Evening star. [volume] (Washington, D.C.) 1854-1972, 1908-07-19
PROSPERITY ON FLOOD
John CIaflin Predicts Good
Times at Hand.
SAYS TRADE IS IMPROVING
Business World on Sounder Basis
Than for Some Time.
ANALYSIS OF CONDITIONS
Believes Railroads Justified in Ad-
vancing Rates, and Prefers That
to Wage Reduction.
rALYs1s OF CONDITIONS
Special Dispatch to The Star.

carried years. brown-bearded, gentleman
nered, soft-spoken and clear-thinking. As
head Of the great business that bears the
Clafiin name and the directing force of
many enterprises In leading cities, he Is in
close and constant touch with the COM
mercial pulse of the country.
This Is what he said today when asked
What is the condition Of business today
and what are the prospects?":
1.-The business world is on sounder
basis than for some time past. Trade
conditions are improving. Barring acct
dent, there may be expected a steady in
crease.
I'VE believe prices touched bottom in
June. We look for improvement in values
during the autumn"
Analysis of Conditions.
Mr. Clafiin was asked on what conditions
his views were founded.
ITO answer clearly that question it is
necessary to 60 back a little, he replied.
THE commercial business of 1907 was
unprecedented in all MISUNDERSTANDING,
wholesale and retail-until the panic that
followed the failure of the Knickerbocker
Trust Company in October.
Let us consider first the retail trade,
with the people and first feels varying
conditions. Merchants had laid in enor-
nous stocks OF goods for their holiday
season. When the crash came their sales
were at once sharply curtailed.
When they took inventory on the LIST
of last January they found themselves
possessed of the largest supply of stock
on hand that they had ever known. Nat
urally they stopped buying, and.even can
celed orders already given. This had it's
effect nd 1c>h
the manufacturer, who was forced to cur
tall production.
But since the LIST of January the retailer
has had good business. There have been
Birmingham. Cincinnati and San Fran
cisco. But taking the average of the en-
tire country we find that during the last
six months the retail business has been
only 10 per cent less than it was for the
corresponding period last year and Just
about the same as for the spring of 1906
Retailers in Sound Condition.
''The merchant has been obliged to cut
prices some and his profits have ue-
creased. But he has disposed Of his ac-
cumulated stock and has not contracted
any new obligations.
whereas on January 1 the average
merchant found himself stocked heavier
than ever before, the LIST of July disclosed
on his shelves the smallest stock he ever
carried, with his credit good and a val
liable lesson learned in economic and con-
servative management.
In 1907 he had gained 10 per cent over
1906. This year he has fallen back to the
1906 record. So his loss has been one
years advance.
With the manufacturer the figures are
different. During the last half year his
production has been only So per cent Of
what 1t was for the corresponding period
last year. The retailer lost only 10 per
turer's sales have gone down 30 per cent.
In these very figures, however. are signs
of improved conditions for the future.
There is a difference of % per cent be-
tween consumption and production. More
goods have been sold than were manufac-
tured during the past six months. The
surplus stock on hand has been greatly re-
duced.
THE merchant soon will have to buy for
the autumn season. The mills are begin
ming to increase their activity in anticipa-
ton Of the demand, and in this way the
revival of prosperity.
One most important point in this con-
nection I have been endeavOring to urge"
continued Mr.. Claflin. THAT is to go
slowly and conservatively in the revival,
Let US not rush hastily to the extreme In
the belief that business is going to resume
full steam ahead all at once.
1T has been too much the custom for
merchants to overstock Often, thinking
prices. they lay in a supply far beyond
current need in order to make an in
creased percentage of profit. But almost
Invariably this extra profit is more than
wiped out by the unsold stock which has
to be sacrificed.
IF we can be satisfied to go along con-
servatively, building up solidly, buying
according to current needs, we shall not be
In danger Of a reaction, and good business
will follow In the autumn
In dry goods, as In any other line OF
trade, July Is the dullest month of the
year. Merchants do not begin to buy
much stock before the end of August and
the retail season is quiet until the latter
part of September. Therefore. SO far as
actual sales are concerned. business activ-
ty Will not make much showing in dollars
and cents for another two months.
Railroads Entitled to Profit.
One of the debated questions in many
branches of commerce today is the one
raised by the railroads of increasing rates
or lowering wages to meet the financial
conditions enforced on them.
Mr.. Claflin was asked his views on the
subject
Speaking solely as a merchant, for l
own no railway shares he said, Il be-
lieve the railways are entitled to some
increase In rates. Prices of nearly every
thing have gone up during the past ten
years. while freight rates have been nota-
bly, reduced.
LAS long as the railways were expanding
and every freight car was in constant use,
the companies could afford to lower rates
to small margin of profit But now, IN
times of reaction. when cars are idle. in
comes reduced. operating expenses heavy
and the cost of labor high most inn
portant item in railroad businessI be-
lieve the companies are entitled to oppor-
tunity to get a fair return on their invest
ment.