(a) Extension of Price Control Act.
Today inflation is our greatest immediate domestic problem. So far the
fight against inflation has been waged successfully. Since May 1943,
following President Roosevelt's "hold the line" order and in the face of
the greatest pressures which this country has ever seen, the cost of living
index has risen only three percent. Wholesale prices in this same period
have been held to an increase of two and one-half percent.
This record has been made possible by the vigorous efforts of the agencies
responsible for this program. But their efforts would have been fruitless
if they had not had the solid support of the great masses of our people.
The Congress is to be congratulated for its role in providing the
legislation under which this work has been carried out.
On VJ-day it was clear to all thinking people that the danger of inflation
was by no means over. Many of us can remember vividly our disastrous
experience following World War I. Then the very restricted wartime controls
were lifted too quickly, and as a result prices and rents moved more
rapidly upward. In the year and a half following the armistice, rents,
food, and clothing shot to higher and still higher levels.
When the inevitable crash occurred less than two years after the end of the
war, business bankruptcies were widespread. Profits were wiped out.
Inventory losses amounted to billions of dollars. Farm income dropped by
one-half. Factory pay rolls dropped 40 percent, and nearly one-fifth of all
our industrial workers were walking the streets in search of jobs. This was
a grim greeting, indeed, to offer our veterans who had just returned from
overseas.
When I addressed the Congress in September, I emphasized that we must
continue to hold the price line until the production of goods caught up
with the tremendous demands. Since then we have seen demonstrated the
strength of the inflationary pressures which we have to face.
Retail sales in the closing months of 1945 ran 12 percent above the
previous peak for that season, which came in 1944. Prices throughout the
entire economy have been pressing hard against the price ceilings. The
prices of real estate, which cannot now be controlled under the law, are
rising rapidly. Commercial rents are not included in the present price
control law and, where they are not controlled by State law, have been
increasing, causing difficulties to many businessmen.
It will be impossible to maintain a high purchasing power or an expanding
production unless we can keep prices at levels which can be met by the vast
majority of our people. Full production is the greatest weapon against
inflation, but until we can produce enough goods to meet the threat of
inflation the Government will have to exercise its wartime control over
prices.
I am sure that the people of the United States are disturbed by the demands
made by several business groups with regard to price and rent control.
I am particularly disturbed at the effect such thinking may have on
production and employment. If manufacturers continue to hold back goods and
decline to submit bids when invited--as I am informed some are doing--in
anticipation of higher prices which would follow the end of price controls,
we shall inevitably slow down production and create needless unemployment.
On the other hand, there are the vast majority of American businessmen who
are not holding back goods, but who need certainty about the Government
pricing policy in order to fix their own long-range pricing policies.
Businessmen are entitled therefore to a dear statement of the policy of the
Government on the subject. Tenants and housewives, farmers and
workers--consumers in general--have an equal right.
We are all anxious to eliminate unnecessary controls just as rapidly as we
can do so. The steps that we have already taken in many directions toward
that end are a clear indication of our policy.
The present Price Control Act expires on June 30, 1946. If we expect to
maintain a steady economy we shall have to maintain price and rent control
for many months to come. The inflationary pressures on prices and rents,
with relatively few exceptions, are now at an all-time peak. Unless the
Price Control Act is renewed there will be no limit to which our price
levels would soar. Our country would face a national disaster.
We cannot wait to renew the act until immediately before it expires.
Inflation results from psychological as well as economic conditions. The
country has a clear right to know where the Congress stands on this
all-important problem. Any uncertainty now as to whether the act will be
extended gives rise to price speculation, to withholding of goods from the
market in anticipation of rising prices, and to delays in achieving maximum
production.
I do not doubt that the Congress will be beset by many groups who will urge
that the legislation that I have proposed should either be eliminated or
modified to the point where it is nearly useless. The Congress has a clear
responsibility to meet this challenge with courage and determination. I
have every confidence that it will do so.
I strongly urge that the Congress now resolve all doubts and as soon as
possible adopt legislation continuing rent and price control in effect for
a full year from June 30, 1946.
(b) Food subsidies.
If the price line is to be held, if our people are to be protected against
the inflationary dangers which confront us, we must do more than extend the
Price Control Act. In September we were hopeful that the inflationary
pressures would by this time have begun to diminish. We were particularly
hopeful on food. Indeed, it was estimated that food prices at retail would
drop from 3 to 5 percent in the first six months following the end of the
war.
