GENERAL ARTICLES

It Can Be Done

BEVERLEY OWEN June 15 1932
GENERAL ARTICLES

It Can Be Done

BEVERLEY OWEN June 15 1932

It Can Be Done

One of Canada’s international salesmen offers practical suggestions for transforming Conference agreements into effective action

BEVERLEY OWEN

GENERAL ARTICLES

OUT of the Imperial economic conference at Ottawa there is expected to emerge a system of preferential tariffs and a network of concessions to further the exchange of commodities and products between the various parts of the Empire.

But when the statesmen and economists have finished their work, and a sheaf of documents and resolutions have been signed and sealed and ratified by the Parliaments concerned, what then? In what manner are these prospective agreements to be brought into action? Are they to be reverently filed and left to work out their own destiny, or is there to be an aggressive, human driving power behind them?

An automobile is given a motor and a set of wheels, but it won't run until someone “steps on the gas.” The same principle applies to the Empire trade machine.

Since it is the business men, those actively trading over the inter-Empire counters, who will be most intimately associated with whatever arrangements are made, the writer asked Harold F. Ritchie, one of Canada’s most successful international salesmen, if he would offer practical, down-to-earth ideas for transposing the conference parchments into an effective, moving reality.

A Practical System Needed

\ÆRRITCHIE is head of the large mercantile concern that bears his name and which has its headquarters in Toronto.

It is incorporated in half a dozen countries, including Great Britain and the United States; and in the distribution of universally known proprietary lines, some of which Mr. Ritchie and his associates control or own outright, it has penetrated every comer of the civilized world and some comers not so civilized. Branches and agencies are maintained in every part of the British Empire. He is president and chairman of International Proprietaries, and several other firms.

Bom in Bobcaygeon, Ontario, fifty-one years ago, his boyhood spent on Manitoulin Island. Harold F. Ritchie started a small and precarious commission agency business in Toronto, the foundation of the present world-wide sales organization. In his youth, because of his selling prowess, he earned the nickname of “Carload” Ritchie. As such, he is known from Moscow to Buenos Aires and from London to Shanghai.

On an average. Mr. Ritchie travels about 100.000 miles a year, and he has now taken to the air to facilitate personal supervision of his far-flung commercial system. Recently, accompanied by Mrs. Ritchie and his secretary John Spence, he completed in four weeks a 10.000-mile airplane tour of the northern part of South America and the West Indies. He knows the Empire at first hand, and has an appreciation of varying points of view and conditions

“Empire trade is not just an ideal,” he said. “It has tremendous substance and potentiality. But it is a merchandising proposition, first, last and all the way.”

And on that basis he proposed a definite plan of commercial action. He would roll up the sleeves of preferential tariffs and put them to work under the aegis of closely linked and semi-official boards of liaison and intelligence, operating as auxiliaries to all the Empire Governments. Federal, Provincial and Colonial. They would be composed entirely of men with keen merchandising sense, initiative and practical sales ability. The whole system would be co-ordinated under a central board in London.

This is just a bare outline of the Ritchie structure, and, as it stands, it approximates other similar ideas. But Mr. Ritchie’s plan has greater virtue in that he suggests the working machinery. And he offers it more or less complete for discussion on its merits. At the same time, he proposes a drastic change in prevailing taxation methods. Especially

does he favor removal of handicaps in the development of export trade. He referred to them as “brake” taxes.

With one or two staccato sentences, Mr. Ritchie cleared the road of pious platitudes. He spoke with the force of definite conviction, in a direct sales manner. He is short and stocky, with a massive head, and his ruddy, clean-shaven face is surmounted with a heavy shock of iron-grey hair.

"Canada is fundamentally interested in British merchandise,” he said. ‘The foundation of Canadian trade was laid with it years ago. And the same is true with the other Dominions and colonies. It is my conviction that British peoples everywhere really want to spend their money within the Empire.

“But we need propaganda to sell to ourselves the idea that we are a great family. There should be a great get-together trade rally. And it must be handled by practical people. When this is done, preferential tariffs will go to work.”

With these premises he launched into his plan. He leaned forward, his folded arms resting on his desk.

“The system I have in mind,” he began, “calls for the establishment of Empire trade boards in each Canadian province. It is essential that their members be thoroughly experienced in merchandising. No theorists or dreamers need apply. Service should be voluntary. This would eliminate self-interest. Each of these provincial boards would work in co-operation with the local customs authorities.

