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Senator BRICKER. How do you finance, through your own organization?

Mr. LINCOLN. Yes; and we just feel that our experience on this electrical thing, and this little pilot plant, plus some others that are here too, to us is evidence that we can lick this housing thing, develop individual houses as against the rows of houses that look like hog houses in some of the speculative developments, and really do something Senator FLANDERS. May I inquire, Mr. Lincoln, whether you

would feel that the Maybank amendments offer terms that your insurance companies would be justified in investing in?

Mr. LINCOLN. You mean to buy the sureties of the mortgage?
Senator FLANDERS. Yes.
Mr. LINCOLN. I do not think there is any question about it, sir.
Senator FLANDERS. It is justified?

Mr. LINCOLN. Yes; if it is legal, and it proposed to be a legal investment.

Senator FLANDERS. I mean, from the financial standpoint, would you feel justified?

Mr. LINCOLN. I think there is no reason why we should not.

Senator FLANDERS. Would you not feel you should perhaps investigate your fund. Why would you not go into FHA mortgage, for instance? Mr. LINCOLN. We are doing both.

Senator FLANDERS. You get a higher return on the FHA than you would on these?

Mr. LINCOLN. Yes, but we are cooperative, Senator. We are not only thinking in terms of return. We think here is a great need that we can assist and develop it.

Any insurance executive has, of course, to take a good look at what the returns on his investment are.

Senator FLANDERS. Yes.

Mr. LINCOLN. But at the same time—and this is evidence of what we have done up to date—we feel that these great aggregates of capital somehow have got to be directed to help economic and social needs. Otherwise, something else is going to happen.

Senator FLANDERS. One of the things which interested me in Sweden was that, so long as the short opportunity we had for investigating it, the whole thing seems to be on a more or less hard-headed business basis, without the social program entering into it as an element.

Mr. LINCOLN. Well, Senator, I do not know about Sweden, but I think Senator Bricker knows from our record in Ohio-although we have been cooperative, I think we have always been hard-headed.

Senator BRICKER. I will testify to that.

Mr. LINCOLN. We have just had to be, and we would not have accumulated a business of $100,000,000 with surpluses that we have now got unless we had at least paid attention to that part of it. In fact, I do not think there is any question. In REA they said we could not do it. Yet, we cut the cost of electric light lines in two. We have done it in these other things. We are cutting the cost of insurance, and growing faster than almost any other company in the country, and we think we can do the same thing on this housing thing, and we also, Senator, feel very definitely that the cooperative group somehow has got to do what you say.

Now, I do not know that this thing will be it, but we are looking forward in the development of this HSB thing, which I think is a sort of agency that guides and approves plans to see that the people are not led astray.

Senator FLANDERS. I may say we feel we do have in your experience an equivalent to the Swedish HSB, which is of course a nongovernmental body, a strictly cooperative body.

Senator BRICKER. It is more under governmental control than we have here.

Senator FLANDERS. But not Government subsidy.

Senator BRICKER. No, but under Government direction as to type, size, and location?

Mr. LINCOLN. There is something the Government has not woken up to. In the REA, in the banking cooperatives, we have got a perfect development whereby the Government can come into a purely business basis, and then get out at the right time when we pay off our loans, and I think that is very important, to have an end point. That is what we have got in our cooperative development.

I do not see how it can fail to answer all the arguments of free enterprise and private enterprise.

Senator FLANDERS. I wonder, Mr. Chairman, if I might make one of my occasional observations?

Senator SPARKMAN. We are always delighted to have your observations, casual or otherwise.

Senator FLANDERS. For a great many years, I have felt, Mr. Chairman, that the cooperative movement was the American alternative to the individual private business set-up of our industry and distributing organizations, and all the rest, rather than state socialism, or communism, or any form of it. It is the alternative. It is the American alternative.

I have been disturbed by its growth with what seemed to me to be certain factors to which private business is not allowed; and, of course, I am referring to taxation, and I am referring particularly to the ability to plow back earnings, instead of having made a contribution to the expenses of the Federal Government.

I wish that the cooperative movement could get along without that particular governmental privilege.

Mr. LINCOLN. Senator, I think you and I ought to spend an evening sometime, and I think I could clear you up on that point. The thing that too few people understand is that it is only certain agricultural groups that have that privilege. These insurance companies that I represent pay every single tax that any other mutual company does. The consumer cooperatives pay all the taxes that any other group does. I think the only point is this double taxation of dividends, but again I say the answer to that is to cure it on the other side rather than make us do the same thing. Senator BRICKER. I agree with you there.

. Mr. LINCOLN. I think you will find that even with some of the agricultural cooperatives—the benefit there when you count the cost of records—and the fact we cannot do more than a certain amount of business with some members, I think, is a pretty good answer to the thing.

In the beginning, of course, that thing was done, remember, to try to make some contribution to this agricultural problem, which is not involved yet, by the way.

Senator BRICKER. I think in Ohio the REA was given a 50percent tax credit; were they not?

Mr. LINCOLN. You mean on their income?

Senator BRICKER. On the real-estate taxes, and property taxes. Aren't they only taxed at 50 percent of value?

Mr. LINCOLN. I think, it is so long since I have had any connection with that. I have forgotten that.

Senator BRICKER. I think about 8 or 10 years ago they were given a 50-percent credit on local taxes. It may have been repealed since; I have not checked.

Senator SPARKMAN. Of course, that was a State provision?

Senator BRICKER. Yes; I think they were given preferential treatment in that respect.

Senator FLANDERS. I do want to say your reduction in the cost of constructing electric lines for electric distribution is an example of good, straight American, successful American, competition.

Mr. LINCOLN. If I had time, I would tell you a story on telephones, but I think that is getting awav from the subject.

Senator SPARKMAN. Are there any further questions?
May I ask you just a question or two?

You may have said, “Is this Amsden Heights development an actual, going concern now?”

Mr. LINCOLN. Yes, sir.
Senator SPARKMAN. When was it built?
Mr. LINCOLN. We started last spring.
Senator SPARKMAN. But they have already been built?

Mr. LINCOLN. Yes; we have got 38 houses, and are going to have to build 150 more,

Senator SPARKMAN. And they are occupied now?
Mr. LINCOLN. They are occupied at the present time.

Senator FLANDERS. Whenever I look at any of these new housing developments, I see you have got a street there, probably an old street. You have a curved street here, and another one here.

When I see aerial views of any of these new housing developments, public or private, or whatever they may be, I cannot help wondering how, when I drive up and want to find the given address, how in Sam Hill I am ever to find the street and number. I think you will have to have licensed guides for strangers.

Mr. LINCOLN. We have good marked streets, numbers and everything.

Senator SPARKMAN. Mr. Lincoln, I want to ask you another question or two. Senator Flanders was asking you whether or not you felt your company would be justified, from a business standpoint, to invest in these securities. Do you have in your portfolio other Government securities?

Senator SPARKMAN. United States Government securities?
Mr. LINCOLN. Most of them.
Senator SPARKMAN. A great many of them?

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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 com

, mittee 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 såvings, 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.

Senátor 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 3132 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 employment.

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


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 hård-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.

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