In anticipation of this decline in food prices, it was our belief that food
subsidies could be removed gradually during the winter and spring months,
and eliminated almost completely by June 30 of this year. It was our
feeling that the food subsidies could be dropped without an increase to the
consumer in the present level of food prices or in the over-all cost of
living.
As matters stand today, however, food prices are pressing hard against the
ceilings. The expected decline in food prices has not occurred, nor is it
likely to occur for many months to come. This brings me to the reluctant
conclusion that food subsidies must be continued beyond June 30, 1946.
If we fail to take this necessary step, meat prices on July 1 will be from
3 to 5 cents higher than their average present levels; butter will be at
least 12 cents a pound higher, in addition to the 5 cents a pound increase
of last fall; milk will increase from 1 to 2 cents a quart; bread will
increase about 1 cent a loaf; sugar will increase over 1 cent a pound;
cheese, in addition to the increase of 4 cents now planned for the latter
part of this month, will go up an additional 8 cents. In terms of
percentages we may find the cost-of-living index for food increased by more
than 8 percent, which in turn would result in more than a 3-percent
increase in the cost of living.
If prices of food were allowed to increase by these amounts, I must make it
clear to the Congress that, in my opinion, it would become extremely
difficult for us to control the forces of inflation.
None of us likes subsidies. Our farmers, in particular, have always been
opposed to them.
But I believe our farmers are as deeply conscious as any group in the land
of the havoc which inflation can create. Certainly in the past eighteen
months there has been no group which has fought any harder in support of
the Government's price control program. I am confident that, if the facts
are placed before them and if they see clearly the evils between which we
are forced to choose, they will understand the reasons why subsidies must
be continued.
The legislation continuing the use of food subsidies into the new fiscal
year should be tied down specifically to certain standards. A very proper
requirement, in my opinion, would be that subsidies be removed as soon as
it is indicated that the cost of living will decline below the present
levels.
(c) Extension of War Powers Act.
The Second War Powers Act has recently been extended by the Congress for
six months instead of for a year. It will now expire, unless further
extended, on June 30, 1946. This act is the basis for priority and
inventory controls governing the use of scarce materials, as well as for
other powers essential to orderly reconversion.
I think that this Administration has given adequate proof of the fact that
it desires to eliminate wartime controls as quickly and as expeditiously as
possible. However, we know that there will continue to be shortages of
certain materials caused by the war even after June 30, 1946. It is
important that businessmen know now that materials in short supply are
going to be controlled and distributed fairly as long as these war-born
shortages continue.
I, therefore, urge the Congress soon to extend the Second War Powers Act.
We cannot afford to wait until just before the act expires next June. To
wait would cause the controls to break down in a short time, and would
hamper our production and employment program.
(d) Small business and competition.
A rising birth rate for small business, and a favorable environment for its
growth, are not only economic necessities but also important practical
demonstrations of opportunity in a democratic free society. A great many
veterans and workers with new skills and experience will want to start in
for themselves. The opportunity must be afforded them to do so. They are
the small businessmen of the future.
Actually when we talk about small business we are talking about almost all
of the Nation's individual businesses. Nine out of every ten concerns fall
into this category, and 45 percent of all workers are employed by them.
Between 30 and 40 percent of the total value of all business transactions
are handled by small business.
It is obvious national policy to foster the sound development of small
business. It helps to maintain high levels of employment and national
income and consumption of the goods and services that the Nation can
produce. It encourages the competition that keeps our free enterprise
economy vigorous and expanding. Small business, because of its flexibility,
assists in the rapid exploitation of scientific and technological
discoveries. Investment in small business can absorb a large volume of
savings that might otherwise not be tapped.
The Government should encourage and is encouraging small-business
initiative and originality to stimulate progress through competition.
During the war, the Smaller War Plants Corporation assisted small concerns
to make a maximum contribution to victory. The work of the Smaller War
Plants Corporation is being carried on in peacetime by the Federal Loan
Agency and the Department of Commerce. The fundamental approach to the job
of encouraging small concerns must be based on:
1. Arrangements for making private and public financial resources available
on reasonable terms.
2. Provision of technical advice and assistance to business as a whole on
production, research, and management problems. This will help equalize
competitive relationships between large and small companies, for many of
the small companies cannot afford expensive technical research, accounting,
and tax advice.
3. Elimination of trade practices and agreements which reduce competition
and discriminate against new or small enterprises.
