Presto

THE PRESTO BUYERS'
GUIDE CLASSIFIES ALL
FIANOS AND PLAYERS
AND THEIR MAKERS
PRESTO
E,tabu.h*d 1884 THE AMERICAN MUSIC TRADE WEEKLY
THE PRESTO YEAR BOOK
IS THE ONLY ANNUAL
REVIEW OP
THE MUSIC TRADES
/• c«.*. ; $2.00 a r . «
RELATION OF PIANO SUPPLIES TO MANUFACTURE
Paul B. Klugh, at Convention of the Musical Supply Association in New York, May 20,
Applies the Acid Test of Vital Facts to Conditions Mutually Interesting to Every Phase
of the Industry and Points Out the Share of Each in the Responsibilities
In the following address, Paul B. Klugh, president
of the Autopiano Co., New York, performed his as-
signment to present the side of the piano manufac-
turers in a general discussion at the convention of
the Musical Supply Association, May 22, at the
Hotel Commodore, New York.
This is an opportunity 1 have long looked for-
ward to. Being interested in the manufacture of
supplies, as well as in the manufacture of pianos, I
believe I can speak feelingly from the standpoint of
both. My only hope is that in making an impartial
and fair address to you, I will not fail in my pur-
pose, as was the case with the negro who was ex-
plaining how accommodating was a chameleon he
owned. He said: "Ah put dat chameeleon on some
green cloth, an' he turned green; when ah put 'im
on red cloth, he'd tuhn red; an' whatever coluh'd
cloth I put him on, he'd tuhn de coluh ob dat cloth.
So finally I put 'im on a piece of plaihd goods, an'
he done blowed up tryin' tuh make good!" I shall
try not to blow up, trying to make good!
I was once told, confidentially, that supply men
were the most wealthy in the entire music industry,
sitting back in the luxurious comfort of their opu-
lency and scrutinizing financial statements of piano
manufacturers with an icy-cold conservatism, chilling
to the bones of those who wanted to buy their
products.
Then another man whispered in my ear that such
was not the case; that the supply men were in reality
an unhappy lot of spineless creatures who, like the
wavering reed, without power to resist, swayed in
the direction of the general trend of events and
trade conditions; that they took particular pride in
helping the weak, uplifting the unfortunate, and
backing the incompetent, and sometimes even the
dishonest, with fabulous lines of credit. I was given
both of these opinions a long time ago, and so it is
quite natural that as the years have passed, I have
watched and studied the supply man as one of, if
not the most interesting of, the human species with
which I have come in contact.
Supply Man's Methods.
The supply man works along novel and peculiar
lines. At times the opinion of my first confidential
adviser would seem to fit. But, just as I had be-
come convinced that, after all, the supply man was
a time-tried and to-be-trusted individual, self-reliant
and competent to take care of himself in any com-
pany, I say, just as I had about formed this good
opinion, I would read in the trade papers of the
failure of some piano manufacturer and, lo and be-
hold, the principal mourners would be several promi-
nent supply men, who had extended credit with reck-
lessness and a childlike faith unbelievable in mature
business men. But these men have said: "We con-
sidered it a good moral risk." I can call to mind at
least two failures where their appraisal of the moral
risk was as imperfect as that of an abandoned
woman.
But times have changed, and so has the supply
man! He now has a factory filled with high-priced
materials and is transacting business along approved
lines. He is no longer selling his products at cost,
and he is no longer extending crazy lines of credit.
It is not the present that we must worry about.
It is the future we must think of! No supply man,
piano manufacturer or piano dealer wants to go back
to the old order of things. The whole music busi-
ness, from supply men to the retail piano merchant,
has come nearer to being a respectably profitable
business in the last eighteen months than ever before.
It, is, I believe, within the power of those engaged
in this trade to perpetuate this condition, and it
should be done.
An Illustration.
Now let us take a case in point: Here is a careful
piano manufacturer who knows what his instruments
cost, and who sells them at a fair profit. He is estab-
lished in business; has built up much good will and
a fine reputation for his instruments. He buys his
parts with prudence, and pays for them properly.
His dealers are his personal friends, and he holds
their entire confidence. On the other hand, here is
another piano manufacturer who has not been in
business very long, He is ignorant of his costs, and
incompetent to build up his business along nat-
ural lines. His method of selling pianos is to find
out what established lines of pianos in his grade are
selling for, and then undersell them. The supply
men extend him credit—unwise credit—and the trade
papers boost him as a newly discovered genius, even
going so far as to state that his novel method of
manufacturing and selling will revolutionize the busi-
ness.
While this is going on, the first manufacturer—
the prudent one, I mean—is chafing under the com-
petition given him by the incompetent manufacturer.
He cannot understand how this new man can sell
his product at such prices. His first move is to have
his own manufacturing processes carefully checked,
frequently employing efficiency engineers to discover
any lost motion or extravagance that may exist in
his own business. He then has his costs carefully
gone over, finally discovering that he cannot sell his
product at any lower price—and having failed utterly
to find out how the new man can continue. Ere
long there are inquiries from banks and rating com-
panies, seeking information about the new man;
then follow rumbles of some trouble impending.
