New-York tribune., 1921-02-27
Building Costs Too High

Our lnduscr1al REIMBURSEMENT can be
only half completed, pending the com
pletion Of the price readjustment. We
nave made partial readjustment
tion Of operations in automobile pro-
duction and in various other lines pro-
ducing goods for consumption rather
than for further production But the
labor released by these industries is
( OF being absorbed as it should be in
ther industries. There is still a lull
efore the. beginning Of those build
ing operations which virtually all agree
are coming and must come Part of the
difficulty here rests in the fact that
building costs are still too high.
Progress has been made in this nat
ter.
Labor efficiency has gone up, with a
consequent reduction of labor costs,
even apart from a reduction Of wage
rates. Probably further substantial
wage reductions in the building trades
must precede the building boom. Build
ing materials rose far higher than the
general average of wholesale prices
during. the boom. They were 341 per
cent Of pre-war levels, according to the
Bureau of Labor Statistics, at their
peak in the months of April and May,
1920. They were still 274 per cent of
-
Further reduction would seem TO be
called for.
one complication in connection with
building materials is the excessive
freight rates upon them. During the
period, Of priorities and government
control rates on building materials
were advanced something like so per
cent with variations on particular
ltems) On top of this SO per cent ad-
vance came the recent horizontal gen
era! advance in freight rates. The
freight item has consequently become
q SERIOUS factor, delaying revival in
the building trades. The railroads will
PROBABLY be well advised to initiate
reduction in, freight rates at this
point, since they themselves will make
more money by moving building ma
terials in large volume than by OBJ
tanning higher rates on a small volume.
further highly important body Of
prices that needs rapid readjustment
is in iron and steel and steel products.
Following the crisis of 1907 the United
States Steel Corporation maintained its
prices through the ensuing depression.
1t was not until early in 1909 that
stee! prices were cut. At that time the
independents" broke away from the
schedules of the United States Steel
WI APOA@LloIi allu iHllldLeQ QraSClC9llV
lower prices. The United States Steel
Corporation was finally forced to fol-
low suit "to protect its customers, 7"
and almost Immediately real business
revival began. We may hope that there
will be no such delay in the readjust-
ment of steel prices in the present
situation. The steel situation is very
much more competitive than it was in
1907 and 1908.
One of the satisfactory develop
ments of the war period has been the
growth Of number of great, strong,
independent steel companies as com
petitors Of the United States Steel
Corporation, and conditions conse-
quently are much more favorable to
flexible steel prices which will quickly
adjust themselves to the needs of the
situation. Building operations and
many other operations involving the
use. OF steel are urgently called for,
including. especially great use Of
steel by the railroads. But much lower
steel prices would seem to be a nee
essary precondition Of this.