We speak a great deal about the free enterprise economy of our country. It
is competition that keeps it free. It is competition that keeps it growing
and developing. The truth is that we need far more competition in the
future than we have had in the immediate past.
By strangling competition, monopolistic activity prevents or deters
investment in new or expanded production facilities. This lessens the
opportunity for employment and chokes off new outlets for idle savings.
Monopoly maintains prices at artificially high levels and reduces
consumption which, with lower prices, would rise and support larger
production and higher employment. Monopoly, not being subject to
competitive pressure, is slow to take advantage of technical advances which
would lower prices or improve quality. All three of these monopolistic
activities very directly lower the standard of living--through higher
prices and lower quality of product--which free competition would improve.
The Federal Government must protect legitimate business and consumers from
predatory and monopolistic practices by the vigilant enforcement of
regulatory legislation. The program will be designed to have a maximum
impact upon monopolistic bottlenecks and unfair competitive practices
hindering expansion in employment.
During the war, enforcement of antimonopoly laws was suspended in a number
of fields. The Government must now take major steps not only to maintain
enforcement of antitrust laws but to encourage new and competing
enterprises in every way. The deferred demand of the war years and the
large accumulations of liquid assets provide ample incentive for expansion.
Equalizing of business opportunity, under full and free competition, must
be a prime responsibility in the reconversion period and in the years that
follow. Many leading businessmen have recognized the importance of such
action both to themselves and to the economy as a whole.
But we must do more than break up trusts and monopolies after they have
begun to strangle competition. We must take positive action to foster new,
expanding enterprises. By legislation and by administration we must take
specific steps to discourage the formation or the strengthening of
competition-restricting business. We must have an over-all antimonopoly
policy which can be applied by all agencies of the Government in exercising
the functions assigned to them--a policy designed to encourage the
formation and growth of new and freely competitive enterprises.
Among the many departments and agencies which have parts in the program
affecting business and competition, the Department of Commerce has a
particularly important role. That is why I have recommended a substantial
increase in appropriations for the next fiscal year for this Department.
In its assistance to industry, the Department of Commerce will concentrate
its efforts on these primary objectives: Promotion of a large and
well-balanced foreign trade; provision of improved technical assistance and
management aids, especially for small enterprises; and strengthening of
basic statistics on business operations, both by industries and by regions.
To make new inventions and discoveries available more promptly to all
businesses, small and large, the Department proposes to expand its own
research activities, promote research by universities, improve Patent
Office procedures, and develop a greatly expanded system of field offices
readily accessible to the businesses they serve.
Many gaps exist in the private financial mechanism, especially in the
provision of long-term funds for small- and medium sized enterprises. In
the peacetime economy the Reconstruction Finance Corporation will take the
leadership in assuring adequate financing for small enterprises which
cannot secure funds from other sources. Most of the funds should and will
be provided by private lenders; but the Reconstruction Finance Corporation
will share any unusual risks through guarantees of private loans, with
direct loans only when private capital is unwilling to participate on a
reasonable basis.
(e) Minimum wage.
Full employment and full production may be achieved only by maintaining a
level of consumer income far higher than that of the prewar period. A high
level of consumer income will maintain the market for the output of our
mills, farms, and factories, which we have demonstrated during the war
years that we can produce. One of the basic steps which the Congress can
take to establish a high level of consumer income is to amend the Fair
Labor Standards Act to raise substandard wages to a decent minimum and to
extend similar protection to additional workers who are not covered by the
present act.
Substandard wages are bad for business and for the farmer. Substandard
wages provide only a substandard market for the goods and services produced
by American industry and agriculture.
At the present time the Fair Labor Standards Act prescribes a minimum wage
of 40 cents an hour for those workers who are covered by the act. The
present minimum wage represents an annual income of about $800 to those
continuously employed for 50 weeks--clearly a wholly inadequate budget for
an American family. I am in full accord with the proposal now pending in
the Congress that the statutory minimum be raised immediately to 65 cents
an hour, with further increases to 70 cents after one year and to 75 cents
after two years. I also favor the proposal that the industry committee
procedure be used to set rates higher than 65 cents per hour during the
two-year interval before the 75-cent basic wage would otherwise become
applicable.
