HOUSING: Where's the Ceiling?

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U.S. home construction, on starvation corner for the past three years, became the first industry to get a full-ripe postwar plum. From the War Production Board came the announcement: as of Oct. 15, order L-41, limiting construction of new houses to an $8,000 outlay, will be completely withdrawn (TIME, Sept. 10). Thus builders got the go-ahead for their biggest boom yet, almost entirely free of Government control.

No one denied that construction should be signaled off to as fast a start as possible. The estimated minimum U.S. need is 12.5 million new houses in the next ten years—400,000 units for 1946, 750,000 for 1947, over a million a year thereafter. But there was one big question: when would it be safe to give the signal?

Almost everyone in Washington thought it was safe last week — except OPAdministrator Chester Bowles. More inflation-conscious now than ever, Bowles argued that abolishing L41 gave contractors the right to build houses on speculation, sell them on the open real-estate market. Since OPA could control a contractor's profits only if he built a house for a private individual, this, said Bowles, would make the sky the only price ceiling.

War Mobilization and Reconversion Director John W. Snyder took the opposite view, arguing that the only way to fight inflation is by production. Reconversion and re-employment would be greatly expedited by encouraging construction to the limit, since the building industry normally accounts for about 5% of the total U.S. employment. And high production would in turn create so much competition that any contractor who let prices get out of hand would just be cutting his own throat.

The OWMR argument is predicated on the theory that by next spring, when the building season starts for most of the U.S., both men and materials will be available on a scale ample to meet the rush. To make the gamble a good one, it has already had OPA put price increases on cast iron, soil pipe, gypsum lath and the clay industry, is now hinting broadly that, to get the labor to make these materials, wages will also have to be hiked.