Cooperatives should establish their own financial requirements for membership appropriate to the particular situation. This is a matter of administration, and agreement between the public agency lending the funds and the particular cooperative, but it is not something which should be written into the law.

A fifth point of unanimous agreement was the need for a new administrative agency. Here we disagree with this bill as now drafted. We feel that there is a clear need for such a separate agency which would, of course, be a constituent unit in the Housing and Home Finance Agency. It would be on a level with the Federal Housing Administration and the Public Housing Administration. It should be sympathetic to and devoted only to the promotion and financing of cooperative and nonprofit housing. Its administrative chief should be appointed by the President with the concurrence of the Senate. The great success of the Rural Electrification Administration with a similar organizational set-up should be pointed out.

On the negative side is the stark, heart-rendering failure of a cooperative program under FHA and title 207 of the National Housing Act.

Considerable information was placed in the record at the hearings before your committee last year as to the treatment of cooperative projects by indifferent or hostile officials of FHA. It is interesting to note in the report entitled "Housing Statistics," for December 1949, issued by the Housing and Home Finance Agency, that applications under title 207 (the cooperative title) were received for a total of 14,102 units during 1948 and 1949. On the following page it is reported that only 326 units were actually started under this same section in this same period.

The other points of agreement on this legislation at this conference

are:

The need for care to prevent speculators and profiteers from taking over the program; we had that same problem in REA.

The need for adequate measures to see that the projects are within the reach of middle-income families.

The right of the cooperative housing association to repurchase the members shares where it is necessary to withdraw from the project. This is necessary to prevent speculation.

And, finally, there should be provision for both individual and group ownership. The principle of home ownership is essential to an American free economy.

One of the best examples of how cooperative action brought abundance to farmers with the help-but not control-of Government is in our electrical development, familiarly known as REA. Prior to 1935, less than 15 percent of the farmers in the Nation had electricity. In Ohio this figure was about 18 percent.

Under REA, which is a separate constituent administrative agency under the Department of Agriculture, technical assistance, planning, and supervision were provided which contributed materially to the success of the program.

We should recognize, too, that at the time REA was created there were in existence less than 50 electric cooperatives. At present there are about 100 housing cooperatives and the fund of experience in construction, management, and maintenance is comparatively much

greater. Even with this fund of experience, however, the provision for technical assistance would contribute greatly to the success of the program.

One of the best examples of how I can wrap this up is to draw to your attention how farmers, without Government help, in electrical development, developed REA. When we understood that in the State of Ohio in 1935-and remember that that legislation was not only to help farmers get electricity but also make work-only 18 percent of the farmers at that time had electricity. Now we have 97.6 percent in our State, and I think over the Nation it is about 80.

We had the same arguments, Mr. Chairman, that were raised by the power interests at that time-that farmers could not afford it; that there was no need for it, and that it would result in failure and also result in putting power companies out of business.

In those days the farmers had to pay a connection charge anything that the company could bargain out of them-and, in addition, 9 cents a kilowatt for electricity. We set up our cooperatives after the REA. Mr. Cook, who was appointed the first Administrator, did not think we could do it. I told him that if he would give us a chance we would, and we went home and got 38 companies set up. We cut the cost of electricity right square in two, eliminated all connecting charges, and I have not heard of any old-line public power company going out of business.

Further than that, it created such a vast market for refrigerators and electric stoves and all of the equipment out on the farm and every other place it just gets me, Mr. Chairman, as to why these certain interests always oppose anything for the people when they themselves can capitalize on the whole thing and have more business.

To me the REA is the best example I know of, and I am sure it would be the best thing here. If it helps certain groups to get the financing to do a good job, you are going to open up a vast market for cement, pipe, refrigerators, land, and the whole shooting match.

Mr. KILBURN. Did you pay taxes to the Government on those? Mr. LINCOLN. The cooperatives, I think, in the beginning paid every tax. Finally-because, remember, the old-line power companies had all the concentrated city business-in order to help to get the electricity to the farmers I think there was some provision by which they had some preference on the amount of money they paid.

