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F e b r u a r y 5 , 1937

8PMMARY OF THE SBCOHD fiEMORAMDUM ON THE PROSPECTS FOR THE

PURPLE ,QpQI?g INDUgTfiP?
By
George T e r b o r g h

ffQUSINg
Introduction*
Certain d i f f i c u l t i e s

beset a d i s c u s s i o n o f housing,

connected w i t h r e a l e s t a t e ,

or anything e l s e

i n terms o f n a t i o n a l averages and t o t a l s *

There

i s no n a t i o n a l h o u s i n g market comparable w i t h the market f o r s e c u r i t i e s
commodities,

since housing i s ,

dependent on l o c a l demand*

i n the n a t u r e o f t h e c a s e , a l o c a l

That i t

terms i s because o f the f a c t

can be d i s c u s s e d a t a l l

in

generalizations

i g n o r i n g the exceptions which are

e x c l u s i v e l y t o non-farm housing*

non-farm M w i l l not be c o n s t a n t l y r e i t e r a t e d ,

b o t h the t e x t and t h e s t a t i s t i c s
the f i g u r e s

reflect

present*

cussion which follows relates
u

descrip-

f o r t h e c o u n t r y as a whole can do no more than

One o r two f u r t h e r i n t r o d u c t o r y e x p l a n a t i o n s a r e i n order*

tive

inflation,

I t mast be k e p t i n mind, however, t h a t

t h e p r e p o n d e r a n t movement o r c o n d i t i o n ,
invariably

national

i n the g r e a t

m a j o r i t y o f cases t o g e n e r a l economic developments s u c h as war,

tive

utility

t h a t h o u s i n g m a r k e t s , though l o c a l , a r e n o t

e c o n o m i c a l l y i s o l a t e d , b u t on t h e c o n t r a r y respond s i m i l a r l y

d e p r e s s i o n , and recovery®

or

The d i s The a d j e c -

i t b e i n g understood that

imply t h i s l i m i t a t i o n t h r o u g h o u t .

c i t e d are almost without e x c e p t i o n estimates,

Secondly,

and a r e t o be

r e a d as such*
Importance o f

housing*

There c a n be no q u e s t i o n t h a t we have i n h o u s i n g one o f the most im


portant of a l l

d u r a b l e goods*

E x p e n d i t u r e s f o r new c o n s t r u c t i o n and r e p a i r s

i n t h i s f i e l d averaged over 5 b i l l i o n d o l l a r s a n n u a l l y d u r i n g t h e

residential

b u i l d i n g boom o f 1923-1928, a f i g u r e w h i c h r e p r e s e n t s r o u g h l y 35 P© r

ce

**t

o f the t o t a l f o r consumers 1 d u r a b l e goods, and 15 p e r c e n t o f t h e t o t a l
all

d u r a b l e goods,

i n the same p e r i o d *

W h i l e the r e l a t i v e

h o u s i n g over a l o n g p e r i o d i s somewhat l e s s
29 and 12 f

respectively,

(these percentages

over tho p a s t 18 y e a r s )

b a s i s a major component o f

the d u r a b l e goods

importance

it

since i t

i s subject

of

averaged

remains even on t h i s

output*

The s i g n i f i c a n c e o f r e s i d e n t i a l c o n s t r u c t i o n from t h e s t a n d p o i n t
business f l u c t u a t i o n s

for

i s g r e a t e r t h a n t h e s e r e l a t i v e magnitudes

of

suggest,

to swings i n a c t i v i t y more extreme t h a n those w h i c h

c h a r a c t e r i z e t h e o u t p u t o f d u r a b l e goods as a whole*

D u r i n g the low y e a r

o f t h e d e p r e s s i o n , house b u i l d i n g and r e p a i r o p e r a t i o n s were o n l y 15 p e r
c e n t o f the p r e v i o u s h i g h , as c o n t r a s t e d w i t h U5 p e r c e n t f o r the o u t p u t
of a l l

o t h e r d u r a b l e goods*

The consequences o f
One r e a s o n f o r
is

durability*
the extreme a m p l i t u d e o f f l u c t u a t i o n i n h o u s i n g a c t i v i t y

the e x t r a o r d i n a r y d u r a b i l i t y o f the p r o d u c t .

average l i f e

expectancy o f somewhere between 50

supply of r e s i d e n t i a l structures

New d w e l l i n g s have a n
100 y e a r s .

