Today, nearly 15 million workers are unemployed in the United States, and millions more worldwide, as a result of the Great Depression of the 21st century. The architecture of this disaster�primarily the system of �too big to fail� private banks in the United States, United Kingdom, Switzerland, France, and Germany that speculated wildly, and government regulators that allowed the speculation�this architecture is still intact, with stronger oversight but with few real restraints, after the G-20 meeting of world leaders in Pittsburgh. No doubt it will remain intact until the day people decide they�ve had enough, and exercise their right to create private money.

We in the commercial exchange business are facing a period of depressed demand, slow growth, and even another recession before the world economies recover. Of course, some economic indicators are bouncing back, but do not be deceived. Recovery in the industrial economies of North America, Europe, and Japan will require more consumer spending and more business investment spending. But with unemployment high and still growing, consumers� incomes have been reduced by the loss of jobs. Moreover, people will be saving more out of those incomes as a precaution against an uncertain future.

Manufacturing plants in the United States are operating today at 65-percent of capacity. With excess capacity and slow consumer spending, businesses will be cautious about investing in new capacity and increasing their inventories; this means we can�t look to business spending to help the economy any more than consumer spending. There cannot be robust growth until unemployment is cured and consumer and business confidence returns.

A slow economy will provide many opportunities for us in the commercial exchange business. As demand has fallen worldwide, manufacturers have been caught with excess inventories which they are eager to get rid of to avoid loss on value of these assets, which impairs their profits, and to avoid storage costs. The corporate traders in our business�and this includes both corporate trade companies who deal with larger manufacturers and trade exchanges who deal with smaller and medium-size manufacturers�have been buying up millions of dollars of unsold inventories in exchange for trade credits redeemable in advertising and other products and services. As manufacturers adjust their inventories in line with demand, these trade opportunities will be fewer; but due to slow growth of the global economy, we can expect several years of good business.

In a slow-growth economy, trade exchanges will be in a more favorable position to establish strong relationships with quality clients. Small and medium-size businesses are usually slower to adjust their inventories and working capital to falling demand, and with credit tight and cash in short supply, more businesses should find it advantageous to join a trade exchange to increase their sales, promote their products, and cover their business costs.

Trade exchanges have a strong incentive to grow their networks by adding quality clients. With more clients they can offer better service and a wider range of spending opportunities, generating more trade and more working capital to stabilize the quality of their services, which can suffer when revenue fluctuates. With stronger finance, trade exchanges can deal for excess inventories just as corporate trade companies do, provided they have the capacity to deliver the fulfillment products and services agreed to in advance.

So our commercial trade industry should plan to capitalize on a time of slow growth and less consumer demand�a period that could last as long as five or six years. Should recovery come sooner, we will be prepared to make good use of it. But recall that I have asked you to set your sights on the next 30 years. Where is the global economy headed in the longer run? To answer this question, I turned to the wisdom of Peter F. Drucker, who was the principal business philosopher of my age (and the age of several of us here). Drucker�s essay written in 1992, called �Planning for Uncertainty,� states as follows:

�Traditional planning asks, �What is most likely to happen?� Planning for uncertainty asks, instead, �What has already happened that will create the future?��

You see, we know a great deal about what has already happened that will create the future. We know the demographics�the generation that will be living 30 years from now has already been born, and its needs for food, clothing, shelter, and everything else can be estimated. We know that more of the world�s peoples live in market economies than ever before, and market economies are known to stimulate productive energy.

Today 4 billion people have mobile phones, and prepaid calling is available even in the poorest regions. Right now, 1.5 billion are on the internet, and the number with internet access is due to grow rapidly with adoption of smart phones, WiMax, and mobile broadband because governments are committed to building mobile broadband as the third-generation architecture of the internet. Yet the power of mobile broadband has only begun to be tapped.

The CEO of Swedish technology company Ericsson puts it this way: �Today broadband infrastructure is widely available, but we have not realized its full impact and potential for society. Over the next 20 to 30 years, it will stimulate innovation across society and lead to deployment of completely new solutions.� Already with a smart phone and internet access, a trader can run a commercial exchange or make deals with corporate clients while on the move.