Mr. KILBURN. I am talking about income taxes.

Mr. LINCOLN. In a cooperative you are not supposed to pay an income tax because you are doing things for people. The result goes back to the individuals.

to.

That is another thing I do not understand. When you do things for yourself you are not paying an income tax for the privilege of doing business; but under that provision you can do it either way you want In addition to that-and that is an interesting thing to me—we have always underestimated the people's capacity to consume when they have the money and it is the right product. I think the same thing is going to be done on this housing. Therefore, we have more experience; and I think that with the experience we have got, this could be proved to be a great success.

If it is necessary to cite precedent for the creation of the National Mortgage Association for Housing Cooperatives, let me point to the

Federal land banks, production-credit associations, and particularly to the banks for cooperatives which have done so much for American agriculture.

You gentlemen are very familiar with all those institutions and their operation, so I will not go into detail.

Recently Senator Douglas was in our city, talking on a lecture tour of some kind, and he made the statement that information has been given him that the REA cooperatives will finally pay back all of the loans to the Government and also show a slight profit, including the administrative costs.

Based on what we have done and what I think we can do, I think this could almost be duplicated. I am sure it could be duplicated in this case.

The experience of cooperatives in meeting the needs of the people is ample evidence that this proposal does not plunge us into untried or unsuccessful fields.

If there were time I could give you an account of the great success of our farm supply cooperatives, our marketing co-ops, rural electric cooperatives, credit cooperatives, our insurance organizations and other forms of cooperative free enterprise.

Members of your committee recently made a trip to the Scandinavian countries to study cooperative housing and can give a more complete and up-to-date report than I can. My last trip to those countries was in 1946, at which time I studied cooperative housing, among other things. I was greatly impressed, as you were, with their accomplishments. At that time, the cooperatives in Norway and Denmark were doing about one-fourth of all the new housing and in Sweden, one central cooperative, the HSB, by assistance to local housing cooperatives, had built 40,000 dwellings. This would be equal to nearly a million homes in the United States. The apartments and houses were neat, clean, modern, livable homes at reasonable costs.

We also have the Queensview project in New York. The Amalgamated, in New York, has had the support of many of the financial institutions, many of the prominent civic leaders there, and so far as I can understand, they have been very successful.

The type of nonsubsidized aid provided in this legislation could break the bottleneck in which these cooperatives find themselves and aid in a substantial number of middle-income families obtaining decent homes for themselves.

This program can be a stabilizing influence in the American economy and will be looked to with great hope by the forgotten families in the continued problem of adequate housing for all Americans. We think this is the way to preserve and extend the important American principle of home ownership for a group which is now almost entirely denied such a possibility.

Mr. Chairman, we ourselves are in this. We have the National Cooperatives Farm Machinery Co. in Belleview which 15 big farm cooperatives of this country own. The president of that company called me two years ago and said, "Mr. Lincoln, we just cannot get the kind of help and number of help in this area unless we provide housing for them." So to meet that situation our insurance company set up a new organization which is called the People's Development Co. and an executive who was with us through all of our REA work was

put in charge of it and we are building 150 houses up there, and have 38 of them done.

Our board of directors was up there Wednesday to view those that are being set up. It is a very small town in northern Ohio. There is a small plant of General Electric. The Nickel Plate Railroad, I think, has it chief shops there and we have the National Farm Machinery.

We just went up there to find out whether a company, in order to get a return—a reasonable return on our money and just a fair return to take care of contingencies-could produce houses as good or better than were being built.

I would like to read to you some of the things that we put into these houses, varying from $8,500 to $12,000. This is just an experiment to see if we couldn't build a better house for less money:

These houses have all poured-concrete casements; No. 1 fir framing lumber throughout; insulated ceilings of 4-inch rock wool and insulated of 2-inch tile; forced-air gas-fired furnaces; oak hardwood floors-treated for lifetime use, so they say; storm doors and screens throughout; steel girders in the basement; adequate bedroom sizes; small basement walls permit a recreation room; outside basin under drain receiver; all garage walls finished with plaster; overhead garage doors; drain tile laid around the foundations; lots seeded and sodded and provided with bushes and shrubs; a quantity of trees planted over the whole development, and street curbs, sidewalks, utilities and other improvements completely paid for.

