The George Lustig and the Pipe Bender Story
This is a true story that was confirmed to me by several people.
Written 2/2012, and rewritten 05/02/2016 unedited
This interesting story is all about how a person that I had met in Chicago, had gotten his start in the very unusual business of buying excess government surplus merchandise. His name was George Lustig, and I personally met, and did business with George starting in 1975.
The following story was told to me by several of his friends, these were people that knew George very well when he was a young man just starting out in business. So I am sure the story is 100% true, and it’s a classic surplus dealer story.
The only reason I even heard the story, was because I had been doing business with two other surplus dealers that were working in the Chicago and Detroit area who all grew up in the business together with George, and when I eventually met them, they all still were doing a very similar type of business, they were buying excess, factory surplus materials.
All their businesses were so similar that they often bought and sold material from each other, and not only did they buy and sell from each other, but on some occasions they were also competitors with each other.
What was interesting about them, was that besides from the fact that their businesses were very similar, and they all had a similar love-hate relationship with each other, each of them, was bad mouthing the other’s constantly, but still, they all remained friends, and the love-hate relationship they had lasted as long as I knew them. So whenever I visited one of them, I had to listen as they always bad mouthed the others, but yet the bottom line was that since they all worked in similar businesses together, and sometimes they were even partners with each other in buying surplus deals.
After WW2, there was a large quantity of excess military surplus items available, and the government did their best to bring a lot of it back to the United States and dispose of it. The government’s method of disposal was usually by public auction, and all of the larger cities had many warehouses filled with this excess military surplus material and the government held weekly auctions to dispose of the stuff, and Chicago was one of those cities.
After the war, and all through the 1950’s and the 1960’s, the surplus business in the United States was booming, lots of fast thinking, inventive guys started to take advantage of it by bidding to buy the tons of material that had become available. There was so many items available that the government couldn’t get rid of it fast enough.
The guys that became involved with buying this type of excess government property became known as the “Surplus Dealers”, they were people who would try to buy from the government any merchandise that they thought that they could sell and make a profit on.
However, it wasn’t always easy for them to sell what they bought, as a lot of the items had only specific military applications and there were no commercial buyers that could re-utilize any of it, so sometimes, it became a tricky game, and the people involved had to be very quick thinkers in order to stay in business.
In 1974, I started doing business with two companies in the Chicago area, both located on Canal Street, their warehouses backed up to the Chicago railroad yard. One of the companies was Fleet Supply, it was managed by the star of this story, George Lustig. A few doors down the street from George was one of George’s friends and rivals Abe Greenstein, he ran a company called Automotive Supply.
Now George and Abe, while they were old friends and neighbors, they still didn’t talk to each other, however, Abe Greenstein was one of the fellows that told me this story. He had said that George had told him the original story many years ago. The other person who corroborated the story was another one of George’s love-hate relationship friends named Barney Kaplan of the B. K. S. Surplus Company in Detroit Michigan.
Barney, who in the early days, started out doing business in Chicago, also still in 1974 did business with both George Lustig and Abe Greenstein. Barney was the third party in the love-hate relationship they all had. When I visited any of them, unfortunately I had to listen as they always talked bad about the others. However I got along with all of them, and on several occasions, I was used as a messenger between them. I was used to be the intermediary while the three guys were always feuding with each other over some reason or other.
I first heard this story from Barney Kaplan in Detroit and it was later confirmed by Abe Greenstein in Chicago, both said George had told them the story.
In the early days, after WW2, around 1950, George Lustig, Abe Greenstein and Barney Kaplan, all had little or no money. They were so broke that Barney said that if he or Abe got invited out for supper by a customer, they would save half the meal and heat it up on a radiator in their office the next morning so they had breakfast.
They told me that every week, their friend and rival George Lustig, would go to the docks in Chicago where the government was auctioning off surplus material. He religiously attended the government sales every week, and he always arrived early to be able to inspect everything before bidding on it. By inspecting everything, George was always hoping to find something he could buy cheap and sell quickly, because he had little money to invest. In those days, George could not afford to make a mistake, as his weekly bankroll to spend was less than fifty dollars.
