Worcester Democrat and the ledger-enterprise. (Pocomoke City, Md.) 1921-1953, 1938-02-18
BABSON THINKS
BUSINESS ASPECTS
ARE DISCOURAGING

Rabson Park, FLORIDA, FEBRUARY 10
business sentiment is about as bad as
ever remember. / think 1t Is even
f1atter than in the 1928 per1oo
Yet. strange as it may seem, TINS Is
a good sign, says David l.. BaDson.
American las pulled herself out OF
former ia spins. The turn has al
vavs come quietly and unseen while
pessimism and uncertainty were al
their peak. Today am convinced
that the despair and gloom of business
men has gone too far. We may even
he making the turn right now. Among
the most important reasons why l
think this is possible is the excel
lent performance of retail trade.
Inustrial output has fallen like a
comet. vet retail trade has held up re-
markedly we'll. January "clearances
while not quite matching the whlrl-
wind 1887 season, were good Mer-
chants cut prices much more than US
ual in order to keep their goods NOV
ing. These recent sales have offered
some real bargains and there will be
more between now and the Easter
season. Not only grocery, meat, de-
partment, clothing, furniture and
shoe stores, but the big mail-order
houses, are going after business ham
mer and tongs." Variously, retail
clothing prices have come down 5-l5
Der cent and retail food has back
watered about z per cent.
This current period of Industrial
recession shows how sensitive the
business cycle is. Each phase brings
its own special opportunities. People
with foresight and courage who
bought securities and commodities
and started new enterprises in 1882
have established fortunes. We have
a similar opportunity today-ln a
smaller way. Right now cash is
"sale" and raw materials and securl-
ties are "buy." Those who are buy
ing and investing today are doing
themselves a good turn. More impor-
tant, they are doing service for their
communities and the nation. AS re-
tail shelves are emptied orders shift
back to factories and the Help Want
ed" signs are hung up once more.
Newspaper. magazine and radio ad-
vertisers are doing their bit, too, to
help defeat the recession before it de-
generates into major depression. For
thirty years, 1 have studied the bust
ness cycle and have tried to discover
how the peaks and valleys can be
ironed out. l have always been con-
WINGED that one of the solutions is by
the proper use of advertising. When
times are good and business is boom
ing, advertisers like to drive for or
ders. This is only natural. Actually
however, manufacturers and mer-
chants should hold back in good times
and build up an advertising backlog
which they can pump out to maintain
their sales volume and their employ
ment in periods such as the present
If all concerns in the same industry
would agree to spend certain per-
centage of their gross sales on adver-
Using, this policy might be made
workable The trouble is that few
outfits would always back out of the
bargain and take advantage Of theil
competitors programs. Two or three
concerns can scarcely afford to carry
the advertising for the industry. So
while the logical policy is to cut down
on space when business is coming il
under its own momentum and to boos
sales budgets in slack periods, in prac
tice the opposite happens.
The government is pouring out mon
ey for various purposes to stimulate
public purchasing power. Why no