Evening star., 1939-10-07
Building Is Warned
To Be Ready 10 Act
Against Rising Prices
Disastrous Results
Would Follow Boom,
Architect Says

The war in Europe may have dis
astrous consequences for the build
ing industry in the United States
unless steps are taken by the in
dustry and by the leaders Of finance
to counterbalance the effect If
prices and interest rates rise, ac-
cording to Arthur c. Holden of the
New York Chapter of the American
Institute of Architects.
But" Mr.. Holden says, "the lead
ers of both the building industry
and OF finance are far better in
formed today and are far better pre-
pared to deal with a dangerous Sit
uation than they were Is years ago.
The consequences of overexpansion
sin plant at high prices and the sad
results of overmortgaging the farm
to bring additional marginal acres
under cultivation are too we'll re-
membered to be repeated. 1t is i'm
probable, therefore, that there will
be an immediate runaway boom for
either factory development or farm
Improvement.
There will be. however, a natural
tendency to speculate for a price
rise in both securities and commodi-
ties. This will be one of the un-
favorable factors with which the
industry must cope. A rise in prices
for building materials will tend to
check construction as labor is drawn
away to increased activities else
where. Increase in general oppor-
tunity for labor will, however, tend
to increase the earnings of labor.
This will probably generate dis
content in the building industry and
a demand for advances in wage
scales.
Hint to Labor Offered.
"Wise leadership in labor will pre-
fer assured continuity of employ
ment and should endeavor to offer
small reductions in hourly rates and
increased productivity, in exchange
for guarantees that will keep the
construction labor more fully en-
ployed.
But the most difficult thing that
the building industry will face will
be the flight of money and credit
into other more Immediately press
ing activities generated by the war;
Unquestionably the international
demand for money will cause a gen.
eral rise in interest rates.
Just how far the administra-
tons avowed policy of 'cash-and-
carry will be successful in prevent
ing the European demand for credit
from stimulating speculative
money market remains to be seen.
Our experience in the past should
have taught us that there will be
needed, in view of a rising interest
rate, to provide for the segregation
OF credits that can be utilized at
the lowest rate possible, provided
that security of regular and ade-
quate amortization payments can be
arranged.
Here again the course of activity
will depend upon the farsighted-
ness of financial leadership. In a
general expansion of credits it
ought to be possible to department.
alize credit flow and to arrange
the terms of credits in such way
as to assure orderly instead of
chaotic production. There are some
who claim that the general expan-
sion of credit as required for war
production stimulates the natural
fear of imitation and that the safest
hedge against imitation is a capital
investment in real estate or even
in unimproved land"
Land Price Not Likely to Rise.
Mr.. Holden contends that because
Of the still uncompleted liquidation
of our difficult mortgage situation
land is far less likely to be bought
for hedge against imitation than
was the case Is years ago.
Therefore," he explains, 'the
price of land is likely to remain
stable or even to continue on its
progressive decline This in itself
should be factor to favor the de-
development of large-scale, we'll
planned construction enterprise
Because of what has been learned
far more care is apt to be taken to
provide adequate housing wherever
warranted by industrial expansion
This is likely to be designed on the