"But the very vigor of the recovery in both durable goods and
consumers' goods brought into the picture early in certain highly
undesirable practices, which were in large part responsible for the
economic decline which began in the later months of that year.
Again production outran the ability to buy.
"There were many reasons for this overproduction. One of them was
fear--fear of war abroad, fear of inflation, fear of nation-wide
strikes. None of these fears have been borne out.
". . .Production in many important lines of goods outran the
ability of the public to purchase them. For example, through the
winter and spring of 1937 cotton factories in hundreds of cases
were running on a three-shift basis, piling up cotton goods in the
factory, and in the hands of middle men and retailers. For example,
also, automobile manufacturers not only turned out a normal
increase of finished cars, but encouraged the normal increase to
run into abnormal figures, using every known method to push their
sales. This meant, of course, that the steel mills of the nation
ran on a twenty-four hour basis, and the tire companies and cotton
factories and glass factories and others speeded up to meet the
same type of abnormally stimulated demand. The buying power of the
nation lagged behind.
"Thus by the autumn of 1937, last autumn, the nation again had
stocks on hand which the consuming public could not buy because the
purchasing power of the consuming public had not kept pace with the
production.
"During the same period. . . the prices of many vital products had
risen faster than was warranted. . . . In the case of many
commodities the price to the consumer was raised well above the
inflationary boom prices of 1929. In many lines of goods and
materials, prices got so high that buyers and builders ceased to
buy or to build.
". . . The economic process of getting out the raw materials,
putting them through the manufacturing and finishing processes,
selling them to the retailers, selling them to the consumer, and
finally using them, got completely out of balance.
". . . The laying off of workers came upon us last autumn and has
been continuing at such a pace ever since that all of us,
government and banking and business and workers, and those faced
with destitution, recognize the need for action."
All of this I said to the Congress today and I repeat it to you,
the people of the country tonight.
I went on to point out to the Senate and the House of
Representatives that all the energies of government and business
must be directed to increasing the national income, to putting more
people into private jobs, to giving security and a feeling of
security to all people in all walks of life.
I am constantly thinking of all our people--unemployed and employed
alike--of their human problems of food and clothing and homes and
education and health and old age. You and I agree that security is
our greatest need; the chance to work, the opportunity of making a
reasonable profit in our business--whether it be a very small
business or a larger one--the possibility of selling our farm
products for enough money for our families to live on decently. I
know these are the things that decide the well-being of all our
people.
Therefore, I am determined to do all in my power to help you attain
that security and because I know that the people themselves have a
deep conviction that secure prosperity of that kind cannot be a
lasting one except on a basis of business fair dealing and a basis
where all from the top to the bottom share in the prosperity. I
repeated to the Congress today that neither it nor the Chief
Executive can afford "to weaken or destroy great reforms which,
during the past five years, have been effected on behalf of the
American people. In our rehabilitation of the banking structure and
of agriculture, in our provisions for adequate and cheaper credit
for all types of business, in our acceptance of national
responsibility for unemployment relief, in our strengthening of the
credit of state and local government, in our encouragement of
housing, and slum clearance and home ownership, in our supervision
of stock exchanges and public utility holding companies and the
issuance of new securities, in our provision for social security,
the electorate of America wants no backward steps taken.
"We have recognized the right of labor to free organization, to
collective bargaining; and machinery for the handling of labor
relations is now in existence. The principles are established even
though we can all admit that, through the evolution of time,
administration and practices can be improved. Such improvement can
come about most quickly and most peacefully through sincere efforts
to understand and assist on the part of labor leaders and employers
alike.
"The never-ceasing evolution of human society will doubtless bring
forth new problems which will require new adjustments. Our
immediate task is to consolidate and maintain the gains achieved.
"In this situation there is no reason and no occasion for any
American to allow his fears to be aroused or his energy and
enterprise to be paralyzed by doubt or uncertainty."
I came to the conclusion that the present-day problem calls for
action both by the government and by the people, that we suffer
primarily from a failure of consumer demand because of lack of
buying power. Therefore it is up to us to create an economic
upturn.
"How and where can and should the government help to start an
upward spiral?"
I went on in my message today to propose three groups of measures
and I will summarize my recommendations.