The proposed minimum wage of 65 cents an hour would assure the worker an
annual income of about $1,300 a year in steady employment. This amount is
clearly a modest goal. After considering cost-of-living increases in recent
years, it is little more than a 10-cent increase over the present legal
minimum. In fact, if any large number of workers earn less than this
amount, we will find it impossible to maintain the levels of purchasing
power needed to sustain the stable prosperity which we desire. Raising the
minimum to 75 cents an hour will provide the wage earner with an annual
income of $1,500 if he is fully employed.
The proposed higher minimum wage levels are feasible without involving
serious price adjustments or serious geographic dislocations.
Today about 20 percent of our manufacturing wage earners--or about 2
million-earn less than 65 cents an hour. Because wages in most industries
have risen during the war, this is about the same as the proportion-17
percent--who were earning less than 40 cents an hour in 1941.
I also recommend that minimum wage protection be extended to several groups
of workers not now covered. The need for a decent standard of living is by
no means limited to those workers who happen to be covered by the act as it
now stands. It is particularly vital at this period of readjustment in the
national economy and readjustment in employment of labor to extend minimum
wage protection as far as possible.
Lifting the basic minimum wage is necessary, it is justified as a matter of
simple equity to workers, and it will prove not only feasible but also
directly beneficial to the Nation's employers.
(f) Agricultural programs.
The farmers of America generally are entering the crop year of 1946 in
better financial condition than ever before. Farm mortgage debt is the
lowest in 30 years. Farmers' savings are the largest in history. Our
agricultural plant is in much better condition than after World War I. Farm
machinery and supplies are expected to be available in larger volume, and
farm labor problems will be less acute.
The demand for farm products will continue strong during the next year or
two because domestic purchases will be supplemented by a high level of
exports and foreign relief shipments. It is currently estimated that from 7
to 10 percent of the total United States food supply may be exported in the
calendar year 1946.
Farm prices are expected to remain at least at their present levels in the
immediate future, and for at least the next 12 months they are expected to
yield a net farm income double the 1935-39 average and higher than in any
year prior to 1943.
We can look to the future of agriculture with greater confidence than in
many a year in the past. Agriculture itself is moving confidently ahead,
planning for another year of big production, taking definite and positive
steps to lead the way toward an economy of abundance.
Agricultural production goals for 1946 call for somewhat greater acreage
than actually was planted in 1945. Agriculture is prepared to demonstrate
that it can make a peacetime contribution as great as its contribution
toward the winning of the war.
In spite of supplying our armed forces and our allies during the war with a
fifth to a fourth of our total food output, farmers were still able to
provide our civilians with 8 percent more food per capita than the average
for the five years preceding the war. Since the surrender of Japan,
civilian food consumption has risen still further. By the end of 1945 the
amount of the increase in food consumption was estimated to be as high as
15 percent over the prewar average. The record shows that the people of
this country want and need more food and that they will buy more food if
only they have the jobs and the purchasing power. The first essential
therefore in providing fully for the welfare of agriculture is to maintain
full employment and a high level of purchasing power throughout the
Nation.
For the period immediately ahead we shall still have the problem of
supplying enough food. If we are to do our part in aiding the war-stricken
and starving countries some of the food desires of our own people will not
be completely satisfied, at least until these nations have had an
opportunity to harvest another crop. During the next few months the need
for food in the world will be more serious than at any time during the war.
And, despite the large shipments we have already made, and despite what we
shall send, there remain great needs abroad.
Beyond the relief feeding period, there will still be substantial foreign
outlets for our farm commodities. The chief dependence of the farmer,
however, as always, must be upon the buying power of our own people.
The first obligation of the Government to agriculture for the reconversion
period is to make good on its price-support commitments. This we intend to
do, with realistic consideration for the sound patterns of production that
will contribute most to the long-time welfare of agriculture and the whole
Nation. The period during which prices are supported will provide an
opportunity for farmers individually to strengthen their position in
changing over from a wartime to a peacetime basis of production. It will
provide an opportunity for the Congress to review the needs of agriculture
and make changes in national legislation where experience has shown changes
to be needed. In this connection, the Congress will wish to consider
legislation to take the place of the 1937 Sugar Act which expires at the
end of this year. During this period we must do a thorough job of basic
planning to the end that agriculture shall be able to contribute its full
share toward a healthy national economy.
Our long-range agricultural policies should have two main objectives:
First, to assure the people on the farms a fair share of the national
income; and, second, to encourage an agricultural production pattern that
is best fitted to the Nation's needs. To accomplish this second objective
we shall have to take into consideration changes that have taken place and
will continue to take place in the production of farm commodities--changes
that affect costs and efficiency and volume.
