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Senator FREAR. Sometime not too long ago, over on the Senate Dor, they were debating the cost of some construction of homes for e Air Force and the Army; and I believe the original estimate came about $14,000; and finally the thing went through at the $12,000. Why wasn't Lustron in on that, selling the Army and Air Force some f these six or eight thousand dollar houses?

Mr. LOBDELL. I have an awfully good answer to that, if I can get y brief case.

Senator FREAR. Surely; I would like to have it. In the meantime, et me ask one more question.

After a house is erected on a certain plot of ground, can it be taken part and moved to another location, and reerected?

Mr. LOBDELL. I have told everybody they can do anything to that house that they can do with any other house. You can do that, but you will do a lot of chipping. You would do a lot of damage.

Senator FREAR. That just bears on the question I asked before. In an Army camp, if the camp decided to move, they could take the houses along with them.

Mr. LOBDELL. It would do a lot of damage to the house, I am afraid; and it may be that the cost of taking it down, and reerecting it-that would be better than to abandon it, yes. By all means, it would be a lot cheaper.

Senator FREAR. I would be interested in the answer to my first question.

Mr. LOBDELL. Just a moment.

Here it is, right here.

These are armed forces requirements; and I understand all of these people had been contacted with regard to Lustron homes by Lustron Corp. As a matter of fact, I have only glanced at it, and I don't know all the contents; but I had seen in here proposals for at least 4,000 homes; maybe it is 6,000, a tremendous number of homes that had been proposed.

Mr. Brightwell, will you tell them about your project that you had all ready to go? Is it all right for him to tell you about it? One of the other members of our committee, who is meeting with RFC, had the project which, apparently, was approved; was desired by some public body; and because of the adverse publicity that is coming out, that implies that Lustron is going to fold up, they canceled it. I think the best argument in answer to your question is a letter from Maj. Gen. Lemuel C. Shepherd.

May I read this letter?

Senator FREAR. I don't want to take too much time. If it is agreeable to the chairman, I would like to have you read it.

want to read it, I will read it.

Senator FULBRIGHT. I am sorry. I didn't hear you.

If you don't

Senator SPARKMAN. He wants to read a letter, He wants to know if

it is all right to read it.

Senator FULBRIGHT. It is all right with me, yes.

Mr. LOBDELL. It was written to Admiral Merrill.

MY DEAR ADMIRAL MERRILL: It was a very pleasant surprise to learn that you have taken a serious interest in the handling of Lustron houses on the market. As you perhaps know, we have a very special interest in these houses because here at Quantico we are just completing 60 of them. They form the first major Lustron project to be erected in the United States.

We had on two previous occasions solicited bids in the open market for conventional houses. However, our remote location here in the country and the large amount of on-the-site work forced the prices up to levels above those which we were allowed to pay. Since it was apparent that work at the site must be reduced to a minimum, we placed our housing project on the market a third time and solicited bids for prefabricated houses.

We received bids from eight manufacturers of plant fabricated houses. The units offered to us varied widely in quality and price, but the lowest of all in cost per square foot was the Lustron steel house.

Now that we have had some of these houses occupied for several months and have had a chance to study them thoroughly, we are more than satisfied with them. I like them because their attractive architecture, their trim appearance. and their varied colors do so much for the appearance of the station. My engi neers like them because they are efficiently designed along sound engineering lines and offer the promise of great durability. The quartermaster likes them because they are so well insulated that it takes a relatively small amount of fuel to heat them comfortably. The maintenance officer likes them because they are not subject to rot nor to termites. Moreover, they offer no fire hazard whatever since there is nothing in them except the furniture which can burn.

The housewives like them because they are so easy to keep clean and because their convenient layout reduces the housework to a minimum. Some of them have reported that their lively youngsters require less attention because there is so little about the house that can be damaged. All of them are enthusiastic about the large amount of convenient storage space. From the viewpoint of the husbands, of course, the most attractive feature is the automatic dishwasher. Those of us who have studied this problem at some length feel sincerely that the Lustron Corp. has opened the door to a tremendous future. I, myself, believe that the techniques used in building these houses will be perfected as time goes along, so that with reduction in housing costs there will be a corresponding rise in housing standards throughout the country.

I believe you have taken a wise course in looking into the Lustron house and wish you every success with it in the future.

