4. Through trade information contained in newspapers, trade journals, market reports, reports of private companies, and through various Government reports.

As new markets have developed, brokers have found it desirable to maintain branch offices in the most important domestic market centers. Such a representative of a brokerage firm can keep the home office constantly in touch with local conditions. This is a much more reliable means of getting information than is otherwise possible.

The broker may choose to advertise either particular goods or his service. In either case, the advertising problem is very much the same as that confronting the sales manager of home products. He must decide whether to advertise to the consumer or to his immediate outlets. He may choose to advertise to both the consumer and his customers, and if he does he must be careful to harmonize the two appeals.

The broker may wish to follow up his advertising by general means, by sending personal sales letters periodically, or whenever deemed advisable by the sales manager.

FOLLOWING THE MARKET

The import broker performs a highly specialized service in the market in which he operates. He maintains the closest possible contact with market conditions, so as to be able to advise either the seller or the purchaser regarding the existing level of prices and the probable future trend. Markets and exchanges for staple commodities, especially foodstuffs, are in session almost daily. Prices quoted and demand-and-supply information can be obtained from these markets or from the local newspaper and trade-information reports.

The Foreign Commerce Service of the Department of Commerce compiles periodic reports on acreage, crop statistics and prospects, price trends, exports, imports, and market reviews on agricultural production abroad and also reports on production, stocks, exports, imports, and developments affecting the imports of mineral and forest products.

QUOTATIONS AND OPTIONS

The import broker is invested by the seller with varying degrees of authority to bind him in his brokerage transactions. In some instances he may be able to make "firm" quotations without referring back to his principal for confirmation. In other instances-and these are more numerous-his quotations are tentative and must be confirmed by the seller. However, even in the latter case, his judgment regarding the market is more frequently accepted than not, and tentative quotations made by a reputable broker are usually confirmed as a matter of course. Where caution is required as to purchases, options are resorted to, to insure a supply. Often, the seller will quote an option, in which case he will either give the buyer some concession or pay him outright for the privilege of selling a certain quantity at a certain quotation within a given time.

THE INDENT MERCHANT

An indent merchant solicits orders for goods from domestic merchants and then proceeds to send these orders to various merchants in

the foreign countries with whom he has connections. Sales are made by sample or from catalog, and this method is quite effective for certain classes of merchandise. An indent merchant usually handles a large variety of commodities; hence, he must have numerous connections in order to fill them.

The bulk of the indent merchant's business is confined chiefly to highly specialized items. The orders are usually for relatively small quantities of merchandise. In some cases the indent merchant carries small stocks of goods for which he expects numerous immediate orders. As this phase of his activity increases, he approaches the functions of an import merchant.

THE IMPORT MERCHANT

In the import trade in staple goods, the import merchant usually conducts a rather specialized business. The successful conduct of a business of this type requires an intimate knowledge of the product itself, the various types and grades, the different countries from which these may be obtained, an abundant working capital or a good line of credit, and a thorough understanding of the markets in the United States which require the product.

TENDENCY TOWARD SPECIALIZATION

The tendency has been toward increased specialization in the import business. Import houses handling only one line of goods such as cotton, wool, silk, rubber, furs, etc., are very common. Examples of houses handling only one grade of a particular line of goods are often found, such as Egyptian cotton, Alaskan furs, Chinese silks, French laces, Italian wines, German toys, etc. Another type of specialization often found is the import house handling only groups of related products such as tea, coffee, and cocoa, wines and liquors, or perfumes and cosmetics. Large import firms handling several lines of merchandise are highly departmentalized and designate salesmen who sell only goods in their respective departments. Likewise, the purchasing agents are restricted to purchases for their department. The purchasing and selling advantages of such an organization are quite apparent. It would be much more difficult to obtain equally efficient salesmen and purchasers who have a high degree of technical knowledge in several lines of goods.

STOCKS

The import merchant usually stocks the goods which he handles. In addition to his purchases for his own account he may import on order. The importer who conducts most of his business "on order" does not require the large amount of capital which is needed by the import merchant who imports for his own account, and depends on his judgment of demand conditions and his ability to find markets for his reimbursement.

The amount of stock an import merchant carries depends largely upon the amount of capital he is willing or able to tie up at one time. Then, of course, possible demand being taken into consideration, the import merchant will stock heavily during a period of rising prices and stock as lightly as possible during a period of falling

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prices. If the import merchant suspects that he may not be able to supply his customers because of a possible shortage in the producing countries, he will resort to buying options, buying for future deliveries or buying outright and holding the goods in stock. In brief, practically the same principles as apply to the stocking of domestic goods apply to the stocking of imported goods. Where the reputation and ability of foreign producers is well known, importers will sometimes make contracts for desired merchandise as much as 6 months in advance of the shipping date in order to insure a supply, and in particular instances have been known to go so far as to advance money to the producer, upon adequate security, to enable him to fulfill the contract.

DIFFICULTIES IN CUSTOMS CLASSIFICATION

Unfavorable tariff regulations often make the importation of certain commodities practically impossible, and numerous shipments are held up at the wharves awaiting the settlement of disputes as to tariff classification. For example, the customs officials may insist upon classifications that place the shipment in a high-duty category, while the import merchant will contend that they should enter under a lower classification. In order to clear the goods, the import merchant must present satisfactory evidence to bear out his contention, and the delay and expense of obtaining the proof is sometimes great.

