COMPETITIVE CONDITIONS IN SOUTH AMERICAN TRADE. 167
SECTION 2. PRESENT CONDITIONS IN SOUTH AMERICAN TRADE
ABNORMAL.

At the time of the outbreak of the present war many of the firms
handling European goods in South America had large stocks on hand.
The buying power of the South American countries was affected by
the financial crisis which followed the outbreak of the war. As a
result of their stocks on hand, taken in connection with the diminished
demand, such firms were able for a time to supply their customers
with European goods. Where unusually large stocks were in existence
 they were still holding the market in certain lines of goods
in 1915. For example, it was reported in Brazil that before the
war considerable stocks of German, Belgian, and British structural
iron and steel had been accumulated. The freight and import duties
had been paid and the material was in storage. Due to the financial
depression in Brazil, the demand fell below normal. Notwithstanding
 the increased demand elsewhere for iron and steel, consequent
bo its use for war purposes, there could be no corresponding rise in
price in the Brazil market since there was little new construction
in progress. Some of the firms holding the stocks were under pressure
fo sellin order to realize on their investment. As a result, the prices
and the trade prospects in Brazil have not been particularly attractive
0 American manufacturers of structural iron and steel, since much
higher prices for their product could be obtained elsewhere. On the
other hand, in Brazil the European stocks were early exhausted in
certain other lines of iron and steel products. The only available
source of supply was the United States. The demand, while
diminished from normal times, has continued, and is of so insistent a
nature that not only the high prices current for such goods in the
United States are paid, but, in addition, the excessive ocean freights
charged to carry them to South America.
Similar conditions exist in other kinds of goods. As a rule, stocks
of European goods in South America are now very low. In some
instances the firms that handled them have been able to buy similar
goods in the United States, and thus continue in business. In other
instances they have practically retired from the field. Obviously
fewer goods have been obtainable from Germany than goods from the
entente allies. The trade of the latter, however, has been much
diminished by the withdrawal from the commercial field of many factories
 needed for the manufacture of war material and the restrictions
placed on the exportation, or the absolute prohibition of exportation,
of certain classes of goods, because of their use for war purposes or their
necessity for supplying the home demand.
As a result of such changed conditions, at the present time American
trade in the South American markets is much less hampered by the