The rise of market economies of enormous size in China, India, and Brazil with hundreds of millions of consumers and millions of small and medium-size businesses is already spilling over into global commerce and propelling global growth. A robust recovery is underway in China, which will grow 7.8-percent this year and is forecast to grow 8.8-percent next year. India�s economy will grow 7-percent in 2010, according to the Asian Development Bank. Isn�t it clear that the fast-growing economies of China, India, and Brazil�with 3 billion people, half the world�s population�will fuel demand for all kinds of goods and services as people�s incomes rise, yielding a rising tide of commerce and trade?

For a final look at what has already happened that will shape the future, we should consider the sources of economic strength in the industrial economies�their ability to innovate, their long-term investments in research and development, the stream of new technologies emerging from their laboratories, and their high-tech manufacturing capabilities in such areas as computer chips, solar arrays, ion batteries.

Some say the fiscal and trade deficits of the industrial world will bring this house down. Will these deficits continue to be financed by the world�s savings? There is no sign they will not be financed, for savings grow as economies grow, and capital continues to pour into the world�s financial centers looking for investment outlets. Future savings of the developing world will be huge, and the owners of those savings will decide where and how it will be invested.

The world economy is so large it can�t be turned around easily, and many countries with trade surpluses or deficits have vested interests who would like to maintain the current situation as long as possible. By running a trade deficit, the U.S. economy buys the exports of other lands and supplies the rest of the world with dollars that finance world trade. Turn the U.S. deficit into a surplus and the world�s money supply becomes smaller, even though more money is required for world trade to grow. A lower U.S. current account deficit is realistic, but a surplus is a long way off because we have a big appetite for foreign products.

The goal set by world leaders at the G-20 is to reduce the U.S. deficit with the cooperation of surplus nations like China and Germany. China will soon become the second largest economy in the world, and it�s possible the yuan may become a reserve currency someday. But for this to happen, China must end its trade surpluses, because how can importers make payments in yuan if China is withdrawing yuan from circulation each year by running a trade surplus? To be a reserve currency, China must begin buying more from the U.S. and the rest of the world than it sells.

But under its current policy of running a trade surplus, China gains in two ways, first, by export sales that propel its economic growth, and second, by accumulating reserves that can be invested in strategic resources like Australian mining, and infrastructure like the high-speed rail link between Beijing and Shanghai. The United States also gains from the relationship, because we get China�s goods and they get IOU�s. What would you rather have, goods or IOU�s?

Some say China may one day dump its U.S. government bonds. Of course, it may do so at any time. But somebody will have to buy the bonds, so the debt is merely transferred to the new owner. Well then, China can demand payment on its bonds as they mature. The U.S. government can then give China all the dollar bills they want. The fact is�this does not seem to be commonly known and I hope it will be useful to you�the only way China can collect its U.S. debt is by buying more from the U.S. than it sells.

To me the global economy of the next 30 years will look something like this. It will be a period of the greatest wealth creation the world has ever known, powered by the developing economies of China, India, and Brazil, and by commercialization of countless new technologies being created as we speak in the research centers of the United States, Europe, and Asia�technologies like electric cars, new medicines, higher-yielding foodstuffs, and hydrogen power.

All nations will have an opportunity to share in the new purchasing power of workers as their productivity rises. Commerce to meet the demands of mass markets will expand�this has already begun in China where industrial countries are hastening to build factories, retail outlets, and distribution channels. People in developing nations will want televisions, refrigerators, cars, and much else, and the rest of the world will make money supplying them.

Unavoidably in a market economy, the rise in income will be unequal. There will be many new millionaires who will keep their money safely invested in the world�s money centers�not only New York, London, and Zurich but Singapore, Hong Kong, and Tokyo. These centers will recycle the savings of the wealthy into private investments in businesses and infrastructure the world over. The flow of the world�s savings to the U. S. and other countries as the global economy rises will make capital plentiful over the long term, and companies in the commercial exchange business should reach for it. More capital means more deals and faster growth of our exchange networks.

