After 27 Days on Top, Then What?
Posted by Michael A. Kamperman on May 17, 2009
On September 19, 1928 Walter Chrysler broke ground on a dream to own the tallest building in the world. He was not the only one with such ambitions and in 1929 the Bank of Manhattan commissioned 40 Wall Street to be two feet higher than the known architectural plans of the Chrysler Building. “The Great Skyscraper Race” was on. On April 30, 1930 40 Wall Street opened as the world’s tallest building. Unbeknownst to the building designers of 40 Wall Street, their rivals building the Chrysler Building changed the plans and secretly raised the height. 27 days later the Chrysler Building opened as the tallest building in the world. Less than one year later the Empire State Building took the title. But by the time the Empire State Building opened in May of 1931 the country had already entered the early part of the Great Depression. The Empire State Building was 77% unoccupied in the 1930’s and didn’t turn a profit until 1950. In its first year the Empire State Building took in more revenue from people visiting its observation deck than it did in rent. It would be more than 40 years for the confidence and ambition of men to once again seek to go bigger, better, faster, and higher.
What happened during the Great Depression was that as projects wound down new projects did not emerge to take their place. Why would anyone build a new building if it might have a 77% vacancy rate? Hence, it became very difficult to find a job a new job to replace one that was lost. When the Empire State Building was completed there were no new major construction jobs to take its place. Companies weren’t looking to expand they were looking to hunker and down and conserve cash. Almost every industry suffered from over-capacity. In the U.S. industrial capacity is now 69.1% and falling. Commercial and residential real estate is over-built in almost every major market in the country. As the projects that were conceived a year ago wind down new ones are not emerging to absorb the workers and suppliers. Slowing the rate of decline is not a green shoot, because the economy is still declining. We need ambitious people once again to try to build something new that will be bigger, better, faster, and higher.
It is ironic that the Chrysler Corporation was so strong at the start of the last Great Depression it could attempt to build the tallest building in the world. Today, it is wounded to the point it has been forced into bankruptcy and is closing hundreds of dealerships wiping out yet thousands of more jobs that will soon show up on the unemployment rolls. Many remain oblivious to an uncomfortable economic truth. Our global economy is mirroring the decline experienced during the Great Depression. As long as access to new capital remains limited, companies will continue to seek to conserve cash. The dominoes are falling into each other just as they did in the 1930’s. Unless real steps are taken to fix the credit markets and stimulate demand we will continue to mirror the Great Depression and the spring of 1931 may eventually turn in to the spring of 1933.
