Mr. O'HARA. Mr. Chairman--

The CHAIRMAN. Mr. O'Hara. We have another witness this morning.

Mr. O'HARA. Mr. Green, long ago I learned that the opinions of men are not always those which spring from the operation of the thinking processes, but too often are influenced by their interest and their associations. As a new member of this committee, I have been evaluating the testimony of witnesses by the associations and the interest of the witnesses.

In evaluating your testimony and in comparing it with the testimony of bankers and mortgage men who were here, men who were comfortably cushioned on the status quo, I took that into consideration. Now I wish to evaluate your testimony.

What percentage of the members of CIO are in the middle-income group, would you say?

Mr. GREEN. An overwhelming majority. I would say about 65 or perhaps 70 percent, because most of them come in the mechanic class. Mr. O'HARA. So you have an interest in the welfare of this 65 percent of the membership of CIO in the middle-income group and you wish to provide them with proper decent housing within their

means to own or to rent.

Mr. GREEN. That is right.

Mr. O'HARA. Now, these men, the members of the CIO, work for private industry, do they not?

Mr. GREEN. Mostly.

Mr. O'HARA. And you have, as the representative and leader of those workers, a real interest in the welfare of the employers who are paying them wages. That is true, is it not?

Mr. GREEN. Yes.

Mr. O'HARA. So, you have no more interest in a system of socialism that would destroy private industry than has management. That is right; is it not?

Mr. GREEN. That is correct, sir.

Mr. O'HARA. Then, having in mind your sole interest is to get housing for your members who are in the middle-income group, within their means to own or to rent, so that they not only can live in the comfort they are entitled to enjoy but also can be better workers and contribut more to private industry-with that in mind you have made a careful study of the housing problem; is that right? Mr. GREEN. I think I have, in my limited way.

Mr. O'HARA. Just one other question. Having made that study and having that interest, do you know of any better approach to the problem of providing housing to those in the middle-income group than is offered by this bill that we are now considering?

Mr. GREEN. The bill does the trick.

Mr. O'HARA. And you know of no other solution of the problem? Mr. GREEN. I have not run up against it yet, because back in June, 1941, I wrote some articles entitled "Labor Looks to the Future" on this question of no man's land in housing. At that time we were speaking then of this same group that you are making provisions for to take care of in this bill.

Mr. O'HARA. Thank you, sir.

The CHAIRMAN. Thank you. You may stand aside, Mr. Green. We are glad to have your views, and they will be considered.

We will now hear from Mr. Lincoln. We know of his fine reputation as an organizer of successful cooperatives, and we are very glad to have his views on the subject.

Mr. LINCOLN. Thank you, Mr. Chairman.

STATEMENT OF MURRAY D. LINCOLN, PRESIDENT, COOPERATIVE LEAGUE OF THE UNITED STATES OF AMERICA, ACCOMPANIED BY MR. BRYANT AND MR. CAMPBELL

Mr. LINCOLN. My name is Murray D. Lincoln, of Columbus, Ohio. I am president of three Farm Bureau insurance companies. These companies are the Farm Bureau Mutual Automobile Insurance Co., the Farm Bureau Mutual Fire Co., and the Farm Bureau Life Insurance Co. These companies serve over a million policyholders in the eastern United States. The Farm Bureau Mutual Automobile Insurance Co. had its beginning in 1926 with $10,000 capital which was invested by the farmers of Ohio. Today our mutual assets are $75,000,000 with surplus of $15,000,000.

We reduced the price of automobile insurance from 4 to 6 percent when we first started under what the majority of them still quote.

Our cooperative business was equal to $50,000,000-that is, feed, fertilizer, petroleum, and everything else.

I want to quote these things, Mr. Chairman, because every time we talk something like this, why, this question of socialism or communism does come up. I think it might be well for Members of Congress to actually get a definition of socialism, communism, and cooperation. I don't know if anybody has ever written it into the record, but, as I see it, the cooperative, in view of some of the testimony that has been presented, I think it is important.

You start with the people, and you want to do something, and the people go direct and do it. In socialism or communism, the people are here. You go through the government and the government does it, whether you like it or not.