Finally the crisis is reached, and the trade papers
publish the death notice. This incompetent manu-
facturer has helped to convince piano dealers that
pianos are sold at too high a price. But those deal-
ers who are experienced look for the aftermath. It
usually shows the creditors to consist of supply
houses and trade papers.
The Best Customer.
The prudent piano manufacturer is the best custo-
mer of the supply house, and is the strongest patron
of the trade paper, and yet in the picture which I
have just drawn, these two agencies have done their
utmost to injure their best supporters. This has
not happened once, but many times. The lesson to
be drawn from it obviously is that the supply houses
and the trade paper should watch with great care
the kind of business being done by new manufac-
turers; because, just as sure as water finds its level,
so will a proper level in prices be found for pianos.
It is a sad commentary on the piano business that
no great fortunes have been made therefrom. I
mean fortunes such as have been accumulated in
the steel, copper, coal, iron, automobile, kodak, talk-
ing machine, safety razor, or other lines, too numer-
ous to mention. Fortunes made in the musical sup-
ply business—or piano manufacturing, or piano re-
tailing, are insignificant in comparison with those I
have enumerated. This, in itself, if one stops to
consider, is sufficient evidence that no part of the
piano business has been done in the past, or at pres-
ent, upon a basis yielding a net profit commensurate
with the hazards of the business, or in keeping with
that expected in other lines of industry.
The Crying Need.
Our crying need is to enlarge the demand for
musical instruments. It is primarily for this object
and for the preservation of our industry against un-
fair taxation and legislation that the Music Indus-
tries Chamber of Commerce was formed. The sup-
ply men are now organized as an active body affili-
ated with this Chamber. It is high time that the
supply men took their part in this great movement.
Heretofore they have been beneficiaries—direct bene-
ficiaries—without contributing toward the support
of the Chamber. I am sure that no far-seeing sup-
ply man will be so lacking in vision as to say that
he should not pay his just share of the burden of
promoting and protecting his own business.
It is said that the output of pianos in this country
has averaged around three hundred thousand instru-
ments annually since 1913. There are many evi-
dences of the increase in piano production in the
last seven years being slight, if any. Now what can
we do to remedy this condition? Why the answer
seems easy to me! It is to utilize the Bureau for the
Advancement of Music as a means of popularizing
music, to the end that there will have been created
a demand for at least a half million pianos a year,
instead of three hundred thousand. This, gentlemen,
is the real and fundamental method of getting at
the old irritating subject of long credits. Most piano
merchants sell instruments on long time, because
they have to resort to that method in order to sell
a sufficient quantity of instruments. The same thing,
in the past, has been true of the piano manufacturer
and the supply man. If we increase the demand for
pianos, we will then reduce the necessity of selling
on long time. "But," you say, "if long time is not
given, how can a large quantity of pianos be sold?"
My answer is: How can over two million automo-
biles be sold yearly, for cash? You say: "But there
is a large demand for automobiles!" That is just
what we want to accomplish in the piano business.
The greater the demand for our products, the shorter
the terms will be.
Some Comparisons.
We sometimes think our industry is a large one!
Do you realize that one automobile manufacturer
this year will turn out and sell for cash three times
as many automobiles as all the piano manufacturers
combined turn out in pianos? I read the other day
that there is one automobile for every fourteen men,
women, children and babies in the Unied States; that
there are ten times as many automobiles in use in
the United States as there are in the balance of the
entire world! Such a condition is the result of a
great demand for automobiles, and it is the stimula-
tion of a similar demand for pianos that will prove
the salvation of our business.
Notwithstanding the rosy picture presented by the
automobile industry, there are some dark clouds on
its horizon. Have you read in the newspapers within
the last few days, of Washington talk regarding a
curtailment of production of luxuries? If you have,
you will recall that the first industry to be mentioned
is always that of the automobile. In fact it is my
opinion that in spite of the strong organization han-
dling the Washington work of the automobile in-
dustry, the results achieved by the Automobile
Chamber of Commerce have not been as satisfactory
as has been the work done by the Music Industries
Chamber of Commerce. Through our Legislative
Department, under the direction of George W.
Pound, we have at least established ourselves as
being somewhat more than a simon pure luxury.
I suppose the average congressman has in his mind
a general classification, of which the following is
typical:
Classification.
1. Utter necessities, such as food^ clothing and
shelter.
2. Necessities, such as special kinds of first di-
vision for certain classes of people.
3. Semi-necessities, such as pianos, because of
their part in educational departments.
4. Luxuries, such as pleasure automobiles.
5 Utter luxuries, such as unusual objects of art,
rare fabrics and fancy jewelry.
Before the music industry took its stand in Wash-
ington on the proper classification of its products,
I doubt whether any Congressman had given a sec-
ond thought to the difference between a piano and
an utter luxury. 1 am now sure this has been
changed.
Surprises of Inventories.
I suppose every manufacturer, in analyzing his
present financial condition, has found that his in-
ventory in dollars is something over twice as large
as formerly. And yet the stock on hand is not larger
in actual quantity. Where has the money come from
to finance this inHated inventory? The answer
is that your receivables have been reduced in about
the same proportion. This is, of course, because you
have been selling your products on shorter time.
(Continued on page 6.)
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