Since

the

i n use i n t h i s c o u n t r y has been e x p a n d i n g

c o n t i n u a l l y s i n c e the b e g i n n i n g , a c o m p a r a t i v e l y s m a l l f r a c t i o n o f

the

p r e s e n t s t o c k i s o f advanced age ( o n l y 8 p e r c e n t o f the h o u s i n g i n 64 c i t i e s
c o v e r e d by t h e R e a l P r o p e r t y I n v e n t o r y i n 1933 was o v e r 50 y e a r s o l d )
t h e volume o f o l d - a g e r e t i r e m e n t s




is

and

therefore r e l a t i v e l y i n s i g n i f i c a n t .

The

-3-

a n n u a l d e m o l i t i o n and wreckage f r o m a l l c a u s e s ,
f l o o d , have a v e r a g e d i n r e c e n t y e a r s much l e s s
o f the amount o f h o u s i n g i n use*

i n c l u d i n g wind, f i r e ,
t h a n one h a l f

and

e f one p e r

T h i s means t h a t even w i t h a complete

p e n s i o n o f new c o n s t r u c t i o n t h e e x i s t i n g s u p p l y o f f a c i l i t i e s
a n almost i m p e r c e p t i b l e r a t e , making p o s s i b l e a p r a c t i c a l l y

cent
sus-

contracts

at

undiminished

t o t a l consumption f o r s e v e r a l y e a r s •
There i s a n o t h e r consequence o f t h i s
noted.

extreme d u r a b i l i t y t h a t s h o u l d be

S i n c e replacement demand i s so i n s i g n i f i c a n t ,

t h e market f o r new

h o u s i n g depends c h i e f l y on a c o n t i n u e d e x p a n s i o n i n r e s i d e n t i a l
( i n the

1

occupancy,

t w e n t i e s replacement a c c o u n t e d f o r about 10 p e r c e n t o f the hew

construction).

D u r i n g t h e p a s t 17 y e a r s , f o r w h i c h e s t i m a t e s a r e

available,

t h e growth o f n o n - f a r m occupancy i n the U n i t e d S t a t e s averaged 2 , 1 p e r
a n n u a l l y , b u t t h e r e were two y e a r s

(1931

a n d

193 2 ) when t h e r e was an a c t u a l

s h r i n k a g e and one y e a r (1923) when the g r o w t h was as h i g h as b . Z p e r
o r t w i c e the p e r i o d average*

Fluctuations

r e l a t i v e l y s m a l l , but f l u c t u a t i o n s
are l a r g e .

Since i t

building activity

is

cent,

i n t o t a l volume o f occupancy a r e

i n the r a t e a t w h i c h t h i s volume grows

the r a t e o f growth w h i c h c o n t r o l s

(except f o r

cent

t h e volume o f new

the c o m p a r a t i v e l y i n s i g n i f i c a n t

demand) c o n s t r u c t i o n tends t o d i s p l a y a r e s p o n s i v e

replacement

instability.

T i m i n g o f movements.
A r e v i e w o f h o u s i n g c o n s t r u c t i o n s i n c e 1919 shows a movement w i t h
t u r n i n g p o i n t s d i f f e r i n g q u i t e w i d e l y f r o m those r e c o r d e d by most types
d u r a b l e goods p r o d u c t i o n , and by b u s i n e s s a c t i v i t y i n g e n e r a l .
d e n t i a l b u i l d i n g t u r n e d down i n t h e m i d d l e o f 19X91

a

Thus

y e a r ahead o f

of

resithe

b r e a k i n b u s i n e s s , and began r i s i n g e a r l y i n 1921, s e v e r a l months ahead o f




