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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