of the great war.
The laws of economics are fulfilled, just as other natural laws, by virtue of
their power, commerce, especially, being developed through the impulse of
reciprocal necessities, which spontaneously seek the means by which a satisfactory
solution may be attained.
The former notwithstanding, no one can minimize the importance of these
meetings, in which the directive energies of business come together for the specific
purpose of obtaining the most perfect knowledge of conditions affecting the different
human centers to which these energies belong.
This Conference is confronted by a fact: the extraordinary development of
Latin American commerce with the United States not as the result of artificial
factors, but as the direct consequence of the natural equilibrium of commercial re-
lations, altered by the war.
A fact of this importance neither can nor should be overlooked, and, indeed,
deserves to be carefully studied so as to obtain the greatest possible advantages,
from the standpoint of the welfare of the different nations of America.
This result must be achieved through the cooperation of merchants and men
of business of the whole Continent, assisted by the administrative element as well as
by the representatives abroad of all the countries of this hemisphere.
Second only to national solidarity, which urges each country to supply its
own needs, this last crisis has affirmed the existence of a continental solidarity,
still more potent than universal solidarity.
My country takes part in this Conference, convinced of the good purposes
which its fulfilment implies; eager, also, that the importance of Peru, as a unit in
the commercial relations of America, be duly recognized and appreciated.
Before the outbreak of the world war the greater part of my country's com-
merce was effected in Europe, because Peru obtained in the Old World at the same
time as better prices for its products, lower prices and greater facilities for the
manufactured articles which it required.
The war has radically changed this condition of affairs and in support of
this statement I would point out that, while in 1913, the foreign trade of Peru
with the United States was 31 per cent, the 1917 statistics give this proportion as
having been raised to 65 per cent.
In order that this position may be maintained within the normal boundaries
set by the recently inaugurated economic life of the word, it is important that both
the buyer and seller in the United States grant the Peruvian exporter and importer
greater or, at least, equal advantages which the buyers and sellers in Europe are
20 SECOND PAN AMERICAN COMMERCIAL CONFERENCE
willing to grant- This must necessarily be the touchstone by which to judge the
future importance of trade between Peru and the United States. Neither should
the matter of credits be forgotten when dealing with the importation of manufac-
tured articles into Peru. And this holds good with regard to other Latin American
countries, for the European manufacturer has always granted facilities which have
been denied by the American manufacturer, perhaps for the reason that his own
credit is evolved under conditions different from those which affect the European
manufacturer. This is a matter which deserves the most earnest attention.
With regard to conditions in Peru, these are such as to warrant the state-
ment that my country is well prepared to receive and do justice to all enterprises
tending to increase commercial and economic activities. The principal items among
its exports being represented by such commodities as copper, sugar, cotton, wool,
petroleum, rubber, etc., the product of industries securely established, it can be
readily seen that the wealth of the country is constantly progressing and its people
therefore constitute a market for the absorption of foreign manufactures necessary
for its requirements.
As a proof of its solid financial condition it must be borne in mind that its
gold monetary standard is established on a firm basis, the stabilization of the value
of the Peruvian pound in relation to the dollar, having been obtained through an
agreement with the United States Government by virtue of which part of the
balances accruing from commercial transactions with this country are deposited
in the Federal Reserve Bank of New York, the equivalent thereof being put into
circulation in Peru. Before this agreement had been carried out the Peruvian
pound was quoted at a premium of more than 20 per cent over the American dollar.
The class of products which Peru exports, the fact that the national debt is
of insignificant proportion, and the circumstance that the revenue of the country
is .constantly increasing, all these factors constitute the surest guarantee that can
be furnished as to the stability of the monetary system, the most powerful stimulus
for the investment of foreign capital, which in Peru is not exposed to the risks
consequent to fluctuation of the currency.
If the development of its commerce is of the greatest importance to Peru,
the investment of capital in productive undertakings is of still greater moment.
Few countries offer a better field for remunerative investments than Peru.
Irrigation, the building of railways and good roads, as well as mining, are especially
to be recommended.
Mr. Charles W. Sutton, a distinguished engineer of New York, who has lived
in Peru for some years, estimates the easily irrigable area of the coast at one
million acres, of which 126,500 acres the same authority considers are immediately
available for irrigation with practically no trouble. The lowest estimate is $19
and the highest $105 per acre for irrigating this land.
It should be remembered that arable land on the Peruvian coast increases
in value every day, so that it is easy to calculate the very productive investment
which irrigation constitutes in Peru.
Cotton and sugar cane, whose prices have been so much increased owing to
the war, are products that have been so extensively grown that they have taken the
place of others, the want of which has made itself felt by consumers in my country,
with the corresponding rise in the price of these commodities, nearly all of which
are articles of primary necessity.