“Now, at Ottawa, there would be a central Canadian bureau with a personnel drawn from the provincial boards, and this Federal office would conduct its activities in close liaison with the Ministers of customs and trade and commerce.

"In turn, it would be subsidiary to a general Empire clearing house in London.”

Co-ordinated Empire Trade

SIMILAR systems, operated in the same way, he explained, would be established in all the Dominions, India and the colonies, the latter perhaps acting in geographical groups. He cited the West Indies as an example. Newfoundland might be persuaded to join the Canadian chain.

“What would be the function of these boards?” he continued. “First of all. in order to import goods, a merchant, dealer or consumer would have to have a license number issued by the customs, and he would be under obligation to notify his Provincial board that he was placing an order abroad. He would be at liberty to conceal prices, transaction terms, names of foreign shippers with whom he proposed to deal and other business secrets. I am not advocating an elaborate system of commercial spying. It would be a simple matter for an importer to use a cut carbon order book.

“All that the board desires to know is that John Jones is importing, shall we say, mirrors or table glassware from Czechoslovakia. Then the Provincial board would say to Mr. Jones, politely: ‘Can you not buy these goods in

Canada and, if not, can’t you buy them in the British Empire?’ Could not the Empire spirit be sold to Jones?” There wrould be no suggestion of compulsion, said Mr. Ritchie; no interference with the inherent right of anyone to buy where he pleased.

“At the same time,” he proceeded, “the Provincial board would notify the Dominion bureau, and a carbon copy of the information would be forwarded to London. Thus, word would be carried throughout the Empire that John Jones, of Vancouver, was in the market for glassware.”

The same principle would apply where goods were being

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imported by Old Country merchants and consumers. The Ottawa bureau, and that at every other Dominion or Colonial capital, and in turn the Provincial boards, would be told that James Brown, of Liverpool, was buying boxes in Scandinavia. What about a possible box factory in Halifax or Saint John?

“It might be sugar, silk, shoes, canned goods, cured meats, automobile tires, or anything you care to mention,” said Mr. Ritchie. “The same process would follow in New South Wales or Rhodesia, New Zealand or Jamaica or Ceylon. It has only to be started and this co-ordinated Empire trade would in a comparatively short time roll into a very big ball.

“We know bank clearings, because they are tabulated and published. We know car loadings, the sales of chain stores, stock market quotations; ve know exports and imports. Why? Because they are tabulated. Then why not go a little farther and really know what we could buy and sell within the Empire. And when business relations are established between any two traders, it is up to each of them, buyer and seller, to give satisfaction if the contact is to have permanence.”

The writer ventured that the plan sounded complicated and might entail a great volume of intricate work as well as heavy expense.

“It is as simple as the alphabet,” returned Mr. Ritchie. “It is no more complicated or difficult than a cost system in an up-to-date factory, or getting out a catalogue. I doubt if it involves anything like the expense and work attempted by the trade commissioners and the Empire Marketing Board.

“In Canada,” he went on, “there are possibly two hundred wholesalers handling different lines who would turn millions of dollars worth of business into the Old Country through the adoption of such a plan. There are equally as many large retailers, and about two thousand smaller ones who could be reached with ease.

“Then, consider that situation conversely and ponder on what it means.

“It seems strange to see California canned fruit sold in Old Country stores when Australia and Canada cannot get the market for want of sales effort and co-ordinated backing. Similarly, it is an odd perversion that Canada should be importing shoes from the United States when some of the best shoes in the world are made in Britain. Raw sugar is grown in many parts of the Empire, yet think of the amount that comes to Canada from Cuba.

“The tin plate used in American canned products going into Britain probably is made in Pittsburgh, the boxes have their origin most likely in Scandinavia, and the sugar and preservatives are produced in some other foreign country.

“Everywhere you go in the Empire these anomalies are strikingly obvious, and they have been multiplied and pyramided.”

Britain, said Mr. Ritchie, produced both heavy and light goods suitable for almost every market. It had the finest proprietary grocery and drug lines in the world. Further, the British manufacturer packed his goods better and they were amply protected for long distance travel.

“Yet,” he observed, “we find Americans who know little about exports stepping in and taking the business from under their noses. It is essential that the Old Country people should revise some of their trading methods.

“Britain is supreme in shipping methods and in insurance. But British ships are lying idle in the quays or tied up to docks. There is not sufficient propaganda to have British and Empire goods carried in British bottoms. In some of the Dominions a preferential tariff cannot be enjoyed unless British ships are used. This idea could be fostered, exploited, developed, and it would mean a great deal.”

