New Measures of Value of Nonfarm Building for the United States, Annually 1850-1939

Abstract

IN a preceding work, an effort was made to develop a new nation-wide series of the number of dwelling units erected annually in the United States since 1840.1 This series contained revisions of the prevailing estimates for the decade levels of building between 1890 and 1940 and added a full half century to our statistical annals of residential building. decade levels of the estimates up to 1910 were aligned to Census increments of housing stock and nonfarm labor force and were adjusted by rates of new residential building for these increments as found in the state of Ohio. In this paper, the same research effort is extended to estimation of the of nonfarm building, both total and residential. necessary preparatory data regarding the of building in Ohio over the period 1837-1912 has been disclosed elsewhere.2 We seek, first, to establish a reliable and consistent set of decade aggregates of new nonfarm building for the six decades before 1910. For this purpose, we have available periodic Census returns on standing stocks closely related to new nonfarm building activity: (a) the socalled value of nonfarm real estate, and (b) the nonfarm labor force. Periodic readings of the true of real estate will obviously reflect intervening activity in building. These readings will also reflect shifts in urban site values, as gauged by speculative opinion, underlying land improvement, and utilities (roads, sidewalks, water, and sewage, etc.) which become reflected in private land values, and rates of wastage or deterioration of existing stocks. Moreover, true will be variously gauged by analysts of different temperaments with access to different kinds of market information. True measures of reality are thus treacherous. Increments from a historic succession of such measures should have an early unpredictable range of error. We have known, however, from the work of Simon Kuznets, that the Censal surveys of value can be utilized to shed light on building activities.3 These Censal surveys were themselves conducted in the later Census periods with awareness of the difficulty of evaluation. And it is proposed here to use them not in their vulnerable form but in the light of Ohio experience with these same Censal surveys and the independently determined Ohio measures of building activity. A particular Censal survey of market values may have badly misgauged market or the scope of enumeration of property may have been altered, but if the survey did not utilize different standards of evaluation or enumeration in Ohio, the Ohio relationship between building and realty will be affected and the necessary correction can be imparted to the national returns. We have * author is Professor of Economics at the University of Wisconsin-Milwaukee. This paper grew out of intensive research during the past four years into all phases of urban building cycles carried on with the aid of the National Bureau of Economic Research and particularly Dr. Moses Abramovitz. See progress reports on the inquiry in the Annual Reports of the National Bureau of Economic Research for 1962, pp. 48-51 for 1963, pp. 46-47, for 1965, pp. 53-54. An early version of this paper was presented to and discussed at the September 4 and 5, 1963 Conference on Research in Income and Wealth. Conference discussion, particularly the challenging comments of Dr. Paul David of Stanford University, helped to direct attention to contentious issues. 'M. Gottlieb, Estimates of Residential Building, United States I840-I939, (National Bureau of Economic Research, Technical Paper No. 17, 1964). 2 See M. Gottlieb, Building in Ohio Between 1840-1912, Conference on Research in Income and Wealth, Proceedings of Conference September 4 and 5, 1963, Output Employment and Productivity in the United States After 1800 (National Bureau of Economic Research, to be published), 243-290. 3 Simon Kuznets, National Product Since I869 (National Bureau of Economic Research, 1946), 202-215. See the further development of Kuznets' estimates in R. Goldsmith, The Growth of Reproducible Wealth of the United States of America from 1805 to 1950, International Association for Research in Income and Wealth, Income and Wealth Series (1952) 225ff and Appendix Tables. Goldsmith found it feasible to utilize the value estimates of the 1850 Census as the basis for his 1850 wealth estimate (p. 317 and following) while Kuznets worked with the Census returns of 1880 and later.