With regard to railways, it is enough to state that the whole future of
Peru is bound up in the construction of railroads, and that all those which have
been projected offer returns of absolute security for the capital which may be
invested in them. Several mining zones of great richness would be at once available
by the construction of a few hundred miles of railway lines. To mention coal
alone, although Peru possesses immense layers in different regions in the country,
this article is still imported from abroad to make up the deficiency of home pro-
A railway of only fifteen miles, branching from the one which starts from
the splendid port of Chimbote, would solve the problem of coal supply sufficient for
the needs of all the Republic and would initiate an era of domestic prosperity of
almost incalculable value.
The petroleum industry in Peru is another extremely profitable opening for
foreign capital. The very rich district of Talara, at the extreme north of the
Republic is not the only one which could furnish abundance of mineral oil. Talara
TUESDAY MORNING SESSION 21
itself is capable of further development through the establishment of other com-
panies in that region.
It is unnecessary to state that Peru considers the investment of American
capital with the warmest interest. A proof of this is furnished by the Cerro de
Pasco Copper Corporation, which has obtained brilliant returns on its investments
and which is at present considerably increasing its capital so as to enlarge its
The wonderful results obtained by this company are outlined in a report,
recently published, which gives the gross income from the sale of metals in 1918
as being $22,867,000, and dividends paid totaling $4,393,000. It has been proved,
besides, that the Cerro de Pasco Copper Corporation can be considered one of the
lowest cost producers of copper in the industry, the company being able to deliver
metal in New York as low as any producer and even lower than many of them.
It is unnecessary, at this time, to deal at length with the importance of sea
transportation for the development of commerce and industry. This problem, for-
tunately, is one which holds the happiest augury for Peru, which, in addition to its
own fleet of steamers, those of the Peruvian Steamship Company, notes with much
satisfaction the additions made to existing lines and the bringing into service of
new ones, such as that which W. R. . Grace & Company contemplate establishing
with New Orleans as the home port in the United States.
I have only to add, gentlemen, while thanking you for your attention to
these brief remarks, that the Peruvian representatives to this Conference will give
every attention to such questions as may be addressed to them on all matters
which may lead to the better understanding of the conditions of the country from
the standpoint of the development of its commerce and specially as regards the
investment of capital in Peru.
DIRECTOR GENERAL BARRETT: I am sure, that you all enjoyed the Am-
bassador's address, because it was thoroughly practical. That is the kind of a
talk we like to have from the representatives of Latin America and the kind they
like to have from those of the United States. I am glad to say that an address
like that does not come under the classification, as one editorial writer said, of
"Latin-American oratory," but under the head of ''Latin-American facts."
I cannot tell you what pleasure I have, speaking from my own knowledge
of American commercial matters, in introducing the next speaker. Long years
before he became Secretary of Commerce I knew of his work in Congress. He
was one of the few men who were sympathetic with those of us, a small band,
who were trying in those days to awaken an interest in the relations of the United
States with the sister American Republics. From the day he became Secretary of
Commerce he has demonstrated the practical side of his powers of vision, and
under his administration the Department of Commerce and its Bureau of Foreign
and Domestic Commerce have done a wonderful work for the building up of the
trade between the United States and the other American republics.
I have great pleasure in introducing to you the Honorable William C. Red-
field, Secretary of Commerce of the United States.
THE SECRETARY OF COMMERCE: Mr. Ambassador, Mr. Barrett, Gen-
tlemen of the Conference: As we look back five years to the conditions that existed
before the war, it is as if we were looking toward an ancient period, one remotely
separated from us rather than one divided from us by so brief a time.
At that time the United States was itself a debtor nation. We had built up
our transportation systems, our public utilities, some of our industries by borrowing
from others the free capital which we did not ourselves have in sufficient quantity.
So that when the war broke out in 1914 we were debtors to the world to the extent
of something like live billions of dollars. We were slowly going "over the top"
of financial freedom we had' begun, but had only begun to invest our own capital
in countries that needed fresh resources of credit, but we were still at that time
drawing upon others for a large part of our own needs.
We lacked at that time the tools of foreign trade which our competitors had.
You are, yourselves, witnesses that in many of the great South and Central Amer-
ican cities there were banks representing Great Britain, Germany, France, Italy and
22 SECOND PAN AMERICAN COMMERCIAL CONFERENCE
other European countries which afforded to those nations the means of knowledge,
the means of supplying credit, the means of conducting business which we at that
time were almost wholly without. We lacked at that time, also, means of trans-
portation within our own control. While emerging from the position of a debtor
nation, though not yet out of that condition, we were at the same time endeavoring
to conduct our foreign trade largely through the facilities provided by our com-
petitors for their own purposes an extraordinary position for as great a nation
as our own, but one which every man familiar with the foreign field knows to
have been a real one. We did our business with Central and South America
through the aid, in major part, of foreign owned and controlled banking institutions
and we utilized the fleets of others for conveying our commerce.
