Evening star. [volume] (Washington, D.C.) 1854-1972, 1926-12-25

Yresiden. American Bond & Mortgage c.

PRESIDENT American Bond & Mortgage Co.
The building industry has once
more defied prediction and confounded
the prophets of gloom. The end OF
1926 finds the oft-heralded building
slump still delayed. and the indica-
lions are that only serious business
depression will prevent another great
year of construction activity in the
United States in 1927.
Building operations during 1926
were unprecedented in volume, reach
ing the record-breaking total of ap.
Droximately $3.50, 900, 900. This rep
Tesents an increase of about s per
cent over 1925, the largest previous
building year in history. The enor.
NOUS investment of this sum has had
Il most beneficial effect on the bust
ness situation and, perhaps. has been
the major factor in stimulating and
sustaining the general prosperity of
the country.
Available data indicate that the
total value OF construction in 1927
WIN closely approach the record
breaking proportions of the last year,
and no serious major building recess
sion is in sight. If there is a decline
during the approaching year-and /
am not sure there will bet should
less than the total of 1926. Any re-
cession will be extremely moderate
and gradual. and there need be no
fear that the bottom will fall out of
the building market.
Steadily increasing popularity of
first mortgage real estate bonds
among investors. banks and institu-
tons was one of the outstanding de-
velopments of the year. Increased
sales of this type of security, which
today ranks next to public utilities.
was an important factor in furnish
ing needed building capital. Realty
bonds sold by the leading investment
houses furnished approximately $780,
100000 for new construction, an in
crease of about % per cent over 1925.
The indications are that by the end
OF 1927 the real estate bond industry
will be furnishing building capital at
the rate of $1,000, 100000 a year.
Building Industry Sound.
Gratifying soundness underlies the
building industry as the new year
begins. There is still evidence of a
strong national demand for well con-
structed uildings-constructed in &C.
cordance with the rise in American
standards. Building costs are well
orally satisfactory, and there is am
ple evidence that reports of overpro-
1uction have been unduly exaggerated.
4 strong, wholesome tone prevails
throughout the industry.
The helpful effect that the great
volume of construction, breaking all
precedentS almost month by month
during the year, has had on general
business and upon practically every
industry in the country cannot be
oyerestimated. 1t has not only fur
nished excellent wages for millions of
men in all the building trades, but it
has also provided steady employment
for the hundreds of thousands of men
engaged in the manufacture and trans
portation of building materials. This
creation of new wealth for the coun-
try and the widespread enhancement
of property values through improve
rllent means real American progress
and prosperity. In view of these bene
fetal effects on the national business
machine it would indeed be unfortu-
nate If there were to be any radical
slowing up in construction activities.
There is still some talk that build
ing costs are too high and that such
costs must come down. While there
win always be fluctuations when, due
building costs ease up somewhat, 1t
should be kept in mind that present
price levels are directly affected by
such economic factors as labor, taxa
ton, transportation and other inn
portant items on which any marked
reductions are improbable.
Costs to Keep Stable.
Building costs, in my opinion, will
remain stabilized at near present lev
els, and those who are postponing con-
templated construction projects eX-
pecting pronounced cost decreases
are doomed. to disappointment. Also
our constantly advancing standards
of living constitute an influence
equally as powerful as any purely
economic factor
Analysis of index figures OH con-
struction costs, as compiled by the
Federal Reserve Bank of New York,
gives a reasonably accurate picture
If actual present-day conditions.
These figures show:
% Building costs are 94oo above
the 1913 level and about go higher
than one year ago. Since April, 1928,
construction costs have been showing
a slight tendency TO decline, with
small seasonal fluctuations. At no
time have they shown indication of
rising to the peak level Of April, 1920
when building costs stood at 1870
bove the 1913 level
% Building wages are 1856 above
the 1918 level--the highest level in
history-and about 4fo aboye the
level Of one year ago. Index figures
show that wages have been steadily
advancing and now stand about 49,
above the former peak reached in the
FALL of 1920.
49, Building material prices are 72To
above the 1918 level and about go
below the level reached year ago.
Since the first Of the year material
prices have shown a gradual tendency
10 decline. Prices are now stabilized
at about 42oo below the peak reached
in April, 1920.
Statistics compiled by the Engineer
Ing News-Record show that the ma.
tional. level Of wages in the skilled
building trades is approximately 95 Cd
above the 1913 level. The rate for
common, unSkiiled labor is about
92So above 1918. This does not
favor common labor so much, when
IL is considered that in 19l3 the skilled
rate was 247eo above that OF com.
mon labor, for the Nation as whole
Compared with rates year ago
skilled men get AZ more, while com
mon laborers receive an average wage
q about SO above the December
925, level
The average rate for common labor
Is $o.5512 per hour for the entire