Some people in government are saying this huge flow of capital is the root cause of the recent financial collapse, but don�t believe it. The fact is the flow of capital to the world�s money centers, representing the savings of wealthy individuals and institutions everywhere, occurs because capital is mobile and owners of capital decide where to park it. Whether it�s foreign funds or money from our domestic insurance companies, pension funds, and endowments, the owners of such capital need to invest it and they are smart enough to know the expertise for investment resides in the talented people of the money centers which invest it for them.

The availability of capital is important to our business. The strongest reason for having a vision of the future, and setting goals only a dreamer would set, is because capitalists are more persuaded by your dreams than by your business plan. So dream large, and sell your dreams!

Trade exchanges are fundamentally local in character, starting with a base of quality businesses that reside in the same area and can deal with each other face-to-face. This is not to say that trade exchange operators do not conduct long-range business, but the foundation of a trade exchange�s business is local and most of its income is derived from transactions among local businesses.

We emphasize quality businesses because our industry has long recognized that an exchange member must be sound enough to carry out its obligations. Credibility to fulfill obligations can be measured by number of years in business, revenue, and credit history among other things. Established trade exchanges have sound methods of identifying quality clients, but we also need sound systems to evaluate a potential client�s strength, sustainability, and value. This is because the first step in growing our networks is to build a target list of quality clients.

If we identify a quality client who would be a valuable partner in the exchange, why would we charge up to $700 for that firm to join? It�s standard business economics that a trade exchange should ask one�and only one�question: What is the lifetime value of the client? The expected revenue produced by a quality client in most exchanges would yield significantly more than $700. I hope trade exchanges will think about this and consider charging a $50 processing fee for a new client, $95 maximum.

Using the same formula�the expected lifetime value of a new client�many businesses have decided to pay for a new client. In the telephone business this is done by promising the client premium services in return for the client�s agreement not to cancel the service for two or three years. Would this work for trade exchanges?

Consider the following situation. A trade exchange in a large city in the United States has 1,000 clients and revenue of $10 million a year. Since most large cities have up to 50,000 small and medium-size businesses the exchange has room to expand, and accordingly it has identified 1,000 potential clients of quality that are top priority for its sales effort. It has also determined that each of these clients would produce lifetime revenue for the exchange of $5,000 or more. The exchange�s goal is to get 100 of the 1,000 potential clients to sign an agreement to join the exchange for three years and sell a minimum of $5,000 a year of their product to other members of the exchange under the usual terms and conditions.

The exchange states that, because of the value of the client to the trading association, it will credit the new client�s account with $2,000 trade dollars upon his joining the exchange, and the client can spend those trade dollars immediately. Why $2,000? Because that is the cost the exchange calculates it will have to spend to acquire a similar client by direct sales and other means. By signing on the spot, the client saves money for the exchange which it gladly pays to him. Will this work?

I believe it�s worth discussing because direct selling as a means of growing our networks with quality clients is so labor intensive and costly as to make hiring a sales force of a size needed to produce, say, 200 new clients a month, impractical for most exchanges. Let me point out the following regarding paying to acquire a client: first, the payment to the client would be a legitimate business expense, offsetting an exchange�s normal trade revenue; second, the client�s purchase commitment puts $5,000 of new goods into the exchange, offset by $2,000 of trade dollars; third, if the client departs after three years, the $2,000 signing bonus which has become part of the exchange�s float must be retired by reducing the exchange�s trade dollar account (so long as the float can be offset by trade earnings the exchange will win by paying for new clients of quality).

Most importantly, signing the client need not be done by direct sales calls. The 1,000 targets could receive a regular piece of mail inviting them to join and explaining the terms and signing bonus�a technique so inexpensive that targeted clients could receive several pieces of mail over the course of six months. The ad would pitch the high quality of trading partners in the exchange, the exclusive character of the invitation, premium services that go along with signing a contract for three years, and advantages of businesses working together for their mutual benefit and conserving cash. Radio and TV advertising to promote commercial trade, and non-media marketing like executive breakfasts to stress that an exchange is, first and foremost, an association of business partners organized for mutual benefit, could reinforce the direct mail pitch.