To me that is a simple explanation, and to me there is no evidence of any sort or shape that a cooperative in any way has anything to do with either socialism or communism.

Mr. MULTER. Before you leave that, the nomenclature is changing. Instead of socialism they are now yelling "welfare state."

Mr. LINCOLN. I think you ought to read what Governor Dewey said on page 2 of the New York Times. It is very interesting. He has apparently adopted it. He says it is a pretty good thing and says he doesn't know why the Republicans ever objected to it. I just happened to read that before I came into the hearing.

We are vitally interested in this middle-income housing bill for a number of reasons. We are interested in sound investments where our funds are protected. If we invest money in a cooperative business venture, it must have as great a chance for success as any other type of business venture. On a broader scale, it has been pointed out that there are about 8,000,000 families in the middle-income group. A substantial portion of these families need homes adequate in size and at a price which they can afford. This is a vast potential market for business. As organizations which have long been interested in coop

eratives, we feel that this legislation is of great significance to American democracy and economic health.

Mr. Chairman, the question is often raised, Is there any necessity for this? Sunday I was on our local town broadcast with a Mr. Idhler, who I think, represents the Washington Housing Authority, and also Mr. Prime, of the Washington Real Estate Board. He made the statement that there was no need of this kind of housing. We had several lines piped into that place for people in the radio audience to ask questions. The people immediately blocked all the lines and, further than that, they used such language against Mr. Prime that the stenographers went on a strike.and said they wouldn't take that language down. They were all saying, "If you know where there are any houses that we can buy at a decent price, we would like to know it." Mr. Idhler could not say any more. We had to stop on that question. He took up most of the time. So I think there is evidence of a need for it.

Farmers join together to form our insurance companies. These farmers have also joined together in cooperatives to sell agricultural supplies to themselves in order to reduce their cost of doing business. Today both farmers and city people are insured and benefited by these companies.

I only quote this to show you, as an example of where we think cooperative and mutual effort has paid off, because today we are writing more automobile insurance in Ohio, Maryland, North Carolina, Delaware, I guess, and one other State, than any other company. And it is a free, competitive enterprise. If we were not producing more service for more people, certainly they wouldn't be using this service. We feel that one of the best ways to invest our funds is in housing. We have something like 37 percent of our total investment funds, which I think is approximately $40,000,000, in mortgages over these four States.

Unfortunately, however, the funds which are available from our business institutions to help solve the housing problem cooperatively are a pittance compared to those for which there is a need. While we believe that this is an urgent need, and that the potential demand for this legislation is great, we are asking the Government to provide nothing which we, as a free-enterprise business institution, would not ourselves do if we were sufficiently large financially to operate on a Nationwide scale.

Farm groups are interested in this bill both because of their long and successful experience with cooperatives and because of its applicability to small towns, rural areas, and farm interests. Many farmers live in or near small towns, as I understand Mr. Clarke, of the Banking Association, stated yesterday in his testimony.

This housing will be of use also in providing decent homes to the more stable and skilled among farm workers. Many of the most successful co-ops have been based on the smaller communities. I understand of the 100 reported sometime ago better than 80 are in what might be termed reasonably small communities.

Farmers are also interested because decent homes and an active building industry are essential to a full and healthy economy. Any programs which help to achieve this end benefit farmers, and, conversely, a decline in building this or next year, such as foreseen by

builders and housing economists, lessens the market for farm products in addition to other damage, because of the loss of wages.

Of course, Mr. Chairman, one of the things we, as farmers, are particularly concerned about-I came into the Farm Bureau in 1921, and now we have a similar situation-is that prices are declining and surpluses are piling up, and unless we can keep this going I think we are going to be in trouble; and, because of the great need of housing, that will keep things going in good shape.

An additional fact is the difficulty in getting home financing in smaller communities even with FHA or VA guaranties, which latter are often difficult or impossible to get. This relatively greater difficulty in getting home financing in smaller communities is a whole problem in itself but is related to the fact that the middle-income legislation will be of special value to these towns.