I
the general recovery*

I t s next downturn came l a t e i n 1925 > f o u r y e a r s

ahead o f g e n e r a l r e c e s s i o n , and the s u c c e e d i n g u p t u r n a p p e a r e d about the b e g i n n i n g o f 1935$ a l m o s t two y e a r s a f t e r

the b u s i n e s s r e v i v a l s e t in«

It

is

a p p a r e n t t h a t h o u s i n g c o n s t r u c t i o n has been i n an e x c e p t i o n a l degree a l a w
unto

itself*

This i s due not only to the fact that the demand f o r new housing moves
i n cycles d i f f e r i n g from those which characterize most goods, but also to
the fact that readjustments of supply to demand i n this f i e l d proceed so
slowly, and with such i n e r t i a , that they are l i k e l y to over-compensate, and to
give r i s e to swings i n production that are at times out of phase with the
swings of business i n general•
M a l a d j u s t m e n t s o f s u p p l y and demand i n h o u s i n g , as e v i d e n c e d by an e x c e s s o r d e f i c i e n c y o f vacant d w e l l i n g s ,

affect

the output o f new u n i t s

l a r g e l y i n an i n d i r e c t manner, t h r o u g h t h e i r e f f e c t on t h e r e n t s and v a l u e s
of e x i s t i n g properties*
sluggish*

Readjustments

i n s a l e and r e n t a l v a l u e s a r e

generally

Not o n l y do r a t e s on new l e a s e s r e s p o n d w i t h c o n s i d e r a b l e

t o changes i n vacancy s i t u a t i o n s , b u t because o f t h e f a c t

t h a t most

inertia
rental

c o n t r a c t s r u n f o r a y e a r a t a f i x e d r e t u r n t h e average r a t e s a c t u a l l y
p a i d and r e c e i v e d l a g w e l l b e h i n d new l e a s e r a t e s ^
the s e l l i n g p r i c e s

of r e s i d e n t i a l properties,

being

As f o r movements

these r e q u i r e t y p i c a l l y

p e r i o d o f i n c u b a t i o n b e f o r e they g a t h e r f o r c e and v e l o c i t y *

in
a

Readjustments

i n b o t h r e n t s and v a l u e s c a n t h e r e f o r e l a g so f a r b e h i n d changes i n vacancy
situations

]J

t h a t h o u s i n g s u r p l u s e s o r s h o r t a g e s accumulate b e f o r e new c o n -

T h i s l a g i s a g g r a v a t e d , i n upward movements, by the tendency o f
r a t e s t o advance more s l o w l y t h a i r a t e s on new c o n t r a c t s *




renewal

-5I
s t r u c t i o n i s s u f f i c i e n t l y c u r t a i l e d or s t i m u l a t e d , as t h e case may b e ,

to

check the a c c u m u l a t i o n *
E x p e r i e n c e i n t h e p r e v i o u s b u i l d i n g boom.
The W o r l d War o c c a s i o n e d a d r a s t i c c u r t a i l m e n t o f r e s i d e n t i a l
t h e volume f o r 1917 and 1918 b e i n g o n l y about h a l f t h a t o f

building,

the two p r e c e d i n g

H o u s i n g s h o r t a g e s , w h i c h were c o n f i n e d d u r i n g the p e r i o d o f

years*

t i e s l a r g e l y t o s p e c i a l war s i t u a t i o n s ,

hostili-

became f a i r l y g e n e r a l w i t h d e m o b i l i -

z a t i o n o f tho m i l i t a r y f o r c e s , and under t h e s t i m u l u s o f r i s i n g r e n t s
r e s i d e n t i a l p r o p e r t y values a sharp recovery i n c o n s t r u c t i o n

and

developed*

T h i s was c u t s h o r t a f t e r a few months by t h e s p r o c k e t i n g o f b u i l d i n g
After

costs*^

the m i d d l e o f 1919 a c t i v i t y dropped as r a p i d l y as i t had p r e v i o u s l y

risen*

As a r e s u l t ,

t h e y e a r 1920 saw a h o u s i n g o u t p u t comparable w i t h the

l o w l e v e l o f 1917 and 1918.
The c o l l a p s e o f commodity p r i c c s
r e d u c t i o n i n b u i l d i n g costs*

