New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1919-07-20
Building and the Cost of Construction

The increase in the cost Of construc
ton varies greatly according to the
type Of project contemplated, for the
advance in prices Of materials and In
wages has not been uniform. The ad-
vance has been most conspicuous In
the metal products group Of materials
structural steel, heating and plumb
ing supplies, etc. The index number
for construction materials, including
steel, has advanced 80 per cent since
1918; excluding steel, the advance is
81 per cent
As regards wages tho principal ad-
vance has been for common labor.
Basing calculations not on actual earn
ings, which include overtime and other
variable factors, but on union wage
scales, the index number for wages in
the building industry in forty-one lead
ing cities has advanced only 28.6 per
cent since 1914.
The result is that the cost Of con-
struction has gone up somewhat more
than so per cent for, say, a high grade
steel skeleton office building and some
what less than SO per cent for dwelling
houses and other buildings, in which
the metals group Of materials Is not so
largely represented.
However, the cost of construction
even Of high grade steel skeleton
office building has not advanced on a
par with commodity prices, the Bureau
Of Labor Statistics index number for
which registered an advance Of 10e
per cent in November, 1918, and Of OF
per cent in February, 1919. Prices
to-day are about as high as they were
last November when the armistice wa q
signed.
What is the prospect for a reduction
the cost OF construction? study
o the general price level, with an
'aaiysls OF causes which raised this
level and Of the causes which NAV
lower it, will throw some light on this
question.
The causes Of the great rise in prices
may pretty be analysed as follows:
]. An abnormal demand for commod-
itles by the governments at war.
Z. Scarcity Of certain commodities.
q. Increased purchasing power of the
governments OF the belfigerept coun-
tr'es acquired by tho sale Of bonds
ano issue OF paper currency, which in
me countries out Of proportion to the
quantity Of commodities available.
The governments could purchase
commodities without limit a. to price
and the chief consideration Of the eov-
ernments in regard to prices was that
the price offered to manufacturers
should be high enough to draw forth
the goods required Manufacturers of
war materials. being able to obtain alb
normally high prices, competed with
one another for labor and materials
forcing up the price level. Manufact'
urers OF nen-war materials, for which
no abnormal demand existed. we're
forced TO compete with war industries
for labor and materials, thus greatly
increasing their costs Of production
and forcing rise In prices Of their
products. In general, the price Of war
commodities was forced primarily BY
abnormal demand and the price Of
non-war commodities by abnormal
costs.
Present prices Of commodities pro-
duced by any business cover the costs
ut doing business and profits, which
may. be ftenized az follows: Interest
On borrowed money, wages and sal
aries. materials used, taxes, a fair re-
turn on the capital and labor of the
owner, and excess profits.
Present prices cannot fall unless
present costs decrease or business
men, including farmers. are willing, or
compelled. 10 forego their profits. What