One morning George overslept and he arrived at the government auction late. By the time he got there the auction had already started, and he had no time to inspect any of the items being sold, so George tried bidding blindly on a few lots. Not having inspected them beforehand, he had no idea of their value, consequently as the sale progressed he had no success buying anything. By the afternoon the final items were being auctioned off, and it seems as though most of the bidders had disappeared. So George listened carefully as the last item was being offered. They were supposed to be two, new and unused pipe bending machines.
Well George certainly knew what a pipe bending machine was. They were probably just a couple of old machines that bent pipes. George raised his hand planning on bidding a maximum of $15.00 for each machine, it was all the money he had to spend. His thinking was that if he was successful, he could load the pipe bending machines on to his pickup truck that afternoon, and try and peddle them to some company that bent pipes.
As luck would have it, there were no other bidders, and George easily won both machines for only $12.00 each. As it was getting late, George was anxious to load up the pipe bending machines and hit the road.
George found the site manager who walked with him to the rear of the long Chicago storage warehouse, where the two machines were supposed to be. But as hard as they both looked they didn’t see anything anywhere that looked like a pipe bending machine. What they did discover was at the very end of the warehouse were two big monster machines. The two machines were so big they actually blocked the light from the windows of the warehouse, each machine must have weighed several tons.
George double checked all his papers, could it be possible these were the machines he had just bought for twelve dollars each, He felt that it wasn’t possible, perhaps there was a mistake. If it wasn’t a mistake, George knew that he neither had the money or equipment to move these giant machines, so he started to get very nervous just thinking about it. He knew that if he defaulted on his bid it would cost him twenty percent which would be five dollars, money he could ill afford to lose.
However, on the other hand, George knew he certainly couldn’t afford to pay anyone to come and move the machines. He knew it would take a lot of expensive heavy equipment to do it, besides, where would George move the machines to. So George was really sweating now, and as he walked around the machines he saw that each machine had a metal data plate on it with the name of the pipe bending machine manufacturer who was located Akron, Ohio.
George drove back to his office, where he used an old wooden crate as a desk. He called information in Akron Ohio and got the phone number of the company that had made the two machines, and fortunately a young man answered the phone. George told him that he had two machines that had been made by his company years ago and he gave the fellow the serial numbers off the data plates. However, the young man appeared less than enthusiastic, he said, he knew the company had made the machines many years ago,
But it was way before he went to work for them.
George, had that bad feeling in the pit of his stomach, he felt he knew that he had hit a dead end, and he now realized that he would have to default on the sale and lose his five dollars. So, as a last resort, George asked the young man if he knew of anyone that might be interested in buying the pipe bending machines, the fellow said no, but that George could ask his grandfather who was the original owner of the company. He told George that his grandfather was ninety six years old, and he only comes by the office for a couple of hours every day, but George could call him on the phone the next day.
The next day George got the boys grandfather on the phone, and the grandfather said, he remembered the pipe bending machines very well as he had built them himself. He said that the machines were very old but he would love to see them again, as they were his first government contract. He asked George, if he got on a train in Akron, would George take him to see the machines. He said he didn’t want to buy them, he only wanted to see them. George wanted to say no, but he eventually relented and agreed to pick the old man up at the Chicago train station.
The next day George met the old man at the Chicago train station, and brought him to the government warehouse. At the warehouse, the old man saw the machines and he said, they were the first machines he had ever made. So again George asked if he would be interested in buying them back. The old man said, “Yes I would, but I only can give you twenty for them.”
George was stunned, as he never expected the offer “That’s twenty for each machine?” George asked, “Yes” the old man replied, forty for both.
Well George quickly calculated, he had $24.00 invested and $40.00 would give him a $15.00 profit. It wasn’t much, but it was a profit.
George decided to give the old man one last push, perhaps he could get him to go up to $50.00 for the two machines. “Are you sure forty is your best offer George asked” “Yes” the old man replied “$40,000.00 for the two machines is the best I can offer you.”