What we seek ultimately is a high level of food production and consumption
that will provide good nutrition for everyone. This cannot be accomplished
by agriculture alone. We can be certain of our capacity to produce food,
but we have often failed to distribute it as well as we should and to see
that our people can afford to buy it. The way to get good nutrition for the
whole Nation is to provide employment opportunities and purchasing power
for all groups that will enable them to buy full diets at market prices.
Wherever purchasing power fails to reach this level we should see that they
have some means of getting adequate food at prices in line with their
ability to buy. Therefore, we should have available supplementary programs
that will enable all our people to have enough of the right kind of food.
For example, one of the best possible contributions toward building a
stronger, healthier Nation would be a permanent school-lunch program on a
scale adequate to assure every school child a good lunch at noon. The
Congress, of course, has recognized this need for a continuing school-lunch
program and legislation to that effect has been introduced and hearings
held. The plan contemplates the attainment of this objective with a minimum
of Federal expenditures. I hope that the legislation will be enacted in
time for a permanent program to start with the beginning of the school year
next fall.
We have the technical knowledge and the productive capacity to provide
plenty of good food for every man, woman, and child in the United States.
It is time we made that possibility a reality.
(g) Resource development.
The strength of our Nation and the welfare of the people rest upon the
natural resources of the country. We have learned that proper conservation
of our lands, including our forests and minerals, and wise management of
our waters will add immensely to our national wealth.
The first step in the Government's conservation program must be to find out
just what are our basic resources, and how they should be used. We need to
take, as soon as possible, an inventory of the lands, the minerals, and the
forests of the Nation.
During the war it was necessary to curtail some of our long-range plans for
development of our natural resources, and to emphasize programs vital to
the prosecution of the war. Work was suspended on a number of flood control
and reclamation projects and on the development of our national forests and
parks. This work must now be resumed, and new projects must be undertaken
to provide essential services and to assist in the process of economic
development.
The rivers of America offer a great opportunity to our generation in the
management of the national wealth. By a wise use of Federal funds, most of
which will be repaid into the Treasury, the scourge of floods and drought
can be curbed, water can be brought to arid lands, navigation can be
extended, and cheap power can be brought alike to the farms and to the
industries of our land.
Through the use of the waters of the Columbia River, for example, we are
creating a rich agricultural area as large as the State of Delaware. At the
same time, we are producing power at Grand Coulee and at Bonneville which
played a mighty part in winning the war and which will found a great
peacetime industry in the Northwest. The Tennessee Valley Authority will
resume its peacetime program of promoting full use of the resources of the
Valley. We shall continue our plans for the development of the Missouri
Valley, the Arkansas Valley, and the Central Valley of California.
The Congress has shown itself alive to the practical requirements for a
beneficial use of our water resources by providing that preference in the
sale of power be given to farmers' cooperatives and public agencies. The
public power program thus authorized must continue to be made effective by
building the necessary generating and transmission facilities to furnish
the maximum of firm power needed at the wholesale markets, which are often
distant from the dam sites.
These great developmental projects will open the frontiers of agriculture,
industry, and commerce. The employment opportunities thus offered will also
go far to ease the transition from war to peace.
(h) Public works.
During the war even urgently needed Federal, State, and local construction
projects were deferred in order to release sources for war production. In
resuming public works construction, it is desirable to proceed only at a
moderate rate, since demand for private construction will be abnormally
high for some time. Our public works program should be timed to reach its
peak after demand for private construction has begun to taper off.
Meanwhile, however, plans should be prepared if we are to act promptly when
the present extraordinary private demand begins to run out.
The Congress made money available to Federal agencies for their public
works planning in the fiscal year 1946. I strongly recommend that this
policy be continued and extended in the fiscal year 1947.
State and local governments also have an essential role to play in a
national public works program. In my message of September 6, 1945, I
recommended that the Congress vote such grants to State and local
governments as will insure that each level of government makes its proper
contribution to a balanced public construction program. Specifically, the
Federal Government should aid State and local governments in planning their
own public works programs, in undertaking projects related to Federal
programs of regional development, and in constructing such public works as
are necessary to carry out the various policies of the Federal Government.
Early in 1945 the Congress made available advances to State and local
governments for planning public works projects, and recently made
additional provision to continue these advances through the fiscal year
1946. I believe that further appropriations will be needed for the same
purpose for the fiscal year 1947.