In sum, we need to experiment in a major way with alternatives to the direct sales model of growing your exchange. To do this properly, design an alternative to direct sales and give it the same amount of dollars you are giving to direct selling. Then compare the results. Ask yourself, �If we had the capital to deploy 100 sales people at $30,000 a year�total $3 million a year�would this be the best way to grow the exchange�or is there a better alternative?�

Can technology help grow our networks faster? Large companies are finding new ways to use smart phones connected to the internet. Mobile phones are being used for banking, Cisco Systems uses them to manage field sales forces on the move, and Unilever is using them to issue bonus points electronically at the grocery checkout, instead of issuing paper. The advent of cloud computing makes it easier to write programs connecting an exchange�s computer to smart phones without having to worry about whether their hardware and operating systems are compatible. The following �points of light� program illustrates the potential.

Suppose we divide the geographic business area of a trade exchange into sub-areas that have lots of businesses, so there will be plenty of prospects. Now we send an independent businessman, armed with a smart phone that�s connected to our computer, into each sub-area as our Business Agent with the mission of organizing a mini-trade exchange of 150 quality members.

I use 150 because, in the early days of commercial trade, we used to say anyone could carry the names of the first 150 clients in his head. Also, British anthropologist Robin Dunbar and others have established that 150 is the upper limit to the number of individuals with whom one person can maintain stable relationships. After 150 you must establish hierarchy, that is, you deal with people through other people. The finding has been confirmed by the way groups self-organize on the internet.

In this case, our Business Agent is a node or point of light within the trade exchange node of a trade exchange system. With seven points of light, within six months you have 1,000 new members. Of course, our business agent must be a trained licensee of the trade exchange, with whom revenue must be shared. I believe young university students, properly trained, would make excellent points of light.

I will guess there may be 100 trade exchanges in the U. S., and perhaps another 30 outside the U. S., who would participate in an IRTA web portal that tied the web sites of these exchanges together. Recently, I read that Forbes magazine, which has been hosting about 400 blogs on financial topics, has decided to link them and create a web portal to attract advertising. CNN Money is another example of a successful web portal popular with advertisers. Web portals are attractive to online advertisers because they have enough �eyeballs� or visitors to make it worthwhile to put display ads on them.

An individual web site does not get enough traffic, so it�s not attractive to advertisers. As the saying goes, you can build a restaurant in a desert and the food may be good, but who�s going to stop there? The idea of a web portal is that it attracts many �eyeballs� to its web site and so offers advertisers an opportunity to reach that population. How could an IRTA web portal attract 100,000 visitors a month? First, by offering access to the product offerings of all IRTA member companies and (eventually) their clients; second, by offering tantalizing bargains for premier quality products and underlining these bargains are in limited supply, so as to create anxiety to check our portal daily.

If successful, IRTA would have a new revenue stream which I strongly recommend allocating to building an industry brand by buying advertising to reach the kinds of businesses we would die for, popularize what we do, and support the marketing and sales of our member companies. We are in a relationship business, and we need a public relations effort on behalf of the industry to establish a positive image to overcome indifference in the quality businesses we are trying to reach.

Large online advertisers have demonstrated that online ads can be targeted to specific populations, and results measured. This is the latest idea in advertising�buying people rather than space�and it�s available for cable TV as well as online. It�s a concept IRTA can use because we know the businesses we want to target in our advertising.

Trade exchanges can also grow by forming cooperatives to combine their markets. I made this recommendation four years ago, pointing out that all our independent trade exchanges had under-utilized members�those who want to sell more but can�t find buyers, and those who want to buy more but can�t find suppliers of their wants. Combining networks expands trading opportunities and increases trade volume per member as a result of the larger marketplace, and the technical obstacles to sharing databases are now smaller than ever.

