Arizona republican., 1922-03-12
ny O. STANLEY TAYLoB
Financial Editor The Architectural
Rorum

ycr the nrst time In several years It II
possible TO demonstrate sound reasons Tor
optimism in regard to Increased ACTIVITY IN
the building construction industry.
This statement is not based alone on the
fact that building reports show consider
able increase in the volume or contracts les
IN the last three months and that here ana
there signs of pronounced activity may De
recognized.
These are merely indications OF underlying
conditions which demonstrate that with the
year 1922 we enter a period OF unusual ac-
tivity in building construction, which VIII
serve not only to meet the normal annuai
demand in this field but 70 contribute an
annual quota toward the relief OF shortage
in many types OF buildings which has de-
veloped over the last period Of depression.
In connection with this article there 10
presented a simple graphic chart which Is
an Interpretation Of the present situation in
the building industry and which serves as a
guide for the purpose OF anticipating future
activity.
Extending Zone OF Stabilization
In this chart we have shown the index
line Of building costs since 1915 10 the pres
ent date. We have shown also a probable
normal cost line based on the general In
crease IN wholesale commodity prices ana
labor costs during the last twenty years to-
Eethor with the fact that 1915 or 1913,
which are the years usually termed normal,
were really sub normal in the building held,
owing to conditions at that time. There
has also been introduced curve Of sta
biiIza4ion in which is to be found much en-
eouragement for building and allied In
terestg.
General expressions Of opinion regarding
the future OF the building industry refer
constantly to tho term .'pre-war levels" As
n matter Of fact. building investors have not
been waiting for 'pre-war levels, but Tor
building costs 20 come down TO a point where
the element OF stabilization OF cost Is in
troduced.
In other words. for building costs to come
down to point where shrinkage OF replace
lnent values is not to be feared, or is OFFSET
by Increased revenue and utility value which
provides q sinking fund 20 meet excess cost
(as abo4e tho so-called ''pre-war iever').
In every business cycle, as the index OF
production costs drops from high levels
(rnore or less artihciaiiy produced by un-
toward eircumstances), there comes time
when prospective purchasers can see their
way clear to buy.
Speculative Builders Starting
So IN the building deld. when we reach q
period where costs have stabilized TO a
point whers the future shrinkage Of replace
nent value Is Offset by the increased pur-
chasing power OF the dollar. II is evident
that speculative builders in certain classes
of residential property, where the demand IL
great, will begin 70 operate
Similarly. In other types OF building con-
str1Iction where the demand Is great and
financing Is not 50 difficult to provide. con-
afruction will be started. From that poant
on. II there il reason to believe that the
efficiency OF labor Is increasing and that
evident that with each drop OF actual con-
struction cost toward the line OF etabilization
other investors who have been waiting fol
this period will begin to contribute toward
che volume of actual construction activity.
Referring to the graphic chart Tor mo-