Holland furnishes a case in point. Essentially a farming country, its traders have for centuries bought and sold in the world's markets and carried the goods belonging to traders of other nationalities. During the sixteenth and seventeenth centuries, Holland was the most powerful nation on earth. The surplus cap \ ital that accumulated in the coffers of the Dutch traders waiilrawn upon by the governments of Eng land, France, Spain and by many of the small Ger man and Italian states, to bolster up their shaky ex chequers. Tho that little country has not been able to maintain its former commanding position in inter national trade and finance, its present prosperity is still largely based upon its foreign business.
The economic power of Great Britain today is de rived in no small degree from the world-wide relations established by her merchants. It is estimated that her yearly income from foreign investments amounts to no less than $700,000,000. In addition to this huge sum, the world pays tribute to the British merchants and bankers in the form of profits realized in foreign transactions, for foreign freight carried in British bottoms, for financing.eign customers and for handling their collection ems. The amount of the annual freight bill alone is estimated at $500,000,000.
All this, while of great interest, is not an imperative summons to the business man to enter the foreign field. There are more important recommendations. The most important is that foreign trade strengthens the competitive position of the merchant in the do mestic market.
5. Commercial and car rying on a business transaction the merchant faces many risks. Some of these are commercial. The merchant may make a wrong estimate of the price at which the goods will sell. He may be unduly opti mistic in regard to the amount of an article which the market will be able to absorb. If homakes any profits he makes them because of having guessed cor rectly. These uncertainties are a legitimate part of "the game." Other risks are non-commercial and arise from fac tors beyond the control of the merchant. Typical non-commercial risks are the danger of fire, storms, water, theft and, as in the recent war, an attack by submarine pirates. No amount of foresight can guard against these dangers.
Fortunately, most of the non-commercial risks are insurable. This means that they may be reduced to a definite payment, a premium known in advance, which may be included in the cost of a transaction. One may insure his goods against fire, theft, damage by sea, or losses resulting from the dangers of war.
The risk involved in domestiC credit transactions may also be covered by insurance.
Nevertheless, a number of non-commercial risks re main against which insurance is impossible. Unfore seen factors may bring about a depression which par alyzes the market. War may be declared, banks may fail, a political upheaval may cause consumers to re strict their purchases. Or, again, some sudden change in fashion may destroy the value of large stocks of merchandise, or destroy a large capital in vestment. No one, for example, could have foreseen that the bicycle, constantly gaining in popularity for commercial and pleasure uses, would as by a wave of a magic wand almost disappear from the streets of our cities.
6. Foreign demand an insurance against risks.— An active foreign demand, tho not offering absolute protection against these risks, softens the effect of these catastrophes. It is not usual for a depression to be felt in all countries to the same extent. If times are hard in the United States, conditions may be fa vorable in the Argentine, or in the markets of South Africa. Thus the foreign demand may frequently absorb the surplus made available by a weak market at home. Even when the foreign customers cannot absorb the entire surplus, the effect of the depression is minimized by as much as they do take.
It is one of the happy dispensations of foreign trade that firms are frequently able to continue selling in foreign markets goods which are no longer acceptable to the American trade. Sometimes the foreign con sumer is not aware of the fact that the style has changed. It is difficult to follow changes in distant markets, and the firms selling the products have no interest in informing the consumers. But even many times the people are indifferent to the shift of style, they are loath to change. Few nationalities are so constantly looking for changes, so willing to take up with fads, as the Americans. The peoples of the older countries are more conservative. Once an ar ticle has proven its worth they do not care to experi ment. They admire Yankee ingenuity, but prefer to await the verdict of time concerning the practical value of a new invention. Thus the double keyboard typewriter is still in general use in European offices. The young clerk there still starts his business career by turning the old-fashioned copy press. The bicycle is used in the countries of Western Europe for busi ness as well as pleasure.