• U.S.

HOUSING: Help for Lustron

3 minute read
TIME

Since he first proposed building prefabricated houses of enameled steel, Lustron Corp.’s Carl Strandlund has found a willing helper in the Government. The Reconstruction Finance Corp. lent him $15.5 million, got him a Columbus (Ohio) surplus plant (TIME, Feb. 10, 1947), pushed his priority claims to steel. Last week RFC again gave Lustron another big boost. Although Lustron has turned out only seven model houses in a year, RFC lent it another $10 million.

That was too much for C. J. Rodman of the Porcelain Enamel Institute, and president of Allianceware, Inc. of Alliance, Ohio. Rodman makes metal fixtures, such as baths and sinks, and fears the Government-financed competition of Lustron, which he contends is tooled up to make four times as many fixtures as will be needed for its houses. Rodman even hinted that the new loan was given to help Lustron concentrate on fixture-manufacturing, thus protecting RFC’s original stake in Lustron. Cried Rodman: “This loan and the Government’s entire relations with Lustron have an extremely bad odor.”

He was not the first to sniff the air. Last winter a congressional Banking & Currency subcommittee looked into Lustron’s deals and called for a full-dress investigation. To help launch the company, the subcommittee found, RFC had made the loan, although it had never been approved by the RFC’s examiners, as is customary. An earlier loan for $32 to $52 million had been blocked by onetime RFC Director George Allen.

Some of RFC’s other conditions had never been met. For one thing, Strandlund had never filed a financial statement with RFC. Although by the loan agreement he had to raise $3,500,000 through the sale of capital stock, he had actually raised only $850,000. Strandlund’s own equity in Lustron (86,000 shares of stock nominally worth $860,000) had been bought by him for only $1,000. This stock, plus the equipment bought with the proceeds of the capital stock issue, had been Strandlund’s only security for the first loan. Last week’s loan was unsecured.

So far, Lustron has got no steel to build its houses. But the Department of Commerce’s Office of Industry Cooperation has approved an allocation of 58,000 tons of steel to builders of prefab housing, the bulk of it to Lustron. Once before, OIC turned down allocations for steel prefabs, because they require six times as much steel as conventional houses. It reconsidered when RFC and other government agencies intervened. Strandlund and his associates are now sure the steel will come through. As one Lustron executive put it: “Our relations with the Government have always been very healthful.”

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