The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1934-11-28
THE FEDERAL HOUSING
ADMINISTRATION

Washington, D. c., Nov. 28.-When
500 Is spent for the construction OF
dwelling or a store, $36.40 OF that
sum goes into the pockets Of the
carpenter, the plumber, the painter,
or other worker engaged directly on
the Job. The prime need OF the ma
ton, in period Of unemployment
and low purchasing power, being the
supplying of ready money to the
rank and file of workers, the stimu-
lation Of housing was selected as Of
outstanding Importance. Hence. the
Federal Housing Administration was
created under the federal housing
act, approved by the president June
a, 1894.
The rapidity with which the con-
struction industry starts money flow.
Ing through the channels Of COM
merce is further emphasized by the
wide incidence Of distribution OF la
Dor wages. OF each 500 spent $21
goes to the workers in saw mills.
sash and door plants, shingle mills,
lumber yards, and other employees Of
material men. Seven dollars in wages
Is paid to labor at raw material
sources, such as the logging camps.
the metal mines, and the quarries.
Still another 81 reaches wage work.
ers on railroads, boats, truck lines,
and other agencies Of transportation.
Finally $50 Is paid to employees Of
engineering firms, architects, and
other workers il office intimately
connected with building activities
and drawing their compensation
from the money spent to create a
house, q store, an hotel, or a motion
picture theater.
With the $36.4O that goes to work.
ers on the job, this makes q total Of
$74 out Of each 500 spent for the
building Of the house which goes in
to the pockets Of persons Of earned
incomes, low incomes for the most
part, who may be depended upon to
put that money into circulation AZ
most instantly. This type OF labor
usually IS paid weekly. This means
that only q week after the work on
q housing job has actually started.
the money invested in the work will
begin to pour into the channels of
trade.
The government did not establish
q housing administration primarily
tor the purpose Of providing indivi-
duals with dwellings. The underly-
ng purpose was providing individuals
with jobs, and it was known that no
activity gives more Jobs or circulates
money with more celebrity.
It will be noted that out Of the
500 spent in building there Is q
balance Of $26 after labor has receiv-
ed Its $74 share. This goes for nate
rails, In profits to contractors. for
professional services, for financing
costs. Some even Of this portion
may pass quickly into circulation.
but It IS more generally classed in
the dividend-income group than the
wage-income group. The capitalist
receiving profits or dividends may
re-invest Immediately. The chances
are he will not even cash q check
received. The money may 60 into
q bank to swell the excess bank re-
serves and be lent, perhaps, to the
treasury where 1t Is tied up for 4
considerable period. It may be paid
over In taxes. A dozen dispositions
Will likely be made Of such receipts.
all calculated to keep them out OF
rather than put them into active
circulation.
Starting the Ball Rolling
In an experiment made to discover
the velocity of circulation, q sum Of
money In marked bills was paid OUT
IN wages. It was traced for q week
and the discovery was made that
every wage 81 paid s. in bills in that
brief period. The carpenter spent
part IN groceries, the grocer paid q
delivery boy. the delivery boy bought
candy from the little corner store.
a stenographer paid her room rent.
the landlady paid her butcher bill,
and SO on. Immediately the ware
earners received their stipends, the
cash whirled into rapid circulation,
II 1t turned over 4 times in q week.
It might well keep up that rate and
turn over 200 times in year. Thus
payment Of 81 would create COM
merce Of 5000.
The Federal Housing Administers
ton found that millions Of dwellings
had fallen into serious disrepair "a
the depressed period, and other MIL
Lions OF new houses were needed I'd
catch up the deficit which had &C.