Friday, June 25, 2004

370 This is not about Lustrons

You’ve probably seen a Lustron--a steel house of porcelainzed panels built in the late 1940s to help solve the housing shortage after World War II. Here’s a brief story from the Ohio Historical Society web site:
“At the end of the war, a severe housing shortage plagued the United States. Businessman Carl Strandlund sought to solve this problem by mass-producing prefabricated, porcelain-enameled, steel houses. With the support of veterans groups, he received millions of dollars in federal loans to establish his factory, which he modeled after General Motors and Ford. The new Lustron Corporation leased the abandoned Curtiss-Wright factory adjacent to the Port Columbus airport. The government also allocated the new firm a generous supply of rationed steel for its enterprise.”
There have been reunions in Columbus, Ohio, of the designers, builders and owners of Lustrons, and I usually get an invitation because my grandparents built a Lustron in 1949, and for awhile I was part of a listserv concerning Lustrons after my Dad purchased that same home fifty years later, and we needed to do some repairs for him. My home town in Illinois has close to 20 Lustrons and it is a very small town. Pink, blue, yellow and tan--just hose ‘em down when they get dirty.

However, this is not a blog about Lustrons, it is about the WWII housing shortage. All my life I’ve been hearing about housing shortages after the war. I never even questioned it. We had a bit of one ourselves when the people who had been renting our house while Dad was in the service wouldn’t move when we came home, and we had to live with my grandparents.

I’ve been reading Thomas Sowell’s book, Basic Economics (rev. 2004). He says that after WWII, there was no scarcity of housing--severe or otherwise. He says scarcity is when a tornado or earthquake destroys housing, but shortage is created by prices. The ratio between housing and people had not changed (from 1941 to 1945), so there was no greater lack of housing. What had changed was artificially low rents due to rent controls during the war. When rents were low, some people rented larger spaces than they needed, and some landlords took properties off the market because they couldn’t cover maintenance costs and make a profit. So there were just as many housing units, but many people looking for places to live at prices they could afford. He said in different decades, the same thing has happened in Sweden and Australia--the more rent control laws, the more housing shortage.

New York City, says Sowell, has had rent control longer than any other American city with the consequence that turnover of apartments there is less than half the national average and it contributes to homelessness, because the small guys who might have housing the poor could afford, are pushed out of the market. People are sleeping outdoors, while buildings stand empty. Very wealthy people keep their rent controlled apartments just because they can, but don’t live there. San Francisco also has rent control, which drives up the cost of living there for everyone.

Also, when price controls on meat were ended in 1946, all of a sudden there was enough meat for everyone because it killed the black market. He also says there was no gasoline shortage in the 1970s. Price controls led to a cutback on the hours that filling stations remained open, so they could stay open for a few hours a day instead of having the costs of being open 12 or 24 hours, and make the same profit.

I never knew that about Lustrons. The government created the shortage, and then supplied the loans to relieve the shortage. I never knew there really wasn’t a housing shortage (less housing) after WWII. I’ll have to think about that and try to undo a lifetime of indoctrination.


Don said...

Rent control is Evil. I've known this since before I was a landlord for nine years. I didn't suffer from it as owner or renter because of where I live, but it has ruined the affordable housing market not only in NY and SF but elsewhere, e.g. my hometown, rad-Left Berkeley CA. I found the Lustron story interesting. Never heard of it but I'm not surprised by the overall scam.

WDL said...

VERY interesting! I just watched a program on PBS's history detectives that reminds me a bit of this story!!

take care,