Shall I Build A House
after the War?
Some Special Reasons for High Prices
We have outlined some features of the progress made in the house-building industry
in recent years-improvements in materials, better and quicker ways of building,
and more efficient building organization. All these things added together suggest
that after the war millions of Americans may be able to get the kinds of houses
they want at prices they can afford.
Will this come to pass?
the demand for better houses by the majority of low-income and middle-income groups
be fully met? In the past this has not been done. Most of the new and
better houses were built for the upper-income groups, and large numbers of American
families continued to be housed unsatisfactorily.
There are various situations
in the building industry that sometimes help to keep prices high and sometimes
help to prevent or delay greater improvements from being made in materials and
In the automobile industry it was not until a few large
firms appeared that prices fell sharply and quality improved. As yet, no such
companies have arisen to build large numbers of low-price dwellings. After the
war, they may appear. Some of the older, established industrial corporations or
some of the large-scale war industries that have grown up to meet military needs
may perhaps give their attention to the problem of building better and cheaper
homes. The rise of large-scale house builders does not mean that the small builders
will not go on building houses. Those who are studying the problems of housing
suggest that there will always be room for contractors who undertake to build
one or two, or at most a very few, custom-made houses a year. At the same time
they suggest that custom-made houses, like custom-made shoes, are likely to be
more expensive than factory-made products.
Some of the problems of lower-cost
housing, according to students of the problem, have to do with agreements between
groups in the industry to control the prices of materials. These, they say, tend
to keep building costs high. Such agreements are in existence between dealers
in building materials and subcontractors, between manufacturers and dealers, and
between contractors and labor unions. The purpose of these agreements is not only
to prevent one group from cutting prices, but to do away with competition, to
protect the interests of those already in business, and often to keep new products
off the market.
For example, the Department of Justice says that manufacturers
who make 80 percent of the plumbing supplies in the United States refuse to sell
directly to builders or home owners. If this is in fact the situation, it means
that builders or home owners who want to buy their products must go to a plumbing
contractor. He in turn can only buy from a recognized jobber.
is pointed out by housing authorities, raises prices because the article must
pass through several hands, and each one who handles it must cover his costs of
doing business and attempt to make a profit as well.
building materials often force their dealers to agree not to sell below certain
prices. Since, under this arrangement, the price is usually high enough to bring
the manufacturer a good profit, he may have little desire to try to find ways
of making a better and cheaper article.
When there is an agreement between
manufacturers and dealers, it is practically impossible for a builder to buy his
materials direct from the manufacturer. Sometimes labor unions make agreements
to work only with materials bought from certain jobbers or dealers. Housing authorities
believe that all this makes for more costly houses because it checks competition
and maintains a roundabout and more expensive system of routing materials from
factory to building site. Even large government orders for camps, bases, airfields,
and the like often have to go through complicated systems like these. Prices are
kept high in various other ways. Manufacturers, for example, sometimes agree not
to compete with each other. That means that they quote the same prices for similar
Sometimes builders in the same area agree not to underbid each
other. Thus when a contractor calls for bids for a particular job he may find
that all bids are the same.
Housing authorities point out that the idea
of self-defense is important in understanding many practices in the building industry.
That is, the house-building industry is loosely organized
and it has great
ups and downs. Activity may be good one week or month or year, but nobody knows
what the next will bring. Labor unions to a large extent have stabilized employment
in the building trades, protected workers against unfair employers, and raised
the pay scales and annual incomes of the members. But the rules and regulations
worked out for self-defense tend to add to the cost of construction, according
to housing authorities.
They assert that such rules and regulations are
designed to keep wages at a high level, to spread work—sometimes even to
make work or to bring about the employment of skilled workmen for jobs that might
be done by workers having less training. In some instances, it is said, bonuses
for doing a job faster are not permitted, or the use of labor-saving machinery
and power tools may be ruled out. A union may inform the builder how many men
to employ for a given operation even if the number is not actually needed, or
it may call for work to be done at the site which might be done more cheaply in
the shop. Some unions may refuse to allow their members to work with nonunion
materials or with articles made by members of a rival union.
such practices, as has been suggested, is the idea of self-defense. A recent impartial
study of the problems and prospects of American housing emphasizes this point.
“Restraints in housebuilding,” it declares, “can be partially
explained as efforts . . . to acquire stability and security. . . . Manufacturers
of building materials strengthen themselves by mergers or mutual agreements. These,
in turn, endanger the position of local distributors, who consequently combine
in self-protection. Subcontractors generally cannot individually resist the price
pressures of distributors of materials on the one hand and of general contractors
on the other. Hence they make intra-trade agreements. Finally, labor unions, faced
with seasonal and sporadic employment, have often consented to act as the enforcing
agents for restrictive agreements of subcontractors or suppliers in the hope of
protecting their jobs and earnings.”
Local governments, by setting
up numerous building rules and regulations in the interest of public safety and
health, may add to the problems involved in building cheaper homes. About half
of all towns and cities with populations of over 2,500 had some form of building
code in 1938. There were also state codes in Indiana, Ohio, and Wisconsin. Many
cities have electrical codes, elevator codes, tenement-house laws, fire-prevention
codes, and yet others.
Codes describe, sometimes in great detail, the
methods and materials that are permitted in building a house-for example, the
thickness of brick walls, the size of pipe, the height of the ceiling, and the
It should not be forgotten that the codes are designed to
promote public safety and health. At the same time, however, housing experts point
out that frequently city laws, as written into the codes, do not permit officials
to approve newer and cheaper materials or more economical building methods. Some
codes, according to these experts, are said to be designed to protect local manufacturers.
Others, it is said, may require builders to use more materials than they need
or forbid them to work with labor-saving machinery or to employ fewer skilled
workmen. In some cases it is alleged that manufacturers try to get authorities
to favor their products or that builders attempt to find ways of using cheaper
materials despite the codes.
The codes, where enforced properly, make
it illegal to put up houses, whether one or many units, that do not abide by the
established requirements of public health and safety. In many cities codes require
builders to install indoor plumbing, fire escapes, brick sidewalks, and to take
other measures to make the dwelling and its surroundings livable and comfortable.
Everyone would concede the purposes of these measures to be good. But
some of those interested in better housing take the position that often the harm
done by trade restraints and outworn or rigid building codes has outweighed the
good. That is, they say that the rules and practices have tended to make houses
more expensive and to discourage the use of newer construction methods and cheaper
materials. This pamphlet obviously cannot settle such a question, but it can set
forth the differences in point of view that are involved and suggest that a realistic
application of the idea of free enterprise will have its effect upon building
materials, building trades, and building codes.
Possible Improvements: What One Group Proposes