Chapter 6. American Business Methods
If I should be asked what is most essential for the successful carrying on
of business in America I would say advertising. A business man in America
who intends to succeed must advertise in the daily, weekly,
and monthly papers, and also have big posters in the streets.
I do not believe any up-to-date merchant in America fails to do this.
Every book and magazine contains many advertisements; sometimes fully half
of a big magazine is covered with notices or pictures of articles for sale.
Wherever you go the inevitable poster confronts you; and even when
you look out of the window of the train you see large sign-boards
announcing some article of trade. The newer the brand the bigger the picture.
If when you get into a street-car you look around you will see nothing
but advertisements of all kinds and sorts, and if you answer an advertisement
you will keep on receiving notices of the matter about which you inquired.
Even now I receive letters urging me to buy something or other
about which I sent a letter of inquiry when I was in America.
At night, if you stroll round the town you will be amazed by the ingenious
and clever signs which the alert minds of the trades people have invented,
such as revolving electric lights forming the name of the advertiser
with different colors, or a figure or shape of some sort
illustrating his wares. But even this is not thought sufficient.
Circulars are often sent to everyone, making special offers,
setting forth forceful reasons why the commodity advertised is indispensable.
Certain stores make it a point to announce cheap sales once or twice a year,
with from 10 to 25 per cent. reduction. It should be noted
that no tradesman voluntarily sells his goods at a loss,
so that if during a sale he can give as much as 25 per cent. discount
we can easily calculate the percentage of profit he generally makes.
There are cases where men who started as petty dealers have,
after a few years, become millionaires.
To show the importance of advertising I cite the well-known sanitary drink
which is a substitute for tea and coffee, and which by extensive advertising
in almost every paper published in every country has now become
a favorite beverage. The proprietor is now a multi-millionaire and I am told
that he spends more than a million dollars a year in advertising.
Another thing inseparable from American business is the telephone.
A telephone is a part of every well-appointed house, every partner's desk
is provided with a telephone, through which he talks to his clients
and transacts business with them. In all official departments in Washington
scores of telephones are provided; even the secretary of the department
and the chief of the bureau give orders by telephone.
It goes without saying that this means of communication
is also found in the home of almost every well-to-do family.
The invention of a telephone is a great blessing to mankind;
it enables friends to talk to each other at a distance without the trouble
of calling.* Sweethearts can exchange their sweet nothings,
and even proposals of marriage have been made and accepted
through the telephone. However, one is subjected to frequent annoyances
from wrong connections at the Central Office, and sometimes
grave errors are made. Once, through a serious blunder,
or a mischievous joke, I lost a dinner in my Legation in Washington.
My valet received a telephone message from a lady friend
inviting me to dine at her house. I gladly accepted the invitation,
and at the appointed time drove to her home, only to find
that there was no dinner-party on, and that I should have to go hungry.
With some trades, in order to create a new market,
commercial travellers or "drummers" give their goods away for nothing.
Experience has proved that what they lose at the start they recover
in the course of time, receiving in addition triple or tenfold more business
than the cost of the original outlay. These commercial agents travel
through all sections of the country to solicit business;
they call upon those who can give them orders; they look up those
who are engaged in similar businesses to their own,
and, if they are retailers, they invite their orders, or ask them
to become sub-agents. These gentlemen practically live on the trains:
they eat, sleep, and do their business while travelling.
One of them told me that in one month he had covered 38,000 miles,
and that he had not been back to his firm for three months.
There is no doubt that the American people are active, strenuous workers.
They will willingly go any distance, and undertake any journey,
however arduous, if it promises business; they seem to be always on the go,
and they are prepared to start anywhere at a moment's notice.
An American who called on me a short time ago in Shanghai
told me that when he left his house one morning at New York,
he had not the slightest notion he was going to undertake
a long journey that day; but that when he got to his office
his boss asked him if he would go to China on a certain commission.
He accepted the responsibility at once and telephoned to his wife
to pack up his things. Two hours later he was on a train
bound for San Francisco where he boarded a steamer for China.
The same gentleman told me that this trip was his second visit to China
within a few months.
American salesmen are clever and capable, and well know how to recommend
whatever they have to sell. You walk into a store just to look around;
there may be nothing that you want, but the adroit manner
in which the salesman talks, and the way in which he explains
the good points of every article at which you look,
makes it extremely difficult for you to leave the store
without making some purchases. Salesmen and commercial travellers
in the United States have certainly learned the art of speaking.
