3- work remaining actually declined from the preceding year. Those contractors who depend for their profits on industrial building, dams, and other heavy engineering works actually had less business available to them. Many of these firms apparently endeavored to maintain the size of their organization and keep their equipment at work by bidding work at very low prices. From the check that I have been able to make, I am relatively certain that much of this work was taken at prices that did little more than cover direct field costs and made little if any contribution to equipment amortization or general overhead. Last year I made an analysis for our Board of Directors which compared over a 6 months' period our bidding prices with those bid by Morrison-Knudsen on the same projects and with the successful bids on those projects. Our figures were a little below those of Morrison-Knudsen but the difference was immaterial. However, our figures were 23% higher than the aggregate of the low bidders, and this was more than we had added to our cost estimates to cover profit and contingencies. While it is too early as yet to draw conclusions there are indications more recently that competitive bidding has returned to a saner level and the bids are once again tending to be concentrated within a reasonable area rather than the wide diversity that characterized the situation last year. While it is logical to expect that those segments of the industry that were faced with a declining demand would react by lowering profit margins, the same condition prevailed in some measure in those categories of construction where the demand actually increased. For example, the sharpest increase in failures took place among the building subcontractors while fewer general non-building contractors failed. The volume of highway work increased 12% over the preceding year, and there is every indication that it will increase even faster this year and in the years ahead. Yet in the face of this increase the bids on highway work in California actually declined 11.3% and the indication