Evening star., 1937-11-21
BY HERBERT M. BRATTER.


N ing construction Is inevitable.
~ The longer it Is delayed, the
4 a surer it is to come. Whether
it will begin within q few months,
in time to ameliorate the present
intermediate" recession-as the Gov-
ernment would like it to-is very
questionable. But it will come.
In SO far as the current business re-
cession creates new uncertainty, build
ing will be deferred, for . new house
is definitely q deferrable purchase.
But, insofar As the current recession
brings about lower material prices
and slows up labor's general agitation
for higher wages, home construction
may quickly come out of its 1897 set
back. Since large volume Of new
construction is now regarded by many
economists as the keystone of further
recovery, the country is vitally con-
cerned with the Governments efforts
to revive it.
Under the New Deal, the Govern
ment has already contributed exten-
sively to heavy construction by means
of loans and subsidies. BY insuring
mortgages through the Federal Hous-
ing Administration to the extent of
about 100000 it has assisted
home building. The Resettlement Ad-
ministration has experimental with
subsidized home construction. The
Home Owners Loan Corporation and
Federal Home Loan Bank Board,
moreover, have aided home owners
and home-financing organizations.
But still the expected building boom
has failed to materialize. Whether
the Government can now devise q
really effective program remains to
be seen.
Special Message Awaited.
President Roosevelt has just an
nounced that he will shortly make
new housing on large scale the sub
ject of a special message to Congress.
In the message he will deal with new
proposals to encourage private cap
ital to enter this potentially impor-
tant field, which for four years has
failed almost completely to keep pace
with the marked improvement in
other industries.
Some small improvement In hous-
ing did indeed evidence itself last
spring, but the movement, modest
though it was, was hit in the head by
rising costs. Spurred by the arma-
ments boom, copper and steel prices
scared, wages In steel and other
building materials were lifted follow
ing prolonged and expensive labor ag-
itation, prices pefe adjusted to re-
fleet not only actual, but expected in
creased costs-and then the public
baked. as might have been expected.
In February. L. J. Chawner. Com
merce Department construction eco
nomics expert. wrote that Increasing
costs of construction due to skilled
labor shortages and advancing ma
terial oricee may retard actual build
ing" And that is what happened.
During the first half Of 1897 resi-
Dental construction increased 80 per
cent as compared with the same semes-
ter of 1896; but during the third
quarter it was % per cent less than
in 1896. Now general business un-
certainty is fuEther adding 10 the
risks Of home construction.
This is particularly unfortunate,
since the latent demand for new
houses is larger than in many years.
In 1882 vacancies in many cities were
as high as per cent Of the existing
dwelling units. This ratio has been
steadily declining, and in some cities
is now down to less than per cent.
Industry Is Business Leader.
During boom times building Is one
Of Americas largest industries. In
1921 residential construction expendi-
lures were estimated at $l,771 ,000. 900;
in 1925, at $4,470, 100000. In 1888
only $781 100000 was paid out by
the entire construction industry.
Over long periods Of time residen-
tial building averages from one-fourth
to one-third Of all building in the
United States. But building is very
unstable. In spite Of its occasional
economic importance, new building
is such a small percentage Of the total
supply, that moderate changes in de-
mand cause very large changes in
building activity.
The demand for houses is Influenced
by many factors, including population
growth, the number Of marriages, i'm
migration, internal migration, the level
of family income and costs of own
ership, including financing, site, con-
struction and taxes. Statistics show
that high-rent conditions stimulate
residential building, while when rent
levels decline, such building also de-
clines. Gndusrial building, on the
other hand, is most influenced by in
dustrial earnings, while commercial
building is closest related to vacan-
cies)
The production Of houses is marked
by severe long-term fluctuations In
volume. Thus, according to one esti-
mate. in 1918, about 2o0.0 900 units were
built, in 1925, $4,000, or more; in
1885, $4,000, and in 1896, 275,000.
Evidence Of cycles Of large amplitude
with durations Of Is to ~ years
have been found by Mr.. Chawner.
No other industry of comparable
size has evidenced as severe fiuctua-
tions during the postwar period. The