Bathtub Blues

No private housing program ever stirred up such a furor in Washington as Lustron Corp.'s plan to build 150 enameled steel houses a day--if the Government would put up the money. After some squabbling, RFC obliged. Last week, Arkansas' Senator J. William Fulbright, whose Banking & Currency Sub-committee was digging into RFC's affairs, popped an interesting question: Did people want to live in steel houses? "I have only seen one of them," said Fulbright, "but it sort of reminds you of a bathtub."

No, not quite a bathtub, replied RFC Director Harvey J. Gunderson. The first blue and yellow Lustron houses were "a little like hotdog stands." But the newer grey and green houses, he thought, were a great improvement.

More Mustard, Please. No matter what they looked like, one thing was clear. Lustron, as Gunderson's testimony revealed, was simply RFC under another name. When Lustron's persuasive President Carl G. Strandlund (who lives at Columbus, Ohio, in a frame house, with an adjoining Lustron guesthouse) proposed his program three years ago, RFC turned it down. Wilson Wyatt, then Federal Housing administrator, quit in protest. Presidential Assistant John Steelman stepped in and asked RFC to reconsider. RFC did so; it set Lustron on its feet with a $15.5 million loan (Strandlund & associates raised $840,000). Within a year, they needed more.

Obligingly, RFC put up another $10 million last July. By February, they again needed more. By the time RFC had put in $7,000,000--for a grand total of $32.5 million--it had embarked on the biggest government peacetime venture in prefabricated housing. But that was not the end. Gunderson said he understood that Lustron needs another $3,000,000 immediately to "tide them, over" for the next few months. After that Lustron would need about $1,000,000 a month to keep going until it reaches its break-even point of 30 to 50 houses a day.

What chance, asked Senator Fulbright, did Lustron have of success? "About 50-50," said Gunderson. On its past performance, that seemed overoptimistic.

More Kinks. What had gone wrong? Well, said Gunderson, it had taken Lustron a long time to get all the machinery and steel it needed to produce houses in the huge war-surplus Curtiss-Wright plant in Columbus. Last February, Lustron thought it had ironed out the kinks and announced production of 25 houses a day, predicted a rate of 100 by July.

But Lustron had run into more kinks in its distribution setup. The house cost $10,000 to $1 1,000 when erected, v. the $7,000 Strandlund had originally predicted. Lustron was turning out more houses than its dealers could handle and production, instead of hitting 100 a day, has now been cut back to 20 houses a day.

How long was RFC going to keep pouring millions into Lustron? Gunderson didn't know, but he thought RFC should keep on until everyone was satisfied that Lustron was either a success or a flop. So far, it had been far from a success.

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