I once, however, met a remarkable exception to this rule
in the person of an American gentleman who was singularly lacking in tact;
he was in China with the intention of obtaining a concession,
and he had nearly accomplished his object when he spoilt everything
by his blunt speech. He said he had not come to China
for any philanthropic purposes, but that he was in the country to make money.
We all know that the average business man is neither a Peabody nor a Carnegie,
but it was quite unnecessary for this gentleman to announce
that his sole object was to make money out of the Chinese.
Up to a few years ago business men in America, especially capitalists,
had scarcely any idea of transacting business in China.
I well remember the difficulty I had in raising a railway loan in America.
It was in 1897. I had received positive instructions from my government
to obtain a big loan for the purpose of constructing the proposed railway
from Hankow to Canton. I endeavored to interest well-known bankers and
capitalists in New York City but none of them would consider the proposals.
They invariably said that their money could be just as easily,
and just as profitably, invested in their own country,
and with better security, than was obtainable in China.
It was only after nearly twelve months of hard work,
of careful explanation and much persuasion, that I succeeded in finding
a capitalist who was prepared to discuss the matter and make the loan.
Conditions have now changed. American bankers and others have found
that investments in China are quite safe. They have sent agents to China
to represent them in the matter of a big international loan,
and they are now just as ready to lend money in China as in Europe,
and on the same terms. In conjunction with the representatives
of some large European capitalists they even formed a powerful syndicate
in China, for the purpose of arranging loans to responsible Chinese investors.
In the spring of 1913, however, they withdrew from the syndicate.
The opportunities to make money in America are great
and a young man with only fair ability, but an honest purpose,
will always get something to do; and if he is industrious
and ready for hard work, if he possess courage and perseverance,
he will most surely go forward and probably in time become independent.
There are hundreds of millionaires and multi-millionaires in America who,
in their younger days, were as poor as sparrows in a snowstorm,
but through perseverance, combined with industrious and economical habits
they have prospered far beyond their own expectations.
The clever methods they adopt in the carrying on of their business
cannot but arouse our admiration, and Chinese merchants would do well
to send some of their sons to America to study the various systems
practised there. But no nation or any class of people is perfect,
and there is one money-making device which seems to me
not quite sound in principle. To increase the capital of a corporation
new shares are sometimes issued, without a corresponding increase
in the actual capital. These new shares may represent half,
or as much of the actual capital as has been already subscribed.
Such a course is usually defended by the claim that as the property
and franchises have increased in value since the formation of the corporation
the increase of the stock is necessary in order to fairly represent
the existing capital. It is said that some railway stock
has been "watered" in this way to an alarming extent,
so that a great deal of it is fictitious, yet though it exists only on paper
it ranks as the equal of the genuine stock when the dividends are paid.
Whether or not such an action really is justifiable, or even moral,
I leave to the Christian clergy and their followers to decide.
The promoters and directors of such concerns have at least hit upon
a very clever method for becoming rich, and if the securities
of the original shareholders are not injured, and the holders
of the genuine and the watered stock can share equally without endangering
the interests of all, perhaps such an action may be less blamable,
but it is a new kind of proceeding to Orientals.
I must not omit to mention, however, the confidence which is placed
in the honesty of the people in general; for example, you enter an omnibus,
you will find the driver, but no conductor to collect the fare.
"It is up to you" to put the fare into a box, and if you do not pay
no one will ask for it. Yet every fare is paid. I have never seen
a dishonest man who omitted to pay. This is a remarkable fact
which I have noticed nowhere but in America. I suppose it is because
the people are not poor, and as they are always able to pay the fare
they do so. They are too honest to cheat. It is certainly a good way
to encourage people to be honest, to put them on their honor
and then rely on their own sense of uprightness.
The most curious sight I have ever seen was the Stock Exchange in New York.
It is used as a market for the purchase and sale of various articles,
but there were no goods exposed for sale. I saw a good many people
running about talking, yelling and howling, and had I not been
informed beforehand what to expect I should have thought that the men
were getting ready, in their excitement, for a general all round fight.
However, I did not see any exchange of blows, and I did not hear
that any blood was shed.
Another remarkable feature of the scene was that I did not see
a single woman there; she was conspicuous by her absence.
Whether or not the rules of the Exchange allow her to become a member
I do not know; that is a question for the woman suffragists to investigate,
but I learned that it is a wealthy association consisting of 1,100 members,
and that to become a member one must be a citizen of the United States
of 21 years of age or more. The number of members is limited.
Persons obtain membership by election, or by the transfer
of the membership of a member who has resigned or died.
A new member who is admitted by transfer pays an initiation fee
of 2,000 gold dollars, in addition to a large fee to the transferrer,
for his "seat in the House". A member may transfer his seat to his son,
if the Committee of the Exchange approve, without charging for it;
but in all cases the transferree pays the above-mentioned initiation fee
of 2,000 gold dollars.