The Congress has already made provision for highway programs. It is now
considering legislation which would expand Federal grants and loans in
several other fields, including construction of airports, hospital and
health centers, housing, water pollution control facilities, and
educational plant facilities. I hope that early action will be taken to
authorize these Federal programs.
With respect to public works of strictly local importance, State and local
governments should proceed without Federal assistance except in planning.
This rule should be subject to review when and if the prospect of highly
adverse general economic developments warrants it.
All loans and grants for public works should be planned and administered in
such a way that they are brought into accord with the other elements of the
Federal Program.
Our long-run objective is to achieve a program of direct Federal and
Federally assisted public works which is planned in advance and
synchronized with business conditions. In this way it can make its greatest
contribution to general economic stability.
(1) National housing program.
Last September I stated in my message to the Congress that housing was high
on the list of matters calling for decisive action.
Since then the housing shortage in countless communities, affecting
millions of families, has magnified this call to action.
Today we face both an immediate emergency and a major postwar problem.
Since VJ-day the wartime housing shortage has been growing steadily worse
and pressure on real estate values has increased. Returning veterans often
cannot find a satisfactory place for their families to live, and many who
buy have to pay exorbitant prices. Rapid demobilization inevitably means
further overcrowding.
A realistic and practical attack on the emergency will require aggressive
action by local governments, with Federal aid, to exploit all opportunities
and to give the veterans as far as possible first chance at vacancies. It
will require continuation of rent control in shortage areas as well as
legislation to permit control of sales prices. It will require maximum
conversion of temporary war units for veterans' housing and their
transportation to communities with the most pressing needs; the Congress
has already appropriated funds for this purpose.
The inflation in the price of housing is growing daily.
As a result of the housing shortage, it is inevitable that the present
dangers of inflation in home values will continue unless the Congress takes
action in the immediate future.
Legislation is now pending in the Congress which would provide for ceiling
prices for old and new houses. The authority to fix such ceilings is
essential. With such authority, our veterans and other prospective home
owners would be protected against a skyrocketing of home prices. The
country would be protected from the extension of the present inflation in
home values which, if allowed to continue, will threaten not only the
stabilization program but our opportunities for attaining a sustained high
level of home construction.
Such measures are necessary stopgaps-but only stopgaps. This emergency
action, taken alone, is good--but not enough. The housing shortage did not
start with the war or with demobilization; it began years before that and
has steadily accumulated. The speed with which the Congress establishes the
foundation for a permanent, long-range housing program will determine how
effectively we grasp the immense opportunity to achieve our goal of decent
housing and to make housing a major instrument of continuing prosperity and
full employment in the years ahead. It will determine whether we move
forward to a stable and healthy housing enterprise and toward providing a
decent home for every American family.
Production is the only fully effective answer. To get the wheels turning, I
have appointed an emergency housing expediter. I have approved
establishment of priorities designed to assure an ample share of scarce
materials to builders of houses for which veterans will have preference.
Additional price and wage adjustments will be made where necessary, and
other steps will be taken to stimulate greater production of bottleneck
items. I recommend consideration of every sound method for expansion in
facilities for insurance of privately financed housing by the Federal
Housing Administration and resumption of previously authorized low-rent
public housing projects suspended during the war.
In order to meet as many demands of the emergency situation as possible, a
program of emergency measures is now being formulated for action. These
will include steps in addition to those already taken. As quickly as this
program can be formulated, announcement will be made.
Last September I also outlined to the Congress the basic principles for the
kind of decisive, permanent legislation necessary for a long-range housing
program.
These principles place paramount the fact that housing construction and
financing for the overwhelming majority of our citizens should be done by
private enterprise. They contemplate also that we afford governmental
encouragement to privately financed house construction for families of
moderate income, through extension of the successful system of insurance of
housing investment; that research be undertaken to develop better and
cheaper methods of building homes; that communities be assisted in
appraising their housing needs; that we commence a program of Federal aid,
with fair local participation, to stimulate and promote the rebuilding and
redevelopment of slums and blighted areas--with maximum use of private
capital. It is equally essential that we use public funds to assist
families of low income who could not otherwise enjoy adequate housing, and
that we quicken our rate of progress in rural housing.
