Harvard -2- construction firms. New construction put in place was $43,000,000,000 12% over 1954, with virtually every type of construction recording an improvement. The experience in 1956 hears out the earlier forecasts that records of new construction put in place will again he broken. The current annual rate indicates over $43,500,000,000 for the current year, with the decline in residential building more than offset by increases in industrial and commercial, and non-residential construction. Only the home builders have any cause for complaint, and their decrease in volume is attributable to these factors: 1. Tight money. 2. Increase in cost of raw land suitable for mass housing. 3. Increase in the cost of physical improvements and facilities where raw acreage is suitable for development. 4. Lower sales because of the necessity to charge higher prices to cover the increased cost of money, land, and improvements. As you know, the Federal Reserve has maintained a policy of tight money, and there is no doubt in my mind that the continuation of this policy will curb construction activities. Money will be the principal bottleneck that will limit construction and force postponement of the work until a time when financing is more readily available. While many of my colleagues in the construction industry would not share my views, it is my own conviction that the construction industry for the current year could not be greatly expanded even if money were easy. Easy money would merely transfer the bottleneck to a shortage of materials or skilled man power or both. The indicated demands for construction so far exceed the supply of materials and man power that there would be a severe inflationary effect if money or credit were made available to meet the demand.