Senator SPARKMAN. Those are direct loans from the Government; are they not?

Mr. LINCOLN. Those are direct loans.

Senator SPARKMAN. How about Public Housing have you got any of those, or do you contemplate buying any?

Mr. LINCOLN. They have not been issued yet; have they?

Senator SPARKMAN. Not since before the war, but they are authorized now, and I wondered if you planned to buy any of those.

Mr. LINCOLN. I do not know, sir. I think the investment committee would pass on them. We have got a lot of FHA, of course. Senator SPARKMAN. You have various United States securities? Mr. LINCOLN. Yes, sir.

Senator SPARKMAN. And you simply think that, from a hardheaded business standpoint, these securities would stand in the same field as the others?

Mr. LINCOLN. And another thing: I think, if you have time to look that through, you are going to find a basic value in these houses. What we are beginning to think of in an insurance company, we ought to think more in terms of basic values of the houses and less of the individuals, not only because the individual is important but the kind of houses we are going to build here, I think, will have, as the report shows, a marked lesser degree of depreciation, 1.25. Outside places have told us we should not have more than a 1.25 depreciation on this stuff because it is not built to make money on; it is built to get the best kind of house the gentleman is going to live in.

Senator FLANDERS. One of the advantages of the long-term Government bond for insurance companies has been that it is fluid capital. They could invest in it under present conditions and be assured of the maintenance of its value; and, when they had the higher rates of return available, they can sell them on the market and get higher rates of return. I do not know whether these debentures would be similarly fluid capital or not.

Mr. LINCOLN. I do not see why in the normal course of events they would not be. Didn't you find out in Sweden that that kind of paper was one of most attractive papers for the investment of banking committees. By the way, Senators, we also paid union wages here, and we think with these figures of just a small development of houses, if this was multiplied there would be vastly greater savings.

Of course, we have our own lumber mills, and, then, our purchases together. We have had offers from electrical companies, and others, to sell us the whole internal thing cooperatively as soon as we get large enough. We think there are considerable savings, far and above what we have today. We think the record so far is pretty good.

Senator SPARKMAN. In other words, you think the cost of building can be cut?

Mr. LINCOLN. We are pretty sure, even more than we would like to indicate now.

Senator SPARKMAN. You have compared the prices in Sweden with the prices in this country. We have often heard of the tremendous job we are doing in house building in this country, and we are all very

proud of it. We believe that we broke the million mark in this past year, although the official figures, I believe, are not yet out.

I was interested in a news item a few days ago I wonder if you saw it. I would like to read it into the record at this time.

It is entitled "United States Housing Program Now Fourth in World." I think others of us have felt it was first, but it is fourth. This is the item dated "New York, January 9—(NaNA)":

The United States house-building industry is booming, but nevertheless it ranks fourth in the world in number of units built per year for each 1,000 inhabitants. Dagens Nyheter, of Stockholm, reports, according to figures obtained throughout the world, that Sweden's house-building program is the most intensive in the world, with 32 units in 1948 and 311⁄2 units in 1949 built for every 1,000 population. New Zealand ranked second with 24 units per 1,000 persons in 1943, and Canada was third with 24.

I believe in this country we built only about seven.

Mr. LINCOLN. Seven?

Senator SPARKMAN. About seven per thousand population. I just thought that was something we might be interested in.

Mr. LINCOLN. We think this gives us an opportunity to do for the urban areas almost comparable to what we have done with REA, and I think it will be a great development.

Senator SPARKMAN. And certainly not showing any more, not giving any greater help; in fact, not as much help, are we?

Mr. LINCOLN. No, sir.

Senator SPARKMAN. And so far as any group benefit, we are not offering to do anything more; in fact, not even as much here in the housing field as we have done in the agricultural field, or REA, or many other places?

Mr. LINCOLN. Right; and I just hope, Senator, as I have read the papers, you are going to be told you are putting the United States into socialism; that is the same story we were told about REA in the early days. We have not seen any of them go out of business, and I am sure they will create an over-all increase in business and employ

ment.

Senator SPARKMAN. Of course, we do not have to leave the private housing field. When FHA was put in, they said the same thing? Mr. LINCOLN. Yes.

Senator SPARKMAN. And even after it had been enacted into law, and would not invest in it for a long time until the Government went in and established a secondary market.

Senator FLANDERS. My own insurance company, National Life, which is composed of hard-headed nonunion dealers, broke the ice on FHA mortgages.

Senator SPARKMAN. Thank you very much, Mr. Lincoln.

Without objection, at this point, there may be inserted into the record the statement of cost-value comparisons.

1 Calculated with garage at 75 percent of actual, and basement at 50 percent of actual.

2 Best available estimate.

Senator SPARKMAN. Our next witness is Admiral Thornton C. Miller, inspector of chaplains of the United States Navy. We are glad to have you here.

Senator FLANDERS. I will be glad to know what you find on inspection.

STATEMENT OF REAR ADM. THORNTON C. MILLER, CHAPLAIN CORPS, UNITED STATES NAVY

Admiral MILLER. That is a great story, sir.

Senator FLANDERS. But not pertinent to our inquiry.

Senator SPARKMAN. Do you have an assistant with you that you would like to bring around?

Admiral MILLER. No, sir; I have not.

Senator SPARKMAN. Do you have a prepared statement?

Admiral MILLER. No, sir.