It has always been, to my mind, one of the most vital proofs of the competing
power of America in the world that under these conditions she did a steadily increas-
ing trade in manufactured products so that the great expanding item in our foreign
trade was that of fully finished products which had grown to a point before the war
where they exceeded the sales of our agricultural products. I cannot too strongly
emphasize the picture of those times and the conditions under which we then
labored because they afford a dark background against which to project the picture
of the present hour.
We were a debtor nation, we were using the banks of our competitors, we
were using their ships, the detailed operations of our commerce passed through the
hands of those with whom we competed and were open to their scrutiny. Never-
theless, under those conditions, such was the competing power of the United
States that our competitive trade /grew steadily !
With the passage of five years those conditions have gone, never, we hope,
to return. It is no longer necessary in a great South or Central American city for
us to use the banking institutions of our competitors to do business. Information
can be brought to our exporters from practically every portion of the great conti-
nent to the southward^ without its being divulged to any other than the person for
whom it is obtained, and we are able ourselves now to extend, not as we ought but
as a beginning, the credits in the field of commerce and industry which we were
not able to grant at all before the war, and which our competitors did extend when
we could not. That power has come to us in some measure with the promise of
Furthermore, we are no longer dependent upon the fleets of our com-
petitors for doing business with the world at large, nor need we be confined as
respects our shipments of goods to routes which may be laid down by lines whose
interests are not our own. I have suggested within the past ten days at the request
of the Chairman of the Shipping Board two new routes, one along the Eastern
arid Northeastern coast of South America and one along the Northern shore of
South America, primarily from the point of view of the needs of American com-
merce and incidentally for the purpose of providing not merely facilities for the
outside world to do commerce with South America but also means of intercom-
munication between the states of South America themselves.
For the spirit of the Department of Commerce fully expressed is this: That
these things are mutual interests, that there are not and in the long roll of time
there cannot be diverse interests between the peoples of the same continent, for
we are essentially one in any large and deep view of commerce and industry; that
the prosperity of South and Central America is inextricably interwoven with ours,
and the things which seem at times to divide us are superficial, while the basic
things all tend to union.
We are, therefore, equipped as never before with the tools of trade. We did
a growing trade without them, with them we expect to do a larger and more
I want to speak to you of two phases of foreign trade and then to pass on
to certain details of that commerce which I wish to bring to your thought. There
are two ways in which foreign commerce may be carried on. Back of both lies
our need of an export trade. That need can be very simply shown. Before the
war, even, the industries of America were so productive that the domestic market
of the United States, vast as it is, was not permanently able to absorb all the
products of all our industries running continuously full time. There came times
when there was surplus production for which a market had to be found abroad.
Furthermore, there were growing up in America industries which depended
nearly or quite exclusively upon the foreign market and which adapted themselves
TUESDAY MORNING SESSION 23
peculiarly to it. There was also, as I have suggested, the beginning of an outreach
of capital into the foreign fields.
Today, as another result of the war, the output of American industries has
been grealty increased. For several years every effort possible was made to ex-
tend the productive capacity of our industries. This was indeed done for purposes
of war but it was very wisely guided, in many industries with a definite expectation
of using it for peace when the war should have ended. So that today the pro-
ductive power of the United States is very much larger than it was before the war.
If it was true, therefore, that our productive power before the war, when
running continuously for long periods of time, touched and at times exceeded the
capacity of our own country to absorb it all, it is even more true today that we
need as a matter of our own economic security, foreign markets for our products
else we shall not be able continuously to run our industries full time. There, is,
therefore, in our outreach after foreign trade, a normal seeking to supply a home
As I have said, this foreign trade can be roughly divided into two kinds. It
is not easy to define them exactly, because the necessity for definition has but just
arisen and our thought has hardly become clear upon the subject. But I may say
that one is the competitive and the other the constructive foreign trade. Or to state
it differently one I might call commercial trading and the other national develop-
ment. The one is of the hour and the day and the month ; the other is for long
periods of time. The one is temporary, the other permanent. The one is strictly
competitive, the other is strictly constructive.