Mr. Ritchie turned from merchandising to taxation.

Tax Exemption On Foreign Business

ASSESSMENT of profits on business done abroad, he contended, weighed heavily against the development of export trade. It was an obstacle to British foreign commerce, and it has worked the same disadvantage in Canada. Revision, in the light of practical exigencies, would give an added impetus to the Empire trade movement.

“If the Government wants to restore good times,” he said, “it has to see that the people have more money to Spend. And if Canada ever needed export trade, it needs it now.

“Why should a Government tax manufacturers or producers who are sufficiently enterprising to send agents into foreign fields and create business which provides employment and increases saleable production at home?

“Instead, would it not be infinitely better and far more profitable to the Government and the country in general if it said: ‘Go into the highways and byways of the world and get all the business you can, and any money you can make out of foreign business you can have, free of impost.’

“These same manufacturers would spend the money thus saved on publicity and salesmanship, and instead of there being thousands of people idle there would be many more thousands working. We would increase our export trade, the machinery would start rolling in unused factories and we would build more. Our goods could be sold at home for less money because increased production through foreign trade would lessen overheads. And we would elevate our manufacturing standards.

“Then the Government could collect all the taxes it needs from domestic business.

“Is it not a handicap to Canadian export business that it must pay taxes on money earned in foreign commerce, when many other nations, France, Italy and Belgium for example, exempt it?

“We in Canada are perhaps too prone to say ‘these countries don’t count.’ But they do count, and quite heavily. They count in steel, in the canned vegetable business, in certain canned fruits, enamelware, furniture, glass, certain textiles, cosmetics, leather, and many other products.”

Mr. Ritchie admitted that the United States imposed taxation on all profits, foreign or domestic, but he argued that that fact was just one more conclusive reason why Canada shouldn’t.

“There isn’t a doubt,” he declared, “that if Canada adopted a tax-exempt policy in respect of foreign business there would be an immediate and big influx of American and also British manufacturers into this country, and many very probably would operate their export trade from here. The way in which American motor-car makers have come to Canada in order to gain access to the Empire markets gives a hint of what would happen if all export brakes were removed.

“The man who gets the first jump usually wins the race. It applies to nations as well as individuals. Canada can be the greatest manufacturing and export country per capita in the world.”

For national revenue purposes, Mr. Ritchie believes that a turnover tax worked in conjunction with an income tax and a flat rate on corporations, offers the simplest and, to the Government, the most profitable method. Other business taxes should be abolished.

“The lifeblood should not be drained out of commerce and enterprise,” he said. "To perpetuate the present system is to invite stagnation.

"A turnover tax, say, of one pier cent, which every one, without exception, would pay on what he spends, is the fairest kind of taxation. It has the added advantage that it is painless. The government coffers would gather twice the amount that accrues from the sales tax. As the latter is applied today,

it is lopsided because of the exempted list. The little things are taxed and the big things escape.”

The same principle would apply to all items, although Mr. Ritchie suggested that a distinction might be made between light and heavy products, the latter paying two per cent.

Collection of the turnover tax from the host of small dealers and tradesmen throughout the country was not a problem, he said. It would be easier to gather than the sales tax.

“Every business which has a turnover below a certain amount would be obliged to keep a certain form of cash book. Now, in each district post-office facilities could be created so that these cash books could be presented weekly and stamps to the amount of the tax forthcoming affixed to them.

“It would be an inexpensive method and would provide added revenue for the postoffice. One has only to observe the multitudinous services provided by English postoffices to be satisfied that such a method could be easily applied here.

“And the Government would be receiving its revenue fifty-two weeks in the year. Systematic inspection would cramp efforts at evasion.

“Larger businesses would be taxed on the basis of their required sworn statements.

A Real Optimist

INCOME taxes should be graded, Mr.

Ritchie suggested, on a basis of, say, one per cent on incomes up to $1,000, up to eight per cent on incomes of $50,000, with an ascending scale in proportion but reaching 12 per cent on $100,000 and over.

“Do not tax the products of the farm, in other words, the first sale by the farmer. Let him have all he can earn from his farm. Let us have agriculture as free from taxation as we possibly can, for agriculture is the backbone of the nation. Let us give all the relief possible to the farmer. He, like every other person, will pay a tax when he spends money, for this would come under the turnover tax. But if there is to be an exempt list, I would exempt farm machinery, but tax all commercial transactions, whether they are building materials or matches, grandfather clocks or canned tomatoes.