OTHER HAZARDS

Changes in quantities of goods imported often result from the fact that local manufacturers have increased their production sufficiently to supply the domestic demand. New inventions or new methods of production that ultimately lower the cost of production of a certain article often bring about the above conditions. The import merchant must watch these developments if he is to know in time when to unload his stocks without taking drastic losses.

SPECIAL SERVICES TO INCREASE SALES

In some instances, particularly in the case of foodstuffs, import merchants may perform some of the functions of a manufacturer. Some of these functions are grading, dividing or sorting, packing, packaging, mixing, blending, and even partial processing. În many cases, the performance of one or more of the above functions will add materially to the sales volume of a particular product and may in certain instances mean the difference between a profit or loss on the article in question.

The larger import merchants maintain branches in the important world markets and producing countries. This enables the importer to keep in closer touch with the markets in those areas, to purchase more advantageously, and thus to perform that special service upon which his existence depends.

IMPORTERS' ASSOCIATIONS

Importers' associations are valuable in that they furnish the means through which collective bargaining with similar groups of foreign

exporters can be made effective. Importers, through such an organization, may be able to induce foreign shippers to make concessions which would be difficult for individuals to obtain. As an added service, import associations as a group are often able to collect valuable market information of use to their members and keep abreast of changes in duties and customs regulations in their behalf.

IMPORT MERCHANTS AS AGENTS

Import merchants are often exclusive agents for foreign shippers, and function as such in a manner similar to that already discussed in connection with the import broker.

FOREIGN PROCESSING PLANTS

Some import merchants selling by brands and attempting to maintain a high and uniform quality have gone so far as to establish processing plants in the foreign countries near the source of the raw materials used. The importer sends his own representatives into the field to purchase the raw materials and utilize their own processing plants to insure uniformity as to quality and kind. A saving is sometimes effected in this manner, but more often the importer engages in processing to insure uniformity of kind and quality, rather than to make an additional profit. This is sometimes done in the case of canned or processed food products, such as butter and cheese. The range, grade of animal, quality of feed, and climate affect a cow so that the quality, color, and taste of milk and milk products are affected; hence, an importer who buys raw materials for further processing can see to it that the kind and quality of the milk desired is obtained from animals of a certain locality, breed, or range. Importers are then in a position to know exactly what the finished product will be like and can advertise their trade brands more judiciously.

WHOLESALER AND JOBBER

The following remarks should be prefaced by the statement that the consensus is that the distinction which formerly existed between the wholesaler and the jobber has been eliminated in staple commodities. The term "jobber" is becoming obsolete. Some mention is still made of jobbers in the produce trade, especially in the city market centers, in the candy and confectionery trade, in the hardware business, and finally in the piece-goods trade. Upon close examination, it is found that these so-called jobbers are really small wholesalers. The term "jobber" is inserted for the benefit of those who think of the jobber

under the old definition.

The wholesaler or jobber is one of the chief means of distributing imported goods. Larger wholesalers who import goods in large quantities directly usually maintain an import department, and contacts with foreign sellers are made through this department. National wholesalers carrying a complete assortment of goods often handle both domestic and foreign merchandise. Articles having a wide consumer appeal such as proprietary medicines, toilet articles, unique hardware products, and other packaged goods are best handled through wholesalers. Marketing of articles that have a wide consumer appeal

through wholesalers or jobbers is desirable because the wholesaler is farther down the line of distribution and has more connections with the ultimate consumer. Some foreign sellers have gone even further than the wholesaler, and market their goods directly to the retailer. This is rarely practical, but the seller will sometimes do this in an effort to introduce a new commodity or a commodity that requires special selling effort.

In brief, the sale of imported goods through wholesalers or jobbers does not present any problems different from those presented by domestic goods. The wholesaler is just as important a channel of distribution for foreign goods as he is for domestic goods. Contact between the foreign seller and the domestic wholesaler is effectively made through the sales agent of the foreign seller.

SOURCES OF INFORMATION

One of the chief sources of information used by the importer of staple goods is the foreign seller. A great deal of trade information, in the form of trade magazines, advertising materials, etc., is sent to prospective buyers, unsolicited, as a matter of good selling technique. Information of this sort cannot be relied upon without further investigation but, when checked through other sources, often proves of great value to the import merchant.

A second source of information is the sales letter. Very often sales effort is built around some peculiar development in the foreign market, and the foreign seller is not likely to disregard any selling point that presents itself. This information is not too reliable but, when checked, may prove of immense value to the importer, as to the quantity and the most favorable time to buy.

A third source of information, and a very important one, is the Federal Government, which, with its trained personnel, is designed to serve the business public efficiently. The Bureau of Foreign and Domestic Commerce is developing the same service to importers as has long been afforded exporters.

Some importers maintain buying agents abroad who keep their offices supplied with current information. For example, a member of almost every tea company resides in one of the leading world tea markets, to bid at the tea auctions and keep his principals informed of market trends.