i n t h e f a l l o f 1920 brought a marked

Thus f a c i l i t a t e d ,

and f u r t h e r e d by a d v a n c i n g

r e n t s and v a l u e s f o r e x i s t i n g r e s i d e n t i a l s t r u c t u r e s ,

construction

revived

a g a i n i n 1921, but by t h a t time the h o u s i n g s h o r t a g e had become acute*
general business recovery which f o l l o w e d the depression of

t h a t y e a r was

accompanied by a n e x c e p t i o n a l l y r a p i d growth i n non-farm r e s i d e n t i a l
p a n c y , so t h a t d e s p i t e a t r u l y s p e c t a c u l a r u p s w i n g i n r e s i d e n t i a l
t i o n no s i g n i f i c a n t

i/

general a l l e v i a t i o n of

occu-

construc-

t h e h o u s i n g s h o r t a g e was a c h i e v e d

A d e c l i n e i n t h e a v a i l a b i l i t y o f mortgage money s h o u l d be mentioned*
I t appears from f r a g m e n t a r y d a t a t h a t b u i l d i n g money became d e c i d e d l y s c a r c e , p a r t l y because o f r i s i n g l o n g - t e r m money r a t e s
g e n e r a l l y , b u t c h i e f l y because l e n d e r s became i n c r e a s i n g l y d i s t r u s t f u l o f the permanence of the h i g h c o n s t r u c t i o n c o s t s t h e n
prevalent*




The

-6I
-until

By that time rental and sale values for existing residential

property had reached so high a l e v e l that the incentive to b u i l d was intense, and construction a c t i v i t y was of boom proportions.
After 1923 there was a f a i r l y steady decline i n the annual growth of
non-farm occupancy.

From a high of 800,000 dwelling units i n that year,

i t receded to a l e v e l of about ^50t000 i n 1928 and 1929®

So intense was

the building incentive developed by the prolonged housing shortage, however, and so great was the momentum of the boom, that construction mounted
u n t i l 1925.

Because of the decline in the growth of occupancy, this high

l e v e l of output resulted i n a rapid accumulation of vacancies i n the
existing supply of housing.

While a c t i v i t y receded s l i g h t l y after 1925, the

decline in output i n the next three years was less rapid than the decline
i n the annual addition to occupancy, so that the growth of vacancies continued.

By 1928, these had reached a high l e v e l .

The slowness of this recession in building a c t i v i t y i s worthy of
particular notice.

While the r i s e i n vacancies which began i n I92U was

followed after a few months by a decline i n rental rates on new leases,
i t was a couple of years before this produced any significant decline i n
the average rate on a l l leases outstanding, and at least as long before
there was any marked softening of residential property values.

By the

time these declining tendencies appeared, the p r o f i t margins per unit obtained generally by contractors and developers had become so wide (a con-

1/

The unusally rapid expansion of non-farm occupancy i n 1922 and
1923 may be l a i d to the following factors: ( l ) heavy net
migration from farms to c i t i e s , towns, and villages; (2)
heavy immigration from foreign countries; (3) high marriage
rates; (k) undoubling of families forced to share l i v i n g accomc
dations during the war and subsequent depression.




sequence of course, of the prolonged housing shortage) that they could he
narrowed materially with hut l i t t l e effect on the volume of construction*
By

this time also, the building boom had developed lender confidence, not

to mention new financing expedients such as r e a l estate bonds, so that the
a v a i l a b i l i t y of construction loans was actually increasing during the
period when an excessive vacancy supply was being accumulated*

Notwith-

standing the f a c t , therefore, that the contractors 1 construction costs did
not decline, sales of new housing were f a i r l y w e l l maintained for two or
three years i n the face of f a l l i n g rents and values for existing properties
by a more or less continuous shrinkage of the unit p r o f i t margins of the
producers of housing, and by the a i d of thinner equities demanded of buyers *
•
This process obviously could not go on forever.

The weight of the

growing volume of vacancies accelerated the cheapening of existing resident i a l f a c i l i t i e s competitive with new construction, while a further c h i s e l i n g
of p r o f i t margins by contractors snd developers became less and less
compatible w i t h the maintenance of the former rate of a c t i v i t y .

