Once upon a time people in America wore naked T-shirts, unadorned by slogans, labels, alligators or other advertising symbols.

Then, in the early '70s, members of the "me generation" began to use T-shirts as a vehicle for expressing their personal preferences, their socioeconomic status, their political leanings. College students boasted across chests and backs about the rock concerts they had attended; vacationers came home with T-shirts flaunting the exotic places where they could afford to relax, and couples could be seen holding hands in matching "slave" and "master" ensembles.

The burgeoning fad created a vast new market and ripe opportunities for young entrepreneurs like Dan Gainsburg and Neal Caplowe. The two local custom-printed T-shirt manufacturers both started businesses out of their basements and now record yearly sales in million-dollar figures.

Gainsburg's Dallas Alice T-shirt Co. was conceived in 1977 when he and a coworker from Discount Books and Records taught themselves to do silkscreening and began printing shirts with book titles such as "Dune," "Catch 22" and "Zen and the Art of Motorcycle Maintenance." They sold enough of their work in local bookstores to start advertising in Publisher's Weekly magazine, which led to a contract making the Kliban cat T-shirts for Workman Publishing Co.

"I quit Discount Books and lived on my savings," Gainsburg said. "Everything was plowed back into the business. It was really tough."

Being in the forefront of this clothing trend, Gainsburg discovered during Dallas Alice's first year that the Smithsonian Institution museums' gift shops were not selling T-shirts.

"We had seen the movie 'To Fly' and we said, 'the Smithsonian needs a "To Fly" T-shirt,' " Gainsburg recalls. "We approached them, made some samples, went back and forth, back and forth. . . .All they bought from us was 'To Fly' and they did great. I talked to them and said, 'Why don't you put a T-shirt in the Natural History museum?' The buyer said, 'No, no more shirts.' Then they got a new buyer. We now do about 10 different T-shirts for them. Each shop has its own."

Gainsburg, now 28, has parlayed his $5,000 investment into a wholesale, retail, mail- and custom-order company that employs 15 people and occupies a 7,500-square-foot warehouse in Rockville. Along the way, he got an $89,000 loan from the Small Business Administration. Current Dallas Alice custom accounts include the White House, the National Geographic Society, WETA-FM radio, International Business Machines Corp. and several local universities.

Dallas Alice has wholesale accounts with the Hecht Co., Woodward & Lothrop, J.C. Penney's in California and in a number of smaller boutiques. The company also is licensed to print the cartoon character Cathy, the French Pierrot mime-clown figures and the teddy bear characters of Peggy and Alan Bialosky. It also prints a variety of designs, conceived by a company artist, that have been published in six mail-order catalogs that go to 35,000 addresses. Sales for the past year were about $1.3 million, Gainsburg said.

Caplowe's Coming Attractions, located in McLean, is an older company. In 1974, Caplowe left his job as a buyer for Herman's World of Sporting Goods with no plans other than "keeping his ear to the ground and looking for the right business opportunity, a good idea at the right time."

A friend in Boston, knowing Caplowe's passion for outdoor sports, sent him a T-shirt with a mountain climber printed on it. The design was unusual at the time and proved to be the catalyst for his T-shirt business, which still concentrates on outdoor graphic designs.

"When I saw the shirt , it just went 'click, click, click' and I said 'That's a great idea,' " Caplowe said. "Having been at Herman's buying in the outdoors department for the last two years, I was pretty confident that no one was doing that and if they were, they weren't doing a very good job of marketing it. So I said, 'Hey, that's a pretty good slot.' "

Caplowe, 31, has parlayed his original $1,200 investment in Coming Attractions into a solid enterprise with annual billings over $2.5 million, 30 full-time employes and 20 sales representatives across the country.

Clients such as Eddie Bauer, L.L. Bean, Hudson Bay Outfitters and Neiman-Marcus buy T-shirts, sweatsuits and other sportswear that has either been imprinted with a graphic designed by the client or with one of Coming Attraction's "stock graphics." These graphics follow the themes of "outdoor people," "sun sports" and "ski collection."

Caplowe said about 90 percent of current sales are T-shirts with graphics from these theme designs.

But that has not always been the case. Rapid expansion into what Caplowe calls the "rugged outdoor clothes" market--such as hiking shorts and flannel shirts--which gained in popularity not long after T-shirts became big business, proved unprofitable for Coming Attractions, Caplowe said. The company had to withdraw from that market.

"The economy had softened and rugged outdoor clothes had taken hold in the market, so that anybody and everybody was turning out an outdoor clothing line," Caplowe said. "Combining that with the fact that we were never really able to become a primary supplier for that slot, and the retailers were in general trying to cut back on their suppliers for each category. . . .the level of risk we were dealing with was greater than the chance of return."

One major difference between the two T-shirt companies is willingness to do small-volume custom design.

Coming Attractions concentrates on high-volume, wholesale orders, while Dallas Alice has capitalized by catering to individuals and groups, such as office softball teams, that want their own slogans or designs printed.

For instance, Dallas Alice recently printed T-shirts for the National Coalition to Ban Handguns. The company also has a separate "custom imprint catalog" from which customers can order T-shirts, sweatshirts, jackets, tote bags, towels, aprons, visors and gym shorts.

But Gainsburg sees wholesaling as a growing part of his business.

Custom business "is our biggest in terms of money-making now, but with the [Bialosky] teddy bears, the wholesale will take off," he said.

Gainsburg, who describes himself as a "feminist," prefers to hire women. In fact, he has 15 women, and no men, working for him because women "are dedicated to getting the job done."

He said he is exploring the possibility of instituting a profit-sharing and stock option plan for his workers. He has also worked with one of his employes to organize a local cottage industry in which Dallas Alice prints designs on unsewn aprons and tote bags and seamstresses who prefer to work out of their homes assemble them.

"There are a lot of people who can sew who can't get work, a lot of refugees," Gainsburg said. "There's a network of five incredible seamstresses that we use. . . .We put an ad in the paper for seamstresses and got over 300 phone calls. People like the idea of sewing at home and it helps us out. We don't have to invest in equipment or have space for them to work."

Both Dallas Alice and Coming Attractions hope to expand into the children's clothing market. Caplowe also says that Coming Attractions is conducting exploratory sales campaigns in Europe and soon will add to its international sales in Japan and Germany by opening a division in Canada.