Yours very sincerely,

LEMUEL C. SHEPHERD, Jr.,

Major General, United States Marine Corps,
Commandant, Marine Corps Schools.

Senator TAYLOR. Would those houses be good houses for Alaska? Mr. LOBDELL. They should be swell up there. They will take more insulation in the wall than what they have, probably, for that climate. I will also say, with perfect frankness, I think they should have a different type heating system; because the unit we now have is not heavy enough to take the continued heat that is put into them in the colder climates. We have had a little bit of trouble in Rockford; and we are replacing them. But for a few hundred dollars, all of these changes could be made. So it should be a wonderful house, unless the cost of transporting the house from Columbus would be greater than what materials could be bought for up there.

Senator SPARKMAN. They can't buy materials up there.

Senator FULBRIGHT. Everything has to be transported. I think they spend about $50,000 apiece for houses up there.

Mr. LOBDELL. There is one point that I haven't brought up yet, that I would like to; and this is awfully important to us. If the Lustron plant is closed down, we are out of business.

Now, if anything can be done by anybody to keep the plant going until we can show what we have here, then that is all we ask.

Senator FULBRIGHT. Well, I will say to you that the RFC stated here the other day that they had prospects with whom they are now negotiating looking toward the continued operation of it in the future. This receivership, they said, was necessary to get control of it. I don't know whether that will work out or not, but they told the committee that.

Mr. LOBDELL. One of our members, the cochairman is here, Dick rabach, from Lima, Ohio, who is not only a Lustron builder but e is an attorney. He was before the court; and our information is at, if the plant closed down and is put into receivership, it will robably take from 6 months to a year and a half to liquidate it; and nat means we are all out of business.

J

Now, we tried to find out from the RFC the other day if that were o, and they said well, they hadn't looked into that legal aspect yet, ut they thought it would only be 2 or 3 weeks.

Well, now, with the little bit of legal procedures that I know about n the real estate business, I don't think it is possible to get the present management out of there and another one in in 3 weeks or 6 months. I think it is going to be nearer a year and a half.

Senator FREAR. Doesn't Lustron have an inventory of houses at the present time?

Mr. LOBDELL. Yes; they have two, and I hope they sent both of hem to my company out in Rockford.

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7.

Senator FREAR. What has happened to all the money that has been put into Lustron that they have been granted from RFC? Is that In unprefabricated inventory?

Mr. LOBDELL. Yes; that is right. As I understand it, $20,000,000 of it is in assets in the corporation. The other $17,500,000 has been expended in promotional work. They have sent men out to Rockford, and all over, to help us get started. They have helped carry our fight. It has been a tremendous expense; and they have wasted a lot of money on advertising. We did; everybody would.

I spent $4,000 in advertising in the first 2 months, and it was just wasted.

Senator FREAR. You mean it was wasted because you didn't have the homes to sell?

Mr. LOBDELL. I beg your pardon?

Senator FREAR. It was wasted because you didn't have the homes to sell before advertising?

Mr. LOBDELL. No; I didn't have the ability to sell the homes to begin with. It took a greater knowledge of the house. It took a heck of a lot of experience to sell the house. It was harder to sell than the conventional house. But now it is pyramiding and selling itself. Senator FREAR. Send them to your customers.

Mr. LOBDELL. We know this: Any business you start is going to take a certain period of time to develop, and is going to take a certain amount of expense. All these dealers have been in the same boat. They have spent their money getting ready. Now they are ready.

Just like Lustron. We think Lustron is ready to go, regardless of who the management is. If they won't cut the production off. That is all we ask.

Senator FREAR. Does this organization of dealers own any stock in Lustron?

Mr. LOBDELL. Not a nickel's worth. I don't know of any.

Senator FREAR. Do you have to pay anything for the franchise? Mr. LOBDELL. No; we have what they call a nonexclusive franchise. It can be cancelled any time.

Senator SPARKMAN. You have been acting as chairman of your group; haven't you?

Mr. LOBDELL. Cochairman, yes.

Senator SPARKMAN. The telegram, as I recall, was signed by you Mr. LOBDELL. Yes.

Senator SPARKMAN. Did your group have a meeting here in Wash ington?

Mr. LOBDELL. Yes.

Senator SPARKMAN. How many attended?

Mr. LOBDELL. We met first in Columbus. How it came aboutdidn't find out that this story hadn't been told until a week ago las Monday night. I called a half dozen fellows around the country; and they all felt the same way I did; and I tried to get the meeting with Mr. Hise; and we couldn't.

