4- for Federal aid highways was a decline of 5.4%. In the building field the various price indices indicate an upward change from 1% to 1.9% which is well below the indicated increase in building costs. As one of my banker friends put it "much of the pricing last year was put on an emotional basis not a business basis". Again generalizing, the segment of the industry that probably fared the best last year were those larger firms engaged in the speculative housing field. The demand for homes, particularly of low priced homes, was very brisk and those companies that had purchased an inventory of land in anticipation of subdivision development fared very well for the most part. The competition among subcontractors kept the cost of constructing these houses relatively low, and the demand for homes kept the prices high. Land suitable for homebuilding increased in price as a result of housing demand and those companies owning land purchased at earlier and more favorable prices prospered accordingly. As to the long range future, I am optimistic about the construction industry. With the inevitable elimination of the inefficient contractor, profit margins should ultimately be restored to a level consistent with the value of the service performed and the risk undertaken. We have in my opinion a vigorous expanding economy that will require more and more of the things that we produce, and I am confident that industry will over the years continue to expand and to profit. For the relatively near term there are two conditions that are some cause for general concern: First, the present demand for private residential construction has been artificially and perhaps unwisely stimulated by the easy credit policy that allows homes to be purchased with no down payment over a 30-year period. This is stimulating the building of homes now at a time when family formation is actually on the decline and, if it continues it could ultimately saturate