direct re lations are gradually built up. But many orders conic in thru commission houses from sources un known to manufacturers, and the latter are, there fore, to a large degree dependent upon the good-will of the commission houses.
18. Commission houses widely used.—Notwith standing the disadvantages cited, commission houses are performing a necessary service and are used gen erally in this country. Even very large American concerns, which are represented abroad by their own selling organizations, as is the case with the United States Steel Corporation, make use of export com mission houses in certain markets which their organi zation cannot effectively reach.
It is difficult to indicate the extent to which foreign sales are handled direct, thru export merchant, or thru commission houses in the various markets. In a gen eral way it may be said that our trade in Mexico and Canada is handled direct, frequently thru branch es tablishments; in South America the export merchants and commission houses do a large business, and com paratively little is being sold direct, tho this amount is steadily increasing; in Asia the export merchants are still powerful; in Australia and in South Africa sales are almost entirely in the hands of commission houses.
19. Financial commission charged by these houses varies, according to the char acter of the goods handled, from one to eight per cent. Where a great amount of detail is required as in the case of shipments made up out of a large va riety of small manufactured articles, the amount of detail and the risk involved in not filling the orders correctly is so great that a high commission is usually charged. Staples are frequently sold on a c. i. f. (cost, insurance, freight) basis, and no commission is charged.
The commission house is losing in importance thru the growing tendency on the part of manufacturers to reach foreign consumers direct. More and more the commission houses are, therefore, abandoning their original sphere as buying agents and are actively coop erating with manufacturers as selling agents.