Evening star. [volume] (Washington, D.C.) 1854-1972, 1926-10-02
BUSINESS CYCLE LOSING OUT
ASPROSPERITY REGULATOR
Familiar Law Has Been Plotted So Often
It's Reliability Wanes-Construction
Field, for Instance, May Ignore 1t.

| II Is scarcely a matter for wonder
| that, at a time when the country
more or less suddenly found the peck
cts Of it's citizens and the vaults of its
banks full to overlooking with I'M
precedented accumulations of money
| and credit, WAYS would be found for
| easing the ra pid flow Of large portion
I of this money and credit into one OF
the most pid-growing and con-
spicuously prosperous of the large In
! dustriOus industries of the country.
| Furthermore, 1t was an industry
which had scarcely had adequate
credit facilities in the past.
Expanding construction activity,
expanding construction facilities, ex-
panding credit, all accompan MED
growth in general industrial and com
mercial prosperity and an unprece-
dented growth in wealth md income
| of the people of this country. BY the
| time our pressing construction needs
were caught up with. at the end OF
| 1924 IL was no longer necessary to
consider merely the country's alb
soute space requirements for nous
ing it's populati lion. it's industry and 1t
commerce.. The people. in the in
dustrv and commerce of the country
were ready TO consider buying what
thev wanted in the way of buildings
with all kinds of modern improved
features, rather than to hold them
SELVES down to immediate space re-
olirememenas This was the situa-
ton at the end OF the second or
growth pha So of the postwar era.
CONSTRUCTION activity during the
first few months of 1925 did not show
anv particular tendency to increase
greatly over the activities of the
m
mer that the boom started. Con-
tracts reached the record volume of
1864 900 900 in August of last year,
and contract volume and construc-
tion activity continued at record
brea king levels practically up to the
nresent time. The boom that de-
veloped last year brought the 1879
contract total up to $6.622 ,Ooo,ooo, an
increase Of 26 per cent over the
preceding year.
Gain in Third Stage.
lust as the transition from the first
phase TO the second phase OF the
most war era was accompanied by
very marked rise in construction Vol
ume tas between the years 1871 ana
1eo2) so also was the ira nsition from
the second phase to the third phase
marked by big increase Inc
monthly contract. average Tor 1870
was $3.50 600, 900, compared with $43e,'
600 900 a month in 1924 and $265,ooo''
600 a month in the 19l9-1S2l perloo'
This brings the record up to the
current year, the final outcome OF
which Is still uncertain. 1t IS also
desirable to make some sort or guess
as to the much more uncertain out
come of 1927.
At nresent it looks as II this years
total construction volume would ne
fairly close to that of 1920 Az the
end of August there was lead OF
to per cent over 1928. The declin-
inc tendency Of the earlier months
of this year rather led to the eXpecta-
ton that the margin over 1879 wouio
decrea Sc a little faster than 1t actual
IL has and that il would pronapi!
vanish before the end of the year
Since this declining trend was inter
,,,nted In August by what now ap-
nesrs to i've a minor Fall revival. the
nrosnect for a final total very close
m that of last wear is very good. In
other words. the monthly average for
1926 will probably not vary greatIE
from that Of 1925. which was $oo2,-
600 900 If the remaining months or
this year should equal in volume the
corresponding months OF last year
which might happen. but is a little
unlikely. the 1926 average will he
S575 900 900. probably the maximum
estimate that one would care to make
today.
The first two years Of the current
nhase of construction evolution ap-
near to show a tendency toward sta
Utilization at a normal volume some
where around $685. 900, 900 month, or
S6 500 600 600 a year. 1t remains 10
he seen whether next year is likely
20 run over that figure.
Surplus Production Capacity.
Ono characteristic of the current
nhase of the construction situation Is
almost entirely new. The growth OF
this industry has produced surplus
production capacity. 1t has been the
surplus capacity for the production Of
materials that has held prices at rel
ativelv stable levels ever since 1923
in spite Of rapidly increasing demand,
II Is proba BILE that very large In
crease in construction volume could
he ga silly met AT the present time with
an adequate supply Of materials. The
same Is scarcely true Of the supply of
labor. But il is true Of the supply Of
credit. Up to the present time the
onlv effective limitation on credit for
building opera tons is the judgment
of investors, lenders and lending insti-
buttons.
These conditions became apparent
last year and operated toward the de-
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