As the

prices required to move new housing declined, more and more situations
developed i n which construction was curtailed or suspended*
stage i n the process was reached i n 1929*

A critical

Partly because of a tightening

of the mortgage market then under way, but c h i e f l y because of overbuilding,
construction a c t i v i t y i n the residential f i e l d entered an acute slump,
which, incidentally, was i n f u l l swing before the break: i n the general
economic situation i n the f a l l of the year.

1/

The a b i l i t y of producers to s e l l new housing at declining prices was
probably increased somewhat during this period by a softening
of the prices of vacant land*




-3I
The decade o f the
t i v e example o f

1

twenties

thus p r e s e n t s an i n t e r e s t i n g and i n s t r u c -

the c o u r s e o f a b u i l d i n g boom^

housing shortage,

the boom g a t h e r e d a momentaam w h i c h c a r r i e d i t a l o n g u n t i l

a s u r p l u s h a d accumulated*
building activity

Generated by a n a c u t e

into a

The impact o f

t h i s surplus eventually

sent

tailspin*

Had t h e g e n e r a l economic s i t u a t i o n remainded s t r o n g a f t e r 1929» a
moderate p e r i o d o f c u r t a i l e d h o u s i n g output might have a b s o r b e d excess
v a c a n c i e s and r e c t i f i e d t h e s i t u a t i o n ,

but t h i s c o r r e c t i v e p r o c e s s had

h a r d l y begun when t h e slump i n b u s i n e s s supervened*

To t h e d e p r e s s i o n the

weakness i n t h e h o u s i n g s i t u a t i o n was a s e r i o u s a g g r a v a t i o n , w h i l e
reflex effect

the

o f t h e d e p r e s s i o n on h o u s i n g was t o make a bad s i t u a t i o n

worse*
H o u s i n g d u r i n g the d e p r e s s i o n *
The most i m p o r t a n t e f f e c t

tf

t h e d e p r e s s i o n on h o u s i n g was t o suspend

f o r s e v e r a l y e a r s t h e growth i n occupancy on w h i c h , as we have seen, most
of

the demand f o r new c o n s t r u c t i o n depends*

p o p u l a t i o n f r o m u r b a n communities t o farms
t i o n from abroad, the c u r t a i l m e n t
d o u b l i n g up o f f a m i l i e s

f

Because o f the m i g r a t i o n
t h e c e s s a t i o n o f net

of

immigra-

i n t h e number o f m a r r i a g e s , and the

on a c c o u n t of r e d u c e d incomes, t h e t o t a l o f

non-

f a r m occupancy a c t u a l l y d e c l i n e d d u r i n g t h e w o r s t p a r t o f t h e d e p r e s s i o n
a n d remained u n t i l 193^ below the 1929 f i g u r e *

Even now i t

exceeds I929

by o n l y 1,500,000 t o 1,600,000 d w e l l i n g u n i t s , as compared w i t h a g a i n o f
a t l e a s t 3,000,000 u n i t s
This

to be e x p e c t e d e x c e p t f o r t h e

depression.

i n c r e a s e i n t h e p r e s e n t occupancy over 1929 has been accomo-

d a t e d i n p a r t by a g r o w t h i n the h o u s i n g s u p p l y i n t h e i n t e r v a l ,




which,

despite the d r a s t i c curtailment of b u i l d i n g , has amounted to 800,000
to 900*000 dwelling units*

In part i t has "been accomodated by an absorption

of some of the large supply of vacancies e x i s t i n g at the beginning of the
period*

Although the number of vacant units increased from 1929 to 1933 by

something l i k e J009000§ the reduction since then nas been approximately
twice as great.

At the present tine the supply i s about 400,000 to 500,000

dwelling u n i t s below the l e v e l indicated by a long-term average vacancy
ratio*
The decrease i n vacancies which be#an i n 1933
193^ hy an upturn i n rental rates on new leases*

followed early i n
I t was at least a year

l a t e r , however, before there was any s i g n i f i c a n t advance i n the average of
rents on outstanding leases or i n property values*
not begin to revive before 1935*

New construction d i d

Th e tendency f o r b u i l d i n g to give a de-

layed reaction to vacancy situations has been evidenced again i n t h i s movement.

