The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1923-06-30
BUILDING COSTS
BLAMED ON
FINANCE
Brick Manufacturers Point to
Huge Bonuses Paid
For Loans.

For Loans.
Who has the strange hold on the
golden egg.laying goose? That's the
big question in the construction in
dustry today. The bankers meet and
decide that the material men and
labor are wringing the goose's neck.
The material men pass resolution
fo-the effect that 1t is the banker
and labor who threaten the produc-
ton of golden eggs, and so the buck
IL passed. Nearly every group Is
willing to put the blame largely on
labor, except the labor group, Whlch
aays that when wartime prices pre-
vail in everything that we buy, why
should we not receive a wartime
wager"
1t must be admitted that the cost
Of living is as high as the cost OF
building. Conferences recently have
been held to decide what should be
done about it. Some say we should
stop building, but no one has ex-
planned how that would help the sit
uation. If there was not a demand
for building there would be little
construction work. The shortage
has not yet been taken care Of. In
every large building center labor is
being paid more than the union de-
mands. 1t is simply the old rule OF
supply and demand" and it seems
that the only remedy is to produce
more men for the construction trades.
VIII Teach Trade.
Some really constructive work II
being done along this line. The Com
mon Brick Manufacturers Assocta~
ton of America, which il vitality in.
eerested in the bricklaying trade
particularly, has called a national
conferences to be held in Cleveland
June for the purpose Of promoting
hricklaying apprenticeship schools
epon the model Cleveland school plan
A every section OF the country where
more bfleklayers are needed. This
conference has the cooperation OF
contractors, material men, labor and
architects. The architects and build
ors are interested In the bricklayer
movement with q view Of introduc.
irR the same methods In other
trades. This, it IL believed, will do
moro to help the situation than viii
the passing Of resolutions to stop
construction, so seriously needed In
every part OF the country.
The word ''profiteer" has come out
uf many Of the conferences held, and
A always IL hurled at labor and the
material man. The facts are that
brick IS selling at practically the
same price In every part OF tho coun.
try today that u did q year ago to-
day, and this 81 spite Of demand
wliich IL far IN excess OF the supply
On many centec1.
Fanancaaf Overlooked.
In III Of tle publicity given 70
construction An meetings both local
and national, little has been said
about the cost az financing. Simply
stating q fact. without comment or
IL nay be said that one
of the chief items Of expense In con-
nection with building Is the financ-
Ing. In many large apartment
today the money costs 20
per cent. That means for every
B ,OOO,O 900 borrowed for the opera
lions only 100000 actually goes
Into land and construction. The in.
Eerest rate may be per cent or
Der cent. but this 20 per cent IL a
s'bonus" or gtft to the institution
the money, which IL not
by q single brick or an
ounce Of steel.
Similar rates apply in the build
ing Of q home. A man who would
borrow $1,000 for the erection of .
residence will probably pay not less
than $500 as a bonus for a three
year to five year loan. In other
words he makes q present of 5000
70 the financing concern for the
privilege Of loaning him money at
z per cent. He pays interest upon
the full $4,000 during the period Of
his loan. but he actually never re.
ceived $4,000. He has placed to his
credit only $1,000 and he must in
vest considerable amount OF his
own money In the lot and the early
stages Of construction before he re,
ceives q dollar Of his loan.
1t may be six months or nine
months before all Of the loan has
been paid to him, but he is paying
z per cent upon $4,000 throughout
the operation. A man who would
build a $4,000 home must charge
up against the operation certainly
not less than $1,000 for financing,
which is not represented in the
building by a single brick or
shingle. The cost Of financing a
home, whether 1t costs $4,000 or
$4,000 is greater than the sub-con-
tract for labor and material, in roof.
Ing, in electrical work, or in heat.
Ing. 1t Is greater than the cost of
the brick, generally speaking, and
next to woodwork and carpentry,
which is always the largest item,
this bonus for financing is the
largest individual item in the table
Of costs.
The regular banker will say that
this shoe does not fit him, and that
ID true. But because the regular
banker loans upon such an ultra
conservative valuation for construc-
ton. he forces the builder to 20 to
the mortgage company or the build
ing and loan company where these
large bonuses must be paid to get
money. This is an important factor
in building today.
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