Mr. BUCHANAN. How much is the average price of those?

Mr. LINCOLN. From $7,300 to $12,500, and outside appraisers have said that there is no house comparable with that integral basic construction around there that would not sell within $2,000 to $3,000

more.

Incidentally, the cost of carpenters per cubic foot: We have far outdistanced any prefab house we would find out about. I think if you will study those figures you will find that they are pretty significant.

There is a lot of discussion going on about prefabs, and we are not against prefabrication. We were just trying to find the "bestest house for the mostest people" at the least cost in order to take care of our people in that area.

Mr. MITCHELL. What is your cost per cubic foot? Do you have the cost per cubic foot?

Mr. LINCOLN. Yes. It goes from 69 cents-it is on the back of my statement.

Mr. TALLE. Mr. Chairman, may I ask a question at this point?
The CHAIRMAN. Mr. Talle.

Mr. TALLE. I am interested in your statement, Mr. Lincoln, that you surveyed the possibilities of the prefabricated houses. In your survey, did you include the Lustron house?

Mr. LINCOLN. Yes.

Mr. TALLE. What were your findings with respect to that?

Mr. LINCOLN. Now, Mr. Chairman, that is such a controversial question in Columbus, Ohio, that I would like the privilege of talking with the Congressman after this, if it is all right with him.

It is very interesting. All I would like to say, Mr. Congressman, is that here are the figures. We did not put this company's figures in because we did not think it was fair.

Mr. TALLE. You have made your viewpoint clear to me. Mr. LINCOLN. Yes. Now, do not misunderstand me. We did not try to beat the prefabricated houses. We just wanted to find out, as a company interested in people and the cooperative method, as to whether we could do a job; and the thing of it is that we cannot get these houses finished fast enough because people want to come in from 15 and 25 miles away. We are going to have a hard time holding them for the people of the General Electric and our own company and the Nickel Plate there.

Mr. TALLE. I offer you any time during this day that is convenient to you for a conference on this point.

Mr. LINCOLN. Thank you, sir.

I know that cooperative or nonprofit housing can be built, that it can be built well and at a cost substantially below the present prices charged for new homes. Some of the "water" can be squeezed out of the building industry, which is probably a major reason for the opposition expressed by builder and real estate groups, which supported title 608.

It will be a good thing for the whole housing industry to have some of this competition which has been talked about so much, and that is what we think of the cooperative as a whole. It is a private enterprise competitive agency. If we go into a field and get licked, then it is our fault. We have lost, but the interesting thing to me is that we have never gotten into a field yet that we were not able to show material savings all along the line.

When we went into this housing, I said, "Here we go again. But we are sure going to get caught here." And our figures are based on only building 38 houses. We could do an immeasurably better job if we were building 1,000 or 10,000.

As we see it, this housing bill will produce single homes grouped together as well as on scattered farms.

It has been pointed out how speculation must be guarded against. On the other hand, thrift should be encouraged by the full protection of the individual equity, particularly where reserves have been accumulated and prepayments made. Cooperative bylaws in terms of the lease or deed of sale can produce such full protection. It should be possible for the individual to make prepayment or pay off his share of the mortgage in full; also with the release clause from the length of the mortgage.

For example, in administrative rules and regulations under section 207 of title II of the National Housing Act, section 207, paragraph 6, it is stated that "the mortgage will cover the entire property included in the housing project." A mortgage of this character is described in paragraph (f) of subsection (2) of this section: "Nonprofit corporations may include provisions for release of the lien therefor and for any improvements on the land on which they are located."

I feel that this legislation is of major import to small towns and rural areas, as well as redevelopment, and to middle-income housing in the big cities, and I would like to urge the early passage of this legislation and the establishment of an agency that I think can make an outstanding success of this particular field.

The CHAIRMAN. How many cooperatives do you have?

Mr. LINCOLN. One hundred or one twenty-five. It would take me a long time to count them up.