First, I asked for certain appropriations which are intended to
keep the government expenditures for work relief and similar
purposes during the coming fiscal year at the same rate of
expenditure as at present. That includes additional money for the
Works Progress Administration; additional funds for the Farm
Security Administration; additional allotments for the national
Youth Administration, and more money for the Civilian Conservation
Corps, in order that it can maintain the existing number of camps
now in operation.
These appropriations, made necessary by increased unemployment,
will cost about a billion and a quarter dollars more than the
estimates which I sent to the Congress on the third of January .
Second, I told the Congress that the administration proposes to
make additional bank reserves available for the credit needs of the
country. About one billion four hundred million dollars of gold now
in the treasury will be used to pay these additional expenses of
the government, and three-quarters of a billion dollars of
additional credit will be made available to the banks by reducing
the reserves now required by the Federal Reserve Board.
These two steps--taking care of relief needs and adding to bank
credits--are in our best judgment insufficient by themselves to
start the nation on a sustained upward movement.
Therefore, I came to the third kind of government action which I
consider to be vital. I said to the Congress:
"You and I cannot afford to equip ourselves with two rounds of
ammunition where three rounds are necessary. If we stop at relief
and credit, we may find ourselves without ammunition before the
enemy is routed. If we are fully equipped with the third round of
ammunition, we stand to win the battle against adversity."
This third proposal is to make definite additions to the purchasing
power of the nation by providing new work over and above the
continuing of the old work.
First, to enable the United States Housing Authority to undertake
the immediate construction of about three hundred million dollars
of additional slum clearance projects.
Second, to renew a public works program by starting as quickly as
possible about one billion dollars worth of needed permanent public
improvements in our states, and their counties and cities.
Third, to add one hundred million dollars to the estimate for
federal aid highways in excess of the amount I recommended in
January.
Fourth, to add thirty-seven million dollars over and above the
former estimate of sixty-three million for flood control and
reclamation.
Fifth, to add twenty-five million dollars additional for federal
buildings in various parts of the country.
In recommending this program I am thinking not only of the
immediate economic needs of the people of the nation, but also of
their personal liberties--the most precious possession of all
Americans. I am thinking of our democracy and of the recent trend
in other parts of the world away from the democratic ideal.
Democracy has disappeared in several other great nations--
disappeared not because the people of those nations disliked
democracy, but because they had grown tired of unemployment and
insecurity, of seeing their children hungry while they sat helpless
in the face of government confusion and government weakness through
lack of leadership in government. Finally, in desperation, they
chose to sacrifice liberty in the hope of getting something to eat.
We in America know that our own democratic institutions can be
preserved and made to work. But in order to preserve them we need
to act together, to meet the problems of the nation boldly, and to
prove that the practical operation of democratic government is
equal to the task of protecting the security of the people.
Not only our future economic soundness but the very soundness of
our democratic institutions depends on the determination of our
government to give employment to idle men. The people of America
are in agreement in defending their liberties at any cost, and the
first line of that defense lies in the protection of economic
security. Your government, seeking to protect democracy, must prove
that government is stronger than the forces of business depression.
History proves that dictatorships do not grow out of strong and
successful governments but out of weak and helpless governments. If
by democratic methods people get a government strong enough to
protect them from fear and starvation, their democracy succeeds,
but if they do not, they grow impatient. Therefore, the only sure
bulwark of continuing liberty is a government strong enough to
protect the interests of the people, and a people strong enough and
well enough informed to maintain its sovereign control over its
government.
We are a rich Nation; we can afford to pay for security and
prosperity without having to sacrifice our liberties into the
bargain.
In the first century of our republic we were short of capital,
short of workers and short of industrial production; but we were
rich in free land, free timber and free mineral wealth. The federal
government rightly assumed the duty of promoting business and
relieving depression by giving subsidies of land and other
resources.
Thus, from our earliest days we have had a tradition of substantial
government help to our system of private enterprise. But today the
government no longer has vast tracts of rich land to give away and
we have discovered, too, that we must spend large sums of money to
conserve our land from further erosion and our forests from further
depletion. The situation is also very different from the old days,
because now we have plenty of capital, banks and insurance
companies loaded with idle money; plenty of industrial productive
capacity and many millions of workers looking for jobs. It is
following tradition as well as necessity, if government strives to
put idle money and idle men to work, to increase our public wealth
and to build up the health and strength of the people--and to help
our system of private enterprise to function.
