The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-06-29
FINANCIAL REVIEW
OF THE PAST WEEK
General and Particular Aspects
of the II. b. Claflin Com
pany Failure.
ITS OMEN FOR FUTURE
Some Lessons for Politicians
and the Probable POliti-
cal Consequences.
IT'S OMEN FOR FUTURE

through which we have been passing will
the failure OF the II. Il. Clafiin Company
stand? Is so great commercial catas-
trophe an effect or Is It TO be a cause,
or related with causes of a further chain
OF developments?
The Claf'in company has been described
as the largest dry goods enterprise In
the world. taking into account Its Job
bling business and the retail trade which
It supported in cities scattered all through
the country through what had come to be
known as Clatlln stores The collapse
announced on Thursday is tho largest
commercial failure in the country's his
tory, and that IL was n distressing failure
Is made clear 10y the decision of the
bankers who canvassed the situation be-
fore the collapse occurred that IL would
he uuwisc To- extend the temporary as
sistance which could have been rendered.
Nor can the dimensions OF the failure be
definitely determined rs yet. Early estl-
mates placed the aggregate OF liabilities
directly involved NJ about S34 900, 900. but
IN matters of this kind. with so many
known and unknown ramifcations time
is always required TO ascertain its scope.
IL is a big thing that Claflin failure,
and moreover things of this sort do not
happen without relation to events that
have gone before and events which are
to come. Still II Is very desirable to re-
member that there are presidents for Just
such occurrences and the Claim failure.
should not be looked upon as though II
were SO novel an economic phenomenon
and as though present times have so little
analogy In the past that their significance
must he sought without the aid of ex-
perience, AS "a matter OF fact calamitcs
of this kind have always been a feature
Of certain stage OF prolonged period
OF economic arrangement of business and
financial difficulty.
More often than not they have Sig
naized the manifest beginnings OF an ex-
tended era OF financial and business
breakdown. of tremendous liquidation and
contraction OF values and enormous trans
fcrs OF property. They are just rs apt
to mark the practical termination Of a
long series OF destructive processes which
had ended In fundamental economic re-
adjustment necessary to enable society.
industrially organized. to resume the for
ward movement which is called mans
material progress The time OF the
Clafin failure. its chronological point
suggests perhaps more reason for an opti-
mistic and constructive view of the future
than any which has been vouchsafed TO
business and finance for several years
II does not come at moment when
there is everywhere expansion of values
and commitments. Enterprise has not
been moving forward. Speculation has
not been booming. The worlds money
markets have not been exhibiting, by the
signs Of towering interest and discount
rates. that banking positions were in a
state of agonzed tension. II does not find
men here or abroad filled with rosy con-
tidcncc In their engagements for profit
because the sky Is cloudess and fair
weather is portended In every quarter
Had the Cafin company come TO grief
gument would be offered for asserting
that the wreck must be the warning ~ q
general commercial and financial debacle
on the contrary the condolences OF
the Clafin failure would seem almost to
constitute guarantee that "a period Of
prosperity lies not far ahead. Approach
to 1t may he toilsome. hating. slow and
irregular. but IL there is anything in
signs the Claflin failure Is OF good augury
rather than i'll, The failure itself may
momentarily aggrHVate disturbance and
Increase doubt and apprehension. but as
an economic Landmark II seems likely TO
prove the notice OF turn into a better
road than that over which business has
been travelling.
Instead Of being all ballooned up trade
and industry have been steadily contract
ing for almost two years while security
values and values otherwise quoted have
been steadily shrinking. Instead OF adj
ing to Indebtedness there has been a
forced discharge of debt. Depression not
expansion Is the economic situation on
which the Claan failure falls Ever
since 1906 men have witnessed the wan
Ding Of an inflated boom. not only in the
United States but over the entire area OF
civilization Rapid delation began all
most two years ago and there Is encour-
agement for believing that the Clain
company receivership is a conspicuous
of the rlDliny of n ryClA nj
depression.
The aspect OF the failure as a CONNER
cal tragedy would only be the more EN-
phasized II after while ii should be dis
covered that. could the company have
held on only a little longer It might have
been pulled through It's troubles by a
general Improvement In business circum-
stances, but financial and commercial his
tory is full OF such tragedy. Ii is usually
when "A bear market in stocks or In bust
ness is at the bottom that some astonish-
Ing surrenders are made whether COM
| PEELED or not, and it subsequently appears
that the surrenders were proof that the
bottom had been reached.
SO much for the general bearings OF
the matter which has overshadowed
everything else In financial considerations
in the last few days. As for It's manifold
| and various special implications 1t will
| be many a month before their particular
| significances are ascertained
There Is no question that there was
enough of the exceptional about the
Clafiin Company's embarrassment 10 pre-
vent II from being regarded as typical
| OF the American business situation or as
! illustrating the unfitness of the great
majority OF business concerns TO hold their
own for better days. The failure resulted
directly from the impossibility OF carry
| Ing along an unwieldy, sprawling and
somewhat unsound organization against
the disntegrating influences of politically
| agitated hard times. The Claflin Com
pany had become less n jobbtng house
and more the financial sponsor OF almost
a score and a half OF widely distributed
retail stores comprised in organization
which lacked structural strength because
sufficient capital actually owned was
lacking. II enjoyed prestige which gave
its paper an extraordinarily high rating.
especially with country banks, and the
ready absorption of this paper by country
banks permitted large and unwholesome