“People would thus be taxed on what they earn and what they spend,” he explained. The Government would “get” them both ways. It would work out between wealthy people, those moderately well off and those with small incomes in as perfect a proportion as it is possible to achieve. And the Government would receive from fifty to sixty per cent more revenue from incomes than it does under the prevailing system.”

There would be no need for the excessive corporation tax, Mr. Ritchie believed, but for the first year or two or until conditions are settled, a slightly larger assessment might be imposed. But he doubted if it actually would be necessary.

“The plan is fundamentally sound,” he declared, “and if commerce and industry could be thus relieved of its burdens, we would create a situation that would cause the eyes of the world to be focused on Canadian taxation, Canadian business and Canadian development.”

Mr. Ritchie reflects a real optimism for these suspicious times. He is a business philosopher who thinks to intriguing conclusions. A realist in commerce, he defends the banks and big business. And he has faith in Canadian business and Canadian business men to stand up to any in the world.

“Once in a while,” he said, “you will hear people say that our banks are not enterprising. From my own experience I know there is not a collection of bankers anywhere who will back legitimate enterprise and sane development more eagerly and with more enthusiasm.”

His own spectacular business career is evidence of what can be accomplished in a Canadian commercial setting. When he began business in Toronto thirty-five years ago his capital comprised meagre savings, a high school education and a few special ideas of his own about selling merchandise.

Discouragement and heartbreak rewarded his efforts in the first few years of salesmanship. And then, in 1905, acting on inspiration, he went to England, where he persuaded one of the largest wholesale grocery concerns in the world to allow him to introduce their products in Canada. He sold hundreds of carloads of coffee, rice, tea, Malaga grapes and Spanish onions. This connection put him firmly on his feet.

Back he went to England the following year, and after considerable effort he induced the house of John C. Eno and Company, Ltd., to give him the chance to double their business in Canada or forego any remuneration. It was a one-sided bargain, but the intrepid salesman met the challenge. He increased the business fourfold, and, to the credit of the company, they paid him much more than they had agreed. In the ensuing year he doubled the business once more.

From then until the war, the Ritchie operations expanded at a rapid rate. Sales agencies for many other English lines in Canada were acquired, and in 1911 Mr. Ritchie erected an office building in Toronto and formed an Ontario joint stock company.

The war gave the infant concern a bad jolt. The Old Country lines were cut off and exchange rates were shot to pieces. But a satisfactory measure of compensation was found in agencies for Canadian and American manufacturers.

In 1918 the Ritchie organization established an office in New York, and branches quickly followed in three other leading American cities. A fresh invasion of the British Isles was undertaken, the Ontario company acquired a Dominion charter and incorporation was effected also in the United States and in London, the latter to cover operations in Britain, Australia and New Zealand. In a short time, the fastgrowing commercial enterprise found itself trading in the Oriental and South American markets, and in the West Indies.

“We followed the policy of acquiring or buying into established proprietary concerns,” Mr. Ritchie told me, “and we have been interested in various wholesale grocery, hardware and other kinds of businesses We have bought and we have sold out. And we always made money on these deals.”

In 1928 the Ritchie company staged its biggest coup, when it acquired at a price in the neighborhood of $10,000.000 the outright ownership of the Eno firm and transferred it to Canada. Mr. Ritchie had represented this company since 1907 and his business had developed with it over half the world. About the same time the Thermogene Company was bought out, and eventually the parent concern, International Proprietaries, Limited, passed into the Ritchie control.

Two other large transactions since then have marked the spectacular development of the business. In 1930, in association with the Shoemaker interests of Elmira, New York, the rights to a well-known face cream were purchased from Colgate-PalmolivePeet, and a year ago the Ritchie company acquired a popular emulsion from the Samuel W. Bowne Estate Company.

Thus, when Mr. Ritchie speaks on a subject of trade in larger perspective and of business in relation to its general repercussions and effects, he does so from a stage high enough to give him a wide view. His opinions on a matter of large-scale merchandizing obviously count.

Of Empire trade he is convinced that it is no chimera or idle dream. Rather, as he said to the writer, it is a reality, a “simple reality.” All we have to do is grasp it aggressively.

He stands by the plan he suggests, that of systematic liaison, founded on a latent but none the less forceful sentiment, combined with an equitable system of taxation which will leave business and industry free to exploit the channels of Empire and world commerce.

“All the conferences they can hold in the next hundred years,” he said, “could not produce a straight set-up such as this one can do in ten.”

The End