The Washington times., 1923-05-05
BUILDING BOOM
THREATENED
BY COSTS
Prices of Labor and. Materials
Reach Point Where Danger
Is Seen.

IS 0GSUa
''The money value of building
and construction in 1922 was the
largest recorded in the building
industry of the country" says
Commerce Monthly, magazine OF
the National Bank of Commerce
in New York.
1.-The value of new contracts
awarded during January, 1928, was
larger than during January OF
either of the two preceding years,
says the banks magazine, land pre-
dictions are being freely made that
In 1928 the volume of building, on a
valuation basis, will exceed even tho
high record of 1922.
Costs Already High.
whether or not these expecta-
tons will be realized, states the
article, depends on building costs.
They are already high and the
urices of building materials and
wages are rising. Under these con-
ditions there is always the posi-
bilitv that as result of high costs,
those who are using their own funds
will prefer to delay building and
that construction dependent upon
borrowed money viii be hampered
by the unwilIingness of lenders to
accept current levels as a proper
basis for long-term loans with the
consequent restriction of such loans
TO so low percentage of construc-
ton costs as will make it difficult
for owners to finance their under
takings.
Price Increase Rapid.
"Superficially the conclusion might
be drawn that a famine of building
materials and supplies is imminent,
but such a conclusion omits the
price factor. Buildings represent
lifetime investment and over and
over again it has been demonstrated
that no industry is more susceptible
than is construction to the effects
of price advances. Since last March
the upward climb of building mate
rial prices has been rapid. The
United States Bureau of Labor
Statistics building material index
has increased "a per cent.
THE building labor situation is
similar to that of building ma
terials. There is a shortage of
This is the combined result of the
competition of industry and the
restriction of immigration. The
resultant shortage OF skilled labor,
combined with effective organiza-
ton, has made for monopoly wages.
While wage scales in the build
ing trades have been cut in most
cities, wages paid have been de-
termined by the law of supply
and demand, and they are now
probably as high as they were
at the peak of prices in 1920.
Hits Home Builders.
With stable prices and reason
able wages. n true shortage OF
building material and of building
labor would be almost certain, hut
rising prices and wages will operate
TO prevent the development of this
condition. AS building costs mount,
they will reach a point at which
home builders OF small means can
not meet them.
ALREADY there are reports of
cancellations of loans for this pur-
pose because the amounts arranged
for have proved insufficient to
meet rising costs Builders for
industrial purposes and municipal
tiles as well will hesitate and in
vestors will be inclined to con-
slider carefully the wisdom of
placing funds in investments which
hold increasingly doubtful promise
OF profit and of which the ultimate
security may be in question.
Takes Is Per Cent of Steel.
Last year building construction
took Is per cent of the steel pro
duced In this country, being second
in its requirements only to the rail
roads. The manufacture of cement
Is the fourth industry in the con-
sumption of coal During 1922,
forest products made up per cent
of total freight car loadings. a larger
proportion than grain, live stock
Or ore.
There are two and a half million
persons engaged directly in the
building industries, besides large
Numbers occupied in industries di-
rently dependent upon them. It is
probable that a tenth of the total
population of the country is Deepen
dent directly or Indirectly upon the
building Industries for its support.
THE effect of even a partial res
sation of building activity would be
far reaching. Unemployment #
only small proportion Of the
workers engaged directly or indi-
rectly would inevitably result in
lessened business activity. Curtail-
n1ent of purchasing power coming
as consequence of unemployment
I'm the building grades would be a