Senator SPARKMAN. Áll right, sir; you may be seated, if you wish, and just proceed in your own way.

Admiral MILLER. I have spent about 30 years working with families in the service of the lower pay brackets, and in 1938 in San Diego we had been having some serious difficulties as to discipline.

We made a survey, and discovered that the major portion of our disciplinary problems came from the families who were living in units which might be called almost slum units, because of their low pay,

and the places they were living. As a result of that, we ran onto the idea that we might call some of our families together and see if we could not help each other in improving the housing situation.

At that time we organized a Navy Homebuilders' Cooperative, a nonprofit organization, and it was incorporated in the State of California on the 11th day of October 1948. We started out, and these enlisted men got together and built 16 homes, averaging from $2,200 to $2,800.

The electrical union, the plumbers' union, and other unions in the city, after we contacted them, would permit a man to go in and work in his own house, and the contractor would give him the same salary he would pay an electrician or a plumber, or a man doing that similar type of work.

He could turn the check right in on his home.

In this cooperative, then, we built these first 16 houses. I remember so distinctly the results. We had some problem boys, with families. When they built a house they ceased to be a problem. It was one of the finest morale boosters we had ever had.

I might tell you this, that over 50 percent of the boys who started out in this very small cooperative became commissioned officers in World War II.

Now, since the war, the cooperative, I understand, has picked up where it left off, and they are building many houses now. I took the matter up with the Chief of Naval Personnel, who is always interested we are always interested in the housing of our personnel, and it has always been a serious problem. I took it up with Vice Admiral Sprague, and he heard my story and thought it was interesting, but not until he went out to the west coast, and was on duty as commander of the Air Force of the Pacific Fleet did he have an opportunity to investigate this particular situation.

I should like to read for you three paragraphs from a letter written to me by him recently about the Navy Home-Builders' Cooperative. I had an opportunity yesterday to look at four of the houses under construction under the cooperative plan with which you are so familiar. My guides were Charlie Hatcher and David Rubenstein.

You would be proud to see the houses they are currently working on. It appears that they will cost about $9 a square foot, and are of excellent workmanship and material throughout. Houses of similar character would cost between $10,000 and $12,000, but will cost the co-op owner in the neighborhood of $7,350. It is really a remarkable showing.

In addition to the above, I would like to suggest that you be very helpful to these boys, and if you could make a visit out here and exchange ideas, you might help them in future expansion of the program.

Naturally, being a chaplain, my interest is in the individual, and his morale, and the only thing that I am competent in saying at this place here is that our Government will stand long on the character and morale of the individual citizen, and if such a program as I understand you are contemplating here is put into effect, where you do not hand the man some money but you give him an opportunity, as an individual, to become self-respecting and do something for himself, and instead of paying exorbitant rent he pays on this house he is building, it is his own, and his morale is changed.

He becomes a responsible citizen. He assumes more responsibility. He is more capable of doing the thing that he ought to do as a good American citizen.

I want to close my remarks by saying that we did not believe it was a good plan to pick out an area and build it all up as a Navy community. These boys went any place they wanted to and got a lot and built a house.

It made them a part of the community. Their children were in the schools. They were on the school boards, or in the Parent-Teachers' Association. They had a feeling of being good Americans.

Senator SPARKMAN. Admiral, two of the gentlemen connected with this particular cooperative called me, Saturday I believe it wasFriday or Saturday-and talked with me about it. I believe one of the gentlemen was named Hatcher.

Admiral MILLER. Hatcher. He was an enlisted man then. He is now a retired officer.

Senator SPARKMAN. But he is active in the operation of this project? Admiral MILLER. One of the original members of this project. Senator SPARKMAN. And another man named Rubenstein? Admiral MILLER. He is the man they contracted with to build for them. He is a contractor in that community.

Senator SPARKMAN. Most of my conference was with Mr. Hatcher, and I gathered he was the one who represented the group. He told me that he wished very much that he could come to Washington to tell of their experience out there, but unfortunately they did not have the funds with which to do it, but he wanted to tell me over the telephone.

He just wanted to bear testimony to the fact that such a project was feasible, that it had been administered well there, and successfully. The payments had been met, and it was a working project.

Now, he made reference to something, and I wonder if you can give us a little light on this. It may be that Senator Flanders or Senator Bricker or some other one would know this.

He said that under a law that the State of California passed they found it possible to get 3 percent money. I don't think I am misunderstanding it, but can you tell us just what he referred to?

Admiral MILLER. I understand that California did pass a law loaning a certain amount of money for 21 years at 3 percent.

it?

Senator SPARKMAN. Then the State itself lends the money; is that

Admiral MILLER. That is something new.

Senator SPARKMAN. I understood him to say they got 3 percent money under a law that the State of California had passed.

Admiral MILLER. That is something entirely new. The way we worked in the beginning, and have worked up until almost the present, is under the normal set-up of the FHA.

Senator SPARKMAN. And borrowed funds that way?

Admiral MILLER. Our cooperative had two plans, one to help the individual get the necessary down payment, or own his lot, or whatever was necessary to meet the FHA requirements.

The other was to get a contractor who would work on us, and instead of charging a flat 10 percent per house, if we built 50 houses, we would charge probably 6 or 4 or 5 percent, and a man could help in that project himself if he got 30 days' leave to do it.

Senator SPARKMAN. In other words, it was a cooperative undertaking all the way through, and according to your experience it has worked out successfully, very successfully.