Senator SPARKMAN. That was the next thing I was going to ask you. Have you met with Mr. Hise, or with members of the Board? Mr. LOBDELL. Yes, with Mr. Hise.

Senator SPARKMAN. You sat down in Mr. Hise's office and talked this over with him?

Mr. LOBDELL. Yes.

f*

Senator FULBRIGHT. When?

Mr. LOBDELL. Monday afternoon at 3 o'clock.

Senator SPARKMAN. When did you first ask to see him?

Mr. LOBDELL. Well, a week ago Monday night, I called him at his home.

Senator SPARK MAN. Was that when he said he knew the story?

Mr. LOBDELL. He had heard all the facts; they had heard all the facts, and any information I wanted would have to come from Mr. Strandlund.

Senator SPARKMAN. In your talk with him here Monday, did he give you any encouragement as to what you might expect in the future?

Mr. LOBELL. He said that they absolutely would not loan any more money to the present management of Lustron.

Senator SPARKMAN. Well, even aside from that, as I understand it, your position is this: Of course, you believe in the house strongly enough that you believe it might have been worked out. But RFC has taken a different attitude; and has started court proceedings. So, apparently, it is not going to be worked out with the present manage

ment.

As I understand it, your next argument is that it is still good enough product that some arrangement ought to be made to keep the production line running.

Mr. LOBDELL. That is right.

Senator SPARKMAN. Is that right?

Mr. LOBDELL. Yes.

Senator SPARKMAN. And you people who have been selling those houses, ought to be allowed, under whatever new arrangement is made, to continue to sell them?

Mr. LOBDELL. That is right.

Senator SPARKMAN. And you feel that they can be sold in sufficient quantities to make it economic to produce the houses?

Mr. LOBDELL. That is right.

Now, we are basing that on what we are told, that 8,000 houses per will make the house economically sound from a production andpoint.

ear

Senator SPARKMAN. How many did you say you could sell in the ourse of a year? Did you say?

Mr. LOBDELL. The first 4 months

Senator SPARKMAN. I just thought off-hand, you could suggest how nany you thought you could sell, you alone.

Mr. LOBDELL. In my own company?

Senator SPARKMAN. Yes.

Mr. LOBDELL. Well, now that I know FHA is going to go along on hese projects, I think the potential is tremendous; because I know I can go out and show people where it is the best investment they could possibly make, to build houses under a program such as section 608, a rental project.

Senator SPARKMAN. Do you think you could sell 50 a year?

Mr. LOBDELL. I have estimated conservatively that I would sell 350 houses this year.

Senator SPARKMAN. You would sell 350 of the Lustron houses, you mean?

Mr. LOBDELL. Yes.

Senator SPARKMAN. Well, it would only take about 25 dealers, then, to sell 8,000.

Mr. LOBDELL. Yes. I am a little guy; so the other fellows should be able to do it, too. That is the thing I haven't been able to understand.

Senator SPARKMAN. Did you start to say you had made a canvass of the various dealers?

Mr. LOBDELL. Yes.

Senator SPARKMAN. What did that total up?

Mr. LOBDELL. These telegrams are still coming in. Ninety-seven dealers, out of 221, expect to sell a minimum of 4,414, up to 8,102. The 4,414 are almost positive, and the 8,102 are based on whether FHA will go along and give us comparable financing with other houses. That is all we ask-a comparable financing program. We can sell

them.

There are another 124 dealers that we haven't heard from yet. We haven't compiled the records. They are still coming in.

Senator SPARKMAN. In other words, you think it is safe to say those 97 dealers could sell somewhere between 4,400 and 8,100?

Mr. LOBDELL. That is right. Now, that is exclusive of what we call these fleet sales.

Senator SPARKMAN. Such as Army and Navy and Air Force?

Mr. LOBDELL. There ought to be another four to six thousand houses right there.

Senator SPARKMAN. I believe Mr. Cushing testified that he was prepared to buy 3,000; wasn't he?

Senator FULBRIGHT. Something like that.

You said you had an attorney with you. Have you considered any intervention in this proceeding in Columbus, to state your case? Mr. LOBDELL. May I call on Dick Krabach? I am sorry that I have done all the talking here.

Senator FULBRIGHT. Will you identify yourself for the record?