It is going to cost something to get out of this recession this way
but the profit of getting out of it will pay for the cost several
times over. Lost working time is lost money. Every day that a
workman is unemployed, or a machine is unused, or a business
organization is marking time, it is a loss to the nation. Because
of idle men and idle machines this Nation lost one hundred billion
dollars between 1929 and the Spring of 1933, in less than four
years. This year you, the people of this country, are making about
twelve billion dollars less than last year.
If you think back to the experiences of the early years of this
administration you will remember the doubts and fears expressed
about the rising expenses of government. But to the surprise of the
doubters, as we proceeded to carry on the program which included
Public Works and Work Relief, the country grew richer instead of
poorer.
It is worthwhile to remember that the annual national people's
income was thirty billion dollars more last year in 1937 than it
was in 1932. It is true that the national debt increased sixteen
billion dollars, but remember that in that increase must be
included several billion dollars worth of assets which eventually
will reduce that debt and that many billion dollars of permanent
public improvements--schools, roads, bridges, tunnels, public
buildings, parks and a host of other things--meet your eye in every
one of the thirty-one hundred counties in the United States.
No doubt you will be told that the government spending program of
the past five years did not cause the increase in our national
income. They will tell you that business revived because of private
spending and investment. That is true in part, for the government
spent only a small part of the total. But that government spending
acted as a trigger to set off private activity. That is why the
total addition to our national production and national income has
been so much greater than the contribution of the government
itself.
In pursuance of that thought I said to the Congress today:
"I want to make it clear that we do not believe that we can get an
adequate rise in national income merely by investing, and lending
or spending public funds. It is essential in our economy that
private funds must be put to work and all of us recognize that such
funds are entitled to a fair profit."
As national income rises, "let us not forget that government
expenditures will go down and government tax receipts will go up."
The government contribution of land that we once made to business
was the land of all the people. And the government contribution of
money which we now make to business ultimately comes out of the
labor of all the people. It is, therefore, only sound morality, as
well as a sound distribution of buying power, that the benefits of
the prosperity coming from this use of the money of all the people
ought to be distributed among all the people--at the bottom as well
as at the top. Consequently, I am again expressing my hope that the
Congress will enact at this session a wage and hour bill putting a
floor under industrial wages and a limit on working hours--to
ensure a better distribution of our prosperity, a better
distribution of available work, and a sounder distribution of
buying power.
You may get all kinds of impressions in regard to the total cost of
this new program, or in regard to the amount that will be added to
the net national debt.
It is a big program. Last autumn in a sincere effort to bring
government expenditures and government income into closer balance,
the Budget I worked out called for sharp decreases in government
spending.
In the light of present conditions those estimates were far too
low. This new program adds two billion and sixty-two million
dollars to direct treasury expenditures and another nine hundred
and fifty million dollars to government loans--the latter sum,
because they are loans, will come back to the treasury in the
future.
The net effect on the debt of the government is this--between now
and July 1, 1939--fifteen months away--the treasury will have to
raise less than a billion and a half dollars of new money.
Such an addition to the net debt of the United States need not give
concern to any citizen, for it will return to the people of the
United States many times over in increased buying power and
eventually in much greater government tax receipts because of the
increase in the citizen income.
What I said to the Congress in the close of my message I repeat to
you.
"Let us unanimously recognize the fact that the federal debt,
whether it be twenty-five billions or forty billions, can only be
paid if the nation obtains a vastly increased citizen income. I
repeat that if this citizen income can be raised to eighty billion
dollars a year the national government and the overwhelming
majority of state and local governments will be definitely 'out of
the red.' The higher the national income goes the faster will we be
able to reduce the total of federal and state and local debts.
Viewed from every angle, today's purchasing power--the citizens'
income of today--is not at this time sufficient to drive the
economic system of America at higher speed. Responsibility of
government requires us at this time to supplement the normal
processes and in so supplementing them to make sure that the
addition is adequate. We must start again on a long steady upward
incline in national income.