The housing shortage, as measured by the supply of vacancies, was

more acute i n 193^ than i n 1925* when 900f000 dwelling units were produced,
yet the 193^ output has been less than a t h i r d of that amount.

Realignments

i n rents and values have c l e a r l y not proceeded fast enough to keep b u i l d i n g
i n step w i t h the growth of occupancy.

Just as i n the 'twenties we passed

from a short ago to a surplus of housing because of the delayed response of
b u i l d i n g to the underlying supply and demand s i t u a t i o n , we have already
passed i n the ' t h i r t i e s from a surplus to a shortage, and f o r the same
reason*
Building prospects during the next f i v e years*
Without going here into questions of method and procedure (which are




-10I
discussed i n the f u l l memorandum) I shall merely summarize the results of
an analysis of the probable housing market during the next f i v e years*

The

estimates are based on the assumption that the period w i l l be prosperous:
Components of the give-Year Housing Market
1*

Increase i n households
(a) Prom currently accruing natural increase
(b) Prom reduction of the depression marriage
backlog
(c) Prom undoubling of families
(d) Prom net reduction i n farm households
Total increase i n households

2*

Replacement of dwelling units demolished during
the period
Elimination of present housing shortage

3.

Total housing market i n
dwelling units
Average market per year

2,400,000
300,000
300f000
200,000
3,200,000
^00,000
500,000
Uf100,000
820,000

The prospect may be summarized a l i t t l e more f u l l y i n three propositions.

( l ) I f building averages 800,000 units a year for the next f i v e

years, the period should close with a reasonably comfortable housing
situation.

(2) I f construction averages J00f000 units annually the period

should close with a shortage comparable i n magnitude with the present
shortage.

(3) I f the average i s 600,000 units, the shortage at the end of

the period promises to be very acute, comparable, l e t us say, with the worst
period after the World War*
In view of the fact that the f i v e years start at a r e l a t i v e l y low
l e v e l of construction (250,000-300,000 units i n 1936) the attainment of a
rate of 800,000 units a year cannot be expected u n t i l we are well into
the period, and the achievement of that rate as an average for the period




•11*

as a whole would c a l l , therefore, for an output of at least a m i l l i o n
units a year i n i t s later stages*

While this i s not impossible ( i t i s only

10 per cent higher than the 1925 peak) i t seems to me doubtful that i t
w i l l pome soon enough, i f i t comes at a l l , to produce an average of 800,000
f o r the f i v e years,

She inference i s , therefore, that theire w i l l be 9ome

housing shortage remaining at the end of the period*
One reason for this doubt i s the danger that as construction a c t i v i t y
increases there w i l l develop shortages of s k i l l e d labor, and of certain
classes of building materials, that w i l l retard further expansion*

Such

a l i m i t a t i o n of the output of new housing, i f i t becomes effective, w i l l
be reflected partly i n higher labor and material costs and partly i n
higher unit p r o f i t margins f o r contractors and developers, but i n any event
the f i n a l cost of the product to buyers w i l l tend to r i s e s u f f i c i e n t l y to
equate demand with the l i m i t e d supply being produced*

I t seems l i k e l y

that i t w i l l require prices for new housing materially higher than those
now prevailing to mobilize enough productive a c t i v i t y to offset demolitions
and occupancy expansion during the next few years, to say nothing of
eliminating the shortage now existing*

I am inclined to believe that

barring unexpected developments i n pre-fabrication, government subsidies,
or other a l l e v i a t i v e s of the situation, supply and demand w i l l be equated
during the next f i v e years by a volume of construction which averages between 600,000 and 800,000 dwelling units a year, with 700,000 as l i k e l y
a guess as any*

This would represent an average expenditure at pre-de-

pression building cost levels (including repair a c t i v i t y ) of U#5 to 5




-12-

f
b i l l i o n s Of dollars annually*

Higher cost levels would of course increase

this figure.
There seems no doubt, i n any event, that the current housing shortage
w i l l become considerably worse before i t begins to be generally alleviated.
Even with the most rapid pick-up i n construction f o r which we have any
reason to hope, the prospect i s for a worsening of the situation for at
least a year, and the p r o b a b i l i t i e s appear to favor a period nearer two
years than one.

