A Challenge to Big Business
THOSE who view with alarm the growth of Big Business in this country have never seen fit to cite the building industry as an example of the blessings of small business. We are thinking of small-house construction, which has remained in the hands of countless independent enterprisers while Big Business has been expressing itself in chain stores, automobiles, telephones, radio, electric light and power, and transportation.
The consequence is that small-home building is still in the horse-and-buggy days, whereas nearly everything else has stepped into the electric age. We have therefore given this article the title, ‘A Challenge to Big Business.’ We also regard the plight of the smallhouse industry a challenge to those who criticize the methods and achievements of Big Business.
What this country needs at this moment is the development of an intelligence in the small-house field that will rival and equal the intelligence that has been manifested in those fields where Big Business has flourished. Unless this intelligence is found and encouraged, it seems likely that the American people will soon be living in automobile trailers, and moving about the country like gypsies, for the building of trailers is now said to be our fastest-growing industry. This ironic situation should be a matter of grave concern. It would be laughable were it not so serious.
Those who have studied the problem of mastering the building and sale of low-cost small homes contend that the approach heretofore has been all wrong. To those millions of employables who have incomes of $2000 or less a year we have been selling speculative building sites and jerry-built shacks. Real-estate salesmen, second-mortgage lenders, and unscrupulous contractors have made a living out. of the business, but nobody has made enough to excite envy, and the buyers of small homes have received less for their money than the buyers of any other commodity.
We have used the principles of mass production to reduce the price and improve the efficiency of automobiles, radios, electric refrigerators, vacuum cleaners, women’s dresses, men’s suits, tires, gasoline, and typewriters, but in the field of home construction we have stood still.
Consequently to-day only 4 per cent of owner-occupied homes are in the price range that 50 per cent of the employables can afford. Three fourths of the employables have incomes of $2000 or less and cannot afford homes that cost more than $4500, complete.
Big Business must tackle this problem. It is not a problem that can be solved by steel men, lumber men, cement men, brick men, or sheet-metal men. It is not a problem for realestate men. It is a problem for smallhouse men, and the intelligence for its solution can only be found and generated by a business that is organized and operated to build small homes that can be sold for less than $4500. Not only must $4500 be the top price, but the down payment must not be more than $900, and the carrying charges, including interest, amortization, taxes, and insurance, must not be more than a family with an income of $2000 can afford to pay for rent — namely, $35 a month.
All this is definitely realizable with our present knowledge and intelligence, but if a Hartford, a Sloan, a Ford, or a Gifford could be persuaded to bring the kind of thought to the small house that has been focused on the automobile, we should have a revolution in living conditions in this country.
The small home must be treated as a piece of packaged goods. The package must include a generous lot at least 50 feet wide and 100 feet deep, a five-room house, a garage, central heating, sidewalk, drive, lawn, shrubbery. The buyer must be able to move in as easily as he now drives off in a new car from the dealer’s salesroom. The bother about deeds, insurance, and financing must be refined until it approximates what we encounter when we buy an automobile on time.
Such a house, we insist, cannot be conceived and marketed by an organization that is thinking primarily of finding an outlet for steel, brick, wood, or electrical appliances. Our automobile builders think in terms of automobiles. They use the materials that give users the best car for the money expended. Steering wheels may be made from wood, steel, or soy beans.
This is inevitable in Big Business operations, as has been proved by Ford, Woolworth, Sears, General Motors, General Electric, Philco, Standard Oil, and scores of others. Big Business concentrates on serving the ultimate consumer, giving him what he wants, demands, and needs.
The waste, inefficiency, and crookedness that have flourished in the field of home building are a scandal. We have allowed one set of speculators to take farm land and subdivide it into narrow lots. These lots, improperly planned, too small, unrestricted, badly situated in relation to schools and factories, have then been serviced with water, sewer, gas, electric light, and telephones, at great cost to the bond buyers, lot owners, taxpayers, and utilities. Every large city is surrounded by these unoccupied building sites, so overburdened by taxes and assessments that they will never be used until they are put through the wringer. Shacks go up on a few. Undesirables move in, who put the property to uncivic uses. Taxes and assessments become delinquent, penalties pile up, and one more blighted area is created.
None of this is necessary, because, according to the experts of the Federal Housing Administration, there is an opportunity, with the facilities and knowledge now available, to do the job properly at a great saving to the smallhome buyer and at a substantial profit to the enterpriser.
That here is a Big Business, awaiting the magic touch of modern intelligence, is clear. A tremendous shortage of small homes exists. Vacancies have nearly disappeared in the cities, and such vacancies as we have are, for the most part, uninhabitable dwellings that should be condemned. The need will exist for 700,000 new homes a year for at least ten years. At $4000 each, that means an annual turnover of $2,800,000,000.
Whoever supplies this need, however, must have a different kind of mind than has heretofore operated in the field. Gone are the days of speculative lot selling, with profits of 300 to 400 per cent on the raw land. Gone are the heavy financing charges. Gone are the concealed assessments. Gone are the charges for the renewal of mortgages. Gone are the innumerable middlemen, each taking a cut out of the wage earner’s capital. Gone are the individual contractors who take one job at a time. Gone are the rows of identical shacks. Gone are the unrestricted, badly situated developments.
Bigger lots, pleasing variations in architecture, cheap and honest financing, are the new order. A ten per cent profit on the whole transaction is easily realizable and is now being obtained by builders in numerous cities where the Federal Housing standards and financial programme are being used.
If such a profit can be had now from furnishing low-cost homes to people with modest incomes, imagine how much better houses can be supplied after Big Business has mastered the art of home construction on a mass scale. By buying in great quantities, prices of many materials can be reduced to a fraction of what they now cost at retail. The principles of mass construction will mean huge savings in labor charges. The utility and cost of every square foot of space, every length of pipe, every pipe connection, every foot of lumber, will be rigidly studied. Little savings, when multiplied by thousands, mean big savings. Small improvements, when there are enough of them, mount into big improvements.
Thousands of minds have concentrated on the improvement of the automobile. Once the production of the low-cost house reaches a construction scale of 500,000 a year, cost-saving ideas and gadgets that effect comfort and convenience will multiply so fast that in a few years the buyer of a lowcost house will either get a much better house for his money or have a substantial percentage knocked off the price.
Big Business, whenever it has taken a mass-production job in hand, has never failed to give the buyer more and more for his money. Not only should this field for useful enterprise challenge Big Business, but it should challenge engineers, architects, builders, inventors, and bankers. It should challenge the operators of public utilities and the officials of our municipalities. Slums must be cleaned up and empty urban acreage put to profitable use. The profit motive will do it. The intelligence of Big Business will do it.
When the job has been done, as it surely will be done, we shall probably hear the usual cry from the croakers that Big Business has driven the little man out of one more field of enterprise. But if five million families are living contentedly in well-built homes in happy neighborhoods, they may be able to read the balance sheet of the company that served them without wanting to write to their Congressman to demand an investigation.