There has been much talk of decentralization and dispersion of industry for security reasons. Many smaller communities are trying to attract a diversity of industries, but often industries will not settle in communities because there is little decent housing available and banks will not loan for home construction because of lack of diversified industries.

I am also happy to report to this committee on a very interesting and important conference held here in Washington, December 16. The meeting was called to work out a mutual agreement on policy and cooperative housing. Participating in the conference were representatives of the major veterans' groups, labor organizations, cooperatives, housing organizations, and other public-interest groups as well as about 15 officials of existing cooperative housing projects.

I understand there is a Congressman on this committee from California. Since that hearing I have had two calls from both Army and Navy posts in San Diego. The persons calling said they want to be sure to be included in this because there is such a lack of adequate housing in Army posts and they think this would be one opportunity for them to get in, and they wanted me-I don't know how they got my name except through my testimony before the Senate committeeto let them know, so that, whatever is passed, the Army and Navy can get in on it.

The conference was in agreement that every effort should be made to bring private capital into the development of cooperative housing and that any legislation presented should include provisions under which the Government might encourage the enlisting of private capital by the guaranty of income debentures, the creation of a mortgage association for housing cooperatives or some other method. There was, however, agreement that the bringing in of private capital should not be a condition precedent to granting the construction loan or the permanent financing.

Oftentimes we find, Mr. Chairman, that just because there is a provision in there-if you are going to try to force this to go through private financing, if the private financing won't come in, and we had the same experience with our farm cooperatives, local financing institutions would not loan us money until we hade the bank for cooperatives, and then everybody came in. So we think this will open up vast sources, and, as soon as this comes in, I think the private financing people will be more willing to come in.

We feel that H. R. 6618 does this in admirable fashion.

The conference agreed that the interest rate to the cooperatives for both construction and long-term financing should not exceed the going Federal rate, plus one-half of 1 percent. By this formula the costs of financing can be brought down to a point where it is possible to build housing that middle-income families can afford-and yet not require any subsidy from the Government. This is a formula which will make middle-income housing pay its own way.

I understand that there was discussion here yesterday of the interest rate in Sweden. It is reported as 3 percent in an article which I have added to my testimony, and I would like to leave it with you.

In that connection, I would also like to point out something else. If I had my way about it, all the public housing would be based on helping the people get into a cooperative because I think the cooperative does something to people that public housing does not. We also have something in a cooperative that I don't think anybody has made a particular point of here. In true cooperative housing, even though the Government comes in to lend the money to the groups on a perfect business basis, you have a way to get the Government out in a perfectly normal, definite fashion. That is, when the loans are paid back, out the Government goes and the cooperative goes on its own.

There is a lot of discussion as to what the Government ought to do, can do, and should do. At least I think this is one way in which the Government can come in and help a group of people and then get the Government out whenever conditions are lived up to.

Mr. KILBURN. May I ask a question?

The CHAIRMAN. Yes.

Mr. KILBURN. Of course we all want housing. Everybody wants everybody to have decent housing. If this is true, why not have the Government take over every real-estate mortgage on a home in the country?

Mr. LINCOLN. It is not a question of the Government taking it over. It is a question of the Government helping people to do it themselves. Mr. KILBURN. Why not have the Government take over every mortgage and bond against those mortgages?

Mr. LINCOLN. Because I do not think it is necessary to do it. Mr. KILBURN. What is the argument against it, if this bill goes through?

Mr. LINCOLN. Because here is a case where a lot of people do not have the wherewithal, and they cannot get the financing to do it with.

If you let me finish my testimony I think I will give some other reasons, and then we can get into that.

A third point of agreement by all these organizations of veterans, labor, cooperatives, and housing organizations was that the amortization period should not exceed 60 years. Your Senate subcommittee came back from Scandinavia reporting that 100-year amortization is common there on well-built housing. We do not go that far. We are happy to see that H. R. 6618 aims for 50 years.

The conference endorsed as a fourth fundamental the need for 100-percent loans to cover development cost, but advocated that within 5 years the cooperative association shall have at least a 5 percent equity in addition to the normal retirement of the mortgage. Writing too large down payment requirements in the law may make the bill ineffective as a tool in urban redevelopment.