The shortage seems destined to become decidedly acute i n

many places during t h i s stage.

The attainment of reasonably comfortable

housing conditions i s , of course, much more remote than the beginning of
improvement, since progress w i l l at f i r s t be slow.
More remote prospects.
For the next few years the housing market w i l l experience an exceptional concentration of demand.

Superimposed on the regular demand arising

from the currently accruing uatural increase i n households and the replacement of structures currently dexaolished w i l l be a special and temporary demand attributable to the after-effects of the depression.

This special

demand appears to t o t a l something l i k e 1,300,000 dwelling units, as follows:
Accumulated housing shortage at the end
of 1936
Delayed marriages l i k e l y to be contracted
i n the future
Probable undoubling of fnmilies s t i l l
doubled because of the depression
Probable net decrease i n farm f a m i l i e s i /

500,000
300,000
300,000
200,000

I f , as seems probable, these special demands w i l l become effective

1/ Theru i s no satisfactory way of estimating t h i s item. The assumpt i o n here i s that the net decrease i n farm fnmilies during
the next few years w i l l be half of the increase attributable
to the depression. This seems a conservative supposition.



d u r i n g

be

t h e

f i r s t

s t i m u l a t e d

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t o

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u n i t s

demand

a

o p e r a t e

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a

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o f

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t h e

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e a r l y

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o v e r t a k e s

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The

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6 0 0 , 0 0 0

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v a l u e s

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one

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be

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m o s t

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i s

w i l l

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g e n e r a l

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s u b s e q u e n t

i s

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o n c e

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p e r i o d

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d u r i n g

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a

be

t h e

r e p l a c e m e n t s ,

i n f e r e n c e s

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demand

I f

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p r o s p e r i t y ,

t h a t

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c o n t r a c t o r s

I

- 1 4 -

a n d

d e v e l o p e r s ,

i t s

c r i t i c a l

b y

and

s t a ^ e

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w h e n

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new

o u t p u t

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I n

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goes

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t h e

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become

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i n

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thus

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moment.

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as

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boo^i

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a t

m o r t g a g e

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s°veriUuent

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t h e

and

I t

o r

d e v e l o p m e n t s

b a s i s

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seems

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now

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and

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t h e

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and

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t k o

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bl^irikut

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m o r t g a g e

T h i s

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now,

new

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o v e r

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money

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d e v e l o p m e n t

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p o w e r

t o

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o f

h o u s i n g

r e s i d e n t i f J.

s u r p l u s e s ,

c o n s t r u c t i o n *

-15-

E v e n

i f

c u r r e n t

h a v e

we

g r o w t h

b u i l d i n g

h a v e

I o n ?

a s

s e e n ,

t h e

p r e v e n t i o n

t h e

m o s t

p r e v e n t

a

p o s s i b l e

i n

b o o n s

i s

o f

boom

a

t o

a n d

i s

h o u s i n g

c a n

and

p r o m p t ,

c o n s t r u c t i o n

( p l u s

c u r r e n t

d e p r e s s i o n s .

e x t r e m e l y

we

t i e

o c c u p a n c y

econosay

t h a t

r e c e s s i o n




w e r e

i ^

s u r p l u s

e v e n

h o p e

r e c e s s i o n

g r a d u a l ,

i n

a n d

t o

g r o w t h

a n d

p r o m i s e s

p e r i o d i c

s e v e r a l

f o r

t h e

f r o n

o f

y e a r s

h e n c e

r e g u l a t o r y

I t

v/e

t o

t h e

w o u l d

o c c u p a n c y ,

t o

b u s i n e s s

m e a n t i m e .

o r d e r l y •

c l o s e l y

r e p l a c e m e n t s )

The

i r r e g u l a r ,

s u b j e c t

a c t i v i t y

r e g a i n

s t i l l

as

so

as

d e p r e s s i o n s .

-

w h i c h

c o n t r o l

c a n

o n l y

i s

-

The

a b o u t

w i l l

make

n o t

t h e