Let us look for a moment on these two possible phases of foreign trade. The
second, which is the greater, the better, the more helpful, has but just become
possible to the United States. The other is the one upon which hitherto we have
based nearly or quite all our foreign transactions. It is a comparatively simple thing
to send out into the foreign field traveling salesmen, to order them to go through-
out the length and breadth of South and Central America, to offer standard goods
now required in those markets at slightly lower prices than they are offered by
our competitors. That, I say, is a comparatively simple thing to do. It needs no
special brains or acumen to see that if goods are offered of equal quality at a lower
price on similar terms and with equal transportation facilities, the better economic
advantage will win.
But that process is not one which, carried to an extreme as it tends always
to go, is in the long run generally helpful. For the hour, for the time, for the im-
mediate transaction, it may amply serve. It builds nothing, it is not of a permanent
character, the countries in which and from which that business is done do not
gain from it any large and permanent increase of wealth and power. It is of im-
mediate and temporary benefit only. It closes one transaction and passes on to the
next. Competition of that character, at its extreme, tends always to destroy the
weaker element, to aggrandize the stronger element. In any such class of business
as that the drift is always toward the survival of the fittest, the organization which
is economically most fit. The progress of that competitive trading, carried to its
ultimate and logical conclusion, is always toward monopoly.
In competition, unregulated save by the power of the competitor, the end is
the survival, of the strong and the passing of the weak. It is not that class of
tiade which, _ in my judgment, is best either for South and Central America or for
North America. Trade of that kind is passing into secondary importance.
The kind of trade for which we seek is that which is permanent and which
sheds its benefactions alike upon buyer and seller and upon all who serve on
either side. For commerce, if it is to stay, must be a servant of the public. Com-
merce is not a servant of the public unless it is based upon permanence of mutual
interest, unless we deal together as those who buy because it is desirable they should
buy and those who sell because it is desirable that they sell, and those who in this
way cooperate for the mutual good. Unless we do that our commerce is essentially
Furthermore, there must not enter into the background of the purpose of
trade any pursuit of national power or any extension of political authority however
indirect. The world has had one very sad example of great national selfishness.
It has seen the downfall of a great power, wonderfully equipped for industry,
guided by the hand of science to a degree equalled by no other nation in every
material factor powerful and strong but upon its spiritual side selfish and weak.
This generation has seen the great tragedy of the collapse of that selfishness and
24 SECOND PAN AMERICAN COMMERCIAL CONFERENCE
its exposure to the world. The spirit of Germany entering into America was not
a spirit intended in its essence to be helpful to America, it was not a spirit, whether
manifested in Buenos Aires or New York, that was for the ultimate advancement
of Buenos Aires or New York, it did not go to Valparaiso or Lima that either of
the countries in which those great cities are located should be the chief beneficiary
by their coming there. German enterprise went outwardly indeed for the same
purposes that others went, but in its inward spirit for the growth of the power
which sought to reach and to control the world for its own purposes. Those facts
the world now knows.
And strong, mighty and effective as the great commercial and industrial
giant Germany was, it was like the image in Holy Writ standing upon feet of clay
which were finally broken away and the purposes revealed in their essential weak-
No nation is powerful enough to take the place that was thus occupied and
to assume the spirit that was thus used. There does not lie in economic power
ability to overthrow the human spirit and the human spirit revolts and will always
revolt against attempt at enthrallment by economic force. There must come into
our mutual trade the spirit of service and if it is in my power to say any one word
to you or to my fellow countrymen which I would write deep into their hearts and
vours as the basis of all our mutual transactions in the future days, it is this thought
of mutual service. Unless we serve you, we shall fail- Unless you serve us, you
will fail. Unless together we serve the world by our trade, we shall all fail and
those who will serve will come and take our places.
The law of service through trade may not as yet be written as clearly
before the minds of the world as is the danger arising from selfishness in trade,
yet it is the antithesis of that selfishness and the reaction of the commercial, the
intellectual and the spiritual forces of the world must lead them to recognize in
principle and carry out in practice the ideal of service in trade.
The United States is suffering now from an overdose of prosperity. We
have paid the five billions we owed and there is something like twelve billions due
us from those to whom we ourselves were debtors not many years ago. We have,
as I have said, an enormous productive capacity which we seek the means to use.
We have a huge reserve of gold behind our currency and in every element of eco-
nomic power stand at the very height of prosperity. But if we glory in that position,
if we regard it as power to be used only for greater gain, we shall default the
moral obligations we owe the world.
This very condition, however, brings with it serious problems. For example,
how shall we be paid the billions due us from the world at large? From whence
and by what method shall the payment come? There are but three ways known
in which debts can be paid. They can be paid in cash or in credit, which is a
deferred form of cash, they can be paid in services, or they can be paid in goods.
Are there any other ways of paying debts than these three?