With cloud computing, it�s now much less costly to link the data bases of exchange systems that have a common clearinghouse for many branch exchanges in different cities so they can accept each other�s cards. Fear of undermining their brand is a deterrent to the independents, so the prospect of a single market in North America remains unrealized for now. The dream lives on because a unified market means greater prosperity for every exchange: with a bigger market, everyone shares a bigger pie.

It will be a great day when a client has access to an international directory, like an Amazon.com of commercial trade, where he or she can buy things online without worrying about who issued their card or check; it will be a great day, too, when a client traveling in another city will be able to find a �Business Card� hotel, restaurant, or merchant and settle his business by paying from the trade account or credit line of his local exchange.

All this is technically feasible. The cost to the client is the same; the corresponding revenue to the system is the same�only there are more transactions and more revenue for the participating exchange owners to share.

Lastly, let me turn to the question of extending our trade networks to other lands. The law of networks is that bigger is better: the value of a network to its participants grows with the size of the network. IRTA has long had a vision of trade exchanges operating in every land. Now with the internet and large networks in several countries as a base, we need to expand to cover the globe. The question is, �What can we do to promote this expansion to every nation that does not have an exchange?�

Here I shall use the example of China. What we can say about China is first, small and medium-size businesses�firms with less than 3,000 employees�are privately run and generate 60-percent of Chinese economic output, employing eight out of ten workers; second, these businesses are starved for credit because banks aren�t lending�just as in other parts of the world; third, to help with the credit crisis, the government is promoting microfinance institutions; fourth, only a quarter of China is covered by the internet, but China is already the top internet user in the world�225 million total users today compared to 217 million in the United States; fifth, Chinese internet is first-rate, with web portals Baidu and Google China in fierce competition to be number one in search, music, and entertainment, while Alibaba is the largest shopping network; and lastly, Chinese companies listed on the mainland and in Hong Kong have raised four times more capital this year than U.S. and European companies combined.

In this sketch we see many of the conditions favorable for trade exchanges: many privately-owned businesses, tight credit, government encouragement of institutions to help these businesses, large and modern internet coverage, and what appears to be plentiful ability to raise capital on the mainland and in Hong Kong.

The situation will vary from country to country, but fundamentally I believe you can see that IRTA could assist development of commercial exchanges in China by giving all-out support to those IRTA members who have entered, or plan to enter, the Chinese market. IRTA and its members have a powerful asset, knowledge of how our industry is organized and operates. Some trade companies have, in the past, sold this knowledge for millions of dollars. To stimulate interest among Chinese entrepreneurs and capitalists, IRTA could make presentations at conferences and universities, explaining our industry without trespassing on the intellectual property of our member companies.

Because of the extent of the market, one can envision using the �points of light� system, with a parent trade exchange and its branch mini-exchanges connected to several similar exchanges and united by a single clearinghouse for an entire system. It will be competent Chinese citizens who will own and run these commercial exchange networks.

But, you will ask, suppose trade networks arise in China, what do we trade for? My answer is to start with travel and tourism, which is no small part of our business or capabilities. China is an attractive tourist destination, and the Chinese people will travel the globe as they become wealthier. We can also exchange items that are not costly to transport, like jewelry, watches, silk scarves, and the like. For marketing we have the internet, and in time Chinese export companies will be bombarding us with offers of their goods and demand for our hotels and tourist destinations. One of our American companies already trades for ocean freight, so even transport costs will come into the trade network eventually.

Ladies and gentlemen, before closing I wish to again pay tribute to the many dear colleagues, past presidents of the Association and industry members who gave so much of their lives to the International Reciprocal Trade Association. Through their sacrifice and dedication, they breathed principles of integrity, loyalty, and fair dealing into our living Ethics Code and our business standards. The �Legends of Barter� have justly earned and well deserve the world�s thanks and respect for their contributions.

Finally, I regret the absence today of several of our industry�s founders and �great captains� who, whether from illness or other conditions, were unable to be with us today. Their staunchness of character in the face of daunting challenges, their inspiration and many contributions, remain with us as treasured memories.