". . . And in that process, which I believe is ready to start, let
us avoid the pitfalls of the past--the overproduction, the
overspeculation, and indeed all the extremes which we did not
succeed in avoiding in 1929. In all of this, government cannot and
should not act alone. Business must help. And I am sure business
will help.
"We need more than the materials of recovery. We need a united
national will.
"We need to recognize nationally that the demands of no group,
however just, can be satisfied unless that group is prepared to
share in finding a way to produce the income from which they and
all other groups can be paid. . . . You, as the Congress, I, as the
President, must by virtue of our offices, seek the national good by
preserving the balance between all groups and all sections.
"We have at our disposal the national resources, the money, the
skill of hand and head to raise our economic level--our citizens'
income. Our capacity is limited only by our ability to work
together. What is needed is the will.
"The time has come to bring that will into action with every
driving force at our command. And I am determined to do my share.
". . . Certain positive requirements seem to me to accompany the
will--if we have that will.
"There is placed on all of us the duty of self-restraint. . . .
That is the discipline of a democracy. Every patriotic citizen must
say to himself or herself, that immoderate statement, appeals to
prejudice, the creation of unkindness, are offenses not against an
individual or individuals, but offenses against the whole
population of the United States. . . .
"Self-restraint implies restraint by articulate public opinion,
trained to distinguish fact from falsehood, trained to believe that
bitterness is never a useful instrument in public affairs. There
can be no dictatorship by an individual or by a group in this
Nation, save through division fostered by hate. Such division there
must never be."
And finally I should like to say a personal word to you.
I never forget that I live in a house owned by all the American
people and that I have been given their trust.
I try always to remember that their deepest problems are human. I
constantly talk with those who come to tell me their own points of
view; with those who manage the great industries and financial
institutions of the country; with those who represent the farmer
and the worker; and often with average citizens without high
position who come to this house. And constantly I seek to look
beyond the doors of the White House, beyond the officialdom of the
national capital, into the hopes and fears of men and women in
their homes. I have travelled the country over many times. My
friends, my enemies, my daily mail bring to me reports of what you
are thinking and hoping. I want to be sure that neither battles nor
burdens of office shall ever blind me to an intimate knowledge of
the way the American people want to live and the simple purposes
for which they put me here.
In these great problems of government I try not to forget that what
really counts at the bottom of it all is that the men and women
willing to work can have a decent job to take care of themselves
and their homes and their children adequately; that the farmer, the
factory worker, the storekeeper, the gas station man, the
manufacturer, the merchant--big and small--the banker who takes
pride in the help that he can give to the building of his
community--that all of these can be sure of a reasonable profit and
safety for the savings they earn--not today nor tomorrow alone, but
as far ahead as they can see.
I can hear your unspoken wonder as to where we are headed in this
troubled world. I cannot expect all of the people to understand all
of the people's problems; but it is my job to try to those
problems.
I always try to remember that reconciling differences cannot
satisfy everyone completely. Because I do not expect too much, I am
not disappointed. But I know that I must never give up--that I must
never let the greater interest of all the people down, merely
because that might be for the moment the easiest personal way out.
I believe that we have been right in the course we have charted. To
abandon our purpose of building a greater, a more stable and a more
tolerant America would be to miss the tide and perhaps to miss the
port. I propose to sail ahead. I feel sure that your hopes and your
help are with me. For to reach a port, we must sail--sail, not lie
at anchor, sail, not drift.
June 24, 1938.
Our government, happily, is a democracy. As part of the democratic
process, your President is again taking an opportunity to report on
the progress of national affairs, to report to the real rulers of
this country--the voting public.
The Seventy-Fifth Congress, elected in November, 1936, on a
platform uncompromisingly liberal, has adjourned. Barring
unforeseen events, there will be no session until the new Congress,
to be elected in November, assembles next January.
On the one hand, the Seventy-Fifth Congress has left many things
undone.
For example, it refused to provide more businesslike machinery for
running the Executive Branch of the government. The Congress also
failed to meet my suggestion that it take the far-reaching steps
necessary to put the railroads of the country back on their feet.
But, on the other hand, the Congress, striving to carry out the
platform on which most of its members were elected, achieved more
for the future good of the country than any Congress did between
the end of the World War and the spring of 1933.