Legislation now under consideration by the Congress provides for a
comprehensive attack jointly by private enterprise, State and local
authorities, and the Federal Government. This legislation would make
permanent the National Housing Agency and give it authority and funds for
much needed technical and economic research. It would provide additional
stimulus for privately financed housing construction. This stimulus
consists of establishing a new system of yield insurance to encourage
large-scale investment in rental housing and broadening the insuring powers
of the Federal Housing Administration and the lending powers of the Federal
savings and loan associations.
Where private industry cannot build, the Government must step in to do the
job. The bill would encourage expansion in housing available for the lowest
income groups by continuing to provide direct subsidies for low-rent
housing and rural housing. It would facilitate land assembly for urban
redevelopment by loans and contributions to local public agencies where the
localities do their share.
Prompt enactment of permanent housing legislation along these lines will
not interfere with the emergency action already under way. On the contrary,
it would lift us out of a potentially perpetual state of housing emergency.
It would offer the best hope and prospect to millions of veterans and other
American families that the American system can offer more to them than
temporary makeshifts.
I have said before that the people of the United States can be the best
housed people in the world. I repeat that assertion, and I welcome the
cooperation of the Congress in achieving that goal.
(j) Social security and health.
Our Social Security System has just celebrated its tenth anniversary.
During the past decade this program has supported the welfare and morale of
a large part of our people by removing some of the hazards and hardships of
the aged, the unemployed, and widows and dependent children.
But, looking back over 10 years' experience and ahead to the future, we
cannot fail to see defects and serious inadequacies in our system as it now
exists. Benefits are in many cases inadequate; a great many persons are
excluded from coverage; and provision has not been made for social
insurance to cover the cost of medical care and the earnings lost by the
sick and the disabled.
In the field of old-age security, there seems to be no adequate reason for
excluding such groups as the self-employed, agricultural and domestic
workers, and employees of nonprofit organizations. Since many of these
groups earn wages too low to permit significant savings for old age, they
are in special need of the assured income that can be provided by old-age
insurance.
We must take urgent measures for the readjustment period ahead. The
Congress for some time has been considering legislation designed to
supplement at Federal expense, during the immediate reconversion period,
compensation payments to the unemployed. Again I urge the Congress to enact
legislation liberalizing unemployment compensation benefits and extending
the coverage. Providing for the sustained consumption by the unemployed
persons and their families is more than a welfare policy; it is sound
economic policy. A sustained high level of consumer purchases is a basic
ingredient of a prosperous economy.
During the war, nearly 5 million men were rejected for military service
because of physical or mental defects which in many cases might have been
prevented or corrected. This is shocking evidence that large sections of
the population are at substandard levels of health. The need for a program
that will give everyone opportunity for medical care is obvious. Nor can
there be any serious doubt of the Government's responsibility for helping
in this human and social problem.
The comprehensive health program which I recommended on November 19, 1945,
will require substantial additions to the Social Security System and, in
conjunction with other changes that need to be made, will require further
consideration of the financial basis for social security. The system of
prepaid medical care which I have recommended is expected eventually to
require amounts equivalent to 4 percent of earnings up to $3,600 a year,
which is about the average of present expenditures by individuals for
medical care. The pooling of medical costs, under a plan which permits each
individual to make a free choice of doctor and hospital, would assure that
individuals receive adequate treatment and hospitalization when they are
faced with emergencies for which they cannot budget individually. In
addition, I recommended insurance benefits to replace part of the earnings
lost through temporary sickness and permanent disability.
Even without these proposed major additions, it would now be time to
undertake a thorough reconsideration of our social security laws. The
structure should be expanded and liberalized. Provision should be made for
extending coverage credit to veterans for the period of their service in
the armed forces. In the financial provisions we must reconcile the
actuarial needs of social security, including health insurance, with the
requirements of a revenue system that is designed to promote a high level
of consumption and full employment.
(k) Education.
Although the major responsibility for financing education rests with the
States, some assistance has long been given by the Federal Government.
Further assistance is desirable and essential. There are many areas and
some whole States where good schools cannot be provided without imposing an
undue local tax burden on the citizens. It is essential to provide adequate
elementary and secondary schools everywhere, and additional educational
opportunities for large numbers of people beyond the secondary level.
Accordingly, I repeat the proposal of last year's Budget Message that the
Federal Government provide financial aid to assist the States in assuring
more nearly equal opportunities for a good education. The proposed Federal
grants for current educational expenditures should be made for the purpose
of improving the educational system where improvement is most needed. They
should not be used to replace existing non-Federal expenditures, or even to
restore merely the situation which existed before the war.
