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December 18, 1937.
NEXT ST5PS IN HOUSING PROGRAM
I-

Costs Mast Be Lowered
The Housing Program is in grave danger of bogging down mil ess positive

and vigorous steps are taken to ensure cost reductions.

II- Monopoly Elements In Building Field
Costs in the competitive portions of the building industry are coming
down. Positive action, however, is vitally necessary to secure cost reductions in the more important monopolistic parts of the field*
Monopolistic elements in the building field can be roughly divided
into those that are national, as in the case of many building materials,
and those that are local, as in the case of labor unions and local collusive practices.
National monopoly situations can be only dealt with by Washington.
Local monopolies must be handled primarily locally, with possibly aid from
the Department of Justice in breaking up collusive local policies which
are in restraint of trade.

III- Materials Prices
Material costs accounted for about 75 per cent of the rise in construction costs last winter and spring* (See table.) Many material prices not
only are higher than in 1929 but exhibit aLaost unmistakeable evidence of
being rigidly controlled*

A few illustrations follow.

The price of plaster is 77 per cent higher than in 1929 and has not
varied since February 1934. The chief constituent is gypsum, about 80 per
cent of the output of which is controlled by the United States Gypsum
Company*
in 1929*




Prepared roofing, shingles are 33 per cent higher in price than

-2Structural steel is 17 per cent higher in price than in 1929* Cast
iron soil pipe is 44 per cent above 1929. As a result of advances in
prices it is now estimated that United States Steel Corporation has lowered its break-even point to approximately 40 per cent of capacity operations.
The price of cement is 4 per cent above 1929 and has not varied
since April 1955.
Coal stoves are 21 per cent higher in price than in 1929*
The possibilities for success in securing lower prices are indicated
by the private statement of one of the leading manufacturers of heating
equipment that he would meet the prices quoted by any mail order house.
There is pressure by buyers for a reduction in steel prices. Delay in
bringing about reductions makes for uncertainty and postponement of building.

IT-

Freight Rates
An advance in freight rates on building materials would be in cont-

plete conflict with the housing program, and should be avoided at all
costs. A vigorous building revival, through its stimulation of traffic,
would provide the solution of the acute railroad problem.

Y-

Controlled prices of materials and equipment can be lowered only

through vigorous leadership by the Administration and the coordinated use
of all the Government's powers and influences in this field.

It is, therefore, respectfully suggested that the drive for lower
prices should be made the responsibility of an aggressive and informed
man such as, for example, General K. E. Wood.




PERCENT OF RISE IN COMBINED COST OF LABOR AND MATERIALS DUE TO, MATERIALS
June 1936 - June 1937

Indianapolis, Ind.
St. Louis, Mo.
Oshkosh, Wis.
Providence, R.I.
Nashville, Tenn,
Tampa, Fla.
Milwaukee, M s .
Newark, N.J.
Wichita, Kans.
Grand Rapids, Mich.
Richmond, Va.
Cleveland, Ohio
Los Angeles, Calif•
Chicago, 111.
New Orleans, La.
Portland, Ore.
Boston, Mass.
Houston, Tex.
St. Paul, Minn.
Albany, N.Y.
Birmingham, Ala.
Pittsburgh, Pa.
Philadelphia, Pa.
Detroit, Mich.
Spokane, Wash.

Source: Federal Home Loan Bank Board




217
117
114
103
101
94
89
88
87
84
76
76
75
74
74
69
66
62
61
57
56
55
53
53
36

WHOLESALE PRICES OF BUILDING MATERIALS AND HOUSEFURNISHIHG GOODS

Percentage change from
May 1957 to November 1957
-5.6

Building materials
Plumbing and heating

+1.1

Structural steel

.0

Cement

.0

Brick and tile

-2.2

Paint and paint materials

-2.6

Other building materials

-2.6

Lumber

-8.0

+1.2

Housefurnishing goods
Furnishing

+2.5

Furniture

-0.1

Source:




Bureau of Labor Statistics




BUILDING MATERIALS AND HOUSEFURNISHING GOODS FOR WHICH
WHOLESALE PRICES REMAINED UNCHANGED FROM
MAY 1937 TO OCTOBER 1937

Building materials
Blocks, concrete
Brick, fire clay
paving
silica
Tile, drain
roofing
Cement
Lath, Douglas fir
Lumber, cedar
chestnut
cypress
maple
white pine
Shingles, cedar
cypress
Paint, prepared, enamel
outside, white
porch and deck
roof and barn
varnish, floor
Paint materials, barytes
butyle acetate
bone black
carbon black
lamp black
Prussian blue
chrome green
chrome yellow
ethyl acetate
putty
whiting
Structural steel
Asphalt
Plaster board
Wall board
Plate glass
Pipe, sewer
Plaster
Slate
Crushed stone
Tar




-2-

BUILDING MATJiMALS M D HOUSEFURNISHING GOODS FOR WHICH
WHOLESALE PRICES REMAINED UNCHANGED FROM
MAY 1937 TO OCTOEER 1957

Housefurnishing goods
Blankets, cotton warp
wool
Comforters
CutleryFloor coverings, felt base
lineoleum
Irons, electirc, nonautomatic
Ironers, electric
Oilcloth
Sewing machines
Shades, window
Stoves, coal
electric
Dinner sets
Nappies, glass
Pitchers, glass
Vacuum cleaners
Washing machines
Mattresses
Kitchen, cabinets
chairs
refrigerators, electric
tables
Living room, chairs
davenports
tables
Office chairs and desks

Source: Bureau of Labor Statistics