The prices for these seats vary, the fluctuations being due
to the upward or downward trend of the stock market. Within recent years
the price has risen considerably, and as much as 95,000 gold dollars
has been paid to the transferrer. This is much higher than the price
usually paid by new members in Stock Exchanges in Europe,
yet when a seat becomes vacant there is no lack of purchasers.
It is clear that a seat in the "House" is very valuable to the holder.
In the building each member has a stall allotted to him
where he has a telephone for his exclusive use; this enables him
to communicate every transaction done in the Exchange to his business house,
and to keep up connections with his constituents in other cities.
When one of his constituents, say in Washington, D.C.,
desires to buy a certain security the order is conveyed to him direct,
and executed without delay. I have seen a transaction of this kind
executed in ten minutes, though there was a distance of several hundred miles
between client and broker. The amount of business transacted
in the "House" every day is enormous, aggregating many millions of dollars.
New York also has other Exchanges, where different articles of merchandise
are purchased and sold, such as corn, coffee, cotton, etc.,
and the volume of business transacted daily in that "Empire City"
must be immense, and almost beyond calculation.
Of course there are Exchanges in Chicago, Boston, Cincinnati,
St. Louis, Philadelphia, Baltimore, Washington and other cities,
all conducted on similar lines, but the prices are always governed
by the quotations from New York. This skilful and systematic
way of doing business is remarkable, and I am inclined to believe
that New York is ahead of many cities in South America and in Europe.
No wonder that the services of Americans are required by other countries
in industrial and technical concerns. Some years ago,
when I was in Madrid, I noticed that the street tram-car
was running according to the American system, and upon inquiry
I was told it was controlled by an American syndicate.
The pursuit of wealth in America is intense; it is apparent everywhere
and seems to be the chief aim of the American people.
Because of their eagerness to become rich as soon as possible
they are all in a constant hurry. You may see people in the streets
almost running to their offices, at luncheon they do not masticate their food,
they bolt it, and in less than ten minutes are on their way
back to their office again. Everyone is urged on by this spirit of haste,
and you frequently hear of sudden deaths which doctors attribute
to heart failure, or some other malady, but which I suspect
are caused by the continual restless hurry and worry.
People who are so unnaturally eager to get rich naturally suffer for it.
It is the general belief that Americans do not live as long as Europeans.
They make money easily and their expectations are high.
I have known many Americans who, in my opinion, were wealthy people,
but they themselves did not think so; in fact, they said they were poor.
Once I asked a gentleman, who was known to be worth
half a million of gold dollars, whether it was not time for him to retire.
He pooh-poohed the idea and said that he could not afford to give up his work.
In reply to my inquiries he informed me that he would not call a man wealthy
unless he should be possessed of one or two millions of dollars.
With such extravagant ideas, it is no wonder that Americans work so hard.
I grant that a man's mission in this world is to attain happiness.
According to Webster, happiness is "that state of being
which is attended with enjoyment," but it is curious to observe
what different notions people have as to what happiness is.
I know an Englishman in China who by his skilful business management,
combined with good luck, has amassed immense wealth; in fact,
he is considered the richest man in the port where he resides.
He is a bachelor, over seventy years old, and leads a very simple life.
But he still goes to his office every day, and toils as if he had to work
for a living. Being told that he should discontinue his drudgery,
as at his death he would have to leave his large fortune to relatives
who would probably squander it, he gave an answer which is characteristic
of the man. "I love," he said, "accumulating dollars and bank notes,
and my enjoyment is in counting them; if my relatives
who will inherit my fortune, take as much pleasure in spending it
as I have had in making it, they will be quite welcome to their joy."
Not many people, I fancy, will agree with the old bachelor's view of life.
I once suggested to a multi-millionaire of New York that it was time for him
to retire from active work, leaving his sons to carry on his business.
He told me that he would be unhappy without work and that he enjoyed
the demands his business made on him each day.
Many a man's life has been shortened by his retiring from business.
It is the mind rather than the body that lives, and apart from their business
these men have no thoughts and therefore no life. A man's idea of happiness
is greatly governed by his personal tastes, and is influenced
by his environment, his education and the climate.
The form which it is to assume may vary with persons
of different tastes and positions, but it should not be carried out
for his own benefit solely and it should not be injurious to his health
or to his intellectual and spiritual improvement, nor should it be detrimental
to the interests of other people.
Chapter 5 Chapter 7
Ken Davies' Home Page Email Ken Davies China Page China latest news