In the future we expect incomes considerably higher than before the war.
Higher incomes should make it possible for State and local governments and
for individuals to support higher and more nearly adequate expenditures for
education. But inequality among the States will still remain, and Federal
help will still be needed.
As a part of our total public works program, consideration should be given
to the need for providing adequate buildings for schools and other
educational institutions. In view of current arrears in the construction of
educational facilities, I believe that legislation to authorize grants for
educational facilities, to be matched by similar expenditures by State and
local authorities, should receive the favorable consideration of the
Congress.
The Federal Government has not sought, and will not seek, to dominate
education in the States. It should continue its historic role of leadership
and advice and, for the purpose of equalizing educational opportunity, it
should extend further financial support to the cause of education in areas
where this is desirable.
(l) Federal Government personnel.
The rapid reconversion of the Federal Government from war to peace is
reflected in the demobilization of its civilian personnel. The number of
these employees in continental United States has been reduced by more than
500,000 from the total of approximately 2,900,000 employed in the final
months of the war. I expect that by next June we shall have made a further
reduction of equal magnitude and that there will be continuing reductions
during the next fiscal year. Of the special wartime agencies now remaining,
only a few are expected to continue actively into the next fiscal year.
At the same time that we have curtailed the number of employees, we have
shortened the workweek by one-sixth or more throughout the Government and
have restored holidays. The process of readjustment has been complicated
and costs have been increased by a heavy turn-over in the remaining
personnel--particularly by the loss of some of our best administrators.
Thousands of war veterans have been reinstated or newly employed in the
civil service. Many civilians have been transferred from war agencies to
their former peacetime agencies. Recruitment standards, which had to be
relaxed during the war, are now being tightened.
The elimination last autumn of overtime work for nearly all Federal
employees meant a sharp cut in their incomes. For salaried workers, the
blow was softened but by no means offset by the increased rates of pay
which had become effective July 1. Further adjustments to compensate for
increased living costs are required. Moreover, we have long needed a
general upward revision of Federal Government salary scales at all levels
in all branches--legislative, judicial, and executive. Too many in
Government have had to sacrifice too much in economic advantage to serve
the Nation.
Adequate salaries will result in economies and improved efficiency in the
conduct of Government business--gains that will far outweigh the immediate
costs. I hope the Congress will expedite action on salary legislation for
all Federal employees in all branches of the Government. The only exception
I would make is in the case of workers whose pay rates are established by
wage boards; a blanket adjustment would destroy the system by which their
wages are kept aligned with prevailing rates in particular localities. The
wage boards should be sensitive now, as they were during the war, to
changes in local prevailing wage rates and should make adjustments
accordingly.
I hope also that the Congress may see fit to enact legislation for the
adequate protection of the health and safety of Federal employees, for
their coverage under a system of unemployment compensation, and for their
return at Government expense to their homes after separation from wartime
service.
(m) Territories, insular possessions, and the District of Columbia.
The major governments of the world face few problems as important and as
perplexing as those relating to dependent peoples. This Government is
committed to the democratic principle that it is for the dependent peoples
themselves to decide what their status shall be. To this end I asked the
Congress last October to provide a means by which the people of Puerto Rico
might choose their form of government and ultimate status with respect to
the United States. I urge, too, that the Congress promptly accede to the
wishes of the people of Hawaii that the Territory be admitted to statehood
in our Union, and that similar action be taken with respect to Alaska as
soon as it is certain that this is the desire of the people of that great
Territory. The people of the Virgin Islands should be given an increasing
measure of self-government.
We have already determined that the Philippine Islands are to be
independent on July 4, 1946. The ravages of war and enemy occupation,
however, have placed a heavy responsibility upon the United States. I urge
that the Congress complete, as promptly and as generously as may be
possible, legislation which will aid economic rehabilitation for the
Philippines. This will be not only a just acknowledgment of the loyalty of
the people of the Philippines, but it will help to avoid the economic chaos
which otherwise will be their heritage from our common war. Perhaps no
event in the long centuries of colonialism gives more hope for the pattern
of the future than the independence of the Philippines.
The District of Columbia, because of its special relation to the Federal
Government, has been treated since 1800 as a dependent area. We should move
toward a greater measure of local self-government consistent with the
constitutional status of the District. We should take adequate steps to
assure that citizens of the United States are not denied their franchise
merely because they reside at the Nation's Capital.